[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



 
                           STEEL TRADE ISSUES

=======================================================================

                                HEARING

                               before the

                         SUBCOMMITTEE ON TRADE

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 25, 1999

                               __________

                              Serial 106-6

                               __________

         Printed for the use of the Committee on Ways and Means




                      U.S. GOVERNMENT PRINTING OFFICE
57-306 CC                     WASHINGTON : 1999




                      COMMITTEE ON WAYS AND MEANS

                      BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
BILL THOMAS, California              FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida           ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut        WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana               JIM McDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania      KAREN L. THURMAN, Florida
WES WATKINS, Oklahoma                LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida

                     A.L. Singleton, Chief of Staff

                  Janice Mays, Minority Chief Counsel

                                 ______

                         Subcommittee on Trade

                  PHILIP M. CRANE, Illinois, Chairman

BILL THOMAS, California              SANDER M. LEVIN, Michigan
E. CLAY SHAW, Jr., Florida           CHARLES B. RANGEL, New York
AMO HOUGHTON, New York               RICHARD E. NEAL, Massachusetts
DAVE CAMP, Michigan                  MICHAEL R. McNULTY, New York
JIM RAMSTAD, Minnesota               WILLIAM J. JEFFERSON, Louisiana
JENNIFER DUNN, Washington            XAVIER BECERRA, California
WALLY HERGER, California
JIM NUSSLE, Iowa


Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.


                            C O N T E N T S

                               __________

                                                                   Page

Advisory of February 12, 1999, announcing the hearing............     2

                               WITNESSES

U.S. Department of Commerce, Hon. William M. Daley, Secretary....    63
Office of the U.S. Trade Representative, Hon. Charlene Barshefsky    67

                                 ______

American Wire Producers Association, H.O. Woltz III..............   140
Barnette, Curtis H., Bethlehem Steel Corp........................    86
 Becker, George, United Steelworkers of America..................   116
 Berry, Hon. Marion, a Representative in Congress from the State 
  of Arkansas....................................................    47
Bethlehem Steel Corp., Curtis H. Barnette........................    86
Buyer, Hon. Stephen E., a Representative in Congress from the 
  State of Indiana...............................................    40
Cardin, Hon. Benjamin L., a Representative in Congress from the 
  State of Maryland..............................................    19
Carpenter Technology Corp., Robert W. Cardy......................   112
Cato Institute, Daniel T. Griswold...............................   151
Co-Steel Raritan Steel Co., George Mischenko.....................   136
Doyle, Hon. Michael F., a Representative in Congress from the 
  State of Pennsylvania..........................................    45
Economic Strategy Institute, Greg Mastel.........................   158
English, Hon. Phil, a Representative in Congress from the State 
  of Pennsylvania................................................    15
 Glyptis, Mark, Independent Steelworkers Union...................   123
Greenwood, Hon. James C., a Representative in Congress from the 
  State of Pennsylvania..........................................    34
Griswold, Daniel T., Cato Institute..............................   151
Independent Steelworkers Union, Mark Glyptis.....................   123
Insteel Industries, Inc., H.O. Woltz III.........................   140
 Jenson, Jon E., Precision Metalforming Association..............   146
Klink, Hon. Ron, a Representative in Congress from the State of 
  Pennsylvania...................................................    37
Kucinich, Hon. Dennis J., a Representative in Congress from the 
  State of Ohio..................................................    50
Mastel, Greg, Economic Strategy Institute........................   158
 Mischenko, George, Co-Steel Raritan Steel Co....................   136
Precision Metalforming Association, Jon E. Jenson................   146
 Regula, Hon. Ralph, a Representative in Congress from the State 
  of Ohio........................................................    21
Specialty Steel Industry of North America, Robert W. Cardy.......   112
Specter, Hon. Arlen, a U.S. Senator from the State of 
  Pennsylvania...................................................    11
 Stupak, Hon. Bart, a Representative in Congress from the State 
  of Michigan....................................................    43
Traficant, Hon. James A., Jr., a Representative in Congress from 
  the State of Ohio..............................................    30
United Steelworkers of America, George Becker....................   116
Visclosky, Hon. Peter J., a Representative in Congress from the 
  State of Indiana...............................................    24
 Woltz, H.O., III, Insteel Industries, Inc., and American Wire 
  Producers Association..........................................   140

                       SUBMISSIONS FOR THE RECORD

American Iron and Steel Institute, statement.....................   166
Costello, Hon. Jerry F., a Representative in Congress from the 
  State of Illinois, statement...................................   170
Dewey Ballantine, Thomas R. Howell, and Brent L. Bartlett, 
  statement and attachments......................................   171
Murtha, Hon. John P., a Representative in Congress from the State 
  of Pennsylvania, statement.....................................   172
Ney, Hon. Robert W., a Representative in Congress from the State 
  of Ohio, statement.............................................   174
Quinn, Hon. Jack, a Representative in Congress from the State of 
  New York, statement............................................   175


                           STEEL TRADE ISSUES

                              ----------                              


                      THURSDAY, FEBRUARY 25, 1999

                  House of Representatives,
                       Committee on Ways and Means,
                                     Subcommittee on Trade,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 1:10 p.m., in 
room 1100, Longworth House Office Building, Hon. Philip M. 
Crane (Chairman of the Subcommittee) presiding.
    [The advisory announcing the hearing follows:]

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                         SUBCOMMITTEE ON TRADE

                                                CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE

February 12, 1999

No. TR-3

                       Crane Announces Hearing on

                           Steel Trade Issues

    Congressman Philip M. Crane (R-IL), Chairman, Subcommittee on Trade 
of the Committee on Ways and Means, today announced that the 
Subcommittee will hold a hearing on steel trade issues. The hearing 
will take place on Thursday, February 25, 1999, in the main Committee 
hearing room, 1100 Longworth House Office Building, beginning at 1:00 
p.m.
      
    Oral testimony at this hearing will be from both invited and public 
witnesses. Invited witnesses will include United States Trade 
Representative Charlene Barshefsky and Secretary of Commerce William 
Daley. Also, any individual or organization not scheduled for an oral 
appearance may submit a written statement for consideration by the 
Committee or for inclusion in the printed record of the hearing.
      

BACKGROUND:

      
    During the first 10 months of 1998, U.S. steel imports grew at 
record levels, rising 30 percent over the same period in 1997. 
Increases were particularly high in key products such as hot-rolled 
sheets and coils, where imports rose 66.3 percent in the first 10 
months of 1998 versus the same period in 1997. Overall, import 
penetration grew from 24.2 percent in the first 10 months of 1997 to 
29.5 percent during the same period of 1998. Steel imports from Japan, 
Russia, and Korea together accounted for 78 percent of the increase. At 
the same time, U.S. steel production for 1998 was at near record 
levels, and steel demand in the United States during 1998 was the 
strongest in history.
      
    Preliminary U.S. Department of Commerce figures for December 1998 
indicate a decrease of 1.1 million metric tons in steel imports 
entering the United States. The November-to-December change in steel 
imports, based on metric tonnage, reflects decreases primarily in hot-
rolled sheets, plates in coil, and blooms, billets and slabs. The 
source of the decrease is primarily Russia, Japan, and Korea.
      
    In response to the increase in steel imports, segments of the U.S. 
industry have sought relief under U.S. trade laws. Most recently, U.S. 
steel producers and workers filed antidumping petitions at the Commerce 
Department on September 30, 1998, on U.S. imports of hot-rolled steel 
from Japan, Russia, and Brazil, and a countervailing duty petition on 
imports from Brazil. The U.S. International Trade Commission (ITC) 
issued a preliminary affirmative injury determination on these 
petitions on November 13, 1998. On November 23, 1998, the Commerce 
Department issued a preliminary ruling of critical circumstances with 
respect to hot-rolled steel imports from Japan and Russia. Based on 
this finding, importers may be retroactively assessed dumping duties 
reaching back 90 days before the preliminary determination to November 
14, 1998, if an antidumping order is issued. As a result of the 
critical circumstances finding, importers have been put on notice of 
potential antidumping duty assessments.
      
    On February 12, 1999, the Commerce Department issued a preliminary 
affirmative determination of dumping with respect to Japan (margins 
ranging from 25.14 to 67.59 percent) and Brazil (margins of 50.66 to 
71.02 percent). In addition, Commerce made an affirmative preliminary 
subsidy determination with respect to Brazil, with margins ranging from 
6.62 to 9.45 percent. The determination with respect to Russia is 
expected shortly. Commerce final determinations are due April 28, 
unless extended, and the ITC final determinations are due June 2, 
unless extended.
      
    On December 30, 1998, another segment of the U.S. steel industry 
filed a petition for relief with the ITC under section 201 of the Trade 
Act of 1974 on imports of steel wire rod, alleging that imports of the 
product are a cause of substantial injury to the U.S. industry. An 
injury determination on that petition is due mid-May.
      
    In the 106th Congress, four pieces of legislation have been 
introduced in the House of Representatives in response to the increase 
in U.S. steel imports. On January 19, 1999, Congressman Aderholt 
introduced H.R. 327, a bill to provide for the assessment of 
antidumping duties on entries of steel products made prior to the 
effective date of any antidumping order issued in the current 
investigation. On the same day, Congressman Regula introduced H.R. 412, 
the ``Trade Fairness Act of 1999,'' to amend the injury test for a 
safeguard action by eliminating the requirement that imports be a 
``substantial'' cause of injury to U.S. industry in order for the ITC 
to recommend industry relief to the President. In addition, H.R. 412 
would establish a steel import permit and monitoring program to permit 
the U.S. Government to receive and analyze import data in a more timely 
manner by requiring the use of a permit to import steel into the United 
States.
      
    On February 2, 1999, Congressman Traficant introduced H.R. 502, the 
``Fair Steel Trade Act,'' to impose a three-month ban on imports of 
steel and steel products from Japan, Russia, South Korea, and Brazil. 
Also on February 2, Congressman Visclosky introduced H.R. 506, a bill 
to require the President to take steps, by imposing quotas, tariff 
surcharges, negotiated enforceable voluntary export restraint 
agreements, or other methods, to ensure that the volume of steel 
products imported into the United States during any month does not 
exceed the average volume of steel products that was imported monthly 
into the United States during the 36-month period preceding July 1997. 
H.R. 327, H.R. 412, H.R. 502, and H.R. 506 were all referred to the 
Committee on Ways and Means.
      
    On January 7, 1999, the Administration issued its own plan to 
address the steel crisis.
      
    In announcing the hearing, Chairman Crane stated: ``There is no 
question that the U.S. steel industry is facing competition from 
foreign producers that has intensified since the onset of the global 
financial crisis. I believe that the United States should strongly 
enforce its existing trade laws, which are designed to deal with such 
competition. I look forward to this opportunity to examine the impact 
of the increase in steel imports on the U.S. industry and the U.S. 
economy, as well as the legislation that has been introduced to address 
the rise in steel imports. I intend to examine whether proposed 
legislation is consistent with our WTO obligations and whether it runs 
the risk of sending messages to our trading partners that erecting 
trade barriers is an appropriate response in these circumstances. 
Finally, I am concerned about U.S. downstream users of steel, who are 
dependent on competitively priced inputs to maintain their own 
competitive stance in the global market.''
      

FOCUS OF THE HEARING:

      
    Witnesses should address the impact of the increase in steel 
imports on U.S. steel producers and workers and on the U.S. economy, as 
well as the legislation addressing this issue which has been introduced 
in the 106th Congress. In addition, testimony presented should address 
the effectiveness of U.S. trade remedy laws and the effect on 
downstream steel users in the United States to restricting access to 
foreign produced steel. Finally, witnesses should address ways to seek 
greater foreign consumption of excess steel and the possibility of 
retaliation against U.S. exports in response to action that would 
restrict the access of foreign steel to the U.S. market.

DETAILS FOR SUBMISSIONS OF REQUESTS TO BE HEARD:

      
    Requests to be heard at the hearing must be made by telephone to 
Traci Altman or Pete Davila at (202) 225-1721 no later than the close 
of business, Friday, February 19, 1999. The telephone request should be 
followed by a formal written request to A.L. Singleton, Chief of Staff, 
Committee on Ways and Means, U.S. House of Representatives, 1102 
Longworth House Office Building, Washington, D.C. 20515. The staff of 
the Subcommittee on Trade will notify by telephone those scheduled to 
appear as soon as possible after the filing deadline. Any questions 
concerning a scheduled appearance should be directed to the 
Subcommittee on Trade staff at (202) 225-6649.
      
    In view of the limited time available to hear witnesses, the 
Subcommittee may not be able to accommodate all requests to be heard. 
Those persons and organizations not scheduled for an oral appearance 
are encouraged to submit written statements for the record of the 
hearing. All persons requesting to be heard, whether they are scheduled 
for oral testimony or not, will be notified as soon as possible after 
the filing deadline.
      
    Witnesses scheduled to present oral testimony are required to 
summarize briefly their written statements in no more than five 
minutes. THE FIVE-MINUTE RULE WILL BE STRICTLY ENFORCED. The full 
written statement of each witness will be included in the printed 
record, in accordance with House Rules.
      
    In order to assure the most productive use of the limited amount of 
time available to question witnesses, all witnesses scheduled to appear 
before the Subcommittee are required to submit 200 copies, along with 
an IBM compatible 3.5-inch diskette in WordPerfect 5.1 format, of their 
prepared statement for review by Members prior to the hearing. 
Testimony should arrive at the Subcommittee on Trade office, room 1104 
Longworth House Office Building, no later than Tuesday, February 23, 
1999. Failure to do so may result in the witness being denied the 
opportunity to testify in person.
      

WRITTEN STATEMENTS IN LIEU OF PERSONAL APPEARANCE:

      
    Any person or organization wishing to submit a written statement 
for the printed record of the hearing should submit six (6) single-
spaced copies of their statement, along with an IBM compatible 3.5-inch 
diskette in WordPerfect 5.1 format, with their name, address, and 
hearing date noted on a label, by the close of business, Monday, March 
8, 1999, to A.L. Singleton, Chief of Staff, Committee on Ways and 
Means, U.S. House of Representatives, 1102 Longworth House Office 
Building, Washington, D.C. 20515. If those filing written statements 
wish to have their statements distributed to the press and interested 
public at the hearing, they may deliver 200 additional copies for this 
purpose to the Subcommittee on Trade office, room 1104 Longworth House 
Office Building, by close of business the day before the hearing.
      

FORMATTING REQUIREMENTS:

      
    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.
      
    1. All statements and any accompanying exhibits for printing must 
be submitted on an IBM compatible 3.5-inch diskette in WordPerfect 5.1 
format, typed in single space and may not exceed a total of 10 pages 
including attachments. Witnesses are advised that the Committee will 
rely on electronic submissions for printing the official hearing 
record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. A witness appearing at a public hearing, or submitting a 
statement for the record of a public hearing, or submitting written 
comments in response to a published request for comments by the 
Committee, must include on his statement or submission a list of all 
clients, persons, or organizations on whose behalf the witness appears.
      
    4. A supplemental sheet must accompany each statement listing the 
name, company, address, telephone and fax numbers where the witness or 
the designated representative may be reached. This supplemental sheet 
will not be included in the printed record.
      
    The above restrictions and limitations apply only to material being 
submitted for printing. Statements and exhibits or supplementary 
material submitted solely for distribution to the Members, the press, 
and the public during the course of a public hearing may be submitted 
in other forms.
      

    Note: All Committee advisories and news releases are available on 
the World Wide Web at `HTTP://WWW.HOUSE.GOV/WAYS__MEANS/'.
      

                                


    Chairman Crane. Will everyone please take their seats?
    Good afternoon and welcome to this hearing on the topic of 
steel trade issues. This hearing provides us with an 
opportunity to examine the underlying causes of the state of 
the steel industry today and the role of imports.
    I believe that we must strongly enforce U.S. trade remedy 
statutes and it appears that the administration is doing so 
with preliminary antidumping and countervailing duty margins 
announced by the Commerce Department in the past few days.
    At the same time, I believe that we must make sure that any 
actions taken against steel imports in our market do not 
violate our obligations in the World Trade Organization or send 
the wrong signals to countries recovering from the global 
financing crises about the steps they should take in their own 
economies. We must also be concerned about the impact of any 
changes to the law on U.S. industrial users and their 
employees, as well as U.S. consumers.
    [The opening statement follows:]

Opening Statement of Hon. Philip M. Crane, a Representative in Congress 
from the State of Illinois

    Good afternoon. Welcome to this hearing of the Subcommittee 
on Trade on the topic of steel trade issues. This hearing 
provides us with an opportunity to examine the underlying 
causes of the state of the steel industry today and the role of 
imports.
     I believe that we must strongly enforce U.S. trade remedy 
statutes and it appears that the Administration is doing so 
with the preliminary antidumping and countervailing duty 
determinations and margins announced by the Commerce Department 
in the past few days. At the same time, I believe that we must 
make sure that any actions taken against steel imports in our 
market do not violate our obligations in the World Trade 
Organization or send the wrong signals to countries recovering 
from the global financial crisis about the steps they should 
take in their own economies. We must also be concerned about 
the impact of any changes to the law on U.S. industrial users 
and their employees, as well as U.S. consumers.
     I would now like to yield to Mr. Houghton, who serves as 
Chairman of the Ways and Means Oversight Subcommittee, to make 
a brief opening statement.
     I would now like to recognize Mr. Levin, the Ranking 
Member of the Trade Subcommittee, for an opening statement.
     We have a very full witness list today and I would like to 
inform all of our witnesses that we will be strictly enforcing 
the five minute rule. Longer written statements will be made a 
part of the hearing printed record of the hearing.
     Because of the length of the hearing, and the number of 
Members interested in testifying, we are using special 
procedures. We will ask the first Member panel to testify and 
then retire to the witness chairs located directly behind the 
witness table. After the second Member panel has finished, 
there will be a question and answer period for both panels. 
Should you be called upon to answer questions, please move to 
the chair located to the left of the panel table. Please 
identify yourself for the hearing record before responding. The 
remaining panels will proceed as usual.
     With that, I would like turn to our first panel of 
witnesses and ask that our Colleagues testify in the order 
printed on the witness list. We will begin with Senator 
Specter.
      

                                


    Chairman Crane. And, I now would like to yield to Mr. 
Levin, who is the Ranking Member of the Trade Subcommittee, for 
an opening statement.
    Mr. Levin. Thank you, Mr. Chairman. I am glad we decided 
last month that it would be useful to hold this hearing. Since 
then, the steel issue has become even more important.
    As we are all aware, over the last year low-priced imports 
of steel have flooded the U.S. market. Although our U.S. steel 
companies and workers are among the most modern, efficient, 
low-cost producers in the world, they have not been able to 
withstand this deluge. Over 10,000 hard-working steelworkers 
have lost their livelihood as companies have reduced their work 
force, engaged in production cuts, and, in some cases, declared 
bankruptcy.
    Over the last few weeks, the administration has taken some 
important steps to address this problem, including aggressively 
enforcing U.S. trade laws. Most recently, the Department of 
Commerce preliminarily decided that Japanese, Brazilian, and 
Russian producers were dumping hot-rolled steel into the United 
States. The Department also announced this week that it has 
reached two agreements with Russia to curb steel imports.
    One immediate step we can take to address further the 
current crises is to ensure that the U.S. Government has 
adequate resources. To that end, I am proposing today that 
Congress make supplemental appropriations to the Department of 
Commerce as soon as possible to ensure that it has adequate 
resources to address this problem.
    Last week, 14 additional petitions were filed to address 
imports of dumped and subsidized steel plate products. This 
supplemental appropriation would ensure that the Department of 
Commerce has the resources it needs to process these cases 
swiftly.
    While this step and the Russian agreements and the 
antidumping determinations against Japanese and Brazilian steel 
will provide some relief to the U.S. industry, the vital 
question remains--and we will address it today--whether they 
will be enough to resolve the problem. As I see it, there are 
three reasons why they are not.
    First, for workers, relief is too little, too late. In 
important respects, U.S. law is unable to provide U.S. 
producers with expeditious relief. To make an effective case 
under the antidumping laws, U.S. producers must wait until the 
damage is imminent or has already been done. Once a case is 
filed, it takes a significant amount of time for relief to be 
provided, even with such steps as the critical circumstances 
finding which was invoked by the administration. Further, 
section 201 has not been used effectively for rapid response to 
import surges, even where anticipated.
    Second, the response largely has been ad hoc. We now have 
provisional measures in place against three countries covering 
one group of products, except for the broader agreement with 
Russia. While these measures appear to have at least 
temporarily stemmed the import surge of these products from 
these countries, other countries may step in to fill the gap. 
Moreover, with respect to Japan and Brazil, the new dumping 
orders cover only specific products; nothing precludes 
producers in other countries from shifting production into 
other product areas.
    Third, the solutions that have been proposed thus far fail 
to tackle the broader dilemma facing Congress and the 
administration with respect to U.S. trade policy. That dilemma 
is whether our existing rules for trade can be applied to and 
reconciled with the new environment in which trade operates. 
The existing rules for trade in competition were conceived to 
address trade among industrialized nations, such as the United 
States and Japan. Antidumping and other U.S. trade remedy laws 
were designed to respond to factors distorting trade flows 
between industrialized nations.
    Amo Houghton and I, with others, fought successfully in 
Geneva to safeguard U.S. antidumping laws. But, as shown in the 
steel crisis, they do not address the more systemic problems of 
structural overcapacity, now exacerbated by the increasing 
involvement of industrializing nations in informal, 
anticompetitive restraints to global steel trade.
    Indeed, our existing rules for trade and competition do not 
provide an overall workable framework for conducting trade with 
industrializing nations. These are countries with very 
different capital and labor markets and very different 
regulatory environments than our own. With these nations, 
differences in producer costs are not attributable mainly to 
efficiency but rather to governmental policies and other 
factors unlikely, for example, to be captured in an antidumping 
analysis.
    Nonmarket economies--such as Russia--provide a more extreme 
version of the problem of assessing what constitutes fair trade 
between countries with divergent market structures. The steel 
issue underlines the need for us to work our way through to a 
new consensus on trade.
    In closing, I would note that there are those who would 
characterize taking action on the surge in steel imports and 
other broader trade issues as starting down a ``slippery 
slope'' to protectionism. They are dead wrong. The danger is 
the opposite, that inaction will bring a slide into economic 
nationalism. Economic globalization is the wave of the present 
and the wave of the future. What we need is not a mindless 
internationalism that accepts passively whatever occurs as 
automatically better, but an active internationalism that works 
to help shape increasing globalization to benefit our standard 
of living that, as the President has put it, levels up not 
levels down.
    [The opening statement follows:]

Opening Statement of Hon. Sander M. Levin, a Representative in Congress 
from the State of Michigan

     Mr. Chairman, I am glad we decided last month that it 
would be useful to hold this hearing. Since then, the steel 
issue has become even more important. As we are all aware, over 
the last year low-priced imports of steel have flooded the U.S. 
market. Although our U.S. steel companies and workers are among 
the most modern, efficient low-cost producers in the world, 
they have not been able to withstand this deluge. Over 10,000 
hard-working steel workers have lost their livelihood as 
companies have reduced their workforces, engaged in production 
cuts, and in some cases, declared bankruptcy.
     Over the last few weeks, the Administration has taken some 
important steps to address this problem, including aggressively 
enforcing U.S. trade laws. Most recently, the Department of 
Commerce preliminarily determined that Japanese, Brazilian and 
Russian producers were dumping hot rolled steel into the United 
States. The Department also announced this week that it has 
reached two agreements with Russia to curb steel imports into 
the United States. One immediate step we can take to address 
further the current crisis is to ensure that the U.S. 
government has adequate resources. To that end, I am today 
proposing that Congress make supplemental appropriations to the 
Department of Commerce as soon as possible to ensure that it 
has adequate resources to address this problem. Last week, 14 
additional petitions were filed to address imports of dumped 
and subsidized steel plate products. This supplemental 
appropriation would ensure that the Department of Commerce has 
the resources it needs to process these cases swiftly.
     While this step and the Russian agreements and the 
antidumping determinations against Japanese and Brazilian steel 
will provide some relief to the U.S. industry, the vital 
question remains whether they will be enough to resolve the 
problem.
     As I see it, there are three reasons why they are not.
     First, for workers, relief is too little too late. In 
important respects, U.S. law is unable to provide U.S. 
producers with expeditious relief. To make an effective case 
under the antidumping law, U.S. producers must wait until the 
damage is imminent or has already been done. Once a case is 
filed, it takes a significant amount of time for relief to be 
provided even with such steps as the critical circumstances 
finding which was invoked by the Administration. Our Section 
201 has not been used effectively for rapid response to import 
surges even where anticipated. We need to promptly analyze and 
learn from this experience with steel.
     Second, the response largely has been ad hoc. We now have 
provisional measures in place against three countries covering 
one group of products, except for the broader agreement with 
Russia. While these measures appear to have at least 
temporarily stemmed the import surge of these products from 
these countries, other countries may step in to fill the gap. 
Moreover, with respect to Japan and Brazil, the new dumping 
orders cover only specific products. Nothing precludes 
producers in those countries from shifting production into 
other product areas.
     Third, the solutions that have been proposed thus far fail 
to tackle the broader dilemma facing Congress and the 
Administration with respect to U.S. trade policy. That dilemma 
is whether our existing rules for trade can be applied to and 
reconciled with the new environment in which trade operates. 
The existing rules for trade and competition were conceived to 
address trade among industrialized nations, such as the United 
States and Japan. Anti-dumping and other U.S. trade remedy laws 
were designed to respond to factors distorting trade flows 
between industrialized nations. Amo Houghton and I, with 
others, fought successfully in Geneva to safeguard U.S. anti-
dumping laws. But, as shown in the steel crisis, they do not 
address the more systemic problems of structural overcapacity, 
now exacerbated by the increasing involvement of 
industrializing nations, and informal anti-competitive 
restraints to global steel trade.
     Indeed, our existing rules for trade and competition do 
not provide an over-all workable framework for conducting trade 
with industrializing nations. These are countries with very 
different capital and labor markets, and regulatory 
environments than our own. With these nations, differences in 
producers' costs are not attributable mainly to efficiency, but 
rather, to government policies and other external factors 
unlikely, for example, to be captured in an antidumping 
analysis. Non market economies such as Russia present a more 
extreme version of the problem of assessing what constitutes 
fair trade between countries with divergent market structures.
     The steel issue underlines the need for us to work our way 
through to a new consensus on trade. This new consensus must 
address both the harder to define barriers to trade that plague 
our relations with our traditional trade partners, as well as 
the special problems that arise in the context of trade with 
developing nations.
     In closing, I would note that there are those who would 
characterize taking action on the surge in steel imports and 
other broader trade issues as starting down a slippery slope to 
``protectionism.'' They are dead wrong. The danger is the 
opposite--that inaction will bring a slide into economic 
nationalism. Economic globalization is the wave of the present 
and of the future. What we need is not a mindless 
internationalism that accepts passively whatever occurs as 
automatically better, but an active internationalism that works 
to help shape increasing globalization to benefit our standard 
of living...that as the President has put it, ``levels up, not 
levels down.''
      

