If you are in the habit of reading LBOT quickly, please realize this is NOT a current news release but historical artefact courtesy of Tim Berners Lee and my ability to clip and paste plain text.
CJ
http://usembassy.state.gov/seoul/wwwh4463.html
(see also: http://usembassy.state.gov/seoul/wwwh4466.html http://usembassy.state.gov/seoul/wwwh4462.html)
USTR'S ESSERMAN ON STEEL IMPORT SURGE POLICY (She cites multilateral, bilateral efforts)
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Washington -- The Clinton administration response to a surge in steel imports has combined multilateral efforts aimed at resolving the global financial crisis and bilateral efforts aimed at steel-producing countries, an Office of the U.S. Trade Representative (USTR) official says.
In November 30 testimony before the Senate Steel Caucus, the official, USTR general counsel Susan Esserman, said the financial crisis precipitated the surge of imports. She said the administration intends to monitor implementation of trade policy and market reforms required of countries rescued by the International Monetary Fund (IMF).
She also cited expedited administration handling of dumping cases concerning imports of hot-rolled steel from Japan, Russia and Brazil. She discussed President Clinton's discussions during his November trip with Japanese and Korean leaders about their steel production.
Of the 34-percent increase in finished steel imports so far in 1998, Esserman said, Japan, Korea and Russia accounted for 84 percent of the increase.
Following is the text of Esserman's testimony as prepared for delivery:
(begin text)
Testimony of Susan Esserman General Counsel Office of the United States Trade Representative before the Senate Steel Caucus
November 30, 1998
Thank you, Mr. Chairman, for providing the opportunity to discuss steps the Administration has taken to date in response to the recent rapid rise in imports of steel.
Our goal in this effort is clear: We seek to ensure that competitive American steel companies and steel workers have the opportunity to compete fairly and not be asked to bear the burden of an economic crisis they did not create. In pursuit of this goal, we are vigorously and expeditiously enforcing our own trade laws; engaging in consultations with steel exporting and importing countries aimed at ensuring fair trade and sharing the import burden; and working with the IMF and our trading partners to address the financial crisis which has reduced world demand for steel.
This is a top-level concern for our Administration. President Clinton personally expressed his deep concern about steel trade, both in public and in private meetings, including in his recent visits to Japan and South Korea. Ambassador Barshefsky has done so as well in meetings with European and Asian officials, as has Secretary Daley. The Administration as a whole has already taken a number of actions to address the situation, and is assessing other options including those recommended by industry, labor, and members of Congress. We welcome the opportunity the Steel Caucus has provided us to review this important issue.
IMPORTANCE OF THE STEEL INDUSTRY TO THE U.S. ECONOMY
The American steel industry is critically important to our economy, including as a vital contributor to the auto, high-tech, and construction industries and many other sectors. The steel industry employs 235,000 American workers and supports employment in many related industrial and service fields.
Internationally, the United States is the world's third largest producer of steel after China and Japan, with production of 110 million metric tons of crude steel in 1997. Over the last several years, due to strong demand and favorable market conditions, U.S. and foreign firms have added substantial new steel capacity in the United States, amounting to about 9 million metric tons. We have a highly competitive industry, which can compete and succeed in a market that is not distorted by subsidies and government intervention.
However, many foreign governments continue to view steel production and self-sufficiency in steel as prerequisites for industrialization. Foreign steel industries, therefore, have often been supported through government subsidies to encourage expansion or forestall restructuring and layoffs. Thus, overcapacity has been a long-term problem in the industry.
EFFECTS OF THE FINANCIAL CRISIS AND RECENT MARKET DEVELOPMENTS
This year, the chronic problem of overcapacity has been compounded by the financial crisis and the catastrophic drop in demand in Asia. As a result, a high volume of shipments has been diverted from Asian to North American markets. Aggravating the situation further, substantial Russian excess steel tonnage, much of which had found a home in Asian markets, also shifted to the United States.
As a result, steel imports to the United States have surged. This year, through September of 1998, the United States imported 27.7 million metric tons of steel. This represents an increase of 27 percent over the 21.8 million metric tons we imported in the first nine months of 1997 and close to the approximately 28 million metric tons total we reached in 1997.
This is the highest figure ever recorded for U.S. steel imports. Imports of finished steel products grew at an even higher rate, reaching 22.8 million metric tons by the end of September -- an increase of 5.8 million metric tons, or 34 percent. Most major foreign steel producers have contributed to this import growth. However, the increase is concentrated in three countries, which together account for 84 percent of the increase. They are:
-- Japan, now the single largest source of imports at 4.1 million metric tons through September, up 154 percent or 2.5 million tons, accounts for 43.3 percent of the import growth;
-- Korea, now the fourth largest source of imports at 2.2 million metric tons through September, up 138 percent or 1.3 million tons, accounts for 22.7 percent of the import growth; and
-- Russia, the third largest supplier at 3.2 million metric tons, up 47 percent or 1 million tons through September, accounts for 17.6 percent of the import growth.
Measured by product category, the largest increase has been in hot rolled carbon flat steel, in which imports grew by 2.6 million metric tons. This growth in hot rolled imports accounts for 45 percent -- nearly half -- of the total import growth we experienced so far in 1998. Japan and Russia together account for 84 percent of this increase. U.S. producers and unions have filed dumping cases on these imports.
The second largest product increase is in heavy structurals, which are up 1.2 million metric tons or 187 percent. This is followed by bars, up 0.7 million metric tons or 41 percent; and pipe and tube, up 0.6 million metric tons or 28 percent. These are the largest increases in tonnage, but increases are evident in almost every product type.
Equally dramatic as the growth in import volume has been the steep drop in prices. The value of the average imported net ton of steel had dropped from about $450 to $370 since the beginning of 1998. This has placed substantial downward pressure on steel prices in the United States.
