Hon. Robert B. Zoellick
United States Trade Representative
Office of the United States Trade Representative
Dear Ambassador Zoellick:
We would like to express our sincere thanks for the
time you spent with us this past Wednesday on the prospective trade remedy the
President will adopt on steel imports. Our minimill sector of the steel
industry, which now accounts for almost one half of US steel production, is
grateful for your leadership role on the steel trade problem.
President’s Steel Trade Objectives
As we indicated during our meeting, the President’s
announcement on June 5, stated he would: 1) initiate negotiations to seek the
near-term elimination of inefficient excess capacity, worldwide; 2) initiate
negotiations on the rules that will govern steel trade in the future; 3)
request the initiation of a steel industry 201 investigation. In regard to his third request, the ITC
unanimously found that on most steel products, the domestic industry has been
seriously injured by imports.
An Effective Remedy is the Key Factor in
Achieving the President’s Program
We wish to reiterate what we said in our meeting with
you on January 9th, namely that there will be little hope of
achieving the President’s first two policy objectives unless the President addresses
the unimpeded and irresponsible importation of the world’s excess steel
production. To reestablish discipline in
the domestic market, we are seeking a remedy that is uniform and easily
applied: i.e. an effective tariff on all
ITC Section 201 affirmative rulings for steel mill products rather than varying
tariffs mixed with quotas which would be both ineffective and an administrative
nightmare to police. The tariff must be
substantial enough to get the steel industry adjustment job accomplished,
otherwise the steel trade problem will recur, a development we believe the
industry, the Congress and the Bush Administration all wish to avoid. We emphasize that the tariff remedy
recommendations of ITC Commissioners Bragg and Devaney
are the trade remedies that would provide the basis for positive adjustment by
the steel industry. We also
emphasize that the proposed recommendations of other Commissioners are
inadequate to redress the injury sustained or to accomplish the adjustment the
industry needs.
The proposed tariff rate quota on slabs proposed by
some commissioners, for example, will eviscerate relief for the flat-rolled
industry. Large quantities of extremely
low priced imported steel slabs, converted to low priced finished
products will prevent any meaningful price recovery from occurring in flat
rolled product prices, nationally.
Importers will amortize any duty they pay on above quota steel slab imports
over all their imports. Low costs of
importing additional slab to the
We are similarly concerned with varying tariff
recommendations on other key products.
Rebar imports, for example, have taken one quarter of the
In addition, the remedy should be in place for four
years. Given the significant capital
costs to achieve improvements in operating efficiency, and the time
needed to develop technical improvements and produce favorable financial
results, a remedy duration of four years is necessary.
An Effective 201 Remedy Will Not Adversely
Affect the Competitive Position of US Steel Consumers
Our economic projections indicate that an effective
trade remedy, combined with a rise in
Furthermore, major steel consuming domestic industries
will experience structural long-term injury if domestic steel prices remain at
levels which will result in further sharp losses in domestic steel product
capability. That, unfortunately, is what
is occurring today. Add further massive
dependency on foreign sources of steel, to the already unacceptable dependency
on foreign oil and US steel users will have a major long-term structural
problem. Moreover, we do not agree with
contentions that a reversion to 1997-1998 steel prices will injure the
competitive capability of US steel users.
It didn’t then, why should it do so now?
An Effective Remedy Under Sections 201/203 Is
WTO-Consistent
A unanimous affirmative determination of injury by the
ITC Commissioners under Section 201, leading to a temporary presidential
remedy, is a clear example of the way the international escape clause provision
of the World Trade Organization is supposed to work. The fact that 29 US steel companies are in
bankruptcy, that major US companies are near or in liquidation, that there is major
unemployment in the steel industry, all found by an independent agency to be
triggered by imports, is a totally WTO-consistent use by the US of the
international escape clause remedy.
Steel exporters to the
The Steel Industry is Most Grateful for the
Support of the Bush Administration
Past Administrations have analyzed the persisting
steel trade problem, but this is the first Administration which has taken the
lead to achieve a definitive long-term solution. We pledge to do our part to achieve effective
industry adjustment, and hope we may count upon your support for an effective
remedy.
Sincerely,
Phillip Casey Daniel DiMicco
President & CEO President
& CEO President
& COO
AmeriSteel Nucor
Corporation Commercial
Metals Steel Group