                                


    Mr. Levin. I would now like to yield briefly, if I might, 
to the gentleman from Pennsylvania, our good friend, 
Representative Coyne.
    Mr. Coyne. Thank you very much. First of all, I want to 
thank Chairman Crane and Chairman Houghton and yourself, Mr. 
Levin, for having given us the opportunity to examine the steel 
dumping problem in this hearing today. Few trade issues rise to 
the importance of steel dumping for the United States. The 
surge in foreign steel imports has seriously damaged the U.S. 
steel industry and put thousands of American steelworkers out 
of work.
    Today's hearings are being held because of the dramatic 
increase in steel imports since July 1997. Imports of steel 
mill products increased by more than 32 percent between 1997 
and 1998 and imports of hot-rolled steel products increased by 
nearly 75 percent over that 1-year period. Commerce Department 
figures released on January 28 indicated that steel imports 
declined dramatically in December 1998. Those preliminary 
figures indicated that steel imports dropped 32 percent from 
November's levels. Hot-rolled steel products, apparently, 
dropped even more between November and December.
    But, that begs the question of whether there has been a 
dumping problem and whether that dumping has hurt American 
steelworkers and steel producers. Today, I hope we will hear 
more about the problems associated with dumping steel into the 
United States and also hear about some proposed solutions. 
Thank you very much.
    Chairman Crane. I now would like to yield to Mr. Houghton, 
who serves as Chairman of the Ways and Means Oversight 
Subcommittee, to make a brief opening statement.
    Mr. Houghton. Thank you very much, Mr. Chairman. I also 
want to thank you very much for having this hearing.
    I am not going to dwell on my own particular feelings and 
philosophies here but I would like to make just a couple of 
points.
    We certainly don't want to abrogate our responsibility with 
the WTO, World Trade Organization, and we certainly don't want 
to give a signal to other people that we are sort of drawing 
back into ourselves. But, at the same time, as we all know, 
freedom is only freedom as we are willing to give up some of it 
and that means to have some discipline. And that means that 
there is sort of a quid pro quo and the concept of free trade 
is that it doesn't always have to be in balance but it has to 
be nearly in balance and we don't want to have the totally 
``beggar thy neighbor'' philosophy.
    Second, I guess we all know--because we live here--the most 
important asset we have is our market and we have got to 
protect that market. And, if we don't, nobody else is because 
other people are protecting their markets.
    The third point is, this morning, Mr. Coyne and I had a 
hearing here on the oil patch problem. It's not identical but 
it is almost similar. Here is an industry of independent 
producers doing a great job. The costs are low, the service is 
good, the quality is fine, they are producing lots of jobs and, 
all of a sudden, they are just closing down one after the other 
after the other. Now, do we have a responsibility here? I 
really think we do.
    One of the things that has always bothered me--and we can 
talk to Ambassador Barshefsky later on--is that there hasn't 
been a single 201 case filed recently. This is not a 301 or a 
dumping case. This is the industry that is going out. Now, you 
can say, well, in a sort of macro sense, intellectual sense, 
that really isn't important because there is sort of a forced 
obsolescence here. Not so. I don't believe that at all.
    I have been in an industry where the same thing almost 
happened to me and when people are going out of work and they 
are doing the best they can, that is when the U.S. Government 
has got to step in to help.
    And I think the thing, Mr. Chairman, just in final, is that 
we have got to be sure we don't end up in this country--
particularly in areas like steel--as the warehouse for a good 
we can't even afford to buy. So, I thank you very much and I 
appreciate the opportunity to let me talk.
    Mr. Levin. Mr. Crane, if I might yield briefly to Mr. 
McNulty?
    Chairman Crane. Certainly.
    Mr. McNulty. Thank you, Mr. Levin, Mr. Chairman, and my 
colleagues. I want to express my deep concern about the crisis 
facing the American steel industry.
    The continued dumping of steel is causing tremendous harm 
to the industry and forcing huge layoffs of hard-working U.S. 
steelworkers. Over 10,000 steelworkers had been laid off in the 
past year as a result of the flood of underpriced steel coming 
into the United States.
    As we all know, America was built on the backs of laborers. 
We cannot turn our backs on them now. Although the actions 
taken by the steel industry and the administration have caused 
the amount of dumped steel to drop, more needs to be done. We 
need to be firm and make it very clear to our competitors that 
we will not tolerate illegal dumping of any kind.
    American steel companies and organized labor have worked 
very hard over the last decade to restructure and to restore 
the integrity of this important industry. We cannot allow these 
sacrifices to be in vain.
    Mr. Chairman, I am a cosponsor of Representative 
Visclosky's bill to reduce steel imports to 25 percent of the 
U.S. market. That is the level that prevailed in July 1997 
before the illegal dumping began. I hope that this Subcommittee 
will adopt this measure in the near future.
    Given the Nation's strong economy, now is the time to 
deepen our commitment to ensuring that working families keep 
the well-paying jobs they deserve. Thank you, Mr. Chairman and 
thank you, Mr. Levin.
    [The opening statement follows:]

Opening Statement of Hon. Michael R. McNulty, a Representative in 
Congress from the State of New York

     Mr. Chairman, I want to express my deep concern about the 
crisis facing our American steel industry. The continued 
dumping of steel is causing tremendous harm to the industry and 
forcing huge lay-offs of hard-working U.S. steel workers. Over 
10,000 steel workers have been laid off in the past year as the 
result of the flood of under-priced steel coming into the 
United States.
     As we all know, America was built on the backs of 
laborers. We cannot turn our backs on them now.
     Although the actions taken by the steel industry and the 
Administration have caused the amount of dumped steel to drop, 
more needs to be done. We need to be firm and make it very 
clear to our competitors that we will not tolerate illegal 
dumping of any kind.
     American steel companies and organized labor have worked 
very hard over the last decade to restructure and to restore 
the integrity of this important industry. We cannot allow these 
sacrifices to be in vain.
     I am a co-sponsor of Rep. Visclosky's bill to reduce steel 
imports to 25 percent of the U.S. market. That is the level 
that prevailed in July 1997--before the illegal dumping began. 
I hope this committee will adopt this measure in the near 
future.
     Given the Nation's strong economy, now is the time to 
deepen our commitment to ensuring that working families keep 
the well-paying jobs they deserve.
      

                                


    Chairman Crane. Thank you all.
    We have a very full witness list today and I would like to 
inform all of our witnesses that we will be strictly enforcing 
the 5-minute rule. Longer written statements will be made a 
part of the printed record of the hearing.
    Because of the length of the hearing and the number of 
Members interested in testifying, we are using a special 
procedure today. We will ask the first Member panel to testify 
and then retire to the witness chairs, located directly behind 
the witness table. After the second Member panel is finished, 
there will be a question and answer period for both panels and, 
should you be called upon to answer questions, please move to 
the chair located to the left of the panel table. Please 
identify yourself for the hearing record before responding and 
the remaining panels will proceed as usual.
    And, with that, I would like first to turn to Senator 
Specter for his presentation and let me remind all the 
witnesses that that little light out there gives you a reading. 
When it turns green, that means proceed. When it turns yellow, 
that means be on your guard. When it turns red, that means wrap 
it up. Any of your printed statements will be made a part of 
the permanent record. The lights help you stay on schedule and 
I know Senator Specter can't stay for questions and answers 
because he has another commitment and so we shall proceed with 
you, Senator.

STATEMENT OF HON. ARLEN SPECTER, A U.S. SENATOR FROM THE STATE 
                        OF PENNSYLVANIA

    Senator Specter. Thank you very much, Mr. Chairman. I 
commend you and this distinguished Subcommittee for focusing on 
this critical problem.
    Within the tight time limits, I shall not review the crisis 
being caused by dumped steel but would focus solely on a 
legislative remedy for which I have been pressing since I 
introduced legislation in the Senate some 17 years ago on March 
4, 1982, which provides for a private right of action in the 
Federal court to get judicial relief where there is a violation 
of our trade laws.
    There is no doubt that the steel coming in from Russia, 
Korea, Brazil and other countries violates U.S. trade laws and 
violates GATT, the General Agreement on Tariffs and Trade. The 
procedures which are available within the executive branch are 
much too slow. Cases filed in September will not be heard for 
months and then there may be some retroactive application to 
duties and, even there, it is subject to change, as, for 
example, with the proposed agreement with Russia where even 
that meager remedy is not being enforced.
    We know that the administration focuses on foreign policy 
and on defense policy and it is an open secret that American 
industry has been sacrificed for those objectives. Judicial 
remedies, however, would provide for legal enforcement and I 
refer to the opportunities to go into a court of equity. If you 
file a legal action in Federal court on affidavit, it is even 
possible to get ex parte relief. If that is done on the 
application of one side without the other even being present, 
then there has to be a hearing on a preliminary injunction 
within 5 days. And there is an opportunity to present evidence 
and for the defense to present evidence.
    You may be able to get a preliminary injunction in a matter 
of days. From then, there is a hearing on a permanent 
injunction. And then, if the dumpers are found against, there 
are very stiff bonds which have to be filed pending appeal so 
that instead of having a very long process administratively--
which takes months--it is possible to have judicial enforcement 
in a matter of days through equitable procedures.
    The original legislation which I have produced called for 
injunctive relief and there is some opinion to the effect that 
that is not consistent with GATT. But, there is no doubt that a 
court of equity could impose duties, which is entirely GATT-
consistent. And, my idea of picking a remedy--which has been 
proposed by Senator DeWine in different legislation--is that 
those duties ought to be paid to the damaged parties, to the 
steelworkers who have lost their jobs and to the steel 
companies which, after enormous capital investments, have been 
pilloried by this dumped steel.
    It is absolutely insufficient to have procedures which take 
months where steelworkers lose jobs which they cannot reclaim, 
where markets are lost which cannot be reclaimed, and I ask 
you--while my yellow light is still pending--to take a very 
close look at this equitable relief which would provide an 
immediate answer--not from what the executive wishes to do 
motivated by the collateral considerations of foreign policy 
and defense policy but judicial relief to enforce the law.
    Thank you very much.
    Chairman Crane. Thank you, Senator, and out of deference to 
your schedule, unless you are willing to accept some quick 
questions here before we bring forward the rest of our first 
panel----
    Senator Specter. I would be glad to, Mr. Chairman, and I 
would even commit to quick answers.
    Chairman Crane. All right.
    Mr. Houghton.
    Mr. Houghton. Well, so, how would this work? What you are 
trying to do is to substitute a 301 action or a super-301 
action----
    Senator Specter. Correct.
    Mr. Houghton [continuing]. Or something in the private 
right of action? Just spell it out. What happens, how is it 
GATT-consistent, and how long does it take?
    Senator Specter. It would work by having the injured 
party--steelworkers or the company--file a case in equity. A 
similar case has been filed by Wheeling, Pittsburgh in the 
State courts of Ohio, since removed to the Federal courts.
    When an equity action is filed, you can ask for what is 
called ex parte relief--that means on one party even without 
the defendant being present where there is an emergency on the 
filing of affidavits. If that relief is granted, there has to 
be a preliminary injunction hearing within 5 days. You might go 
straight to an injunction hearing without ex parte relief and 
that can be done in a matter of days. Then, the judge hears the 
evidence and the evidence of dumping is overwhelming--there 
really is no defense--and then an injunction would be issued.
    When we come to GATT, the opinions differ as to whether you 
can get an injunction which says, no more steel. It stops at 
that point. But, it is consistent with GATT beyond any question 
to impose a duty so the Federal judge would find dumping and 
then would find the remedy to impose a duty on any steel which 
comes in after that finding. And those funds, instead of going 
to the Treasury, would go to the damaged parties--the 
steelworkers or the company.
    Mr. Houghton. Can I ask just one other question?
    It is a very appealing motion because when you go through a 
301 proceeding, it's years and years before you get anything 
accomplished. I don't know whether it is true or not but the 
question is, don't you lay yourself open to a problem with 
other countries being able to create their own laws, their own 
standards in doing the same thing for products such as ours 
moving in on an export basis into that country?
    Senator Specter. Do we raise the risk of having other 
countries----
    Mr. Houghton. Fine.
    Senator Specter [continuing]. Retaliate? Yes, but so far, 
the Japanese are the past masters at closing their markets in a 
variety of ways, as are the other countries. And, free trade 
seems to be only the province of the United States to allow 
other countries to come in and dump in the United States. I 
think that is a risk but a minimal risk compared to the damage 
which is currently being sustained by the dumping.
    Mr. Houghton. I think I am a good, straight man, Mr. 
Chairman. Thanks very much for----
    Chairman Crane. Thank you----
    Mr. Houghton. OK.
    Chairman Crane [continuing]. Congressman Houghton.
    Mr. Levin.
    Mr. Levin. Senator, your proposal has been around a long 
time but it's more cogent, I think, than ever. The 
administration acted quickly under our present laws and 
aggressively and, indeed, I think that shows there is an issue 
of timeliness that your proposal seeks to address. The horse is 
too long out of the barn--the steel horse, in this case.
    So, I hope we can work together to see if we can find a 
way--and yours is one alternative--to be able to move faster 
before thousands of jobs are lost and companies are in 
bankruptcy because you can't revive them. And, you also put 
your finger on the problem of where these duties go and I think 
we need to address the issue of why don't actions that we take 
accrue to the benefit of those people who were most hurt. So, 
I, for one, welcome your reraising your proposal and let us 
dedicate ourselves to addressing the issue that you discussed 
and I discussed in my opening statement, one of the issues 
here, timeliness.
    Senator Specter. Well, thank you very much, Congressman 
Levin, for your comments. This legislation had been pressed. We 
came as close to a 51-to-47 vote in the eighties on this 
legislation but it has never been pursued successfully because 
of administration opposition. But, with the crisis which is 
present now I think the scene is set to get it done and the 
administration has other weapons at its disposal which they are 
not willing to activate because of concern for the economy of 
Russia and the economy of Brazil, and so forth.
    I do not believe in criticizing the administration because 
it sounds political coming from a Republican but I can tell you 
we had a steel caucus hearing in Pittsburgh on Thursday. I 
chair the caucus on the Senate side, Congressman Regula is here 
from the House side, and Senator Rockefeller is the vice 
chairman and I would only have to quote Senator Rockefeller in 
his denunciation of what the administration has done. We really 
need to take it out of the hands of executive discretion--which 
is concern about foreign policy, defense policy, and 
international issues--and put it in the courts where you get 
enforcement of the laws.
    Mr. Levin. To finish, I am not sure what process will allow 
us to be expeditious. We may well need a process that takes 
into account all factors. But, the problem is that even when 
there is action under present law, it's very likely. So, let us 
work together to see if we can find an approach that will be 
timely.
    Senator Specter. I will be delighted to do that, 
Congressman Levin.
    Chairman Crane. Thank you very much, Senator Specter. We 
appreciate your testimony, we are sorry for your schedule and--
--
    Senator Specter. Well, thank you very much for 
accommodating the schedule. Thank you----
    Chairman Crane. Well, you are more than welcome----
    Senator Specter [continuing]. For conducting the hearing.
    Chairman Crane [continuing]. And let me now, then, call the 
remainder of our first panel to collectively come up and take 
seats. And that's Hon. Ben Cardin, Hon. Phil English, Hon. 
Ralph Regula, Hon. John Murtha, Hon. Peter Visclosky, Hon. Jim 
Traficant, and Hon. Jim Greenwood.
    And, if you gentlemen will please take seats, we will 
proceed in the order that I called you up. I think you may have 
names--well, I guess the name tags are going up now.
    But, I would remind everyone again to keep your eye on the 
lights there and keep your presentations, please, to 5 minutes 
or less, and any printed remarks will be made a part of the 
permanent record. With that--let us see, is Ben here?
    Well, then, we will start with Phil English.

 STATEMENT OF HON. PHIL ENGLISH, A REPRESENTATIVE IN CONGRESS 
                 FROM THE STATE OF PENNSYLVANIA

    Mr. English. Thank you, Mr. Chairman. I want to thank the 
fellow Members of the Ways and Means Committee, and especially 
you, Mr. Chairman, for the opportunity to testify here today 
and your prompt willingness to schedule this hearing at our 
request.
    I will leave the bulk of my comments to be printed in the 
record but I would like to make a few points while I may.
    Mr. Chairman, American steel is facing a crisis which, 
without immediate action from the Federal Government, is 
threatening to devour a significant part of the industry. The 
domestic steel market has been flooded by imported products 
pouring in from Asia, Russia, and Latin America, swamping more 
efficient American producers and drowning thousands of jobs. 
This tsunami threatens to wash away a strategic industry that 
has been a keystone of our manufacturing sector for 
generations, and nowhere more so than in my part of western 
Pennsylvania, where the Bessemer process was first perfected in 
the last century.
    Today, American steel jobs are threatened by illegal 
foreign imports as our trade competitors attempt to unload the 
consequences of their failed economic policies on American 
companies and workers. I predict the bad news will get 
increasingly worse, as other manufacturing sectors face similar 
unfair competition as foreign producers target lucrative U.S. 
markets, causing rolling depressions that sweep away industry 
after industry. The time has come for Washington to stand up 
for steel, and insist on a level playingfield for American 
producers.
    Mr. Chairman, the question before us today is this: What 
can Congress do to stop the current steel crisis and reduce the 
possibility of another crisis that could be devastating to the 
industry and its workers? I firmly argue that we need 
legislative action. There are several major areas that can be 
effectively addressed by legislation if we act quickly.
    We need to start by strengthening our ability to deal with 
import surges. By bringing U.S. standards in line with the WTO 
``Safeguards Agreement,'' we can make laws which have been on 
the books for years--such as section 201 of the Trade Act--more 
effective and easier to use.
    Second, we need to establish a strong tracking system to 
monitor imports. Many of our trading partners already have 
systems for this purpose in place. I suggest a steel import 
notification and monitoring system that would allow the U.S. 
Government to receive and analyze critical import data in a 
more timely manner and allow industry to determine more quickly 
whether unfair imports are disrupting the market.
    We should consider strengthening our antidumping and 
countervailing duty laws and, given the current situation, I 
believe the United States needs to put pressure on our trading 
partners to curb their exports into our market. Negotiated 
Voluntary Restraint Agreements are one possible method the 
administration can use to accomplish that result.
    I believe that we should also take a look at legislation 
similar to what Representative Visclosky has introduced to 
consider providing quotas under certain circumstances. In 
addition, we should look for ways we can limit the effect that 
foreign cartels of steel producers have on our ability to 
export U.S.-made steel products. It is apparent that cartel 
activity in foreign countries is not only creating an unlevel 
playingfield for our producers but may, in fact, be leading to 
increasing instances of dumping into the U.S. market. We should 
also strengthen Trade Adjustment Assistance.
    Mr. Chairman, in closing, any time an American loses their 
job, it's a tragedy. But, in the steel valleys and mills across 
our country, this tragedy has been replayed thousands of times 
in just the past few months. The administration has been 
unwilling to act. No wonder our communities are demanding 
action from us--strong action necessary to stop this tragedy 
and prevent the theft of our jobs by illegal imports.
    Let me make it clear. The choice we face today is not 
between free markets on the one hand and protectionist barriers 
on the other. The choice today is whether we have the will to 
take appropriate action--such as I have outlined here--to 
prevent the victimization of our economy by predatory exporters 
determined to pursue a mercantilistic economic policy at the 
expense of our workers. We need to take action now and I 
appreciate the opportunity to testify today.
    [The prepared statement follows:]

Statement of Hon. Phil English, a Representative in Congress from the 
State of Pennsylvania

                              Introduction

    America's steel industry is the most efficient, competitive 
and technologically advanced in the world. Our domestic steel 
producers have long since shed the inefficiencies that plagued 
the industry in decades past. American steel companies are 
capital intensive and internationally competitive.
    Nevertheless, American steel is facing a crisis which, 
without immediate action from the federal government, is 
threatening to devour a significant part of the industry. The 
domestic steel market has been flooded by imported products 
pouring in from Asia, Russia and Latin American, swamping more 
efficient American producers and drowning thousands of jobs. 
This tsunami threatens to wash away a strategic industry that 
has been a keystone of our manufacturing sector for 
generations, and nowhere more than in my part of western 
Pennsylvania, where the Bessemer process was first perfected in 
the last century.
    Today, American steel jobs are threatened by illegal 
foreign imports as our trade competitors attempt to unload the 
consequences of their failed economic policies on American 
companies and workers. And I predict the bad news will get 
worse. Increasingly, other manufacturing sectors face similar 
unfair competition as foreign producers target lucrative U.S. 
markets, causing rolling depressions that sweep away industry 
after industry.
    The time has come for Washington to stand up for steel, and 
insist on a level playing field for American producers.

                               Background

    The American steel industry is facing a crisis due to an 
immense surge of illegally dumped and subsidized foreign steel 
imports. Since mid 1997, many foreign markets have been rocked 
by economic and financial crises. One consequence of these 
financial crises has been the significant drop in demand for 
steel products in foreign markets. When combined with 
preexisting overcapacity and subsidized foreign producers, the 
drying up of foreign demand for steel has led many countries to 
attempt to illegally unload their excess steel onto the U.S. 
market.
    Since the 1980s the American steel industry has reinvented 
itself as one of the most efficient, most competitive in the 
world. Through sacrifice by the industry and its workers, 
streamlining and investments, the U.S. steel industry has 
nearly tripled productivity. The new U.S. steel industry can 
compete against anyone in the world. The sad part of this story 
is that our industry plays by the rules and has restructured 
itself to be a model of economic efficiency. It is only through 
illegal and unfair trading practices that foreign producers 
have been able to undercut U.S. producers.
    Import volumes in 1998 reached record levels, surging 33 
percent over 1997. And 1997 was itself a record year for steel 
imports. Imports have surged over a wide variety of product 
lines. We have recently seen, in response to trade cases filed 
by the industry and unions, a decline in certain products that 
are subject to duties that would be imposed by the final 
disposition of the cases. But steel is still flowing in massive 
quantities from countries not covered and in the form of 
products not listed by the cases. Also it is entirely possible 
that imports have declined temporarily because we're simply out 
of storage space at U.S. ports.
    This crisis is precisely the reason why the Congressional 
Steel Caucus, Republicans and Democrats together, have been 
urging the Administration to use all of the tools at its 
disposal under our trade laws to take decisive action to 
address this crisis. So far, we have all been disappointed by 
the Administration's general lack of concrete, effective 
action.
    Mr. Chairman, the question before us today is this: What 
can Congress do to stop the current steel crisis and reduce the 
possibility of another crisis that could be devastating to the 
industry and its workers?
    I firmly believe that we need legislative action. There are 
several major areas that can be effectively addressed by 
legislation if we act quickly.

                              Section 201

    We need to start by strengthening our ability to deal with 
import surges. By bringing U.S. standards in line with the WTO 
``Safeguards Agreement,'' we can make laws which have been on 
our books for years, such as Section 201 of the Trade Act, more 
effective and easier to use. U.S. standards for proving injury 
are currently more strict than required by the World Trade 
Organization. With these changes, the industry or the 
Administration will be able to challenge unfair trading 
activities by foreign competitors in a more timely fashion.

                           Import Monitoring

    Secondly, we need to establish a strong tracking system to 
monitor imports. Many of our trading partners already have 
systems for this purpose in place. I suggest a steel import 
notification and monitoring system, which is modeled on similar 
systems currently in use by our largest trading partners, 
Canada and Mexico, that would allow the U.S. government to 
receive and analyze critical import data in a more timely 
manner and allow industry to determine more quickly whether 
unfair imports are disrupting the market.

                              Anti-dumping

    We should consider strengthening our anti-dumping and 
countervailing duty (AD/CVD) laws. We can bring the injury 
thresholds in line with international standards to allow 
workers and companies adequate remedies when it is proven that 
our trading partners are trading unfairly. One aspect of the 
AD/CVD laws that can be improved is the consideration of 
currency devaluations. Currency devaluations can have the 
effect of ``robbing'' the value of sanctions imposed and allow 
dumpers to avoid the penalties they should legally face.

                 Voluntary Restraint Agreements (VRAs)

    Given the current situation, I believe that the United 
States needs to put pressure on our trading partners to curb 
their exports into our market. Negotiated Voluntary Restraint 
Agreements (VRAs) are one possible method the administration 
can use to accomplish this result.
    We need to be careful, however, that we do not end up 
rewarding destructive and illegal actions by our trading 
partners. For an example of how this might happen, think of a 
horse thief who sneaks into a barn which has 10 horses in it. I 
am concerned that in some instances, VRAs are being used to 
limit the theft to just 3 horses once he is caught in the act 
of stealing.
    It is critical to allow the anti-dumping suits which have 
been filed in accordance with our trade laws to run their 
course and come to fruition. Only then can we expose illegal 
dumpers to the full weight of the law. The concept of a level 
playing field and our ``rules-based trading system'' depends on 
this. VRAs should be used as an additional tool which can 
supplement the remedies allowed for under our anti-dumping 
laws, NOT as an alternative that weakens anti-dumping 
sanctions.

                           Russian Agreement

    In this light, the recently announced agreement with Russia 
gives reason for concern. In addition to short-circuiting the 
legal process of proving dumping and imposing sanctions against 
violators of the trade laws, the agreement would cede a large 
part of our market to one of the most inefficient steel 
producers in the world.

                         H.R. 412 as the basis

    To those of you who have been following the introduction of 
steel related legislation in this Congress, you will probably 
recognize the first two points of my suggested legislative 
action as the components of a bill introduced by my colleague, 
Rep. Ralph Regula, who has most ably led this fight as Chairman 
of the Congressional Steel Caucus. I believe that his bill, 
H.R. 412 should be the basis for legislation that should be 
considered by the House of Representatives. The strengthening 
of our ability to enforce our trade laws and effectively 
monitor our imports is critical to ensuring that this crisis 
does not worsen and that a similar future crisis can be 
forestalled.
    Rep. Regula's bill would make it easier for the President 
to impose duties, impose a tariff-rate quota system, or impose 
quantitative restrictions under section 201 in a way that is 
fully consistent with our WTO obligations and the WTO 
``Safeguards Agreement.''
    This approach is completely ``WTO compliant'' and can 
hardly be colored as sending any sort of protectionist 
signal(s) to our trading partners.
    To this base legislation we should seriously consider 
adding several other elements:

                                H.R. 506

    I am a cosponsor of H.R. 506, introduced by Congressman 
Peter Visclosky and cosponsored by over 170 members of the 
House. Language similar to Rep. Visclosky's bill reducing the 
burden of imports into our market to pre-crisis levels will 
help to limit the damage done to communities, workers, and 
firms in the U.S. steel industry in the short term.

                                Cartels

    Additionally, we should look for ways we can limit the 
effect that foreign cartels of steel producers have on our 
ability to export U.S. made steel products. It is apparent that 
cartel activity in foreign countries is not only creating an 
unlevel playing field for our producers but may in fact be 
leading to increasing instances of dumping into the U.S. 
market.

                                  TAA

    Finally, I think that it is important that the 
certification requirements for steel industry workers applying 
for benefits under the Trade Adjustment Assistance program be 
relaxed to parallel the requirements for the NAFTA transitional 
adjustment assistance program. This small change would be a big 
help in allowing workers whose jobs were disrupted by surges in 
imports to obtain benefits under this valuable program.

