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CITAC CALLS PROTECTIONIST STEEL UNION PROPOSALS DANGEROUS TO U.S. COMPETITIVENESS

Washington, DC:     Consuming Industries Trade Action Coalition (CITAC) Chairman Jon Jenson stated today that recent proposals by U.S. steel unions and their allies in the U.S. Congress are anti-consumer and could cause irreparable harm to the U.S. economy.  CITAC is an association of companies and organizations who are committed to promoting a trade arena where U.S. consuming industries and their workers have access to global markets for raw materials and other imports that enhance the international competitiveness of U.S. firms.

The United Steelworkers Union proposed several protectionist measures, including a five-year quota on steel imports, a $10-per-ton surcharge on steel shipments and a government handout of $10 billion to the domestic steel industry.  Concurrently, the Department of Commerce is beginning an investigation, requested by Reps. Jim Oberstar (D-MN) and Bart Stupak (D-MI) and initiated by the departing Clinton Administration, into whether imports of iron ore and slab steel jeopardize U.S. national security interests.  Such an investigation could lead to import restrictions on iron ore and semifinished steel products.

 "These protectionist measures will punish American consuming industries for the domestic steel industry's failure to modernize and become competitive in the global market," said Jenson.  "If enacted, the measures will cause significant injury to the steel consuming sector that relies on steel imports because U.S. producers do not make enough steel or the right kinds of steel to satisfy U.S. demand."

The steel consumers include heavy equipment, industrial machinery, construction and transportation equipment, as well as the domestic steel industry itself, which imported approximately 10 million tons of semifinished steel in 2000.  Several U.S. steel companies have announced their opposition to the Commerce investigation.

Jenson noted that major steel-consuming industries employ more than 40 workers for every one employed by the domestic steel industry.  Major U.S. manufacturers will lose market share and jobs if they cannot obtain the products they need from competitive domestic and international suppliers.  The harm to these industries and to the American consumer would far outweigh any short-term benefit to steel companies or workers.

Jenson stated that thirty years of federal, state and local government support for the domestic steel industry, through special tax provisions, loan programs and trade protection, have not made the domestic steel industry competitive. 

"Steel companies in the U.S. are failing because of their own structural weakness," stated Jenson.  "Their reliance on government handouts and failure to modernize and restructure are at the root of their problems today.  The United States has been a leader in building our global free trade system.  Creating artificial barriers is not the long-term solution for the internal structural problems of the domestic steel industry.  These barriers promise to create many new equally burdensome problems for American companies trying to compete globally," he concluded.