During this period, U.S. steel production and employment have fallen. The American Iron and Steel Institute (AISI) reports that capacity utilization has dropped to 77 percent this month as compared with 91 percent a year ago. Further, AISI estimates that 2,500 workers have been laid off this year, and 10,000 more affected in other ways.
ACTIONS TO DATE
To date, we have taken steps in three broad areas:
1. U.S. Trade Remedy Laws
Our efforts begin with vigorous enforcement of our trade laws. Maintaining strong trade laws and vigorous enforcement has been a critical element of our trade policy. Dumping orders are in effect for a number of steel import categories, and most products covered by these orders are already subject to import duties. In response to the recent surge in imports, the U.S. industry and workers have filed dumping cases against hot rolled steel from Japan and Russia, which account for a large proportion of the recent increase, as well as cases against Brazil. As you will hear from Undersecretary Aaron, the Commerce Department is administering these cases on an expedited basis. It has made early determinations on critical circumstances to afford the earliest possible relief consistent with U.S. law.
2. Bilateral Initiative in Support of Fair Trade
We are also engaging Japan, Russia, Korea, other steel producing countries, and the European Union in consultations on steel trade beyond these particular products and cases, with the goal of ensuring that nations follow fair trading practices, respect established international rules, including refraining from subsidization, and fairly share the burden of absorbing additional steel imports. Let me briefly review these initiatives:
Japan -- Japan is responsible for almost half of the recent increase in steel imports. During his trip to Japan 10 days ago, the President expressed concern about the enormous increase in Japanese steel imports into the United States. Citing the 500 percent increase in imports of Japanese hot rolled steel into the United States, the President underscored the need for fair, rules-based trade and greater market opening, as well as the need to avoid market penetrations that have no relationship to market forces. The President and Ambassador Barshefsky reiterated that Japan cannot expect to export its way out of its recession; rather, it must take decisive and immediate steps to revive its economy and consequently its domestic demand for steel.
Russia -- As I noted earlier, hot rolled steel from Russia is already the subject of a dumping case. We are also looking for other ways to secure early and effective relief for the industry and its workers.
Korea -- Led by President Clinton, we have an active dialogue under way with Korea on steel issues, aimed at placing its steel sector on a market footing. As in Japan, President Clinton made clear in Korea, in public and in a private meeting with President Kim, that the openness of the U.S. market depends on nations playing by the rules. He asked President Kim that special care be taken to avoid unfair trade practices or subsidization in sensitive sectors such as steel. He emphasized the need for further progress in our expanded steel dialogue.
We have been engaged in extensive and detailed consultations with the Korean Government regarding Hanbo Steel, which has been an important concern of our industry. Hanbo has now temporarily shut down production of hot rolled sheet. We worked to obtain assurances from the Korean Government that it will not support or direct others to support Hanbo, and that the company will be sold based on transparent international procedures. We are continually monitoring those commitments.
We have recently expanded our dialogue to include concerns with two other Korean steel producers: POSCO, the world's second largest steel producer, and Dongkuk, a large producer of cut plate which is being shipped to the United States. The Korean government is in the process of selling its remaining 33 percent share of POSCO. Our goal is to ensure that POSCO is fully, expeditiously, and permanently set on a market footing. We also want to ensure that Dongkuk is not benefiting from government support.
European Union -- We have pressed the European Union to bear its share of absorbing the excess supply of steel in the world market. In her recent visit to Brussels, Germany, France and Britain, Ambassador Barshefsky, while acknowledging that the EU has also experienced substantial steel import increases, underscored that the EU's steel imports from Russia are only half of our Russian imports, and its imports from Japan are only a tenth of our Japanese imports. We have thus urged the European Commission to review its import licensing and quota arrangements with Russia and other former Soviet republics and to examine reasons for the low levels of imports from Japan.
3. Addressing the Financial Crisis
Third, we are addressing the financial crisis, which has precipitated the recent surge in steel imports into the United States. Our targeted steps in steel trade thus come against the backdrop of a broader macroeconomic and international economic policy designed to help us weather this international financial crisis with minimum damage to the U.S. economy. This includes the recent Congressional appropriation of IMF funding and the important conditionalities in the IMF stabilization programs in Korea, Thailand and Indonesia, which require structural trade policy reforms, including goods and services market liberalization, restrictions on the use of funds for subsidization purposes, enhanced competition, and commercial and financial decisions based upon the disciplines of the market, transparency and deregulation. These steps, in addition to our bilateral efforts with key countries, are aimed at restoring stability and growth abroad, which in turn will help revive domestic demand for steel products in these Asian markets. Restoration of growth in Asia is critical to reducing the steel import pressure on our market.
The Administration has also developed a monitoring program to help ensure full implementation of the commitments made to the IMF. USTR and the Department of Commerce are actively monitoring actions taken by IMF recipients to implement their trade-related and subsidy commitments, and the State Department has instructed our Embassies to supplement these efforts. The information collected is reviewed with the Treasury Department, which uses its representatives to the international financial institutions to ensure its effective use.
4. Other Options
Finally, we are also continuing to consult with industry, with the unions, and with Members of Congress on further steps we might take. We will listen carefully to all suggestions to address this situation and work closely with all interested groups.
CONCLUSION
In conclusion, let me say that this year's sharp rise in imports has presented America's steel producers and workers with a very difficult challenge. The Clinton Administration is determined to provide an effective response.
The steel industry is a critical part of our economic strength. Its companies, workers and communities deserve an environment which gives them a fair chance to compete and succeed. We intend to continue to work with the industry, its workers, and Members of Congress toward that goal.
Once again, I thank the Steel Caucus for holding this hearing.
(end text)
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