                                Closing

    Anytime an American loses their job it is a tragedy. But in 
the steel valleys and mills across our country this tragedy has 
been replayed thousands of times over in just the past few 
months. The Administration has been unwilling to act. No wonder 
our communities and districts are looking to Congress to take 
the strong action necessary to stop this tragedy and prevent 
the theft of our jobs by illegal imports.
    I want to be clear. The choice we face today is not between 
free markets on the one hand and protectionist barriers on the 
other. The choice today is whether we have the will to take 
appropriate action, such as I have outlined here, to prevent 
the victimization of our economy by predatory exporters 
determined to pursue a mercantilistic economic policy at the 
expense of our workers. Unfortunately, nations sometimes try to 
take unfair advantage of their trading partners. Companies may 
attempt to benefit--at the expense of their legitimate 
competitors--from unfair and often disguised subsidies. When 
that happens it is the job of government to step in and ensure 
a level playing field where competition--which benefits us 
all--can survive. Now is such a time for government action. I 
hope this committee will answer our call and restore fairness 
for American steel producers. Thank you.
      

                                


    Chairman Crane. Thank you, Mr. English, and now, Mr. 
Cardin.

   STATEMENT OF HON. BENJAMIN L. CARDIN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MARYLAND

    Mr. Cardin. Thank you, Chairman Crane and Mr. Levin and the 
other Members of the Subcommittee. I appreciate this 
opportunity of testifying before this Subcommittee.
    I would ask that my full statement be made part of the 
record.
    Chairman Crane. Without objection, so ordered.
    Mr. Cardin. I have the honor of representing the 3d 
Congressional District of Maryland. I represent many of the 
steelworkers who work at Bethlehem Steel at Sparrow's Point. 
They are amply represented by their locals--2610, 4727, and 
9084--and many of them have been to visit with you. You know 
firsthand their problems.
    Let me underscore what has happened. Now, I understand the 
last month or two might have shown some improvements on steel 
imports. But what we saw between 1997 and 1998, for example, 
was an increase of 162 percent--going from 7.4 percent of the 
U.S. market to 15.8 percent of the U.S. market in 1 year. That 
occurred because of illegal dumping of steel. There is no 
question about that.
    Now, Mr. Chairman, I have been in government long enough to 
remember the problems of U.S. steel production. We were not 
competitive internationally during the seventies and the 
eighties and the steelworkers and the steel companies made the 
adjustments necessary to become competitive. At Sparrow's 
Point, we can compete on a level playingfield with any steel 
producer in any country in the world. We couldn't do that in 
the seventies, but we can do it today if we have a fair 
playingfield.
    What's happening right now is not fair. The steelworkers 
are losing their jobs and we are losing our capacity in this 
country to produce steel. That is not right. It is time for 
action. There are those who say: Well, just wait and let the 
normal trade process work. If we do that, we are going to lose 
steel production in the United States unfairly. It is time for 
us to move legislation now.
    I support the Visclosky bill, H.R. 506, as a way to move 
this issue forward. It is time for us to help the distressed 
steelworkers in this country. It is time for us to help the 
steel companies in this country maintain their production. When 
they are competitive and on a level playingfield, they will be 
able to do that.
    So, I urge the Subcommittee to act soon. Let us bring a 
bill to the floor and let us move legislation. Thank you, Mr. 
Chairman.
    [The prepared statement follows:]

Statement of Hon. Benjamin L. Cardin, a Representative in Congress from 
the State of Maryland

    Mr. Chairman and distinguished members of the Ways and 
Means Subcommittee on Trade:
    I applaud your efforts here today on steel dumping and look 
forward to an open debate on this troubling issue.
    I represent many of the 4,600 men and women who work at 
Bethlehem Steel's Sparrows Point Division in Baltimore. They 
are very ably represented by locals 2610, 4727, and 9084. I say 
that because I, like many of you, have had the chance to meet 
with many of these workers and their union leaders in the last 
six months--in my office and around the district. They have 
painted a compelling and disturbing picture of the state of the 
industry in the wake of these unfair dumping practices.
    Mr Chairman, these people are frightened and frustrated. 
Although no jobs have been lost yet at Sparrows Point, there 
has been a slowdown at the plant and the fourth quarter 
financial report from the company was especially bleak. 
Bethlehem Steel, as my friend Hank Barnette will attest, is 
clearly hurting.
    And, to be blunt, the workers who have taken time to visit 
my office are furious. They are furious at the inaction of 
their government in the face of a foreign invasion. They are 
furious that 10,000 fellow steelworkers are already out of 
work. They are furious because they realize they're next. They 
are furious but they won't go quietly. And I think the House 
Steel Caucus has made it clear that Congress won't sit quietly 
either.
    It is hard to argue with this fury when you consider the 
numbers and the facts. U.S. imports of steel from Japan jumped 
nearly 162-percent from 1997 to 1998. In 1998, Japan exported 
to the US a staggering 385-percent more steel mill products 
than it did in 1997, according to new statistics from the 
Commerce Department. It is no surprise that Japan's share of 
the US market for imported steel also jumped dramatically--from 
7.4 percent to 15.8 percent.
    At Sparrows Point in Baltimore, they experienced a 20-
percent drop in hot-and cold-rolled steel from June 1997 to 
November 1998. During that same time, the plant weathered a 25-
percent decrease in realized prices. Although they have avoided 
layoffs, plant officials say they can't operate at these levels 
for too long without them.
    I contend that the American steel industry took the lumps 
it deserved in the 1970s and 80s and managed to reemerge 
stronger and more profitable because of it. Since 1985, there 
has been a $1 billion investment in the Sparrows Point 
facility. I began my career here in Congress just as this 
revitalized plant and industry returned to the fore in 1988.
    But I also remember the darkness before the dawn. As 
Speaker of the House in the Maryland General Assembly 
throughout the 1980s, I remember that painful process for Beth 
Steel and the steel industry as a whole. Between 1977 and 1987, 
45 million tons of steelmaking capacity was lost due to 
bankruptcies, plant closures, and partial closures. Employment 
dropped 57-percent from 442,000 to 188,000 jobs, and the wages 
and benefits of those workers who survived were substantially 
cut as well.
    The industry had let itself lag behind other countries, 
failing to adopt new techniques and practices until these 
techniques and practices themselves were out of date. The 
industry needed to change and a revitalized international steel 
industry did just that.
    But, Mr. Chairman, we can't blame the US steel industry for 
the problems it faces today. And one month declines in the 
levels of steel imports are nice; but I fear them to be the 
streaks of a false dawn.
    I am a supporter of HR 506 and congratulate Rep. Peter 
Visclosky for his work on its behalf. The bill is simple 
because the problem is relatively simple. An avalanche of steel 
dumping began last summer; HR 506 would return import levels to 
what they were pre-July 1998. Let's all go back to the same 
level field we were all competing on. Let's get off this tilted 
track before it's too late.
    I appreciate the complexity of the financial crisis in Asia 
which many agree prompted this glut of imports. I appreciate 
the work of Treasury Secretary Rubin in minimizing the effects 
of global economic problems on the US. I appreciate the 
distress of steel workers all over Asia, South America and 
Russia. But quite frankly I am concerned about the effects of 
steel dumping on our economy. A recent report from the Economic 
Strategy Institute makes it clear that the long term negative 
effects of steel dumping--lost production, investment and high 
wage jobs--easily outweigh the short term benefits of cheaper 
steel.
    And I am most concerned about the distressed steelworkers 
at Beth Steel and all over the US. They are my primary 
responsibility--they are our primary responsibility--and we 
have to do more for them. I am equally concerned about the 
future capacity to produce steel in the US.
    This industry has been sending us SOS signals for months. A 
full hearing on this bill and its consideration by the full 
House would help us convince them and the American public that 
we hear their calls.
    Thank you.
      

                                


    Chairman Crane. Thank you, Mr. Cardin.
    Mr. Regula.

 STATEMENT OF HON. RALPH REGULA, A REPRESENTATIVE IN CONGRESS 
                     FROM THE STATE OF OHIO

    Mr. Regula. Thank you, Mr. Chairman. First of all, I would 
like to ask unanimous consent to enter the statement of Jack 
Quinn in the record. He cannot be here today. So, I will submit 
that and also ask unanimous consent to put my statement in the 
record and I will summarize that statement.
    I know that you have a lot of witnesses. I will try to keep 
my remarks very brief.
    It goes without saying that there is a problem. We all 
agree on that. The issue is how to solve the problem. You have 
a number of options that will be available to you.
    I have one option that I think is constructive and that is 
H.R. 412. We have approximately 50 sponsors for this bill. It 
is important in that it does not violate our international 
trade agreements. It is totally compatible with the WTO 
requirements. I think that is an important element.
    Second, it would permit the establishment of something 
comparable to the VRAs, Voluntary Restraint Agreements, that 
worked so effectively in the eighties. Congressman Murtha and I 
were very involved in getting the VRAs put in place and, as a 
result of the VRAs--which this Subcommittee supported--we have 
allowed the steel industry in the United States to become 
probably the most efficient, the most quality-conscious, and 
the most productive in the world today. And, in the process, 
labor, management, and government worked as a team.
    One result of this modernizing effort was significant 
downsizing. Jobs in the steel industry have gone from 440,000 
to 180,000. Industry and labor have worked together on this 
modernizing effort. Industry invested $50 billion in new plants 
and equipment. So, it's not a case that the management and 
labor have not worked together as a team and, likewise, 
government was a party to the effort in establishing the VRAs.
    Now we are faced with a crisis again--not because we don't 
have quality, not because we are not competitive, not because 
we don't have the most efficient steel industry, but because 
product is being dumped in our marketplace to get access to 
hard currency and to export unemployment in other countries to 
us. That's not fair.
    In the President's report of January 7 produced as a result 
of a congressional request, it says ``free and fair rules-based 
trade is essential for both global economic recovery and for 
U.S. prosperity.'' I think that establishes the benchmark that 
we want to achieve.
    What H.R. 412 does is change the standard on section 201. 
It eliminates the term ``substantial'' because if you look in 
the dictionary, ``substantial'' is very large. So, what we have 
proposed to do is to make the standard compatible with WTO 
rules. We want an effective tool for the President to deal with 
the current crisis that has resulted in a loss of 10,000 jobs, 
and 3 companies in bankruptcy.
    And, I would point out that the other feature of this bill 
is that it does establish an import permit and monitoring 
program. Such a program was suggested earlier as something that 
would be very important in receiving timely import data.
    So, I think this bill--maybe combined with elements that 
are in other bills before this Subcommittee--will provide 
effective tools to address a very serious threat to the steel-
producing unions, the management and to the United States. This 
crisis is a threat even to our defense capability because a 
viable steel industry is an important asset of any nation.
    I thank you, Mr. Chairman, for holding the hearing and I 
look forward to action by your Subcommittee.
    [The prepared statement follows:]

Statement of Hon. Ralph Regula, a Representative in Congress from the 
State of Ohio

    Mr. Chairman, Congressman Levin and Members of the 
Subcommittee, I want to thank you for scheduling this important 
hearing on steel trade issues. As Chairman of the Congressional 
Steel Caucus, I became concerned about the serious impact that 
the dramatic surge of steel imports was having on the steel 
industry and steel workers last September when the Steel Caucus 
held two days of briefings on this subject. The Caucus heard 
from CEO's from the large integrated companies, from the 
President of the United Steelworkers, and from CEO's 
representing the mini-mills, the specialty steel companies, and 
pipe and tube manufacturers.
    The message from all, at that time, was that steel imports 
were pouring into the U.S. at unprecedented levels and that 
prices of these imports were extremely low. This surge of 
imports at very low prices was threatening the health of the 
industry and the jobs of its workers.
    This became a fact after the following data was finally 
made available to the public. Steel imports from July through 
November 1998 were at all-time record levels:
     in July 4 million net tons of steel entered the 
U.S.;
     in August 4.4 million net tons;
     in September 3.8 million net tons;
     in October 4.1 million tons;
     and, in November 4 million net tons.
    Although imports did decline somewhat in December of 1998 
because of the impact of the preliminary determinations in the 
hot-rolled steel trade cases, the level of December steel 
imports was still 30 percent higher than a year before. And we 
ended 1998 with the highest level of imports ever--41.5 million 
net tons of steel mill products, which represents a 33 percent 
increase over 1997, which was also a record year.
    These unprecedented levels of steel imports continue to 
threaten the health of an industry and the well-paying jobs of 
its workers. Since the import crisis began, over 10,000 steel 
jobs have been lost according to the Administration's steel 
report. Three companies have filed for bankruptcy protection. 
Other workers find themselves subject to short work weeks and 
on temporary lay-off. Suppliers and community businesses in the 
affected communities are also feeling the impact of these lost 
steel jobs.
    As you know, the steel industry and steel workers went 
through a painful restructuring in the 1980s which saw 
employment drop from over 440,000 to around 180,000. The 
industry invested $50 billion in new plant and equipment and to 
develop new production techniques. The U.S. steel industry is 
today a world-class competitive industry. Steel workers have 
become the world's most productive in terms of man-hours 
producing steel and the industry is among the world's low-cost 
and most environmentally sound industries.
    Why are these steel imports surging into the United States 
and threatening a highly competitive industry? Other nations 
have pursued industrial policies over the years that have built 
up a steel industry using trade protection and subsidies. This 
has resulted in a distorted steel market world-wide, and also 
in tremendous over capacity in steel production world-wide. 
Then you have the financial collapse in Asia, and economic 
crises in Russia and Brazil. These nations can no longer afford 
to buy steel or no longer have use for the quantities of steel 
they once did.
    Because the U.S. continues to have an open market for 
steel--with low tariffs on steel and no substantial non-tariff 
barriers--the steel that was once sold in Asia, in Russia and 
in Brazil is now surging into the U.S., even though U.S. steel 
companies and steel workers are among the world's most 
efficient producers. In order to obtain hard currency, foreign 
companies continue to ship to the world's most open market.
    We were told by the Administration, and I quote from the 
January 7th report on steel: ``Free and fair rules-based trade 
is essential for both global economic recovery and for U.S. 
prosperity.'' But what we have seen since July 1997 when the 
Asian financial crisis began and the Russian economic crisis 
flared up has certainly not been ``fair rules-based trade.'' 
This is confirmed by the overall steel import figures and by 
recent preliminary decisions in dumping cases that have found 
substantial dumping margins.
    In view of this steel import crisis, I ask the Subcommittee 
to reexamine our overall trade policy. I would like to pose the 
following questions: As we provide nations in financial and 
economic turmoil with international monetary aid, should these 
nations be allowed to export their way our of their troubles, 
thereby threatening a basic industry in the United States? Why 
should an industry, such as the steel industry, which has 
modernized and down-sized to become world-competitive, now be 
put at risk because of outside factors over which it has not 
control? And, do we want to become a nation without any basic 
manufacturing capability, totally dependent on foreign supply 
for such basic materials as steel? Do we want to subjugate U.S. 
manufacturing jobs to foreign policy objectives when those 
objectives could be reached by other means? I believe that 
these are questions that we must address and which have been 
brought to the forefront by this steel import crisis.
    I continue to urge the Administration to take additional 
and immediate actions to stop unfair steel imports under their 
existing authority. The Administration could self-initiate a 
Section 201 case and provide a comprehensive solution to this 
import crisis.
    I also believe that it is time for Congress to reexamine 
this existing authority and ensure that the appropriate tools 
are available to the industry, to labor and to Administration 
officials. I have introduced legislation, H.R. 412, the Trade 
Fairness Act of 1999, which lowers the injury standard to bring 
it in accordance with the World Trade Organization (WTO) 
Safeguards Agreement. I would like to emphasize that this 
change is consistent with our WTO rules. Why should the U.S. 
law contain a higher injury standard that is required by 
international law?
    Section 201 of the Trade Act of 1974 is the appropriate 
current law remedy accepted under our international obligations 
to stop import surges that injure a domestic industry. It 
allows a comprehensive approach to solving the problem. Under 
current law, if the International Trade Commission determines 
that an article is being imported into the United States in 
such increased quantities as to be a ``substantial cause of 
serious injury'' then the President can take appropriate action 
to ensure a positive adjustment to import competition.
    Current law requires that imports are a ``substantial cause 
of serious injury'' to U.S. industry. Our WTO obligations 
require only that imports be a cause of serious injury. 
Therefore my bill would delete the term ``substantial'' from 
the causation standard in Section 201. Under current law 
``substantial cause'' is defined as a cause that is important 
and not less than any other cause. My bill clarifies that in 
order to gain relief there only needs to be a causal link 
between imports and injury.
    H.R. 412 also would include in U.S. law the factors to be 
considered by the International Trade Commission, as set forth 
in the WTO Safeguards Agreement, to determine whether the U.S. 
industry has suffered serious injury. These factors include: 
the rate and amount of the increase in imports of the product 
concerned in absolute and relative terms; the share of the 
domestic market taken by increased imports; changes in the 
levels of sales; production; productivity; capacity 
utilization; profits and losses; and, employment.
    I am proposing these changes to Section 201, to restore the 
effectiveness of Section 201 and to once again make it a viable 
remedy against import surges. With this change to Section 201, 
the Administration could join with the Congress, industry and 
labor to rekindle the partnership that was so effective during 
the 1980's in rebuilding this vital industry, and come up with 
a comprehensive solution to stop this import surge. The remedy 
could encompass all countries that have been exporting large 
quantities of steel and all products that are affected. I 
should also make the point that these changes to Section 201 
would be applicable to any industry that is being injured by 
import surges.
    H.R. 412 has a second section which establishes a steel 
import permit and monitoring program. In order to gain relief 
under U.S. trade laws, domestic industries must demonstrate 
that unfairly traded imports have caused injury. This requires 
complex factual and economic analysis of import data. Under 
normal procedures, such data is not available to the public 
until at least 45 days after the data has been collected for a 
particular month. The Commerce Department has been making steel 
import data available recently within three to four weeks after 
the end of a month. But in both cases, the data is not 
available until well after the imports have already arrived in 
the U.S. The steel import and monitoring system I propose, 
which is modeled after similar systems now in use in Canada and 
Mexico, would allow the U.S. to receive steel import data on a 
``real time'' basis. This would allow the Administration and 
the industry to determine more quickly whether unfair imports 
are disrupting the U.S. market.
    As you know, I have also been a long-time proponent of 
other trade law changes. In particular, I reintroduced a bill 
yesterday, the Continued Dumping and Subsidy Offset Act, that 
seeks to stop continued dumping of foreign goods after an 
antidumping order is in place.
    Again, I thank you for holding this hearing and I urge you 
to take action to ensure that the Administration and our 
domestic steel industry and steel workers have effective tools 
to ensure that they can protect themselves against import 
surges and unfair imports. H.R. 412 in no way is a 
protectionist bill. It simply brings our laws into conformity 
with WTO standards and allows us to respond to import surges 
without having one hand tied behind our back. We cannot put a 
highly efficient domestic industry and the jobs associated with 
this industry at risk because of outside factors that are not 
under their control.
      

                                


    Chairman Crane. Thank you, Mr. Regula.
    Let me see, Mr. Murtha is not with us. Mr. Visclosky.

   STATEMENT OF HON. PETER J. VISCLOSKY, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF INDIANA

    Mr. Visclosky. Thank you, Mr. Crane, Mr. Levin and the 
other Members of the Subcommittee. I understand that my 
prepared statement will be entered into the record.
    Mr. Chairman, I am here to ask your Subcommittee to 
favorably report to the Full Committee and to the House of 
Representatives, H.R. 506. I ask because since noon, when many 
people sat down for a comfortable lunch in the last hour and a 
half, one steelworker somewhere in the United States of America 
was told, don't come to work tomorrow.
    I have never been told not to show up for work because I 
have been fired. I cannot imagine the devastation that causes a 
family. But, pursuant to the numbers that you received from 
Dave Cantor, the steel analyst for the Congressional Research 
Service, today, the average job loss for a U.S. steelworker is 
every 90 minutes since this crisis started in July 1997.
    Why has that steelworker lost his or her job in the last 90 
minutes? Because people have violated U.S. trading statutes. 
They have broken our laws.
    I appreciate that others have problems, particularly in the 
Asian Basin. That's why I testified before the House Banking 
Committee last year with George Becker, president of the United 
Steelworkers of America, to ensure that reforms took place at 
the IMF, International Monetary Fund, to help those in need.
    I appreciate that there have been reductions in foreign aid 
and to supplement that loss of explicit aid we are providing 
aid indirectly through trade policy. But, I think it is wrong 
that jobs are used to supplement that trade policy.
    The role of government is to not hurt one person to help 
another. This is not a zero-sum game we are all involved in 
here today. Government should add to the lives of its people.
    Why is H.R. 506 necessary? The administration has acted and 
I do believe that Ambassador Barshefsky, Secretary Daley, and 
others have an absolute commitment to help those in our 
country. However, the very nature of our trade laws, as 
reiterated by the number of members that the panel spoke about 
during their opening remarks, is reactive. We are reacting to a 
problem the cause of which is discovered after the fact. I 
would like to suggest that we should help the administration by 
taking what the gentleman from New York and the gentleman from 
Michigan characterized as ``a global approach.''
    The administration has acted against three countries: 
Japan, Russia, and Brazil. But, given trade figures that were 
given to the Subcommittee at 11 o'clock this morning, I would 
point out that exports from Indonesia are up 890 percent in 
January 1990 from July 1997. I would suggest that it has only 
dealt with some products, and that the price set for steel 
imports, as far as the Russian agreement is concerned, is 
inadequate to protect those in this country. Moreover, people 
will shift product lines if we do not take that global 
approach.
    I think we should enact H.R. 506 to alert our trading 
partners that we are serious, the problem is urgent, Europe 
should be engaged, and we must give the administration 
flexibility, within a specific timeframe, to solve this 
problem. We need to be global and we need to act now. I also 
support the suggestion of the gentleman from Michigan that we 
ought to make sure that the financial resources are available 
to the administration to pursue the path that we can draw for 
them.
    Thank you very much, Mr. Chairman.
    [The prepared statement follows:]

Statement of Hon. Peter J. Visclosky, a Representative in Congress from 
the State of Indiana

    Thank you, Mr. Chairman, for inviting my testimony on the 
crisis facing the American steel industry. I am grateful to you 
and to Mr. Levin for giving me this opportunity to discuss with 
you the unique place steel has in America's economy, its 
current challenge, the inadequacy of the Clinton 
Administration's response to the problem, and a proposed 
solution.

               Steel's Special Role in American Industry

    Steel occupies a unique place in the American economy. It 
is the most basic and widely used material in industry. Without 
it, no car would be made, no building would be constructed. A 
$70 billion industry in the United States, it occupies 8 
percent of worldwide steel production, employs more than 
170,000 Americans, and ships nearly 80 million tons of steel 
every year.\1\ Furthermore, it is the most recycled material in 
North America.\2\ Steel's singular importance to our nation's 
economic security is undisputed.
    A strong domestic steel industry is also a key to the 
national security of the United States. The steel industry's 
present and future competitiveness has long been a priority of 
the Department of Defense because of the importance of a 
sufficient wartime steel supply.\3\ During the Cold War, steel, 
like aircraft and ship manufacturing, was essential to our 
ability to defend ourselves if the need arose.\4\ We could not 
then count on imports from the Soviet Union, Brazil or Japan, 
nor could our allies.
    As recently as the Gulf War, the U.S. Army relied on 
American steel in 5,000 tanks, Bradleys, and other Armored 
Personnel Carriers.\5\ At the peak of the conflict, the U.S. 
Navy deployed 120 ships made almost exclusively from American 
steel, including the aircraft carrier U.S.S. Nimitz and the 
battleship U.S.S. Missouri, to the Persian Gulf.\6\ As the crew 
of the Nimitz likes to say, she represents 95,000 tons of 
diplomacy that carries 4.5 acres of sovereign U.S. territory 
anywhere in the world--that diplomacy stands on 95,000 tons of 
American steel.\7\
    Corporate leaders from the aerospace, vehicle, and 
shipbuilding industries successfully argue that production 
lines for equipment, such as submarines and F-16s, must remain 
open, if for no other reason than to ensure that the means and 
skills to produce those ships, tanks, and planes remains 
ready.\8\ The line of reasoning goes that our defense 
industrial base must maintain the capacity to increase 
production within a reasonable amount of time. Obviously, a 
domestic steel industry that cannot provide the millions of 
tons of steel necessary to make ships and tanks would have a 
devastating impact on America's ability to respond to a threat 
to our national security.
    Steel stands strong among America's industries in boasting 
of the significant role it played in winning and securing our 
freedom.
    In the second half of this century, the United States 
increasingly dedicated itself to open trade and the principles 
of the free market for every sector of our economy. 
Unfortunately, other nations did not follow our example.\9\ The 
European Union, while closely patterning their trade laws after 
ours, built high market access barriers to steel. Russia's 
industry is state-owned and geared more toward keeping Russians 
employed than responding to market needs.\10\ During the Cold 
War, the Soviet steel industry supported its military; now, 
Russia floods the U.S. market with steel to prop up its failing 
economy.\11\ Japan, Korea and Brazil also use government 
subsidies and government ownership to control their domestic 
steel industries.\12\ Subsidies are the rule, the United States 
is the exception. No other industry so integral to our economic 
freedom and national security can make that claim. We are the 
sole player in the global marketplace that has not intervened 
on behalf of its steel industry.\13\ According to the 
Department of Commerce, the United States has low tariffs on 
steel products and no material non-tariff barriers to 
imports.\14\

