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Steel Industry and Trade Issues

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Publication Date: May 2002

Publisher(s): Library of Congress. Congressional Research Service

Series: RL31107

Topic: Manufacturing and industry (Metals industry)

Abstract:

The U.S. steel industry has faced increasing difficulties since the late 1990s. More than 30 U.S. steel producers, including Bethlehem, LTV, National, and Wheeling Pittsburgh, have gone into bankruptcy and some have ceased operating. While different companies and parts of the industry have been affected to different degrees, active and retired steelworkers and their union representatives have become particularly concerned about the industry's possible inability to continue to fund pension and healthcare benefit commitments (an issue known as "legacy costs").

U.S. policymakers have responded with a variety of measures. The House of Representatives in early 1999 approved a bill that would have required the President to take measures that would have rolled back imports to a level prevailing before a 1997-98 import surge. The Clinton Administration responded with expedited enforcement of U.S. antidumping and countervailing duty laws, as well as a Section 201 trade case focused on wire rod and line pipe products. The 106th Congress also approved and President Clinton signed laws to establish a steel loan guarantee program and to distribute to petitioners penalty duties from antidumping and antisubsidy trade cases, including those involving steel. These measures did not prevent a new downturn in the domestic industry in 2001.

In the 107th Congress, a broader version of the 1999 import quota bill was reintroduced and gained a majority of the House as co-sponsors. Pressed to act by Members of Congress, steel companies and labor representatives, President Bush in June 2001 requested the U.S. International Trade Commission (ITC) to undertake a broad Section 201 trade investigation on the steel industry. The ITC decided that a substantial part of the industry is being injured by increased imports and recommended relief measures to President Bush. President Bush on March 5, 2002, decided to impose three-year remedy tariffs with top rates of 30%. Some Members of Congress, economists and representatives of steel-consuming industries have expressed concerns that measures to aid the industry will have a negative impact on the competitiveness of a broad range of U.S. businesses. Supporters of government assistance for legacy cost relief have introduced legislation, now that President Bush has acted on remedy tariffs under Section 201.

The Section 201 trade case is one element of an Administration strategy concerning steel, which includes a multilateral international negotiation on global overcapacity in the steel industry and future rules for world steel trade. U.S. and other countries' negotiators have discussed worldwide capacity reductions in the forum of the OECD steel committee in Paris, and have so far offered possible cuts of more than 100 million metric tons by 2005. Meanwhile, U.S. trading partners are challenging the Section 201 measures under WTO rules.

This report examines the recent performance of the U.S. steel industry, the Bush Administration Section 201 initiative, and measures in Congress addressing other aspects of problems in the steel industry. The report will be updated as events warrant.