January 2, 2002

Largest Mill Customer Group Urges Bush Administration to Protect Domestic Steel Producers and Manufacturers

January 02, 2002

Largest Mill Customer Group Urges Bush Administration to Protect Domestic Steel Producers and Manufacturers

Embargoed for release at 7 a.m. EST Wednesday, January 2

PRESS RELEASE              

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Jonathan Kalkwarf

773-867-8760 Ext. 105

Largest Mill Customer Group Urges Bush Administration to Protect Domestic Steel Producers and Manufacturers

CHICAGO, Illinois, January 2, 2002 – The Steel Service Center Institute (SSCI), in its first direct policy statement on appropriate remedies to protect U.S. steel makers from low-cost imported steel, today recommended that additional tariffs be placed on imports of both steel mill products as well as imported goods that contain foreign-made steel.

The recommendation, contained in a submission to the Trade Policy Staff Committee, which will advise President Bush on relief measures for mills harmed by steel imports, is significant because the institute, with nearly 300 members, represents the largest single bloc of steel buyers and distributors in the nation. SSCI members’ metals distribution and first-stage fabrication facilities together purchase more than 30% of all carbon steel and more than 50% of all specialty steels distributed in the U.S.

“The issue before the President is how best to balance the national interest, and the very strong need to support U.S. steel manufacturing capabilities, while at the same time maintaining a diverse marketplace,” said Eugene H. McNichols, board chairman of SSCI and president and chief executive officer of McNichols Company of Tampa, Florida.  “We must have a strong and viable U.S. steel production base, and, similarly, we must not price U.S. manufacturing out of the marketplace due to high materials costs.”

In an attempt to balance these interests, SSCI has proposed a five-step program for President Bush to consider.

  1. The President should proclaim an additional tariff of 20% on all steel mill products and a corresponding offsetting tariff on certain imported steel-containing products (to be identified by the President in consultation with steel consuming industries), using Section 203 or some other statutory authority. 

    SSCI Steel Relief Statement 2

  2. 2For each steel mill product, the maximum tariff rate should be applied so as to eliminate: a.) the lowest current import prices from the market, and b.) the average financial loss, if any, incurred by producers of that product in 2000-2001.  In each group, the tariff should be gradually phased out in regular intervals as import values increase until the tariffs reach zero.
  3. The President should waive additional tariffs for any country or Customs Union that he certifies as in compliance with the principles of free and open trade in steel. Among the guidelines that the President should take into account in certifying a country, are: 1.) the relative balance between steel mill imports and exports; 2.) the relative balance between capacity and consumption; and 3.) the extent to which the exporting country uses subsidies to maintain or increase capacity. Depending on the degree of compliance with these objectives, the President may eliminate the additional tariff partially or completely.
  4.  Any country or Customs Union that has not achieved certification by the end of the fourth year of this program should have the additional tariffs applied for an additional four years.
  5. The President should appoint a Special Ambassador within the Office of the U.S. Trade Representative to negotiate and administer this program.

“We believe this approach provides needed relief that will blunt predatory pricing practices while recognizing that imports play a role in our markets,” said McNichols. “It provides a way for nations that want to continue to sell steel to the U.S. to rehabilitate themselves and rejuvenate their trade with us.  Most important, it recognizes that there are many valid, competing interests that need to be recognized in emerging U.S.policy.”

The Steel Service Center Institute is a trade association that represents the North American metals service center industry and its customers, including about 300,000 manufacturers and fabricators in the U.S.,Canada and Mexico.