                        The Current Steel Crisis

    The story of the American steel industry is almost 
Dickensian. For them, it truly is the best of times and the 
worst of times. It is a tale of two industries. One industry, 
steel in the 1970s and 1980s, was bloated and inefficient. 
Consequently, it increasingly lost market share to less 
expensive foreign steel imports (which accounted for 26 percent 
of the U.S. market in 1984).\15\ However, the industry reformed 
itself through pain, hard work, and struggle. By 1992, steel 
imports fell to only 18 percent of the market.\16\ The other 
industry, the New Steel, is the most productive, 
environmentally sound, and competitive in the world. It takes 
fewer hours of labor for steel workers in the United States to 
make a better quality of steel, and with less pollution, than 
in any other country. Yet, in 1998, foreign imports shattered 
the record by grabbing 35 percent of the U.S. market share.\17\ 
American steel has failed, struggled, and reformed, and still 
it suffers at the hands of others.
    Because of America's openness, our steel industry has been 
subjected to periodic surges in imports from these countries. 
The most recent round has left steel companies and their 
workers reeling. In 1998, more than 41 million tons of cheap, 
foreign steel flooded our shores, 33 percent more than the 
record.\18\ The 1998 numbers are 77 percent higher than the 
annual average of imports since 1990.\19\ The fourth quarter of 
1998 showed a dramatic increase over the same period in 1997: 
Imports from Japan were up 141 percent, Russia was up 162 
percent, Korea was up 102 percent, and Brazil was up 65 
percent.\20\ Imports from Russia, Japan and Brazil cost 10 to 
27 percent below that of domestic producers, causing total 
market share of imports to skyrocket from 23 percent to a new 
high of 35 percent.\21\ By November 1998, foreign steel was 
coming into the United States as low as $195 a ton, $130 a ton 
less than it would cost to produce here.\22\
    On February 12, 1999, the Commerce Department officially 
recognized what the steel industry and unions have been 
concerned about when it announced that Japan and Brazil were 
selling hot-rolled steel at ``unfairly low prices'' in the U.S. 
market.\23\ Commerce Secretary William Daley declared, ``The 
situation here cries out for action because of the abuse.''\24\ 
On the same day, the Commerce Department stated that they are 
in talks with Russia about dumping.\25\ One week later, Brazil 
announced that it, too, wanted to enter into a discussion over 
steel imports.\26\
    By every measure, and recognized in every quarter, the 
United States steel industry is suffering. The backbone of the 
industry--hot-rolled steel--fell $50 a ton (18 percent) in 
price, in 1998 to reach a record low of $200.\27\ Consequently, 
the steel industry's profits plummeted 50 percent in 1998 and 
net income was down almost 60 percent.\28\ Stock prices of the 
biggest firms, such as U.S. Steel, LTV, and National Steel, hit 
the floor.\29\ Salomon Smith Barney issued a report estimating 
that up to 30 percent of the steel industry's 170,000 jobs are 
endangered.\30\ More than 10,000 steelworkers have either been 
laid off, had their hours cut, or lost their jobs completely 
because of bankruptcies in the industry (Laclede Steel in St. 
Louis and Acme Metals in Riverdale, Illinois).\31\
    Critics have argued that the numbers belie an uncompetitive 
industry bowing to free market pressures. Fifteen years ago 
that might have been true. In 1982, domestic production fell to 
75 million tons, 49 percent lower than in 1974.\32\ Then it 
took 10 hours of labor to produce one ton of steel.\33\ Steel 
companies lost their market share to imports. Steel imports 
rose to capture 26 percent of the domestic market in 1984.\34\ 
The Reagan Administration was forced to negotiate Voluntary 
Restraint Agreements (VRAs), mainly with the European Union and 
Japan, to protect the industry and buy time for it to modernize 
and restructure.
    The steel industry had its own painful role to play. The 
Reagan Administration required that it modernize mills that 
polluted the air and invest in worker training.\35\ By 1987, 
the industry had closed 462 facilities, shed 273,000 jobs and 
decreased by 42 million tons of capacity.\36\ It invested $50 
billion in upgrading its mills and equipment.\37\ The 
productivity of the average steelworker rose 4 percent every 
year, dropping the hours of labor it took to make one ton of 
steel from 9.3 hours of labor in 1980 to 4.8 hours of labor in 
1993, a 94 percent improvement.\38\ In 1999 it takes 2 hours of 
labor to produce one ton of steel. Recent reports now cite the 
American steel industry as the most competitive, efficient, and 
least polluting in the world.\39\
    Moreover, the steel industry's renaissance showed dramatic 
improvements in its environmental record. The industry invested 
$7 billion alone in new environmental technologies since 
1980.\40\ It annually recycles millions of tons of steel scrap 
that is remelted to produce new steel.\41\ The steel industry's 
overall recycling rate is about 65%--higher than any other 
industry.\42\ This saves more than $2 billion in annual 
landfill charges.\43\ In fact, each new steel product contains 
some amount of recycled material.\44\ The industry's 
competitiveness and quality increased although environmental 
operating costs account for 10 percent of total operating costs 
(which often exceeds industry profits).\45\
    By the time the Bush Administration let the VRAs expire in 
1992, foreign imports had fallen to less than 18 percent of the 
U.S. market.\46\ Compared to 1980, the industry had 68 percent 
fewer workers and 35 percent less capacity.\47\
    The cause of the current domestic steel crisis is not a 
steel industry that cannot measure up to others in the global 
marketplace. Quite to the contrary, if foreign governments did 
not own and subsidize their steel manufacturers, and erect 
trade barriers that closed markets, American steel could 
succeed on a firm and fair footing. The ability to compete on a 
level playing field is what free trade is all about. However, 
foreign governments, as illustrated in the aforementioned 
figures, are charging lower prices for the steel they export to 
the United States than they do at home. Dumping is illegal 
under American law and grounds for punitive action under the 
rules of the World Trade Organization. Companies can engage in 
dumping only if their governments help them. The consequences 
of selling products lower than the production cost are simply 
too great to maintain over the long-term without trade barriers 
or subsidies.\48\

                            Antidumping Laws

    Dumping--the practice of importing steel that cost less 
than its price in the home market or less than its cost to 
produce--has been against the law in the United States since 
Congress passed the Antidumping Acts of 1916 and 1921. The 
world recognized dumping as an unfair trading practice through 
the General Agreement on Tariffs and Trade (GATT) in 1948.\49\ 
Based on principles articulated by Adam Smith and Alexander 
Hamilton, who were concerned with predatory trade tactics, 
antidumping laws were established as an extension of antitrust 
laws.\50\ Modern antitrust laws differ from antidumping laws in 
several key respects. First, antitrust laws target private-
sector actions while prohibitions on dumping are directed to 
actions taken by foreign governments. Second, antitrust laws 
are aimed at protecting consumers while antidumping laws seek 
to protect domestic producers (since they are the injured 
party).
    More recently, the World Trade Organization (WTO), GATT's 
successor, rewrote Article VI, the Anti-Dumping Agreement, that 
authorizes member states to take unilateral steps to address 
dumped imports that harm domestic industries.\51\ The WTO also 
provides a multilateral system of settling disputes if a member 
country violates trade rules. The typical case normally takes 
more than one year from initial investigation through appeal 
and final adjudication.\52\ The U.S. has prevailed on 19 of the 
21 cases decided by the WTO so far.\53\ Other complaints, on 
bananas, beef hormones, and magazines, have been vigorously 
pursued by the United States. In fact, the United States 
brought an antidumping complaint against Mexico over high-
fructose corn syrup that has remained active since September 4, 
1997.\54\

                 The Clinton Administration's Response

    In 1997, Asian economies that were deeply intertwined--
Indonesia, South Korea, Thailand and Malaysia--began to slow 
and were pressed to repay huge loans to struggling Japanese 
banks, and other international investors. Many factors, 
including government corruption, poor banking practices, and a 
host of others made the situation worse. The contagion soon 
spread as governments in Eastern Europe and Latin America 
devalued their currencies and raised interest rates. Country 
after country lined up at the door of the International 
Monetary Fund (IMF) asking for emergency loans to pay their 
debts.
    Russia's economy fell drastically in the summer of 1998 
when the ruble lost more than twice its value and the 
government defaulted on its foreign debt. Brazil soon looked 
like it would follow suit. In each country the story was the 
same--markets dried up, unemployment rose and investment 
capital either fled for safer pastures or disappeared 
altogether.
    The IMF faced a crisis of its own. Its commitments to help 
struggling economies depleted its treasury and caused it to 
look to its donor states, the United States chief among them, 
for help in filling its coffers. As members of Congress, each 
of us was concerned about the impending peril facing world 
markets and were eager to find a responsible means of stemming 
the tide of economic collapse. The only question facing 
Congress was which avenue to take. Domestic fiscal 
considerations and changes in policy led to a marked decrease 
in appropriations for foreign operations. This clearly limited 
the Clinton Administration's ability to deal with international 
economic problems. The Administration had to find a way to go 
around Congress and keep troubled economies afloat.
    Treasury Secretary Robert Rubin found such a way: America 
would use the strength of its own economy to provide a 
stabilizing force for countries encountering financial 
difficulties. Nations such as Korea, Japan, Russia, and Brazil 
could trade cheap steel for jobs. This indirect foreign aid can 
be measured in the value of each American steel job lost. A 
dollar out of a steelworker's pocket is a dollar used to prop 
up an ailing foreign economy. Therefore, the Administration has 
been very hesitant to enforce our antidumping laws lest it send 
the wrong message to other countries about America's economic 
strength.\55\ Secretary Rubin has stated publicly, in response 
to a question about the surge of steel into the American 
market, that ``[O]ur country has benefitted greatly from having 
relatively open markets. I think it has contributed to lower 
prices, greater choice and a more efficient economy.'' \56\ 
However, as Secretary Daley has said, ``Enforcing our trade 
laws is not protectionist.'' \57\ U.S. Trade Representative 
Charlene Barshefsky echoed this view when she stated, ``U.S. 
trade laws are also a vitally important means of ensuring 
respect for U.S. rights and interests in trade.'' \58\
    Secretary Rubin went on to say that ``the appropriate 
people at the right time'' would deal with the surge of foreign 
steel that is undercutting our domestic industry.\59\ 
Apparently, the time is not yet right. Instead of taking direct 
action in the face of mounting evidence of the damage already 
done, the Administration, in a report mandated by Congress, 
responded with $300 million in proposed tax breaks to the steel 
industry (that the industry neither solicited nor desired) and 
stated that it would continue to work through the WTO-approved 
framework to deal with the problem.\60\ Part of this approach 
included the Commerce Department's recent announcement that 
antidumping duties would be imposed on hot-rolled steel from 
Japan and Brazil, and the tentative agreement it has reached 
with Russia to limit their imports.\61\
    Unfortunately, the Administration's action has done nothing 
to address the fundamental problems faced by the American steel 
industry. Unlike direct foreign aid, which each American 
taxpayer shares equally, our domestic steel industry bears the 
entire burden of indirect foreign aid through the sacrifice of 
their jobs. The supposed long-term benefit of making a 
particular sector of the economy absorb the impact of the 
world's financial woes should not obscure the inherent 
unfairness and long-term damage done to thousands of individual 
steel workers. The Administration should be explicit in its 
efforts to provide overseas assistance. Instead, it hides 
behind the mounting casualties--in the form of lost jobs, 
slowed production, and shrinking capacity--in the American 
steel industry. While the Commerce Department investigates and 
the U.S. Trade Representative negotiates, steel workers 
continue to be laid off. Furthermore, the Commerce Department's 
action against Japan and Brazil applies only to one product 
from those two countries. Further discussions with Brazil are 
merely that--discussions.\62\ The recent agreement with Russia 
does not go far enough. Instead of continuing to talk and 
monitor import data, as Ambassador Barshefsky has stated, the 
Administration should aggressively pursue negotiated agreements 
with countries to achieve a global, comprehensive resolution to 
the surge of cheap steel imports.\63\ As a stick in their 
negotiations, the Administration can point to one bill that 
provides a quantitative solution to the matter--H.R. 506, the 
Stop Illegal Steel Trade Act (SISTA).
    The tentative agreement the Commerce Department reached 
with Russia, if it is finalized, is a good example of what the 
Administration might accomplish when Congress pushes it into 
action with strong steps of our own. Through its use of quotas 
and bans that apply to all steel products from Russia, rather 
than just one or two, the Administration is following the 
Visclosky-Traficant approach to end this crisis.\64\ However, 
the Russian steel deal is only one step in the right direction. 
Its sets quotas that are too high and minimum prices that are 
too low. It is clearly not a solution that is fair to the steel 
industry or to steel workers.

           H.R. 506, the Stop Illegal Steel Trade Act (SISTA)

    SISTA, bipartisan legislation cosponsored by over 170 
members of Congress, requires that the Administration return 
steel imports to the pre-surge levels of July 1997. How the 
Administration gets there is entirely up to the President and 
his advisers. The bill explicitly provides for tariff 
surcharges, VRAs, and quotas. These measures, arguably, violate 
the WTO's general prohibition on unilateral antidumping 
measures without first meeting certain established 
criteria.\65\ However, the House of Representatives is already 
on record as supporting measures to end the steel crisis that 
do not comply with the WTO.\66\ H.Res. 598, sponsored by 
Congressman Traficant, expressed the sense of the House that 
the Administration should ban steel imports from countries who 
are not abiding by our trade agreements with them due to 
illegal dumping.\67\ The measure passed overwhelmingly in the 
105th Congress, 345 to 44.\68\ Furthermore, neither Russia nor 
Ukraine, both of whom are major participants in the steel 
surge, are members of the WTO. Consequently, such measures do 
not apply, even theoretically, to those countries. For WTO 
members whose flood of exports will be stemmed by this bill, 
the WTO's dispute settlement system is well-equipped to deal 
with their complaints. Meanwhile, America's market and, most 
important, steel workers' jobs, will no longer be threatened.
    Ambassador Barshefsky was right when she said we should not 
stop imports for reasons other than unfair trade.\69\ If the 
Administration wishes to avoid meeting other nations before a 
WTO hearing panel, it can find a way that is WTO-compliant to 
bring this crisis to a close. SISTA gives the Administration 
permission to ``otherwise'' ensure that the volume of steel 
imports does not exceed pre-surge levels.\70\ Personally, I 
would welcome any action by the President that made SISTA a 
moot issue because that would mean we have reached an end to 
the crisis facing tens of thousands of American steel workers. 
Until that time, SISTA stands by to do what the Administration 
cannot--defend an industry vital to our national security, and 
tens of thousands of American jobs, from attack by a tidal wave 
of illegally dumped, cheap foreign imports.
    Thank you, Mr. Chairman.

                                Endnotes

    1. Department of Energy, Office of Industrial Technologies, Steel 
Industry Profile.
    2. American Iron and Steel Institute, ``A Few Facts About Steel.''
    3. American Metal Market, ``Defense Ponder's Steel's Wartime 
Readiness,'' March 14, 1994.
    4. U.S. Senate Steel Caucus hearing on the impact of foreign steel 
on the U.S. market, November 30, 1998.
    5. Information from the House Army Liaison Office, February 22, 
1999.
    6. Paul Barton, ``Getting Troops Home a Challenge Itself,'' 
Arkansas Democrat-Gazette, May 21, 1991.
    7. U.S.S. Nimitz Public Affairs Office, January 28, 1999.
    8. Vago Muradian, ``Douglass to Industry: Start Planning for the 
Next Century,'' Defense Daily, September 24, 1998.
    9. Greg Mastel, ``Leveling the Playing Field: Antidumping and the 
U.S. Steel Industry,'' Economic Strategy Institute, February 1999.
    10. Ibid.
    11. Greg Mastel, ``Russia, Steel, and U.S. Policy,'' The Journal of 
Commerce, January 4, 1999.
    12. Mastel, February 1999.
    13. Ibid.
    14. Ibid.
    15. Chimerine, June 1994.
    16. Ibid.
    17. American Iron and Steel Institute Press Release, February 19, 
1999.
    18. Ibid.
    19. Ibid.
    20. Ibid.
    21. Ibid.
    22. Mike Boyer, ``AK Steel Rolling Against Trend,'' Cincinnati 
Inquirer, November 7, 1998.
    23. Paul Blustein, ``Steel From Japan, Brazil Facing Punitive 
Damages,'' Washington Post, February 13, 1999.
    24. Ibid.
    25. Ibid.
    26. Michael Kepp, ``Brazil Seeks Steel Deal with U.S.,'' American 
Metal Market, February 22, 1999.
    27. Leslie Wayne, ``American Steel at the Barricades,'' New York 
Times, December 18, 1998.
    28. Michael Lelyveld, ``U.S. Steelmakers Go on the Import 
Offensive,'' Journal of Commerce, October 26, 1998.
    29. Len A. Costa, ``U.S. Manufacturers Propose a Steely Ban,'' 
Fortune, February 15, 1998.
    30. ``Suit Alleging Steel Dumping on Commerce Dept. Fast Track,'' 
Legal Intelligencer, November 12, 1998.
    31. Testimony of George Becker before the U.S. Senate Committee on 
Finance, January 27, 1999.
    32. Chimerine, June 1994.
    33. Congressional Research Service.
    34. Chimerine, June 1994.
    35. Chimerine, June 1994.
    36. Ibid.
    37. Mastel, January 4, 1999.
    38. Chimerine, June 1994.
    39. Mastel, February 1999.
    40. Department of Energy, Talking Points for Steel Vision Press 
Conference, May 2, 1995.
    41. Steel Recycling Institute, Recycling Fact Sheet.
    42. Ibid.
    43. DOE Talking Points, May 2, 1995.
    44. Recycling Fact Sheet.
    45. DOE Talking Points, May 2, 1995.
    46. Chimerine, June 1994.
    47. Ibid.
    48. Greg Mastel, ``Antidumping Laws and the U.S. Economy,'' 
Economic Strategy Institute, 1998.
    49. Arlene Wilson, ``Antidumping and the Uruguay Round: An 
Overview,'' CRS Report for Congress, January 25, 1995.
    50. Mastel, 1998.
    51. World Trade Organization, Agreement on Implementation of 
Article VI of the General Agreement on Tariffs and Trade, 1994.
    52. World Trade Organization, ``Settling Disputes: The WTO's `Most 
Individual Contribution','' 1997.
    53. Testimony of U.S. Trade Representative Charlene Barshefsky 
before the U.S. Senate Committee on Finance, January 26, 1999.
    54. World Trade Organization, Overview of the State-of-Play of WTO 
Disputes, February 17, 1999.
    55. Costa, February 15, 1999.
    56. Jack Lucentim, ``Rubin Defends Imports as Steel Trade Surges,'' 
Journal of Commerce, December 9, 1998.
    57. Blustein, February 13, 1999.
    58. Barshefsky, January 26, 1999.
    59. Ibid.
    60. Report of the President to Congress on the Steel Crisis, 
January 7, 1999.
    61. Department of Commerce, Press Release, February 22, 1999.
    62. Kepp, February 22, 1999.
    63. Barshefsky, January 26, 1999.
    64. H.R. 506 and H.R. 502.
    65. WTO, Article VI of GATT, 1994.
    66. H.Res. 598, Roll Call #532, October 15, 1998.
    67. Ibid.
    68. Ibid.
    69. Blustein, February 13, 1999.
    70. H.R. 506, Section 1.
      

                                


    Chairman Crane. Thank you, and our next witness is Mr. 
Traficant.

STATEMENT OF HON. JAMES A. TRAFICANT, JR., A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF OHIO

    Mr. Traficant. Thank you, Mr. Chairman. I would ask that my 
statement be incorporated into your record.
    Chairman Crane. Without objection, so ordered.
    Mr. Traficant. I would like to talk about this in a little 
bit of a different vein, talking about GATT and the World Trade 
Organization. Our policy so far I think has been misguided and 
it's hurt our industry.
    America has taken Europe to GATT over beef and over 
bananas. GATT ruled in our favor. Europe laughed in GATT's 
face. GATT referred us to WTO. WTO ruled in both cases in our 
favor. Europe laughed at WTO's ruling, then later appealed it. 
In the process is now a reference back to GATT which will be 
about a 3-year malaise over bananas and beef.
    For every head of cattle we export, we are importing 11. We 
exported 44,000 hogs and imported a half a million. Hogs are 
selling for 8 cents a pound.
    I am talking about GATT. The dilemma bananas and beef posed 
were nonmilitary, so we didn't have much of a choice. Now, in 
October, we passed a ban in the House as a nonbinding 
resolution. Japan's exports to American steel dropped 22 
percent. I recommend you bring out the Visclosky bill but you 
allow the Traficant amendment to be offered on the floor, which 
is simply a 3-month ban.
    I want to read this to you. In article 21 of GATT, it 
states, ``nothing in this agreement shall be construed to 
prevent any contracting party from taking any action which it 
considers necessary for the protection of its essential 
security interests relating to the traffic in arms, ammunition 
and implements of war and to such traffic in other goods and 
material as it carried on directly or indirectly for the 
purpose of supplying a military establishment.''
    Steel is not styrofoam. We are clearly in our rights to 
take a stand legally in the world and my bill just calls for a 
90-day ban. I don't care what the final workout is because I 
know in 90 days this problem will be solved. You do not 
regulate illegal trade, you do not manage it, coordinate it, or 
massage it with international bodies. You ban it.
    That is my feeling very strongly here. And I believe we 
have delegated the role of Congress, constitutionally mandated 
with the power to regulate commerce with foreign nations, and 
given it to the White House. And they are playing politics with 
it. As a Democrat, I will say that. They have been weak.
    But, I want to let this panel know that in the negotiated 
voluntary agreement with Russia there is a 6-month moratorium 
on this steel--too little, too late. My legislation speaks 
right to the core. I want an opportunity for an amendment to 
whatever vehicle you bring out to present this argument. I 
think it needs to be heard on the floor of the House.
    I thank you.
    [The prepared statement follows:]

Statement of Hon. James A. Traficant, Jr., a Representative in Congress 
from the State of Ohio

    Mr. Chairman, Mr. Vice-Chairman and Members of the 
Committee. I ask that my written statement be submitted for the 
Record.

 The Impact of Steel Dumping on U.S. Steel Producers, Steelworkers and 
                            the U.S. Economy

    U.S. steel companies have transformed themselves. I believe 
that statement is of utmost importance in understanding. The 
U.S. steel industry is no longer the inefficient, uncompetitive 
entity it was in the 1970s. I am not here today to ask for 
special favors to save a dying American industry. The truth is, 
the U.S. steel industry underwent a painful restructuring in 
the 1980s--losing hundreds of thousands of jobs and investing 
over $50 billion into new technologies, equipment and 
facilities. Millions have been expended to retrain 
steelworkers. As a result, U.S. steel companies are 
technologically-advanced, remarkably competitive, and employ 
some of the most highly-skilled workers in the world today.
    The question is, Mr. Chairman, why are we here today? If we 
have a world-class steel industry and world-class workers, why 
is the U.S. steel industry not turning out so much as a simple 
profit during a time of record steel demand and consumption in 
the United States?
    The answer is simple. Our foreign competitors have been 
dumping steel in America below market value for well over a 
year. This practice, which has been allowed to continue 
unencumbered by the Clinton Administration, has had a 
devastating effect on the U.S. steel industry and U.S. 
steelworkers.
    The numbers are incredible. In 1997, imports of hot-rolled 
carbon steel flat products averaged approximately 525,000 tons 
per month. In 1998, monthly imports averaged almost 1 million 
tons per month. The surge was concentrated in the last half of 
the year, which led to sharply falling prices and shipments by 
domestic producers. Similarly, hot-rolled steel imports 
averaged 676,000 tons per month from January to June, but then 
exploded to an average monthly rate of 1.3 million tons from 
July to November. November 1998 imports reached an all time 
record of 1.6 million tons, capturing over 55 percent of the 
American market that month.
    Japan alone accounted for 41 percent of the import surge in 
the first 11 months of 1998. Russia and Korea accounted for 
another 38 percent. By product group, hot-rolled sheet and 
plate-in-coil accounted for almost 50 percent of the volume 
surge in 1998. However, import surges are clearly not limited 
to the three countries and two products that are on everyone's 
lips. Steel dumping has become a global event. For example, in 
the first 11 months of 1998, steel imports were up 167 percent 
from Japan, up 60 percent from Russia, and up 112 percent from 
South Korea. But during that same time period, steel imports 
were also up 68 percent from the Ukraine, up 150 percent from 
Australia, up 105 percent from South Africa, up 114 percent 
from Brazil and up a whopping 586 percent from Indonesia. 
Dumping is dumping, Mr. Chairman. Our laws should be enforced 
across the board. Why isn't the Administration looking at all 
potential violators?
    What impact has steel dumping had on an industry vital to 
U.S. national security? It's not just that U.S. steel companies 
aren't turning a profit during a time of record demand and 
consumption--U.S. steel companies are posting devastating 
losses. For example, Bethlehem steel reported a $23 million 
loss for the fourth quarter of 1998, compared to the net income 
of $42 million for the same quarter in 1997. Bethlehem is just 
a snapshot of a widespread problem. Ongoing unfair trade 
practices have cost 10,000 steelworkers their jobs and 
threatened the job security of many thousands more. Ten 
thousand lost jobs over two months translates into 860,000 
hours of lost earnings. With an average hourly wage rate of 
$18.25, that's $16 million in lost wages. That's not just a $16 
million loss to the U.S. economy. How much will the federal 
government pay out in unemployment compensation and job 
retraining, or worse--welfare, housing vouchers, and Medicaid? 
These men and women aren't hopeless or helpless. They are 
highly-skilled, well-trained, hard-working, law-abiding, 
taxpaying citizens.

The Effectiveness of U.S. Trade Laws

    U.S. trade laws have been of little help in resolving the 
ongoing import surges quickly, or with any sense of urgency. 
While the Administration has taken action to expedite the 
antidumping petitions, the process continues to be multi-
leveled, complicated and exceedingly slow. I have been told 
that the entire process is expected to persist a minimum of 
nine months, from start to finish. However, a lengthy 
investigative process is only one facet of our trade law 
effectiveness problem.
    There is one overreaching problem that the U.S. steel 
industry, steelworkers amd Members of Congress have run into 
like a brick wall: it is the Administration's unwillingness to 
enforce the law.
    First, the steel dumping investigation has been focused on 
three countries: Japan, Russia and South Korea. Granted, these 
three countries are responsible for approximately 79 percent of 
the steel dumping. But what about the other 21 percent? Why are 
we not pursuing these violators--violators that account for 
one-fifth of all steel dumping?! Similarly, just as steel 
dumping is not limited to three countries, it is not limited to 
two products. If all but a few countries and products are 
ignored with respect to steel dumping, what does this say about 
the quality of enforcement? It seems clear that our trade laws 
are not equally enforced and violators not ardently pursued.
    Second, if enforcement of our trade laws is inconsistent 
and uneven at best in an officially-requested investigation and 
highly-publicized case, what is the quality of enforcement when 
an a antidumping petition has not been filed? In other words, 
is the U.S. steel industry case purposely being mishandled, or 
is this the best the federal government is capable of when 
called upon? Not much of a choice, is it?
    Let's look at a similar case, to illustrate my point. While 
the White House continues to drag its feet on steel, U.S. Trade 
Representative Charlene Barshevsky said the United States is 
going to the mat with the European Union--over bananas. That's 
right, the Administration has drawn up a list of goods--from 
cashmere sweaters to pork and pasta--on which to impose 100 
percent additional tariffs totaling $520 million a year, to 
force the EU's hand on bananas. Think about it. While Uncle Sam 
is prepared to wage a trade war over bananas, 10,000 
steelworkers are receiving unemployment compensation.
    Finally, and most importantly, this Administration would 
rather negotiate empty promises than enforce our trade laws. 
U.S. trade laws were designed by Congress to protect our 
economic and national security and our sovereignty. However, it 
has become obvious to me that this Administration is unwilling 
to take the type of definitive action necessary to deal with 
this serious crisis. The voluntary restraints the 
Administration has asked of Japan is like putting a kid in a 
candy store and asking him not to eat. No disincentives, no 
repercussions--it's strictly voluntary. Promises won't help the 
10,000 steelworkers who have lost well-paying jobs and promises 
won't stop industry giant Bethlehem steel from closing the 
doors on two of its plants, and neither will $300 million in 
tax relief.
    While I support relief for the steel industry, I am livid 
that the President expects the American taxpayer and the 
steelworkers who have lost their jobs to pay for the illegal 
actions our foreign competitors. Perhaps if the Administration 
enforced our trade laws for a change, and penalized dumping, we 
would collect enough revenue to pay for tax relief for our 
domestic steel industry.

H.R. 502/FASTA, the ``Fair Steel Trade Act''

    The time for negotiating, monitoring and litigating are 
long past. Tax breaks and retraining will not bring back good-
paying manufacturing jobs and industries vital to our national 
security. It's time to stop the feet dragging and do something 
FASTA!
    My bill, H.R. 502, the ``Fair Steel Trade Act'' (FASTA), 
would force the Administration to impose swift and severe 
penalties on those countries that have flagrantly and 
repeatedly violated our trade laws. Specifically, FASTA will 
impose a three-month ban on imports of steel and steel products 
from Japan, Russia, South Korea and Brazil.
    FASTA is strong, fast and to-the-point. Our trade laws are 
exceedingly slow and not equitably enforced by the 
Administration. Negotiations are at best a drawn-out process, 
and at worst, a handshake of empty promises. America's steel 
industry and steelworkers need our help now. The message FASTA 
sends is the Congress of the United will not tolerate illegal 
trade practices.
    On the one hand, FASTA's moratorium has been criticized as 
being unreasonable and in violation of the General Agreement on 
Tariffs and Trade (GATT) by free traders. On the other hand, 
the ban has been challenged by pro-steel supporters for being 
too short, and therefore, ineffective. I would like to address 
both criticisms.
    First, a total, but temporary ban on steel is not an 
unreasonable action. FASTA calls for a three-month ban on 
steel. I found it interesting that the Clinton Administration 
recently negotiated a six-month moratorium on hot-rolled steel 
products--twice the length of the FASTA--in its agreement with 
Russia. That is precisely the type of action I and many in 
Congress have been advocating for months.
    Second, some Members of Congress are worried that FASTA 
will violate the principles of GATT. The truth is, Japan, South 
Korea, Brazil \1\ and numerous other cosigners of GATT have 
violated GATT by dumping steel in America below market value. 
As such, FASTA is not a precedent-setting measure. Our trading 
partners have restricted U.S. imports based upon national 
security or health and safety principles for years. In fact, 
Section XXI of GATT, entitled Security Exceptions, makes 
exceptions for trade measures taken in the interest of national 
security. Specifically, Article XXI of GATT states, ``Nothing 
in this Agreement shall be construed...(b) to prevent any 
contracting party from taking any action which it considers 
necessary for the protection of its essential security 
interests...(iii) relating to the traffic in arms, ammunition 
and implements of war and to such traffic in other goods and 
materials as is carried on directly or indirectly for the 
purpose of supplying a military establishment [emphasis 
added].'' The U.S. steel industry, a direct and indirect 
supplier of materials used in maintaining implements of war--
unarguably--is an industry vital to U.S. national security. If 
our trading partners want to challenge FASTA's national 
security claims, they are welcome to do so at the WTO.
---------------------------------------------------------------------------
    \1\ Russia is a special case. Since Russia is not a co-signor of 
GATT or a member of the World Trade Organization (WTO), the United 
States and Russia are not violating the principles of GATT.
---------------------------------------------------------------------------
    Third, FASTA is not meant to start a trade war, hence the 
three-month ban. It is merely a tool to allow the U.S. steel 
industry to recover while giving the Administration time to: 1) 
expedite these antidumping petitions through the investigations 
process, and 2) negotiate import agreements on steel. FASTA 
also gives Congress an open window of opportunity to propose 
and enact substantive trade reform legislation. In fact, FASTA 
is part of my two-pronged approach toward ensuring that U.S. 
trade laws are more responsible and accountable to U.S. 
industry. Within a month, I plan to introduce a comprehensive 
trade reform bill that will have a positive, long-term effect 
on American industries and American workers.
    Finally, FASTA's three-month moratorium has been criticized 
by some as not being long enough to have any effect. I strongly 
feel that FASTA is a wake-up call to countries that continue to 
engage in unfair and illegal trade activities, without causing 
undue financial hardship. I believe that the United States and 
our trading partners can reach an understanding in three months 
time. Anything longer is protectionist. In terms of long-term 
effectiveness, it is imperative that Congress enacts 
comprehensive trade reform legislation and stops patching the 
holes with band-aid-type measures.

Conclusion

    In his Presidential campaign, Bill Clinton spoke of using 
U.S. trade policy to build a bridge to the 21st century for 
American workers. Mr. Chairman and Members of the Committee, 
that bridge is crumbling under the weight of millions of tons 
of illegally dumped foreign steel. I say to you today: If 
Congress does not take extraordinary and decisive action, 
hundreds of American communities and thousands of American 
families will enter the 21st century in poverty.
    Thank you.
      

                                


    Chairman Crane. Thank you. We want to make sure that 
``traffic can't come in,'' right? [Laughter.]
    Mr. Traficant. Just allow it as an amendment and you can 
bring out whatever you want, Mr. Chairman.
    Chairman Crane. OK.
    Mr. Greenwood.

   STATEMENT OF HON. JAMES C. GREENWOOD, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF PENNSYLVANIA

    Mr. Greenwood. We want to make sure the traffic can't come 
in as long as it doesn't come in ``by crane.'' [Laughter.]
    Thank you, Mr. Chairman, for giving me the opportunity to 
testify. The first several pages of my testimony spell out the 
problem and you don't need to hear that from me. You have heard 
it enough and you will hear it a lot more. Instead, I want to 
just focus briefly on solutions.
    Mr. Chairman, I am a fair trader, I am not a free trader. I 
have supported NAFTA, the North American Free Trade Agreement, 
strongly, I have supported GATT, I am a supporter of fast 
track, and year after year, as the union members from my 
district have visited me in my office, they have argued against 
these policies. I have defended these policies, explaining the 
importance of America being an exporter and the number of jobs 
created because of our openness to trade. But I can't look my 
300 laid-off steelworkers in the eyes anymore and tell them 
that there is nothing wrong with the system. I can't defend the 
system as working for them.
    We don't need to throw it out but we need to make some 
changes. I am a cosponsor of the Regula bill. I think that bill 
ought to be brought straight to the floor. It does improve the 
system and it improves it significantly.
    I also today, after a lot of anguish and a lot of research, 
became a cosponsor of Mr. Visclosky's bill, H.R. 506, because I 
believe the foreign countries have broken our trade laws and 
they have caused American steelworkers to lose their jobs.
    I would, however, like to work with the sponsors of the 
legislation to clarify the intent of the legislation to ensure 
that it does not violate WTO safeguard regimes and I think that 
that's possible. In its present form, the bill could be 
interpreted to leave that opportunity open--to be inconsistent 
with WTO--but I believe that the bill could be amended slightly 
to make sure that it does not violate the safeguards of WTO. 
That's a possibility.
    I also would like to add that under section 201 of the 
Trade Act of 1974, the International Trade Commission may 
conduct an investigation upon receipt of a petition from 
numerous sources, including a resolution of the House Ways and 
Means Committee. I think it was Mr. Houghton who wondered why 
201 had not been invoked. This Committee can invoke it, the 
administration can invoke it, the requisite Committees of the 
Senate can invoke it. I am not clear on why the industry or the 
unions have not invoked the protections that are available to 
them under 201. Following an affirmative injury determination, 
the Commission may recommend a duty, a tariff rate quota, or 
other appropriate remedy in a way that does not run afoul of 
the procedures set forth by the International Trade Commission.
    I believe that the administration must be more aggressive 
in its discussions with our trading partners, they must 
understand that our patience and forbearance are not 
inexhaustible and that the continued practice of dumping steel 
into our market in violation of bona fide trading agreements 
risks bringing a less measured and a more protectionist 
response from this Congress and from the American people. I 
urge this Subcommittee to impress upon the administration the 
need to make illegal dumping a priority in any bilateral or 
multilateral discussions we have with our trading partners 
around the world.
    While I appreciate the administration's reluctance to be 
overly harsh with emerging democracies--most notably, Russia--
suffering from a cash-starved and a troubled economy, the time 
has come to make it clear to Russia that membership in the WTO 
will not come until it commits itself fully to responsible 
trading practices.
    And finally, I believe we in Congress have an opportunity 
in the new round of trading talks in Seattle to send a strong 
message to our negotiators that the issue of ending the 
practice of illegal dumping must be one of our highest 
priorities. And I thank you again for the opportunity to come 
forward and I yield back.
    [The prepared statement follows:]

Statement of Hon. James C. Greenwood, a Representative in Congress from 
the State of Pennsylvania

    Good Afternoon, Mr. Chairman, distinguished members of the 
Ways and Means Subcommittee on Trade. Thank you for convening 
this hearing.
    Today, you will hear from an array of witnesses on the real 
and present danger our domestic steel industry faces from the 
unfair trading practices of countries in South America, Europe 
and Asia.
    These practices are no longer in dispute. They are well 
documented by the International Trade Commission and the U. S. 
Department of Commerce. In fact, just last Friday, Commerce 
issued a preliminary determination against Brazil and Japan, 
finding high dumping margins for both these nations. 
Significant subsidization of imported steel products was also 
identified in Brazil.
    This was not a surprise to anyone participating in or 
observing the U.S. steel market. Last November, President 
Clinton noted that our country had just experienced a one-year 
300 percent increase in imports of hot-rolled steel from Russia 
and a 500 percent increase in hot-rolled steel from Japan.
    Five days later--one day before Thanksgiving--the impact of 
this unprecedented dumping of steel hit my district.
    Three hundred of the men and women employed by U.S. Steel 
at the Fairless Works were notified that they would be laid-off 
indefinitely. Altogether, an additional thousand Fairless jobs 
will be at risk if this crisis is allowed to continue unabated.
    Ironically, the seeds of this crisis were sown over the 
past decade and a half, as our domestic steel industry 
undertook the most expansive restructuring in the history of 
any basic industry. In the early 1980's, suffering huge losses 
from aging plants and equipment, big steel nearly surrendered 
its competitive edge to foreign producers and thousands of 
American steelworkers left the mills forever.
    But domestic producers fought back. By the middle of this 
decade, with billions invested in new plants, equipment and 
employee training, our domestic steel producers recaptured 
their place as the world's most competitive steel 
manufacturers. In product quality, customer service and 
productivity, no one ranks higher.
    Yet, while our steel producers were bringing new and 
environmentally compliant steel facilities on-line, many of our 
trading partners continued to retain excess capacity through 
government subsidies. They relaxed environmental standards for 
older plants on the one hand and imposed import barriers on the 
other. Today, the amount of excess capacity worldwide may be as 
great as 300 million tons. That is roughly one-third more steel 
making capacity in any year than world markets could possibly 
absorb.
    Due to the current growth in the U.S. economy, demand for 
steel is strong and there has been no shortfall in the ability 
of our domestic steel industry to provide high quality products 
for its customers in the quantities needed. Still, the volume 
of imported steel reached historic proportions in 1998, even as 
prices for imported steel plummeted nearly $100 per ton last 
year.
    The effects at home have been devastating. Thousands of 
layoffs, families and communities shattered, and an increasing 
number of bankruptcy filings have come in the wake of this 
import tsunami.
    Equally disturbing to me is the time it takes to identify 
and punish these steel-making predators. In the case being 
reviewed by the Administration--one that was brought last 
September--a final injury determination is not expected until 
June, nearly three quarters of the business cycle.
    Before WWII, when President Franklin Roosevelt first 
explained why the Lend-Lease program was important in the fight 
to save Europe, he used the analogy of the ``good neighbor.'' A 
good neighbor, he observed, would certainly lend a hose to a 
neighbor whose house was on fire, even if he himself didn't 
join in to extinguish the fire. I wonder what President 
Roosevelt would have thought of a neighbor who responded to the 
urgent call by remarking that he would first have to undertake 
a lengthy six-step investigation to determine if his neighbor's 
house were actually on fire and then develop an appropriate 
form of relief.
    Sadly, we are the reluctant neighbor under existing trade 
laws. To me, it seems unfair to our vital interests.
    Instead of rewarding American industries that have met the 
challenge of global markets by becoming leaner, environmentally 
cleaner and more competitive, we punish them and ourselves by 
allowing subsidized products, produced under questionable 
environmental standards, to flood our markets while our 
government painstakingly crosses its bureaucratic ``t's'' and 
dots its regulatory ``I's.''
    Our basic industries cannot hope to remain strong if our 
trading partners are allowed to dump their excess capacity on 
our shores at prices that fail to reflect the genuine cost of 
production. We need to remind our partners that our commitment 
to free and fair trade rests on the innate sense of fairness in 
the American people. If these kinds of unfair practices go 
unchanged, the American people may decide they have seen 
enough, risking retaliatory measures and trade barriers that no 
reasonable person wants.
    The Regula bill, of which I am a cosponsor, is a 
responsible first step to providing timely relief to our 
domestic steel producers. By harmonizing injury standards with 
the World Trade Organization (WTO) rules, we will significantly 
strengthen our ability to address these dumping cases. The 
development of a steel import-monitoring program, envisioned in 
the proposed legislation, is also an important new tool in our 
efforts to fight illegal steel dumping.
    Further, the Administration must be more aggressive in its 
discussions with our trading partners. They must understand 
that our patience and forbearance are not inexhaustible and 
that the continued practice of dumping steel into our market, 
in violation of bonafide trading agreements, risks bringing a 
less measured and more protectionist response from this 
Congress and the American people.
    I urge this Committee to impress upon the Administration 
the need to make this issue of illegal dumping a priority in 
any bilateral or multilateral discussions we have with our 
trading partners around the world.
    If we do not get an adequate response from the WTO and our 
bilateral negotiations, then we will be forced into unilateral 
steps to protect American interest.
    And while I appreciate the Administration's reluctance to 
be overly harsh with emerging democracies suffering from a 
cash-starved and troubled economy, the time has come to make 
clear that the membership in the WTO will not come until they 
commit themselves fully to responsible trading practices.
    Finally, I believe we in Congress have an opportunity in 
the new round of trading talks to send a strong message to our 
negotiators that the issue of ending the practice of illegal 
dumping must be one of our highest priorities.
    This November, when all our families gather to give thanks 
to God and our nation for our prosperity, I want the 
hardworking men and women at the Fairless Works, and at steel 
mills across this country, to be able to give thanks that we in 
this Congress took the wise and responsible actions needed to 
enable them to return to their jobs.
    Again, thank you for this opportunity to testify before 
your Committee this afternoon.
      

                                


    Chairman Crane. Thank you very much, Mr. Greenwood.
    And now, if you folks would retire to the row behind you, I 
would like to call our next panel to testify.
    Hon. Ron Klink, Hon. Jack Quinn, Hon. Bart Stupak, Hon. 
Stephen Buyer, Hon. Michael Doyle, Hon. Marion Berry, and Hon. 
Dennis Kucinich.
    And I will remind all of you to please keep your oral 
presentations to 5 minutes or less. You can watch the light in 
front. When it turns red, that's 5 minutes and any printed 
statements will be made a part of the permanent record. And, I 
would ask that you proceed in the order I presented you.
    Mr. Klink will go first.

STATEMENT OF HON. RON KLINK, A REPRESENTATIVE IN CONGRESS FROM 
                   THE STATE OF PENNSYLVANIA

    Mr. Klink. Thank you very much, Mr. Chairman. I would ask 
again for unanimous consent that my entire statement be put 
into the record and I be able to talk extemporaneously for 
further----
    Chairman Crane. All of it.
    Mr. Klink [continuing]. Or less if it's your pleasure.
    Let me just say that, rather than adding to a lot of what 
was said, I would like to associate myself with the remarks 
that many of you made on the panel--and thank you for being 
here--and also a lot of the comments that were made by the 
previous panel.
    I just wanted to focus in on a couple of points. Number 
one, I agree and want to just expand upon what was said 
earlier. We need not try to mix foreign policy and defense 
policy with trade policy and my sense is that there are some 
people in this administration who have been trying to do that 
and I think that they may have influenced the President wrongly 
on some of these issues.
    We have seen, throughout the last several decades, a 
tremendous downturn in the number of people who are employed in 
core industries in our Nation--in southwestern Pennsylvania, in 
the Midwest, in the Great Lakes, and across America. The steel 
industry has been bashed, steelworkers have been laid off by 
the tens of thousands, and communities have fallen apart. I 
watched it in Pittsburgh, which, at one time, was known as the 
``Steel City.'' It's not the ``Steel City'' anymore and when 
those workers are laid off in those numbers and you go into a 
town like Aliquippa, Pennsylvania and 13,000 workers are laid 
off in 1 day and the steel mill is leveled, the town is 
leveled. Families are torn apart. Violence occurs both in the 
community and among family members. People commit suicide.
    What we are talking about here is a diminishment of a core 
industry and a prolonged period of time where this is just 
getting a lot worse. And, what we have heard is, well, we will 
make more trade adjustment assistance available. What does that 
do? The horse has been stolen. What are we going to train him 
to do?
    We have heard, well, we are going to give the steel 
industry more tax writeoffs. They don't need tax writeoffs. 
They need us to enforce the trade laws.
    I would say, gentlemen--and I know that, from your 
statements, most of you agree--the people that we are talking 
about, the 10,000 that have been laid off, occur at a time when 
we have not recovered from those tens of thousands that were 
laid off in the seventies and eighties. Those communities 
haven't recovered yet. These are people that work very hard. It 
used to take 10 man-hours to produce a ton of steel, now it 
takes 2 man-hours. That is how much better they have gotten 
just since 1970. They work hard, they play by the rules, and 
now the Federal Government fails to enforce those rules. What 
kind of a message do we send to those workers that are out 
there in the workplace?
    We have had a record trade deficit of $168.6 billion last 
year. Steel is the tip of the iceberg. As it has been said, we 
have gone bananas over bananas, we have got a beef with beef 
but when are we going to stand up for steel, a core industry? 
If this country finds itself in a defense dilemma, we will need 
steel. We can put blueberries on our cereal. The heck with 
bananas. We can live without them.
    I agree. We have to have the Visclosky bill. I am a 
cosponsor of the Regula bill. I think that Mr. Traficant is 
right, we need a 3-month moratorium, just to have time to 
figure out where it is that we are and where we need to be. We 
have watched the textile industry go away, the shoe industry go 
away, so many of our industries we have chased away. Don't make 
the steel industry the next industry.
    Mr. Crane, Mr. Levin, Mr. Coyne, the rest of you and Mr. 
Becerra, thank you for being here, thank you for putting time 
in this. It is, I would say in closing, Congress that shall 
regulate commerce. It is not the President, it is not the 
Supreme Court, it is not the WTO, it is the Congress that our 
Constitution says will regulate commerce. And thank you for 
holding this hearing and taking the first step toward putting 
Congress back in that role again. It is an honor to be with 
you.
    [The prepared statement follows:]

Statement of Hon. Ron Klink, a Representative in Congress from the 
State of Pennsylvania

    Thank you, Chairman Crane, Ranking Member Levin, and 
Members of the Trade Subcommittee for holding this hearing. The 
United States has become the international dumping ground for 
the glut of steel on the worldwide market. As a result of that, 
our steel companies have had to reduce their operating capacity 
to 74% and lay off 10,000 steelworkers. Your Committee has the 
jurisdiction to bring legislation to the Floor to send a firm 
signal that we will not tolerate steel dumping. But before I 
turn to legislation, I ask that we put ourselves in our 
steelworkers' shoes.
    In return for lost jobs, the Administration offered to give 
Trade Adjustment Assistance to displaced steelworkers. What 
good will that do? We need to fight to save steelworkers' jobs 
in the first place rather than catering to foreign nations' 
unfair trade practices. Trade Adjustment Assistance will not 
guarantee them new jobs.
    Back in the 80's when I was a TV reporter in Pittsburgh, I 
saw thousands of steelworkers lose their jobs when their plants 
closed. Now, here we go again. Over the past year 10,000 of our 
American steelworkers have lost their jobs because of steel 
dumping. In the Pittsburgh area alone, we lost 1,000 
steelworkers' jobs in just four months.
    I've seen the devastation caused when a plant shuts down. 
Whole towns disappear or become shells of what they once were. 
In the early eighties, I saw the pain on the faces of the 
steelworkers in Aliquippa, PA when it was announced that more 
than 10,000 of them would lose their jobs due to plant 
closings. I will never forget the feeling of despair and loss 
that set in immediately. To this day Aliquippa has never 
recovered and the sad fact is there are hundreds of cities just 
like Aliquippa all across this country. I ran for Congress 
because I was tired of standing by while no one did anything 
for these people and my message today is that once and for all 
we must do something to protect this vital American industry 
from being destroyed by illegal foreign dumping.
    We have every reason to be proud of our American steel 
industry. Twenty years ago the steel industry may not have been 
the most efficient or competitive, but since then it has worked 
hard to modernize and update its processes. Now we have the 
most efficient steel producers in the world. They have reduced 
the amount of time it takes to make a ton of steel from 10 man-
hours to just 2 man-hours. Regarding workplace safety, U.S. 
steel makers have cut their injury and illness rates by 40% in 
the past 10 years and under the scrutiny of government 
regulators they have cut pollution discharges by 90% since 
1970. In contrast, foreign competitors who dump cheap steel 
into this country are subsidized by their governments and are 
completely unburdened by tough environmental regulations.
    What have the American steel companies gotten in return for 
providing good jobs, stimulating the economy, contributing to 
our tax base, and being good environmental citizens? An offer 
of a $300 million tax break to try to make up for their losses. 
What good will that do? Tax breaks for the steel companies 
won't put food on the table for our displaced steel workers. 
Nor will tax breaks bring the steel companies back to operating 
capacity so the workers can get their jobs back. The only 
answer is to stop the flood of cheap foreign steel being dumped 
on our nation.
    We must consider our trade deficit and the ripple effect 
the steel dumping crisis will have on our economy. Last 
Saturday, February 20, an article in the Washington Post 
emphasized that the U.S. trade deficit hit a record $168.6 
billion last year, ``and may well go higher...thanks to 
continuing economic troubles overseas.''
    Other industries worry about the negative ripple effect 
unfair trade has on our economy. For example, every Member of 
Congress got copy of a letter the American Foundrymen's Society 
wrote to President Clinton a few days ago saying that the 
metalcasting industry also competes in a global marketplace. 
They urged the President ``to take all action necessary to 
enforce our trade laws'' because they also face tough foreign 
competition. Overseas foundries are often subsidized, pay lower 
duties than U.S. foundries in order to export products, and do 
not have to meet environmental and safety regulations as our 
businesses do in this country.
    Congress must take immediate action. Mr. Chairman, I am an 
original co-sponsor of several bi-partisan bills to help our 
workers and our industries get relief from unfair trade. Each 
bill has been referred to the Committee on Ways and Means. Mr. 
Regula has introduced HR 412, the Trade Fairness Act of 1999, 
which will allow the President to provide relief to an industry 
which has been seriously injured by imports. This bill also 
would start a steel import monitoring program to determine 
whether unfair imports are disrupting the market.
    Mr. Traficant has introduced HR 502, a bill to ban imports 
of steel and steel products from Japan, Russia, South Korea and 
Brazil for three months.
    Mr. Visclosky has introduced HR 506, a bill that would 
require foreign nations to limit their steel exports to the 
United States back to the levels preceding July of 1997, when 
the current steel dumping crisis started to heat up.
    I want to see any one of these bills come to the Floor for 
a vote. I've heard that some Members are reluctant to sign on 
to these bills because they do not want to be perceived as 
anti-free trade. The question is not about free trade, but 
about fair trade. Last month, every Member of Congress received 
a letter from Kevin Kearns, president of the United States 
Business and Industry Council, which represents 1,500 
conservative business leaders. Mr. Kearns encouraged Members to 
co-sponsor the Visclosky bill, because the Council recognizes 
that the U.S. steel industry receives no government subsidies, 
but does stimulate our economy. If we lose our American steel 
industry, then once it is gone, it will not be brought back.
    The Committee on Ways and Means has jurisdiction over all 
of the bills I just mentioned. I urge you to consider them and 
send them to the Floor for a vote. I ask you to do that for our 
displaced American steel workers, so they can rebuild the 
financial security they were fighting hard to achieve; for the 
steel companies, who have worked to be the best steel producers 
in the world; and for the workers and industries from broad 
segments of our economy who need to see us get tough, 
permanently, with foreign countries who have betrayed our good-
faith effort to promote open and fair trade.
    Thank you Chairman Crane, Ranking Member Levin, and Members 
of the Subcommittee.
      

                                


    Chairman Crane. Thank you, Mr. Klink.
    Mr. Buyer.

    STATEMENT OF HON. STEPHEN E. BUYER, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF INDIANA

    Mr. Buyer. Thank you, Mr.----
    Chairman Crane. Excuse me for my earlier mispronunciation.
    Mr. Buyer [continuing]. Chairman, Mr. Levin, Members of the 
Subcommittee, I also join with our colleagues thanking you for 
this hearing today and I am sure all of you understand the 
importance of the steel industry to this country. I also 
appreciate your willingness to accommodate many of the 
different Members and to hear their views at this hearing.
    This Subcommittee, over the years, has taken steps to 
support American competitiveness in world markets. This 
Subcommittee has worked very hard to put into our trade laws 
steps that can be taken to support our industries, our workers, 
when other countries do not play by the rules. I thank you for 
your hard work and dedication.
    The steel industry has invested billions of dollars in 
modernizing itself and, at the same time, improving 
environmental compliance. It has learned the hard way of the 
benefit of cutting-edge technology. The industry has seen a 5.5 
percent annual gain in productivity. American steelworkers are 
the most productive in the world.
    I have met with these steelworkers. I have toured the 
modern facilities in Indiana. I have spoken with these workers, 
who like their fathers and their grandfathers, have worked the 
mills in northern Indiana. Generations have contributed to 
America's growth to become a world power.
    I doubt there is one person in this room who disagrees on 
the objective, and that is to ensure a free trade policy is, in 
fact, fair trade. Nobody in this room supports illegal 
subsidies or illegal dumping of steel products or any other 
products or commodities from foreign sources into this country. 
The disagreement arises over the methods and the tactics that 
lead us to this objective.
    I respect the efforts of Pete Visclosky and Jack Quinn, who 
are not only my friends but colleagues. Mr. Visclosky's 
district and my district border each other. We share Lake and 
Porter counties in Indiana. We have cooperated on many issues 
for the benefit of our constituents in Indiana. Pete and Jack 
have introduced legislation to impose quotas on steel products 
coming into this country. They have done this with the best of 
intentions and, I surmise, out of a level of frustration felt 
by all of us when our trading partners take advantage of the 
U.S. open market and the slow wheels of our bureaucracy.
    But, my view is that this legislation and the imposition of 
quotas should always be the solution of last resort. I would 
prefer that this administration, working with Congress and this 
Subcommittee, in particular, make sure that the laws already on 
the books are enforced and utilize the tools that this 
Subcommittee has given the executive branch to do so.
    This industry and labor can petition the government to take 
action. They have done so in the case of hot-rolled steel 
products and those cases are being pursued. I believe the 
administration has operated in good faith to expedite these 
investigations, for which I applaud them.
    The administration could take unilateral action on the 
dumping and unfairly subsidized products coming into the 
American market and they should do such action. I regret the 
administration has not done that today.
    If we utilize our current trade laws and prove that another 
country is unfairly trading, we bring credibility to our laws 
and to our determination to see them enforced and to our policy 
of encouraging other countries to play by the rules. If we 
impose quotas without these findings, we lose the moral high 
ground.
    I am also concerned that taking a hasty action would bring 
retaliation from our trading partners. Take the case of Japan. 
Japanese steel is not going to evaporate if the United States 
hastily imposes quotas. It might return to the United States in 
the form of automobiles, trucks, or other vehicles. The 
Japanese could make their market even more restrictive than it 
has already done so to our agricultural products, for example. 
The price for a fully operating steel industry and full 
employment for its workers should not be hardship in the 
automotive market or other industries.
    Nonetheless, we cannot foot-drag. The administration must 
give this situation the highest priority, and the cases must be 
pursued expeditiously. I would encourage the Subcommittee to 
hold the administration's feet to the fire. However, if the 
administration does not move swiftly and does not listen to 
Congress, then perhaps it may be necessary to further consider 
what Pete Visclosky and Jack Quinn have offered as a solution.
    I am on Mr. Regula's bill but I am hopeful that we don't 
need to move to quotas. I would ask that the rest of my 
statement be submitted for the record.
    [The prepared statement follows:]

Statement of Hon. Stephen E. Buyer, a Representative in Congress from 
the State of Indiana

    Mr. Chairman, Congressman Levin, Members of the 
Subcommittee. I first want to express my appreciation for 
holding this hearing today. I am sure you realize the 
importance of the steel industry, its workers and communities 
for many of us in Congress. I also appreciate your willingness 
to accommodate Members who wished to present testimony in 
person.
    This Subcommittee, over the years, has taken steps to 
support American competitiveness in world markets. This 
Subcommittee has worked very hard to put into our trade laws 
steps that can be taken to support our industries and our 
workers when other countries do not play by the rules. I thank 
you for your hard work.
    The steel industry has invested billions of dollars in 
modernizing itself and at the same time improving environmental 
compliance. It has learned the hard way of the benefit of 
cutting-edge technology. The industry has seen a 5.5% annual 
gain in productivity. American steelworkers are the most 
productive in the world.
    I've met with steelworkers. I've toured the modern 
facilities that have made Indiana the number one producer of 
steel in the world. I've talked to workers whose fathers and 
grandfathers worked in the mills--generations who have 
contributed to America's growth into a world power.
    I doubt there is one person in this room that disagrees on 
the objective--that is to ensure that free trade is fair trade. 
Nobody in this room supports illegal subsidies and illegal 
dumping of steel products, or any other products or 
commodities, from foreign sources into this country.
    The disagreement arises over the methods and tactics that 
lead us to the objective. It is my honor to call Pete Visclosky 
and Jack Quinn my friends. Pete's district and my district 
border each other. We share Lake and Porter Counties. We've 
cooperated on many issues for the benefit of our constituents 
and Indiana. Pete and Jack have introduced legislation to 
impose quotas on steel products coming into this country. They 
have done this with the best of intentions and, I surmise, out 
of a level of frustration felt by all of us when our trading 
partners take advantage of the United States' open market, and 
the slow wheels of our bureaucracy.
    But my view is that the legislative imposition of quotas is 
a solution of last resort. I would far prefer that this 
Administration, working with the Congress, and this 
Subcommittee in particular, enforce the laws already on the 
books and utilize the tools that this Subcommittee has given to 
the executive branch to do so.
    Industry and labor can petition the government to take 
action. They have done so in the case of hot-rolled steel 
products and these cases are being pursued. I believe the 
Administration has operated in good faith to expedite these 
investigations, for which I applaud them.
    The Administration could take unilateral action on dumping 
and unfairly subsidized products coming into the American 
market. I regret that the Administration has not taken this 
step and I have encouraged them to do so.
    If we utilize our current trade laws, and prove that 
another country is unfairly trading, we bring credibility to 
our laws, to our determination to see them enforced, and to our 
policy of encouraging other countries to play by the rules. If 
we impose quotas without these findings, we lose the moral high 
ground.
    I am also concerned that taking hasty action would bring 
retaliation from our trading partners. Take the case of Japan.
    Japanese steel is not going to evaporate if the United 
States hastily imposes quotas. It might return to the United 
States in the form of automobiles, trucks and SUVs. The 
Japanese could make their market even more restrictive than it 
already is to American agricultural products. The price for a 
fully operating steel industry and full employment for its 
workers should not be hardship in the automotive market and its 
workers or bankruptcy for American farmers or other industries.
    Nonetheless, we cannot foot drag. The Administration must 
give this situation its highest priority. These cases must be 
pursued expeditiously. I would encourage this Subcommittee to 
hold the Administration's feet to the fire. However, if the 
Administration does not move swiftly and forcefully to enforce 
our trade laws, it will be necessary for Congress to consider 
quotas.
    Any tools that could be given to the Administration to 
strengthen the ability to enforce our trade laws would be 
helpful. To this end, I have cosponsored Mr. Regula's bill, 
H.R. 412, to address the injury standard that must be showed 
under Section 201. This legislation would help any industry in 
the future that might find itself in the same position the 
steel industry is now. I encourage the Subcommittee to take 
action on this measure.
    Finally, there is a national security aspect to this 
problem that must be factored in the equation. The defense of 
our nation depends on steel. Our aircraft carriers, cruisers, 
tanks, HUMMVEES, are all made of steel. We cannot become 
dependent on foreign sources for this material so vital to our 
national defense. The United States is the only superpower in 
the world. We cannot project our force around the globe, which 
from time to time is necessary, without the ability to move men 
and equipment quickly. It is in our national interest to 
maintain a vigorous steel industry.
    I hope the Subcommittee will be vigilant on this issue and 
take those steps that are necessary to see that our trade laws 
are enforced and strengthened. I thank the Subcommittee for the 
opportunity to testify.
      

                                


    Chairman Crane. Without objection, so ordered. Thank you.
    Now, Mr. Stupak.

  STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF MICHIGAN

    Mr. Stupak. Well, thank you, Mr. Chairman and Ranking 
Member Levin and Members of the Trade Subcommittee for inviting 
me here to this critically important hearing. I appreciate the 
opportunity to share my views of this crisis as it is 
threatening communities in my district. I urge my colleagues on 
this Subcommittee and in Congress to take aggressive action to 
eliminate the illegal dumping by foreign steel producers.
    Mr. Chairman and Members of this Subcommittee, I do not 
have steel manufacturers in my district. I have iron ore mines. 
Over the past 20 years, these mines have made very painful 
changes in their manufacturing process of iron ore pellets to 
become more efficient. Our community has watched in horror as 
the Reagan administration did nothing to prevent the illegal 
dumping during the eighties.
    In 1980, we had over 4,500 people employed in the iron 
mines in northern Michigan. Today, we employ less than 2,200 
people. Mr. Chairman, we cannot absorb any more losses in the 
mining industry. If we do not take action to prevent this 
illegal activity, there will be no domestic iron ore mines, no 
domestic steel industry. It can't get any smaller.
    If we were to stop all illegal dumping of foreign steel 
today, there would still be a large oversupply of steel. I have 
heard reliable estimates that in the Minnesota and Michigan 
mines there will be around 8 million tons of oversupply. This 
means that there is a strong possibility that mines in my 
district may need to shut down for 4 weeks or 6 weeks later 
this year. I want to remind the Subcommittee that this will 
occur even if we stopped the illegal dumping right now--today, 
at 4 o'clock--because there is such a large volume of illegal 
dumped steel in this country that it is hurting my miners now.
    The Clinton administration has been slow to recognize this 
concern. However, with some recent action, I am pleased to see 
that the administration has taken a somewhat more aggressive 
action. Still, the preliminary determinations on the 
antidumping from Japan and Brazil--as well as the agreement 
with Russia--are only a start--a good start, but it is a start. 
It does not, however, solve the problem.
    While preliminary numbers seem to show a decline in 
imports, we must remain vigilant. Time and time again we have 
seen foreign producers make a mockery of our trade laws by 
playing cat and mouse with the Commerce Department and the U.S. 
Trade Representative. If the administration stops applying 
pressure, import levels will again begin to rise immediately. 
We must stop the illegal dumping here and now.
    I am a cosponsor of the Regula, Visclosky, and Traficant 
bills. I, like all members of the steel caucus, want to work 
with this Subcommittee to enact meaningful legislation to 
ensure that we end the current crisis and prevent it from 
occurring in the future.
    We should not fiddle while Rome burns. We should not fiddle 
while mines remain inactive. We must take strong and forceful 
action now. Our constituents, our communities, are desperate 
for our help. Mr. Chairman and Members of this Subcommittee, I 
urge you to hear their plea and I pledge to work with you and 
all Members to solve this crisis. Thank you.
    [The prepared statement follows:]

Statement of Hon. Bart Stupak, a Representative in Congress from the 
State of Michigan

    Thank you for inviting me to this critically important 
hearing. I appreciate the opportunity to share my views of a 
crisis that is threatening communities in my district. I urge 
my colleagues on the subcommittee and in the Congress to take 
aggressive action to eliminate the illegal dumping by foreign 
steel producers.
    Mr. Chairman, I do not have steel manufacturers in my 
district, I have iron ore mines. Over the last twenty years, 
these mines have made painful changes in their manufacturing 
process to become more efficient. Our communities watched in 
horror as the Reagan Administration did nothing to prevent the 
illegal dumping during the 80's.
    In 1980, over 4,500 people were employed the iron mines in 
Northern Michigan. Today they employ less than 2,200. Mr. 
Chairman, we cannot absorb more losses. If we do not take 
action to prevent this illegal activity, there will be no 
domestic iron ore mines, no domestic steel industry. It cannot 
get any smaller.
    If we were to stop all illegally dumping of foreign steel 
today, there would still be a large oversupply of steel. I have 
heard reliable estimates in the Minnesota and Michigan mines 
there will be around 8 million tons of oversupply. This means 
that there is a strong possibility that mines in my district 
will need to shut down for 1 = months later this year. I want 
to remind the subcommittee that this will occur even if the 
illegal dumping ceased today, because of the large volume of 
illegally dumped steel that exists in this country now.
    The Clinton Administration was very slow to recognize this 
concern. However, I am pleased to see that the Administration 
has recently taken more aggressive action on this issue. The 
preliminary determinations on the anti-dumping from Japan and 
Brazil, as well as the agreement with Russia, are a good start. 
But they will not solve the problem.
    While preliminary numbers seem to show a decline in 
imports, we must remain vigilant. Time and time again we have 
seen foreign producers make a mockery of our trade laws by 
playing cat and mouse with the Commerce Department and the US 
Trade Representative. If the Administration stops applying 
pressure, import levels will begin to rise immediately. We must 
stop the illegal dumping here and now.
    I am a co-sponsor of the Regula, Visclosky and Trafficant 
bills. I, like all members of the Steel Caucus, want to work 
with this subcommittee to enact meaningful legislation to 
ensure that we end the current crisis and prevent it from 
occurring in the future.
    We should not fiddle while Rome burns. We must take strong 
and forceful action now. Our constituents, our communities are 
desperate for our help. Mr. Chairman, I urge you to hear their 
plea and I pledge to work with you and all members to solve 
this crisis. Thank you.
      

                                


    Chairman Houghton [presiding]. Thank you, Congressman 
Stupak.
    Congressman Doyle from Pennsylvania.

    STATEMENT OF HON. MICHAEL F. DOYLE, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF PENNSYLVANIA

    Mr. Doyle. Thank you very much, Mr. Chairman.
    Mr. Chairman, Mr. Levin and Members of this Subcommittee, 
thank you very much for this opportunity to speak today. I will 
keep my remarks brief and ask that my written statement be 
submitted for the record.
    I do want to thank you all for convening this hearing on 
this issue and, especially, I would like to thank my good 
friend, Bill Coyne, representing the city of Pittsburgh, who 
has done so much work to focus attention on this current steel 
crisis.
    I am testifying here today because the current steel crisis 
is more than just another important issue. Those of us in 
Congress who represent steelmaking communities are deeply 
concerned. We are seeing an entire industry--what was a 
healthy, thriving industry--begin to hollow out under pressure 
from below-production cost imports. America's steel production 
capacity is quickly being warehoused at an alarming rate.
    To my knowledge, not a single economic analyst has 
contested the fact that foreign steel producers are dumping 
their product in the United States at prices that are below the 
cost of production. This is not a question of traditional 
competitive economic pressures forcing inefficient producers 
out of business. The recent moves by the administration to 
address dumping by Japan, Brazil, and Russia implicitly 
acknowledge this fact.
    Mr. Chairman, I am sorry to say it but it appears that the 
American steel industry and American steelworkers have somehow 
been caught up in someone else's economic theory. The theory 
has it that export-led economic growth and unhindered exports 
to the United States will allow the damaged economies of Asia 
and Russia to grow their way out of this crisis.
    But, this theory has taken no account of the real-world 
consequences. The decision seems to have been made to just 
offer the afflicted countries permanently a major portion of 
America's heavy industry. Whatever theoretical economic policy 
we are laboring under cares nothing for the future--for the 
future of our steel industry, or for America's future in an 
unstable world where tanks and planes might be guided 
electronically but they will still be made of steel.
    Moreover, this economic theory apparently calls for just 
ignoring flagrant violations of our trade laws by continuing to 
take no action to protect our domestic steel market or just 
incentivizing this dumping to continue.
    Mr. Chairman, steel has seen tough times before. All of us 
from those areas remember the tough times and steel came back 
with tremendously higher labor productivity, new equipment and 
better management. But, the current crisis is different. We are 
forcing a good industry to go bad. We are going to permanently 
lose a good industry here, a strategic industry, that is 
important to our national defense with good jobs and a good 
product.
    Mr. Chairman, I will just close by saying there is 
something wrong with a trade policy that allows 10,000 
Americans to lose their jobs before we do something. We need to 
act decisively to end this crisis. We need an early warning 
mechanism to deal with future violators swiftly and decisively.
    I support the Visclosky bill--I am a cosponsor of that 
bill. I have also cosponsored Mr. Regula's bill. I hope this 
Subcommittee will report those bills up. Thank you very much.
    [The prepared statement follows:]

Statement of Hon. Michael F. Doyle, a Representative in Congress from 
the State of Pennsylvania

    Mr. Chairman, Mr. Levin, and Members of the Subcommittee, 
thank you very much for this opportunity to speak today. I want 
to thank Chairman Crane for convening this hearing on this 
important issue. I'd also like to thank my good friend, my 
colleague representing the City of Pittsburgh, Bill Coyne, who 
has done so much work to focus attention on the current steel 
crisis.
    I'm testifying here today because the current steel crisis 
is more than just another important issue. Those of us here in 
the Congress who represent steelmaking communities are deeply 
concerned. In our communities we're witnessing layoffs and 
plant closings spreading like wildfire. We're seeing an entire 
industry, what was a healthy, thriving industry, begin to 
``hollow out'' under pressure from below-production-cost 
imports. The steel industry is one of the most critical 
strategic industries there is, and yet America's steel 
production capacity is quickly being warehoused at an alarming 
rate.
    This is not a question of traditional competitive economic 
pressures forcing inefficient producers out of business. To my 
knowledge, not a single economic analyst has contested the fact 
that foreign steel producers are dumping their product in the 
U.S. at prices that are below their cost of production. The 
recent moves by the Administration to address dumping by Japan, 
Brazil, and Russia implicitly acknowledge this economic fact--
that illegal steel dumping is occurring.
    Mr. Chairman, this is an extraordinary situation. I'm sorry 
to say it, but the American steel industry and American 
steelworkers have somehow been caught up in someone else's 
economic theory. This theory has it that export-led economic 
growth, and unhindered exports to the U.S., will allow the 
damaged economies of Asia and Russia to grow their way out of 
their crisis. But this theory has taken no account of the real-
world consequences--such as the loss of jobs and infrastructure 
in one of America's few remaining heavy industries.
    Rather than submitting for consideration a comprehensive 
plan for relief for the affected countries, the decision seems 
to have been made to just offer them, permanently, a major 
portion of America's heavy industry. Whatever theoretical 
economic policy we're laboring under cares nothing for the 
future, for our future steel industry, or for America's future 
in an unstable world, where tanks and planes might be guided 
electronically but they'll still be made of steel. And this 
economic theory, whose apparent aim is to create a free and 
fair world market for everyone, this economic theory calls for 
just ignoring flagrant violations of trade law.
    Mr. Chairman, one of the stated tasks of the Committee 
today is to examine whether the proposed steel legislation, the 
Visclosky, Traficant, Regula, and Aderholt bills--whether these 
bills are consistent with our obligations under the WTO. But 
how can the United States enforce, and support, a system of 
international trade law that other countries are ignoring? 
That's no way to build a free and fair international economic 
framework. Dumping of steel at below-production-cost is simply 
illegal. By continuing to take no action to protect our 
domestic steel market, we're just incentivizing this dumping to 
continue.
    In our steel industry, 10,000 jobs have been lost 
nationwide. Hundreds of mills and plants have closed in the 
past year and a half. Steel has seen tough times before, as all 
of us here remember. In the 1980s, the American steel industry 
went through a serious and difficult restructuring. And steel 
came back, with tremendously higher labor productivity, new 
equipment, and better management. But the current crisis is 
different--a foreign economic crisis, and illegal and wrong 
foreign trade practices, are forcing a good industry to go bad. 
As I grew up in Pittsburgh, my father and grandfather were 
steelworkers; and these days, both steelworkers and clerical 
workers at the steel companies in my district, my constituents, 
my friends, and friends of my family, have lost their jobs. So 
I see the damage firsthand. It is wrong to stand by and witness 
the wrecking of the steel industry by illegal foreign business 
practices.
    I'm urging you, my colleagues, some of you whose 
communities are farther removed from the steel crisis, please 
listen to our concerns and work to stop steel dumping before 
it's too late. We're going to permanently lose a good industry 
here, a strategic industry, important to our national defense, 
with good jobs and a good product. The idea that America can be 
a pure service economy is not true, it's always been an 
unproven economic theory--America makes things, America makes 
steel, and we're going to continue making steel. I urge the 
Committee to continue its investigation of this crisis, and I 
urge the Members to do everything in their power to resolve 
this situation so that a powerful sector of the American 
economy is not permanently knocked out for the sake of this 
temporary crisis.
      

                                


    Chairman Houghton. Thank you very much.
    Congressman Berry.

 STATEMENT OF HON. MARION BERRY, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF ARKANSAS

    Mr. Berry. Thank you, Mr. Chairman, Mr. Levin. I appreciate 
the chance to speak with you today, although I am not here to 
give you a good report about what is happening in the districts 
that I represent.
    Unfortunately, I am here to share with you the pain of a 
small community, the Blytheville area of Arkansas. I don't 
represent one of the traditional steel districts that you hear 
about. Actually, I represent a part of the country where 
farming is much more common. I grew up on a farm and so did a 
lot of the men and women who now work in the steel plants.
    Before the steel industry came to the Blytheville area, 
there was a U.S. Air Force base located there. It was closed in 
the early nineties. If any of you have lived through the 
closing of a military base, you know how devastating it can be 
to a local economy and a community. These are hard-working 
folks who had the rug yanked by the Federal Government less 
than a decade ago. Jobs were lost and money just disappeared 
from the community.
    I am proud to say that this town has rebounded in a 
remarkable way. The Nucor Steel Company came in and built a 
ministeel plant that created hundreds of high-paying jobs for 
the whole region. Passlode and Maverick and, since then, others 
have joined Nucor in either expanding or building new 
facilities in the area that has resulted in many good jobs.
    These Nucor jobs were averaging about $60,000 a year. In 
the Arkansas Delta, that is a remarkable sum--the median family 
income for the district that I represent is only about $18,000 
per year. That is low, I know, but think about this: the per 
capita income is less than $10,000. That is poverty.
    The steel industry rescued many, many families from living 
at a subsistence level. The residents finally were getting 
properly rewarded for their hard work. These are farmers turned 
steelworkers. They know how to work long, hard hours and get 
the job done. This happens to be a good fit. The way it works 
in this company is that the more steel it has produced, the 
more money the employees take home. I can tell you that, until 
last year, these folks were making an unbelievable amount of 
steel and, for that part of this country, an unbelievable 
living for their families.
    That was before last year. I would like to run through a 
couple of figures that really illustrate what this surge of 
imports has done to one small town in America. As I have said, 
much of the income of the steelworkers in Arkansas is directly 
related to the amount of steel that is produced. If American 
steel is not able to compete with dumped foreign steel, 
obviously there is going to be less steel produced at these 
factories.
    The two main steel producers have about 1,200 employees 
and, as I have said, they average $60,000 a year. Other steel-
related industries in the region employ about a thousand people 
and they average about $30,000 a year. All of these employees 
have seen their incomes go down by 30 percent as a result of 
the unfair trade practices of the foreign steelmakers and our 
government's inaction on their behalf.
    A quick calculation shows that we have seen $30 million 
disappear from this community. I consider that this $30 million 
was stolen from the constituents of the 1st Congressional 
District of Arkansas by the foreign companies. This is not fair 
and it is not right.
    I know that this is not a result of poor performance. The 
plants in Arkansas are some of the most efficient in the world. 
People there had every reason to believe that they were putting 
out the best product at the best price that it could be 
produced. Under normal economic circumstances, this is a 
guarantee of success. Normal circumstances don't include 
illegal action that our government permits to continue.
    This dumped steel should alarm everyone in Washington. I 
have lost a lot of faith in our country's commitment to its 
citizens and that faith can only be restored by taking the 
strongest possible steps to end this dumping. I have met many 
times over the last several months with Representatives from 
the USTR on this issue and continue to hear the same thing--
they are working on the problem. So far, the administration 
that has promised to work on the problem has done nothing for 
the people in the Blytheville area who has lost their jobs and 
continue to suffer because of financial crises overseas.
    We have seen the reports. We know the numbers. We have been 
promised action. But, unfortunately, nothing has been done and 
steps have not been taken to fix the problem. What the 
steelworkers in the district that I represent and all over the 
country need are solid, immediate plans to end the flow of 
underpriced steel that is flooding our markets, not empty 
promises. We simply cannot solve the world's financial crises 
on the backs of the steelworkers of the United States of 
America.
    Mr. Chairman, I know that some of these bills before this 
Subcommittee are rather aggressive in solving this crisis. Some 
have been labeled protectionist. I want to address that very 
briefly. I have always advocated free trade. I worked hard for 
the passage of fast track. I supported NAFTA and GATT in my 
previous position with the administration. I do not come before 
you recommending this legislation lightly.
    My belief in free trade is rock solid but it is predicated 
on fairness. Given a level playingfield, our industry can 
compete with any in the world. But, I would challenge anyone to 
look at these export figures and tell me with a straight face 
that our antidumping laws have not been egregiously violated. 
Illegal actions deserve stern punishment.
    It is my hope that this Subcommittee will look favorably on 
the various bills that have been introduced to address this 
crisis and act quickly to bring them to a vote. Only the most 
aggressive action by the United States will ensure that our 
trading partners do not continue their illegal actions which 
are harming our citizens and our communities. The time has long 
since passed to evaluate and commiserate. The time now is for 
action--strong and decisive action. That is what the 
constituents deserve. This is what I will work to achieve. And, 
again, I thank you, Mr. Chairman, for this opportunity.
    [The prepared statement follows:]

Statement of Hon. Marion Berry, a Representative in Congress from the 
State of Arkansas

    Thank you, Mr. Chairman and Mr. Levin (Ranking Dem).
    I appreciate the chance to speak today, although I am not 
here to give you a good report about what's happening in the my 
District. Unfortunately, I am here to share with you the pain 
of a small community in the Blytheville area of Arkansas.
    I don't represent one of the traditional steel districts 
that you hear about. Actually I represent a part of the country 
where farming is much more common. I grew up on a farm, and so 
did a lot of the men and women who now work in steel factories. 
Before the steel industry came to the Blytheville area, there 
was a U.S. Air Force base located there. It was closed in the 
early 90's. If any of you have lived through the closing of a 
military base, you know how devastating it can be to a local 
economy and the community. These are hard working folks who had 
the rug yanked out by the federal government less than a decade 
ago. Jobs were lost and money just disappeared from the 
community.
    I'm proud to say that this town has rebounded in a 
remarkable way. The Nucor steel company came in and built a 
mini-mill steel plant that created hundreds of high paying jobs 
for the whole region. Since then, another Nucor plant has been 
built nearby, and numerous other steel jobs have emerged as a 
result. These Nucor jobs were averaging $60,000 per year. In 
the Arkansas Delta, that's a remarkable sum--the median family 
income for my Congressional District is only about $18,000 per 
year. That's low, I know, but think about this--the per capita 
income is less than $10,000. That's poverty. The steel industry 
rescued many, many families from living at a subsistence level. 
The residents finally were getting properly rewarded for their 
hard work. These are farm-folks, turned steel workers. They 
know how to work hard, long hours to get the job done. This 
happens to be a good fit. The way it works in this company is 
that the more steel that's produced, the more money the 
employees take home. Let me tell you: until last year these 
folks were making an unbelievable amount of steel, and for that 
part of the country, an unbelievable living for their families.
    That was before last year. I'd like to run through a couple 
of figures that really illustrate what this surge of imports 
has done to one small town in America. As I have said, much of 
the income of the steel workers in Arkansas is directly related 
to the amount of steel that is produced. If American steel is 
not able to compete with dumped foreign steel, obviously 
there's going to be less steel produced at these factories. The 
two main steel producers have about 1200 employees, and as I've 
said they average $60,000 a year. Other steel related 
industries in the region employee another 1000 people and they 
average about $30,000 a year. All of these employees have seen 
their incomes go down by 30% as a result of the unfair trade 
practices of foreign steel makers--and our government's 
inaction on their behalf. A quick calculation shows that we 
have seen $30 million dollars disappear from this community. I 
consider this $30 million dollars stolen from my constituents 
by foreign companies. This is not fair, and it's not right.
    I know that this is not a result of poor performance. These 
plants in Arkansas are some of the most efficient in the world. 
People there had every reason to believe that they were putting 
out the best product at the best price that it could be 
produced. Under normal economic circumstances, this is a 
guarantee of success. Normal circumstances don't include 
illegal action that our government permits to continue. This 
dumped steel should alarm everyone in Washington. I have lost a 
lot of faith in our country's commitment to its citizens and 
that faith can only be restored by taking the strongest 
possible steps to end this dumping. I have met many times over 
the last several months with representatives from USTR on this 
issue and continue to hear the same thing-that they are working 
on the problem. So far, the Administration's promise to ``work 
on the problem'' has done nothing for the people in the 
Blytheville area who have lost their jobs and continue to 
suffer because of financial crises overseas. We have seen 
reports. We know the numbers. We have been promised action. But 
unfortunately, nothing has been done and steps have not been 
taken to fix the problem. What the steel workers in my District 
and all over the country need are solid, immediate plans to end 
the flow of underpriced steel that is flooding our market, NOT 
empty promises. We cannot solve the world's financial crises on 
the backs of our steel workers.
    Mr. Chairman I know that some of the bills before this 
committee are rather aggressive in solving this crisis. Some 
have labeled them protectionist. I want to address that 
briefly. I have always advocated free trade. I worked hard for 
the passage of Fast Track. I supported NAFTA and GATT and in my 
previous position with this Administration, I helped negotiate 
some of the GATT provisions for agriculture. So I do not come 
before you recommending this legislation lightly. My belief in 
free trade is rock solid--but it is predicated on fairness. 
Given a level playing field, our industries can compete with 
any in the world. But I would challenge anyone to look at these 
export figures and tell me with a straight face that our anti-
dumping laws have not been egregiously violated. Illegal 
actions deserve stern punishment.
    It is my hope that this Committee will look favorably on 
the various bills that have been introduced to address this 
crisis and act quickly to bring them to a vote. Only the most 
aggressive action by the United States will ensure that our 
trading partners do not continue their illegal actions which 
are harming our citizens and communities. The time has long 
since past to evaluate and commiserate. The time now is for 
action--strong and decisive action. This is what my 
constituents deserve, and this is what I will work to achieve.
    Thank you again Mr. Chairman. I yield back and will answer 
any questions the Committee may have.
      

                                


    Chairman Crane [presiding]. Thank you, Mr. Berry.
    And, our final witness in the panel is Mr. Kucinich.

   STATEMENT OF HON. DENNIS J. KUCINICH, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF OHIO

    Mr. Kucinich. Thank you, Mr. Chairman, Members of the 
Subcommittee.
    We are here because the policy of the administration on 
international finance and trade is contributing to a crisis for 
American workers and industries. Much of the rest of the world 
is experiencing a severe recession, if not depression. Many of 
these countries have witnessed a dramatic devaluation of their 
currencies, which makes their products very cheap when sold in 
the United States.
    Steel is a case in point. Even if the Department of 
Commerce and the International Trade Commission had not made 
preliminary determinations that foreign nations were illegally 
dumping steel in the United States, foreign steel would still 
underprice American steel because of the devalued currencies of 
those nations.
    This is why section 201 and 301 trade cases are important 
but not adequate. Cheap, foreign steel will continue to 
underprice and take away market share from American steel 
companies and American steelworkers. As this process continues, 
it is reflected statistically in a growing trade deficit. The 
administration's policy response to the global economic crisis 
has been to encourage foreign producers to keep manufacturing 
for sale in the United States. In other words, the centerpiece 
of the administration's policy is to widen the U.S. trade 
deficit. This is contributing to layoffs in many U.S. 
industries and it has reached a crisis level in steel.
    There is no question that the U.S. trade deficit is growing 
at a rapid pace. The goods and services trade deficit grew 
nearly 54 percent last year over the preceding year, according 
to figures compiled by the Economic Policy Institute, and 
reached a level of $169 billion, according to the U.S. 
Department of Commerce. Cheap, foreign steel is flooding the 
American market. Last year, a record amount of foreign steel 
came to the United States. In the third quarter, 54 percent of 
foreign steel was brought to the United States. More steel was 
brought than in the third quarter of the preceding year.
    At the same time, American workers in industries affected 
by foreign imports are losing their jobs. We are here today 
because the steelworkers have been dramatically affected by the 
import of foreign steel made cheap by currency devaluation.
    An estimated 10,000 American steelworkers have already lost 
their jobs. Steelworkers are not losing their jobs because the 
American steel industry is inefficient. In fact, American steel 
is the world's most efficient. The reason American steelworkers 
are losing their jobs is that the price of foreign steel is so 
much cheaper--due to the devaluation of the currencies of those 
countries.
    Steelworkers are not the only workers losing their jobs to 
cheap imports. According to the Economic Policy Institute, 
285,000 American workers lost their manufacturing jobs between 
March 1998 and January 1999. The inflow of foreign products 
made cheap by currency devaluation is having and will continue 
to have a profound, negative effect on the U.S. economy. The 
Financial Times wrote in an editorial on February 1 that the 
U.S. trade deficit is ``unsustainable''--unsustainable because 
record levels of consumer debt combined with mounting American 
job loss and resulting loss of wages and benefits will make it 
impossible for Americans to continue to spend record amounts on 
foreign products.
    Nothing the administration has done to date recognizes that 
only comprehensive action to stem the inflow of foreign steel 
made cheap by currency devaluation will, in effect, work to 
resolve this. On the contrary, members of the administration 
have counseled that America ``stay the course'' and continue 
importing cheap foreign imports at record levels.
    When the administration announced an agreement with Russia 
on Monday, February 22--which shows that the administration can 
do something when it wants to--I am concerned that is the limit 
of what the administration response will be to directly curb 
the inflow of cheap foreign steel. Left at that, this response 
will be inadequate. Similar agreements are needed with Brazil 
and Japan and I am concerned the administration will be 
deterred from taking effective action because of the World 
Trade Organization. Of course, an agreement with Russia is not 
subject to the WTO because Russia is considered a ``nonmarket 
economy.'' Brazil and Japan are full members of the WTO.
    I want to address the objection that our remedy for the 
steel crisis conflicts with the World Trade Organization. I do 
not believe that the WTO is a legitimate reason for the 
administration or this Congress to fail to limit steel imports. 
When Congress passed the WTO Implementation Act in 1994 and 
gave the administration negotiating authority for the WTO in 
1988 and again in 1994, Congress did not do so knowing that the 
cost would be the American steel industry.
    I defy anyone to show me that any congressional committee 
discussed and accepted the demise of the steel industry as an 
acceptable and foreseeable cost of passing fast track and the 
WTO. It simply did not happen because Congress did not 
anticipate that the WTO would prohibit appropriate, quota-based 
limits on imported steel made cheap by currency devaluation. If 
you feel the WTO does not permit America to take effective 
steps to preserve the steel industry from the import surges 
caused by currency devaluation, then it is a clear signal that 
the Uruguay round Agreement was inadequate.
    Why should that stop us? Congress has always and routinely 
refined and amended laws based on experience. In conclusion, we 
should treat the question of the WTO no differently. This 
Subcommittee hopefully will report and Congress should pass the 
Visclosky-Quinn-Kucinich-Ney steel import bill. If the WTO is 
deemed the problem, Congress should choose to preserve the 
steel industry and change the WTO Agreement just as it would 
any other inadequate, defective law.
    Thank you, Mr. Chairman.
    [The prepared statement follows:]

Statement of Hon. Dennis J. Kucinich, a Representative in Congress from 
the State of Ohio

    We are here because the policy of this Administration on 
international finance and trade is contributing to a crisis for 
American workers and industries.
    Most of the rest of the world is experience a severe 
recession, if not depression. Many of these countries have 
witnessed a dramatic devaluation of their currencies, which 
makes their products very cheap when sold in the United States. 
Steel is a case in point. Even if the Department of Commerce 
and the International Trade Commission had not made preliminary 
determinations that foreign nations were illegally dumping 
steel in the U.S., foreign steel would still underprice 
American steel because of the devalued currencies of those 
nations. This is why Section 201 and 301 trade cases are 
important but not adequate. Cheap foreign steel will continue 
to underprice and take away market share from American steel 
companies and American steel workers. As this process 
continues, it is reflected statistically in a growing trade 
deficit. The Administration's policy response to the global 
economic crisis has been to encourage foreign producers to keep 
manufacturing for sale in the U.S. In other words, the 
centerpiece of the Administration's policy is to widen the U.S. 
trade deficit. That is contributing to lay-offs in many 
American industries, and it has reached a crisis level in 
steel.
    There is no question that U.S. trade deficit is growing at 
a rapid pace. The goods and services trade deficit grew nearly 
54 percent last year over the preceding year, according to 
figures compiled by the Economic Policy Institute, and reached 
a level of $169 billion, according to the U.S. Department of 
Commerce. Cheap foreign steel is flooding the American market. 
Last year, a record amount of foreign steel came to the U.S. In 
the third quarter, 56 percent more foreign steel was brought to 
the U.S. than in the third quarter of the preceding year.
    At the same time, American workers in industries affected 
by the foreign imports are losing their jobs. We are here today 
because the steel workers have been dramatically affected by 
the import of foreign steel made cheap by currency 
devaluations. An estimated ten thousand American steel workers 
have already lost their jobs. Steel workers are not losing 
their jobs because the American steel industry is inefficient. 
In fact, the American steel industry is the world's most 
efficient. The reason American steel workers are losing their 
jobs is that the price of foreign steel, though more 
inefficient, is so much cheaper due to the devaluation of the 
currencies of those countries. Steel workers are not the only 
workers losing their jobs to cheap imports. According to 
Economic Policy Institute, 285,000 American workers lost their 
manufacturing jobs between March 1998 and January 1999.
    The inflow of foreign products made cheap by currency 
devaluation is having and will continue to have a profound, 
negative effect on the U.S. economy. The Financial Times wrote 
in an editorial on February 1 that the U.S. trade deficit is 
``unsustainable.'' Unsustainable because the record levels of 
consumer debt, combined with mounting American job loss, and 
resulting loss of wages and benefits, will make it impossible 
for Americans to continue to spend record amounts on foreign 
products.
    Nothing the Administration has done to date recognizes that 
only comprehensive action to stem the inflow of foreign steel 
made cheap by currency devaluation is necessary. On the 
contrary, in recent statements to Congressional committees, 
members of the Administration have counseled that America 
``stay the course'' and continue importing cheap foreign 
imports at record levels. While the Administration announced an 
agreement with Russia on Monday, February 22, which shows what 
the Administration can do when it wants to, I am concerned that 
it is the limit of what the Administration will do to directly 
curb the inflow of cheap foreign steel. Left at that, the 
Administration response will be completely inadequate. Similar 
agreements are needed with Brazil and Japan, and I fear that 
the Administration will be deterred from taking effective 
action because of the World Trade Organization. Of course, an 
agreement with Russia is not subject to the WTO, because Russia 
is considered a ``non-market economy.'' Brazil and Japan are 
full members of the WTO.
    The Administration's policy response to the worldwide 
economic recession is unsustainable. The U.S. cannot continue 
as an ``oasis of prosperity'' while the rest of the world 
experiences economic depression of a magnitude in some 
countries that greatly overshadows our own Great Depression of 
the 1930's. The extent of the economic crisis around the worked 
is so great that even if the U.S. doubles its record trade 
deficit, it will not be enough to pull the rest of the world 
out of its troubles. But it will be enough to send thousands 
more Americans out of work and send the U.S. into a recession 
of our own.
    I want to address the objection that our remedy for the 
steel crisis conflicts with the World Trade Organization. I do 
not believe that the WTO is a legitimate reason for the 
Administration or this Congress to fail to limit steel imports. 
When Congress passed the WTO implementation act in 1994 and 
gave the Administration negotiating authority for the WTO in 
1988 and again in 1994, Congress did not do so knowing that the 
cost would be the American steel industry. I defy anyone to 
show me that any Congressional committee discussed and accepted 
the demise of the steel industry as an acceptable and 
foreseeable cost of passing Fast Track and the WTO. It simply 
did not happen, because Congress did not anticipate that the 
WTO would prohibit appropriate, quota-based limits on imported 
steel made cheap by currency devaluation. If you feel that the 
WTO does not permit America to take effective steps outlined in 
the Visclosky-Quinn-Kucinich-Ney bill to preserve the steel 
industry from the import surges caused by currency devaluation, 
then it is a clear signal that the Uruguay Round Agreement was 
inadequate. Why should that stop us? Congress always and 
routinely refines and amends laws based on experience. We 
should treat the question of the WTO no differently. This 
Committee should report and Congress should pass the Visclosky-
Quinn-Kucinich-Ney steel import bill. If the WTO is deemed a 
problem, Congress should choose to preserve the steel industry 
and change the WTO agreement, just as it would any other 
inadequate, defective law.
      

                                


    Chairman Crane. Thank you.
    And now we shall commence questions. Ralph, could you take 
a seat at the end of that dias for a question from me, please?
    Ralph, H.R. 412 deletes the word ``substantial'' from 
section 201 but does not include WTO replacement language, 
which requires that increased imports cannot be the cause of 
injury when factors other than increased imports are causing 
injury at the same time.
    To me, it seems that, although the WTO does not use the 
word ``substantial,'' it still imposes requirements that mean 
the same thing. Therefore, it appears that H.R. 412 may impose 
an easier standard than the WTO. Under this standard, imports 
can be blamed for injury caused by unrelated factors, which is 
not consistent with the WTO. How do you square your bill with 
the WTO? Do you believe that imports should be blamed for 
injury if other factors are causing the serious injury?
    Mr. Regula. Well, I think the bill very clearly changes the 
text by removing the word ``substantial.'' It is generic so it 
would apply to any product that would substantially injure the 
U.S. economy. That test is more severe that required by WTO.
    My contention would be that the removal of that word does 
not make H.R. 412 inconsistent with the standards that we are 
signed on to as a party to the GATT Agreement.
    Chairman Crane. So, in your estimation, you are not 
weakening any of the existing----
    Mr. Regula. No, I think H.R. 412 is consistent with the 
agreement that we have under international law. I think that 
the present 201 requirement is more severe than that required 
by virtue of our membership in the WTO and part of the GATT 
Agreement.
    Chairman Crane. Commerce has recently implemented a program 
where it releases steel trade statistics on an expedited basis 
and the information is released only 2 weeks later than it 
would be under H.R. 412. What do you think that Commerce 
Department might be lacking that the monitoring program 
provides and do you think that the Commerce program can be 
modified to meet those needs?
    Mr. Regula. I think it would be and I think that they are 
removing--in response to not only my legislation but Mr. 
Visclosky's and others'--to be more responsible, more 
responsive to the impact of imports and I believe that we have 
the mechanisms in today's world to monitor the inflow and the 
surges. That's a part of the problem, these surges.
    And, therefore, that is the reason we have this requirement 
in the bill to provide a system that gives us real-time, quick 
information on surges because otherwise the excessive dumped 
imports are here before people know. For that matter, right now 
there is steel piled up in warehouses that goes back prior to 
the imposition of tariffs on Brazil and Japan.
    Chairman Crane. Thank you very much and next I would like--
is Peter Visclosky still here?
    Peter, if you could jump up there. If we pass your 
legislation, aren't we improving the condition of the steel 
industry on the backs of our downstream users who employ U.S. 
workers, our exporters and our consumers.
    Mr. Visclosky. Absolutely not, Mr. Chairman. The fact is, 
that hot roll today costs less per ton in real hard dollars 
than they did in 1990. As many of the panels suggested, as well 
as people on the dias earlier in the day, the integrated U.S. 
producers are world class and are cutthroat relative to the 
competition against one another.
    Some of those integrated facilities are U.S. domestic 
companies. Some are wholly owned subsidiaries of foreign firms. 
That competition is real. Additionally in the United States of 
America, you also have very tough competition between those 
integrated firms, that in many instances along this table, are 
in States like Ohio, Pennsylvania, Michigan and Indiana, that 
are competing with firms in States like Arkansas, as Mr. Berry 
testified. Those steel prices for hot roll today wouldn't be 
less 9 years later in real dollars if that competition wasn't 
real. So we have got to get over this idea that this is going 
to be inflationary and we are going to hurt someone.
    I would also point out that under the Visclosky-Quinn bill, 
you also still provide a level of imports that represent one 
out of every four tons of steel sold in the United States. So 
you still, on top of all of that very real hard competition 
have a quarter of that still represented by the export market 
that is fairly traded. Nobody here today that I heard 
complained about that other 25 percent of the steel coming in, 
36 percent of which is bought by the steel companies 
themselves.
    Chairman Crane. H.R. 506 proposes a quota on U.S. steel 
imports. How much of a decrease would this be in the amount of 
steel available in the U.S. market? Would U.S. production be 
able to make up the difference in all product categories?
    Mr. Visclosky. Yes, sir. Because what we are simply asking 
is that the levels return to where they were when steel was 
fairly traded in July 1997. Figures indicate that capacity 
utilization today is down from where it was and that our 
domestic firms can meet that competition.
    Chairman Crane. There has been no increase in demand.
    Mr. Visclosky. Oh, we can meet an increase in demand. I can 
take you to five mills in northwest Indiana, and every Member 
on this panel can take you to mills in their congressional 
districts where there is underutilized capacity and also steel 
that is onsite in those plants that cannot be sold because of 
unfairly traded steel.
    So as far as increased demand, we have inventories in all 
of our plants that we would love, the steelworkers would love 
that steel sold. We will make all the steel you need, we'll 
make all the steel the auto producers need, we'll make all the 
steel anybody in this country needs in these U.S. plants.
    Chairman Crane. Mr. Levin.
    Mr. Levin. Thank you, Mr. Chairman. To all of you, this has 
been an unusually broad and impressive array. Most of you come 
from areas with steel production or related industries. I think 
one message we need to send forth is that the issues you raise 
relate vitally to steel, but also to other areas actually or 
potentially in this country, because most districts do not have 
much steel production in them, but they have production related 
to it or areas of activity where there have been or could be 
similar problems.
    I think, Mr. Regula, your response to the Chairman was as 
important as Mr. Visclosky's. I think clearly our 201 standard 
is more stringent than allowed by the WTO. Also, I think 
whether your technique is the exact one or not, we need a much 
better monitoring system. There have been proposals for 
licensing, for example, which would clearly bring about a 
better information flow.
    We have other panels. Maybe we should therefore go on so we 
finish. Yesterday we didn't finish or the day before until 8 
here. I don't think we want to do that today. But let me just 
say one other thing to each of us.
    I am not sure we can devise a system where foreign policy 
or foreign economic policy or defense considerations are made 
irrelevant to trade considerations. That may not be workable or 
wise, but the problem has been that those considerations often 
dominate and snuff out considerations of trade and economic 
impact in this country.
    But one other thing. Even if there weren't a defense or 
security issue here or foreign policy issue, there are numerous 
people within our midst who would still say we should do 
nothing about this surge of steel imports. We need to talk 
through that issue because there are lots of people who would 
argue that any action against this kind of a surge will hurt 
much more than it will help. Then they automatically roll out 
the label that we know.
    So we have this original barrier to get over, whether this 
kind of a predicament isn't worthy of action, which I think it 
is.
    Mr. Buyer.
    Mr. Buyer. I want to associate myself, Mr. Levin, with some 
of your comments. There is such synergy between our domestic 
policy, our trade policy, our national security policies, that 
we cannot treat them each in its own department. So when it's 
the responsibility of the President to lay out the national 
security interests of this Nation, he then lays out a national 
military strategy to accomplish those objectives, whether it is 
protecting our own trade routes or in the enforcement of our 
alliances and agreements around the world.
    But if we are going to maintain the status of a world 
superpower, we have to ensure that when there is a vital 
industry that is important to achieve those objectives, we have 
to take some special caution in order to protect that industry. 
So take steel as the example. It is so vital to our defense and 
being able to have power projection capabilities around the 
world to rapidly respond to whatever crisis. So long as we 
maintain a two major regional conflict scenario, we have to be 
able to have force projection, whether it is by air or by sea, 
let alone when our soldiers hit the ground, be able to have the 
proper equipment to fight and win the Nation's wars. That is 
why I associate myself, Mr. Levin, with your comment.
    Mr. Levin. Let me just respond quickly, because we have 
been through this for 15 or 16 years, where foreign policy 
considerations or national security considerations prevent our 
looking at the economic impact within the United States, even 
if that product, say machine tool or automobile or textiles, or 
whatever it is, doesn't have any direct defense connection.
    I don't think we can have a system where defense foreign 
policy considerations are made irrelevant. But we must have a 
system where they don't automatically predominate and end the 
need for us to take action.
    Mr. Kucinich. Mr. Levin, I would like to state that we have 
to make sure our priorities are straight here. That is, that we 
can help the world as long as the United States is strong, 
which means our steel, automotive, and aerospace industries are 
strong. When we see trade adversely affecting our national 
defense and our national economy, I believe it is our job to, 
in the historic sense, to promote the common welfare and 
provide for the common defense, and correct our trade policy 
accordingly.
    I think when we start using foreign policy considerations, 
where we are more worried about what is happening in other 
parts of the world than we are worried about what is happening 
with our own people here, we are going in the wrong direction 
and we are undermining support for ourselves and what we try to 
do in this Congress. The Congress loses credibility with the 
American people.
    Mr. Levin. I think you are wise, you are right to look at 
this in the more global way, even if you and I might not come 
out the same place every time. What we have failed to do is to 
look at trade issues in a broader sense. We need to do that.
    Thank you, Mr. Chairman.
    Chairman Crane. Mr. Houghton.
    Mr. Houghton. Thank you, Mr. Chairman. Strange. In the last 
year, there has been one 201 filing. That was on steel wire 
rod. There have been no 301s. Why is that? I mean this didn't 
happen yesterday. This has been coming. We have seen it coming. 
All of us who have been through situations like this totally 
identify with you. Why haven't we used the government?
    Now you can say well, the last person out of the Oval 
Office is the Secretary of State and Secretary of the Treasury. 
They are looking at the macro issues and they never listened to 
the U.S. Trade Representative and the Department of Commerce, 
but they are there. Other people have used that. Maybe you can 
help me on the answer there.
    Mr. Regula. If I may, Mr. Houghton, I think part of the 
reason is that the test is so severe. That is what we are 
suggesting, that we make the test consistent with WTO, that by 
removing the word ``substantial,'' and then I think you would 
find more filings because of course the burden of proof is 
substantial even under the language as I propose in the bill. 
But at least it makes it doable.
    Mr. Houghton. As far as the 301 is concerned, an individual 
union or a company cannot file this. It has to be filed by the 
administration. However, the case could be brought by an 
industry, a company, a union, and just the fact that you have 
put the pressure and submitted some sort of a statement or a 
brief, usually sends a shot across the bow of those people who 
are violating our trade laws.
    Mr. Regula. Well, I think that section 301 has been a time 
problem because by the time you get action, you may be 
bankrupt. In the meantime, people can't pay their mortgages.
    Mr. Houghton. I understand that. I think your changing 
wording is very good. I think that is great. But the point is 
that we don't have it now. We have had these other things and 
they haven't been used. Maybe you have got some other ideas.
    Mr. Visclosky. Mr. Houghton, the only thing I could suggest 
is that you have the companies as a panel later as well as the 
members of organized labor, and you might ask them that 
specific question because it is more or less addressed to them.
    I also do think, however, we are all creatures of habit. As 
Mr. Regula suggested, we can talk about a shot over the bow, we 
can talk about a time delay, but where you are in a plant, you 
are on a specific line, and you are making a product. It is 
that product that you cannot now sell. I think, again, the 
weapon of choice in these issues has been tending to go after 
that specific target that has hurt you in that line, in that 
product, in that plant. I think that, historically, has been 
the way the industry, as well as labor, has approached the 
problem.
    I would simply add onto that, I think that's why, and you 
and Mr. Levin earlier had talked about a global approach and a 
number of people on the panel, because one statistic that I 
would refer the Subcommittee to is the action against Japan, 
for example, was taken on hot roll. But for the first complete 
7 months of 1998, if you look at structural steel from Japan, 
you already see that shifting in product line. Now you have a 
35-percent increase in structural steel from Japan because you 
have gone after hot roll, which I guess in a way reconfirms 
your earlier point that you do have to look at this as a whole. 
But they are being hurt by products.
    Mr. Houghton. Yes. I guess the only, and then I'll be quiet 
here, but I guess the only thing that I am suggesting is that 
we have lots of different remedies. The problem is the 
administration, it's not just a Democratic administration, it's 
gone on for years, they don't listen very well. They are not 
sensitive because they are looking at sort of hands-across-the-
sea global issues. But it's there and it's used. It may not be 
the most effective and it may not be timely. People may be in 
trouble if they wait too long, but it's there. I really think 
we ought to use absolutely everything that is available out 
there.
    Thanks, Mr. Chairman.
    Chairman Crane. Mr. Coyne.
    Mr. Coyne. Thank you, Mr. Chairman. I just want to follow 
up on what Mr. Houghton has raised. It is amazing that you 
don't see any of these filings of the 201. The recommendation 
of Mr. Visclosky is I think well put; why the aggrieved parties 
in the steel industry have been reluctant so far to file 201 
filings. With representatives of the steelworkers and the 
companies coming up later on, I think that is going to be a 
very interesting question to put to those people. Thank you.
    Chairman Crane. Ms. Dunn.
    Ms. Dunn. Thank you very much, Mr. Chairman. My questions 
are generated by a visit that Alan Greenspan paid us a couple 
of weeks ago in which he mentioned in response to a question on 
this particular topic from somebody on our Committee, that it 
would be dangerous to move toward any legislation such as 
yours, Mr. Visclosky, and that because of the possibility of 
starting a trade war, and that possibly the better approach 
would be to provide additional adjustment assistance to the 
workers in the industry.
    Now I know that the administration is following this 
advice. I guess I would just like to ask you what are they not 
doing that you would like to see them do?
    Mr. Visclosky. Ms. Dunn, I would be happy to submit to you, 
as well as the Chair and every Member of this Subcommittee, a 
detailed two-page memorandum that I did provide to the 
Secretary of Commerce yesterday, as well as to the Trade 
Ambassador, as to the very specific actions I think that they 
need to take.
    I would, because you have raised it in relationship to my 
bill, along with Mr. Quinn and I think just about everybody at 
the table is a cosponsor of it, the fact that the Japanese 
exports to the United States significantly declined in December 
and January from November levels, that is your evidence that 
this is absolutely a controlled market. Those decisions being 
made in Japan are being made in the same context that Mr. 
Greenspan raises his concern.
    I would further suggest that the continent of Europe, the 
last time I looked, is much closer to Russia than it is to the 
United States of America. Somehow, none of that illegally 
traded steel has made its way into Europe. If Mr. Greenspan is 
so concerned about an international global meltdown, if we all 
are, he ought to go talk to the Europeans and straighten them 
out, and make sure that if they want to protect the globe from 
that meltdown, they should assume part of the responsibility 
too. It is a sad day in this country if we have to sit here and 
say we can't enforce specific statutes against specific 
products that are breaking our law because of potential 
retaliation or a trade war that would develop.
    As far as trade adjustment, I must tell you, and I 
appreciate the good intentions, I appreciate the idea that we 
should improve these statutes. In the congressional district I 
represent, from 1977 to 1987, 38,000 people lost their jobs so 
that two steelworkers per hour could make a ton of steel, as 
Mr. Klink indicated earlier. That is a real fact. I do not know 
one of those 38,000 people that ever got a real job because of 
trade adjustment. Every hour this Subcommittee and every hour 
this administration spends on trade adjustment is an hour you 
are not spending getting that illegally traded steel out of our 
market.
    I don't want to train somebody for a low paying, no health 
insurance, no pension job. I want this Subcommittee, I want 
this Congress, and I want this administration to stop that 
steel.
    Ms. Dunn. Let me just quickly ask another question related 
to the same sort of thing to any Member on the panel. One of 
the messages the United States is trying to convey to countries 
who are now experiencing economic and financial crises over the 
last 1\1/2\ years is the importance of open markets to create 
stable economies. Wouldn't it be hypocritical for the United 
States to ask countries to take steps to open their markets 
while we take steps to close a sector of ours, and might it not 
lead into some vice versa situation over the next few years?
    Mr. Buyer. May I respond to that?
    Ms. Dunn. Certainly.
    Mr. Buyer. This is an issue about illegal dumping, the 
violation of our present trade laws. That is why I believe that 
Mr. Visclosky's bill would be the bill of last resort, that is, 
quotas.
    Now, in his level of frustration, he has said, ``Steve, I 
have had it. We have to do it now.'' That is where I support 
Mr. Regula. But if I can't take it any more, maybe it is 1 week 
or days or months with the administration, then I am going to 
be right here with Mr. Visclosky. So I would say, Ms. Dunn, 
that is the issue.
    If I can comment for a second on Mr. Houghton. Amo, I have 
to agree with you. The enforcement of laws in this country 
requires vigilance, not only by government, but also by 
victims. Our present system though is woefully lacking of 
vigilance on behalf of government, and relies upon victims to 
come forward and make their filings. That is a wrong system.
    So the vigilance on behalf of government, whether it is the 
executive or the legislative, should lead the way, not a system 
that requires on the victims to beg of their government to 
enforce the laws.
    Mr. Regula. I would just comment to Congresswoman Dunn that 
we are not talking about closing the market. We are really 
talking about having a fair level field. We are saying that we 
want to have the same rules apply on imports that apply to us 
as our Nation exports. I think that is only fair.
    I would hope this Subcommittee would look at the laws on 
illegal dumping and countervailing duties to see if they could 
not have a more rapid response, because it is approximately 8 
months to 1 year before there is action taken. A lot can happen 
adversely to both an industry and to its work force in that 
period of time.
    Chairman Crane. Mr. Jefferson.
    Mr. Becerra.
    Mr. Becerra. Thank you, Mr. Chairman. Thank you, to each 
one of my colleagues who has taken the time and actually sat 
through and stayed to respond to some of the questions.
    I really have only one question because I know that we do 
want to move on to the other panels, and I do not want to keep 
Members any longer than they have already been here. It relates 
to some of the colloquy that occurred right now to the 
questions asked by the gentlelady from Washington.
    Mr. Visclosky, your bill would return the levels of import 
to where they were as of mid-1997-July 1997. Give me a sense, 
and maybe you all agree on this or maybe there is some 
difference. When would we feel that our foreign partners are 
responding favorably to the pressures we are applying short of 
legislation? The administration I guess believes that they can 
ask these countries to voluntarily curtail their exports to us, 
but at what point would we feel comfortable that, in fact, 
those countries are no longer intending to illegally dump their 
steel in our market? Is there a level? Or do we need to get 
back to the mid-1997 level before we feel comfortable that in 
fact they are now intending to comply with fair trade?
    Mr. Visclosky. Mr. Becerra, I would say that we have to get 
back to where we were in July 1997. It was not an accident that 
exports from Japan increased 141 percent, or that from Russia 
they increased 162 percent, or Korea, 102 percent. Or that as 
of January of this year, Indonesian exports are up 890 percent 
from that month's level.
    I would also point out that in the legislation there is a 
3-year limitation. I would hope, and I think all of us would, 
that we see real hard numbers. There is a proposal out to 
monitoring, so that we have an early warning system. I am a 
cosponsor of Mr. Regula's bill. That is a long-term problem. 
But it is almost 3. Since noon now, you have had two 
steelworkers lose their jobs today. We have to do something.
    Mr. Klink. Mr. Becerra, if I could just chime in. I think 
that we would know that when they stopped dumping their steel 
at less than the cost of production. That is really what has 
occurred here. We have to have that monitoring ability.
    We were talking, and I have to agree with my dear friend 
Mr. Buyer. Imagine if we ran a country of laws, where a rape 
victim or a robbery victim had to go out, catch the criminal, 
and prove the case against them, that we didn't have a police 
department that would go out, or a Justice Department that 
would go out. That is really what we have with trade laws. The 
victims themselves have to go out and catch the culprits and 
then prove the case. Then you have got a prolonged period, 
whether it's section 201 or section 301, of year upon year. In 
the meantime, you have to be sitting there as a board of 
directors, as a CEO, chief executive officer, as a CFO, chief 
financial officer, of that corporation saying look, I have got 
payroll, I have got capital investment decisions to make, I 
have got market share that I have got to worry about. In the 
meantime, you are doing what it is that the Congress and the 
Department of Commerce and all the trade officials of this 
country should actually be doing for you.
    We need to set that mechanism up so that we don't depend on 
the industries themselves or the labor unions to do that 
policing. That is the problem we find ourselves in.
    Mr. Becerra. Actually, Mr. Klink, if I could follow up with 
you on that, can we, and I don't know the answer to this, can 
we ascertain whether or not a country is exporting its steel 
below cost? Are we able to ascertain that?
    Mr. Klink. I think that it was very evident to the 
industries themselves, I think that we do have mechanisms in 
place where we know it. I felt personally, and I can't speak 
for all the Members of this panel, but I felt personally that 
it took the Department of Commerce a prolonged period of time. 
We knew well over 1 year ago. The steelworkers and the steel 
industry knew, but it still took the Department of Commerce 
until I think it was October or something, until they finally 
made a firm determination. I don't know why it has taken that 
long.
    But I think that it is very evident to the industries 
themselves, they know when the steel is coming in, and if it is 
being sold at a price that costs less than the cost to produce 
it, they know instantly.
    Mr. Becerra. So we may not know the precise costs in Japan, 
but we can certainly determine when they are dumping and going 
beyond selling at their cost.
    Mr. Klink. Absolutely. Because they know first of all the 
technologies that these people have. They know what the 
salaries are. They know what it costs to transport that steel, 
whether it is hot roll or specialty steel, whatever it happens 
to be, from point A to point B, and if they are bringing it 
here. So all of those things can be figured it out. It should 
not really take a prolonged period of time for us to make that 
determination. We should have a mechanism where we can act a 
lot quicker. I think that is what some of these pieces of 
legislation are attempting to do.
    Mr. Becerra. We probably need to go beyond Mr. Visclosky's 
proposal. We have to be vigilant to make sure that from here on 
in, we are watching so that the next time we don't have to go 
after them in this way. Rather, we are ready to say to them act 
now before it gets any worse.
    Mr. Klink. And it's not, Mr. Becerra, it is not just steel. 
I mean steel is our case in point. It has propelled us to where 
we are giving it this kind of attention. But it could happen 
with any other industry.
    Mr. Regula. I think this makes a good point. That is, that 
I would hope the Subcommittee, as a result of this hearing, 
will take an overall look at our trade laws and policies in 
this Nation, because this problem is not going to just be 
restricted to steel. It could be any number of things. We are 
the market of choice because of the hard currency that other 
countries need. So I hope you will prospectively take a look at 
it.
    I think the other comment I would make, and I think many of 
our panelists would make this, trade policy should not be 
driven solely by foreign policy and military policy. It is not 
fair to do those policies on the backs of American workers. So 
I think there needs to be a balance. That is the responsibility 
that this Subcommittee has.
    Mr. Becerra. Thank you, gentlemen.
    Thank you, Mr. Chairman.
    Chairman Crane. Mr. Houghton has asked permission for one 
final question.
    Mr. Houghton. Yes. I would just like to ask Mr. Visclosky 
this. I don't know whether you feel we ought to try to be World 
Trade Organization compliant. I happen to think so, because if 
we don't, we unravel something which we have been working for a 
long time.
    But in order to have your legislation acted on, as I 
understand it, and I'm sure you know more about this than I do, 
that you just can't submit a bill to have it passed in the 
House. You must have someone submit a 201 filing. That must 
then go to the ITC, International Trade Commission. That must, 
if there is injury proved, which I am sure there would be, then 
that must go to the President, and he can act on it. If he 
doesn't act on it, then you can have the legislation.
    So I hope that process, if you really believe in this, is 
taking place.
    Mr. Visclosky. Mr. Houghton, a couple of things. One, a 
number of countries we are having a problem with are not 
members of the WTO. So for them, it is a moot issue.
    Mr. Traficant testified earlier that he believes under 
article 21 of the GATT that as far as the necessity of a 
healthy domestic steel market for the national defense, that it 
would be exempted in any event.
    Last, the only----
    Mr. Houghton. Yes, but Mr. Traficant also suggested that we 
put a total break on everything. I am not sure that is the 
great signal we want for the rest of the world.
    Mr. Visclosky. In a sense, the administration has done what 
Mr. Traficant suggested and what the House did in a resolution 
in October of last year in coordination, essentially, with the 
terms of the legislation we have discussed today as far as the 
agreement they have entered into with the Russians.
    But the third point I would make is someone is also going 
to have to file a complaint. I am old enough to remember the 
black box that David Stockman had. If you were in that box, you 
were stuck. What I would like to see with this legislation 
passed by the House, in a sense is put everything in a box and 
not let anybody out until we solve the problem. If they knew 
they had 60 days, I think we are the best tool the 
administration could have at their disposal for fixing this 
problem now in a WTO compliant fashion.
    Chairman Crane. Well, let me express appreciation to all of 
our panelists, our Members, our colleagues, and appreciate your 
participation and endurance.
    Now, I would like to let you exit and welcome Hon. 
Secretary of Commerce, our distinguished colleague from 
Chicago, Mr. Daley.
    I have just been informed Mr. Secretary, that our other 
distinguished fellow Chicagoan has arrived. So, Charlene, if 
you would be so kind as to take a seat next to Bill. Then we 
shall proceed with Secretary Daley's testimony, and then yours. 
If you can try and keep the verbal testimony abbreviated about 
5 minutes, any written statements will be made a part of the 
permanent record.
    With that, will you proceed, Bill.

STATEMENT OF HON. WILLIAM M. DALEY, SECRETARY, U.S. DEPARTMENT 
                          OF COMMERCE

    Mr. Daley. Thank you very much, Mr. Chairman, and Members 
of the Subcommittee. I appreciate the opportunity to appear 
before you.
    As you know, President Clinton and his entire 
administration shares the concerns of this Subcommittee. He is 
most dedicated to ensuring that America's steel industry, our 
steelworkers and their families are not hurt by unfair trade 
practices and import surges. The President has made this one of 
his top priorities, and all of us in the administration have 
been actively involved in putting together a swift and 
effective response.
    Before I describe to you the substantial efforts made by 
the Commerce Department, I would like to announce some 
encouraging news. Just this morning the Commerce Department 
released the preliminary steel import statistics for January. 
Let's look at how January compares with November 1998, when 
steel imports reached record highs, and the last month before 
our critical circumstances determination began to have an 
impact.
    Hot-rolled steel imports from Russia, Japan, and Brazil, 
the three countries subject to the dumping investigation, fell 
dramatically. Imports from Russia fell from over 600,000 metric 
tons in November, 1998, to less than 11,000 tons in January 
1999. Hot-rolled imports from Japan also plummeted from over 
400,000 tons in November, to less than 16,000 tons. Imports 
from Brazil fell from 64,000 tons to less than 16,000. These 
three countries combined, fell by 96 percent from the record 
levels of November. Worldwide imports of hot-rolled steel fell 
by 70 percent from November to January.
    These figures show that worldwide imports of all steel 
products dropped by 34 percent compared with November 1998. 
Total steel imports from Japan and Russia plunged from more 
than 1.4 million tons to less than 425,000 tons, a drop of over 
70 percent.
    These numbers are encouraging. They show that tough 
enforcement of our trade laws does work. However, we recognize 
that 1998 was a record year for imports, and that 1 or 2 months 
of good data do not make a trend. Let me assure you, Mr. 
Chairman, that we will not relent in our determination to 
ensure that the United States does not become the dumping 
ground for unfairly traded steel.
    This administration has made fast and strong enforcement of 
the trade laws a key component of our steel action. First, we 
established a new policy on critical circumstances, which we 
applied for the first time in the hot-rolled steel 
investigation. This was, in our opinion, a key factor in the 
substantial decline of hot-rolled imports in December/January. 
Under this new policy, Commerce can issue determinations of 
critical circumstances prior to preliminary dumping 
determinations in order to respond to import surges.
    In November, we made preliminary critical circumstances 
determination in that hot-rolled cases in Japan and Russia, 
almost 3 months before the preliminary determination was due. 
This put the importers on notice earlier than ever before, that 
they could be liable for retroactive dumping duties. On 
February 12, we issued preliminary determinations on hot-rolled 
steel from Japan and Brazil, finding dumping margins ranging 
from 25 to 71 percent, as well as subsidy margins for Brazil. 
We made a commitment to expedite these cases and have shifted 
resources within our department so we could provide relief to 
the industry and workers as soon as possible. The 
determinations were issued in an unprecedented 25 days early.
    On Monday of this week, we reached two proposed agreements 
with Russia that will significantly reduce imports of Russian 
steel, and provide effective relief to the industry and 
workers. The first agreement would suspend the hot-rolled steel 
dumping investigation in favor of a three-part deal. First, 
there will be a 6-month moratorium on imports, which is 
intended to offset the recent surge. As a result, total 1999 
Russian hot-rolled steel imports will be less than 345,000 
metric tons, a reduction of almost 98 percent from the 1998 
import levels of 3.8 million metric tons.
    Second, starting in 2000, there will be an annual quota of 
hot-rolled steel of 750,000 metric tons. This is equivalent to 
the presurge noninjurious 1996 import levels, and represents a 
78-percent reduction from 1998.
    Finally, this agreement sets a minimum price for Russian 
steel, high enough to ensure that U.S. prices are not forced 
down. As required by law, we also issued the preliminary 
dumping determination on Russian hot-rolled steel, finding 
margins of 70 to over 200 percent.
    The second agreement is a comprehensive agreement 
restricting imports of other Russian steel products to the 
United States back to 1997 levels. This agreement will provide 
the steel industry and workers with additional immediate relief 
from imports of other Russian steel products, covering 16 steel 
products other than hot-rolled steel, such as cold roll, 
galvanized sheet, wire rod, and pig iron. The comprehensive 
agreement will prevent surges in other products. In addition, 
it will deter circumvention of the hot-rolled agreement by 
preventing the Russians from shifting to other steel products 
to get around their quota. Together, the two agreements when 
combined with the 1997 steel plate agreement, will reduce 
overall imports of Russian steel by almost 68 percent.
    Early last year in response to the Asian financial crisis, 
we at the Department of Commerce established an import 
monitoring system to watch for import surges and falling 
prices, particularly from import-sensitive industries such as 
steel. Building on this approach, the President's steel action 
plan, announced in January, put into place new guidelines for 
the release of preliminary import statistics to ensure that the 
industry and workers had accurate information as early as 
possible. The Commerce Department took the unprecedented step 
of publicly releasing preliminary steel import statistics 
almost 1 month before the release of their official statistics. 
The release this morning of steel import data makes the second 
time we have done this.
    In addition, the Commerce Department is expediting the hot-
rolled steel cases and issuing a new policy on critical 
circumstances. Last November, the Commerce Department issued 
strong new countervailing duty regulations that strengthen our 
ability to combat unfair subsidies. Overall, the Commerce 
Department is currently enforcing over 100 antidumping and 
countervailing duty orders on steel. We currently have 31 
ongoing antidumping and countervailing duty investigations on 
steel products.
    Mr. Chairman, the President and his entire administration 
remain deeply concerned about the recent plant closings and 
layoffs in the steel industry. We are all committed to 
continuing these efforts to ensure a long-term solution for our 
industry, the steelworkers of America, and their families. That 
is the end of my statement.
    [The prepared statement follows:]

Statement of Hon. William M. Daley, Secretary, U.S. Department of 
Commerce

    Thank you, Mr. Chairman. President Clinton shares the 
concerns raised by this Committee, and he is dedicated to 
ensuring that America's steel industry, our steel workers, and 
their families are not hurt by unfair trade practices and 
import surges. The President has made this one of his top 
priorities, and all of us in the Administration have been 
actively involved in developing a swift and effective response.
    Before I describe for you the substantial efforts made by 
the Commerce Department, I would like to announce some 
encouraging news.

                January's Preliminary Steel Import Data

    Just this morning, the Commerce Department released the preliminary 
steel import statistics for January. Let's look at how January compares 
with November 1998--when steel imports reached record highs, and the 
last month before our critical circumstances determination began to 
have an effect. Hot-rolled steel imports from Russia, Japan, and 
Brazil, the three countries subject to the dumping investigation, fell 
precipitously. Imports from Russia fell from over 600,000 metric tons 
in November 1998 to less than 11,000 tons in January 1999. Hot-rolled 
imports from Japan also plummeted, from over 400,000 tons in November 
to less than 16,000 tons. Imports from Brazil fell from more than 
64,000 tons to less than 16,000 tons. The three countries combined fell 
by 96% from the record levels in November. Worldwide imports of hot-
rolled steel fell by 70% from November to January.
    The January figures show that worldwide imports of all steel 
products dropped by 34% compared with November 1998. Total steel 
imports from Japan and Russia plunged from more than 1.4 million tons 
to less than 425,000 tons--a drop of 70%.

                       Enforcement of Trade Laws

    These numbers are encouraging. They show that tough 
enforcement of the trade laws works. However, we recognize that 
1998 was a record year for steel imports, and that one or two 
months of good data do not make a trend. Let me assure you that 
we will not relent in our determination to ensure that the 
United States does not become a dumping ground for unfairly 
traded steel.
    This Administration has made fast and strong enforcement of 
the trade laws a key component of our steel action plan. First, 
we established a new policy on critical circumstances., which 
we applied for the first time in the hot-rolled steel 
investigations. This was a key factor in the decline of 
hotrolled steel imports in December and January. Under this new 
policy, Commerce can issue determinations of critical 
circumstances prior to the preliminary dumping determination in 
order to respond to import surges. In November, we made 
preliminary critical circumstances determinations in the hot-
rolled steel cases on Japan and Russia, almost three months 
before the preliminary dumping determination was due. This put 
importers on notice--earlier than ever before--that they could 
be liable for retroactive dumping duties.
    Then, on February 12, we issued preliminary determinations 
on hot-rolled steel from Japan and Brazil, finding dumping 
margins ranging from 25 to 71 percent, as well as subsidy 
margins for Brazil. We made a commitment to expedite these 
cases, and we shifted resources within the Department so that 
we could provide relief to our industry and workers as early as 
possible. These determinations were issued an unprecedented 25 
days early.

                        Russian Steel Agreements

    On Monday of this week, we reached two proposed agreements 
with Russia that will significantly reduce imports of Russian 
steel and provide effective relief to the steel industry and 
U.S. workers. The first agreement would.suspend the hot-rolled 
steel dumping investigation in favor of a threepart deal:
     First, there will be a six-month moratorium on 
imports, which is intended to offset the recent surge. As a 
result, total 1999 Russian hot-rolled steel imports will be 
less than 345,000 metric tons. This is a reduction of almost 90 
percent from the 1998 import level of 3.8 million metric tons.
     Second, starting in 2000, there will be an annual 
quota on hot-rolled steel of 750,000 metric tons per year. This 
is equivalent to the presurge, non-injurious 1996 import 
levels. It represents a 78 percent reduction from 1998 levels.
     Finally, the suspension agreement sets a minimum 
price for Russian steel, high enough to ensure that U.S. prices 
are not forced down.
    As required by law, we also issued the preliminary dumping 
determination on Russian hot-rolled steel finding margins 
ranging from 70 to over 200%.
    The second agreement is a comprehensive agreement 
restricting exports of other Russian steel products to the 
United States to 1997 levels. This agreement will provide the 
steel industry and U.S. steelworkers with additional immediate 
relief from imports of other Russian steel products.
     It covers 16 steel products other than hot-rolled 
steel, such as coldrolled steel, galvanized sheet, and wire 
rod. It also covers pig iron.
     The comprehensive agreement will prevent surges in 
other steel products. In addition, it will deter circumvention 
of the hot-rolled suspension agreement by preventing the 
Russians from shifting to other steel products to get around 
the quota.
    Together, the two agreements, when combined with the 1997 
steel plate agreement, will reduce overall imports of Russian 
steel mill products by almost 68 percent in 1999 compared to 
l998 import levels.

             Early Warning System to Monitor Import Trends

    Early last year, in response to the Asian financial crisis, 
the Commerce Department established an import monitoring system 
to watch for import surges and falling prices, particularly for 
import-sensitive industries, such as steel.
    Building on this approach, the President's steel action 
plan, announced in January, put into place new guidelines for 
the release of preliminary import statistics. To ensure that 
the U.S. steel industry and workers had accurate information as 
early as possible, the Commerce Department took the 
unprecedented step of publicly releasing preliminary steel 
import statistics almost a month before the release of the 
official trade statistics. The release this morning of steel 
import data, which I announced earlier, marks the second time 
we have done this.

                    Other Trade Enforcement Efforts

    In addition to expediting the hot-rolled steel cases and 
issuing a new policy on critical circumstances, last November 
Commerce issued strong new countervailing duty regulations that 
strengthen our ability to combat unfair subsidies.
    Overall, the Commerce Department is currently enforcing 
more than 100 antidumping and countervailing duty orders on 
steel products, and we are currently conducting 31 new steel 
investigations.

                           Bilateral Efforts

    We continue to press the countries accounting for the 
largest volume of imports to end unfair trading practices, 
particularly Japan, which accounts for the largest share of the 
recent import surge. The President put Japan on notice in his 
State of the Union address and in meetings with Prime Minister 
Obuchi that if Japan's exports in 1999 do not revert to their 
pre-crisis levels, the Administration stands ready to take 
further action. Ambassador Barshefsky and I have reiterated 
this message as well in our bilateral meetings. In addition, we 
have pressed Korea to end government involvement in the steel 
industry.
    Finally, we have also issued stern warnings to other 
countries that may be tempted to sell more steel in the United 
States unfairly: we are monitoring imports closely and will 
enforce our trade laws vigorously.

                               Conclusion

    Mr. Chairman, the President remains deeply concerned about 
the recent plant closings and layoffs in the steel industry. We 
are all committed to continue our efforts to ensure a long-term 
solution for our industry and the steelworkers of America and 
their families.
    I would be happy to take any questions
      

                                


    Chairman Crane. Thank you, Mr. Secretary.
    Now, Madam Ambassador.

STATEMENT OF HON. CHARLENE BARSHEFSKY, OFFICE OF THE U.S. TRADE 
                         REPRESENTATIVE

    Ms. Barshefsky. Thank you, Mr. Chairman. Last year steel 
imports rose 33 percent or 9.4 million metric tons over the 
1997 level. The import growth was concentrated in the April 
through November period, during which imports surged 
considerably. While U.S. demand for steel has been very strong, 
the import surge was driven by the sharp drop in demand in 
Asia, and subsequently in Russia, whose exports to Asia were 
displaced and imports to the European Union capped by quotas.
    The excess foreign supply was rushed into the U.S. market 
at fire-sale prices. Commerce Department findings show that at 
least a significant portion of this increase resulted from 
dumping. Price suppression and over supply were evident in the 
U.S. market by fall of last year.
    In a matter of months, imports threatened the stability of 
our domestic industry and the jobs of many of its employees. 
Jobs and families are at stake. This administration realizes 
that. We have listened and we have responded rapidly and 
forcefully. The President has personally committed, as he said 
in his State of the Union address, to ensure that our trading 
partners act fairly, and the policy we have adopted is working.
    The steel report the President sent to Congress on January 
7 is a comprehensive and forceful response. It includes four 
complementary trade policy actions. First, expedited 
enforcement of our laws to address dumping and subsidies. 
Second, bilateral initiatives with respect to the three 
countries which account for the bulk of the import surge. That 
is, Japan, Russia, and Korea.
    Third, strong support for the safeguards law, and a 
willingness to ask for expedited ITC investigations of cases 
brought under that law. Last, the creation of an early warning 
system for steel import monitoring, and active review of 
additional targeted actions that need to be taken.
    Let me say two things about this overall approach before I 
review our work on each of the elements. First is that it is 
producing results, meaningful results. Import volume is down 
considerably from November, reflecting a global reduction in 
exports to the United States of 34 percent. Japan's total steel 
exports to the United States are down 50 percent, Russia's down 
93 percent, Brazil's down 70 percent.
    The decline in total imports of hot-rolled sheet is even 
more dramatic. There has been an overall 70-percent reduction 
from November levels, with Japan's imports of hot-rolled sheet 
virtually stopping. They are down 96 percent. Russia's down 98 
percent, Brazil's 77 percent.
    U.S. capacity utilization on the other hand has risen 
slightly, from about 74.8 percent in December, to 77.2 percent 
over the same months. Although this still remains substantially 
below the rates of 1 year ago, this evidences at least some 
progress. The market share of imports is down from 36.6 percent 
in November, to 29 percent in December, and a further decline 
is anticipated for January. This again is an improvement.
    But most important perhaps, our steel producers have 
cautiously begun to increase prices for hot- and cold-rolled 
steel products. Analysts predict that the increases will likely 
stick.
    Second, the President's action plan operates within the 
framework of domestic law and the international commitments our 
country has made. Both of these are crucial. By working within 
our domestic laws, we ensure a fair and transparent process. By 
remaining true to our international commitments, we prevent a 
cycle of protection and retaliation which would harm working 
families and other sectors, notably steel-intensive 
manufacturing exports, farmers, and ranchers, the latter of 
whom who are also suffering as a result of the Asian financial 
crisis.
    Let me briefly review our actions in the four areas covered 
by the President's plan. First, as Bill Daley has already 
noted, the vigorous and expeditious enforcement of the 
antidumping law by the Commerce Department. Expedited 
investigations have brought relief to U.S. carbon producers in 
record time with retroactive effect 90 days prior to the 
Commerce Department announcement of preliminary dumping 
margins.
    Further cases are now underway. The U.S. steel industry and 
steelworkers have filed additional antidumping and 
countervailing duty petitions with respect to carbon cut-to-
length steel plate. Eight countries are included in that.
    Second, we have made steel a focus of bilateral 
initiatives, with the largest sources of import growth over the 
past year, Japan, Russia, and Korea. As to Japan, last year we 
informed Japan that we had expected its steel exports to revert 
to precrisis levels, and that if such a rollback did not occur 
in short order, the administration would self-initiate trade 
action to ensure a reduction of imports and prevent further 
injury to U.S. steel producers and workers.
    We did not seek agreements from Japan. We simply told them 
what was needed and what the consequences would be of their 
failure to ensure results. We have built on statements by 
Japanese officials that exports are likely to decline. We 
believe we are beginning to see some impressive results.
    We are, in addition, monitoring import trends closely for 
each major product category from Japan. We remain determined to 
act if full reductions are not achieved across the board. As to 
Russia, Secretary Daley announced on Monday a set of agreements 
which roll back imports to precrisis levels, and which will 
ensure stability and predictability for our industry.
    Second, with respect to Korea, we are somewhat concerned 
about the January numbers that were announced today. I am 
sending my deputy, Richard Fisher, to Korea next week. He will 
discuss the steel situation with Korean officials. He will also 
be in Japan and discuss the steel situation further with 
Japanese officials.
    In the meantime, with respect to Korea, as you may know, we 
have already been successful in achieving the closure of Hanbo 
steel, which is Korea's second largest steel producer. The 
company has stopped production of hot-rolled sheets. We have an 
agreement with Korea that the company was sold based on market 
principles. That sale is being managed at arms-length by 
Bankers Trust.
    In addition, we are in active negotiation now with Korea 
with respect to POSCO, Korea's largest steel producer, and the 
world's second largest producer, for the expeditious, complete, 
and market-based privatization of POSCO.
    The President has also reaffirmed his strong support for an 
effective section 201 safeguards provision. He has expressed 
his willingness to ask the ITC to expedite any steel 
investigations under this provision. U.S. industry and workers 
have already filed a petition for relief on steel wire rod 
under section 201 in December of this year, and the 
International Trade Commission is now investigating that 
petition.
    Finally, as Secretary Daley has said, we have created an 
import monitoring system to offer an early warning of import 
trends and surges to industry and government. We will be 
looking carefully at import trends and dealing with countries 
on a bilateral basis to ensure that they do not fill any 
perceived gap in import supply occasioned by a downturn in 
imports as a result of case filings.
    In summary, we believe we have been responsive to you, to 
the steel industry, and to steelworkers. We intend to provide 
relief from unfair trade, and to find longer term solutions to 
the issues at the root of the crisis. We must ensure that steel 
firms and steelworkers do not bear the full weight of the Asian 
financial crisis. At the same time, we remain committed to work 
within the framework of American law and international 
commitments, helping us to prevent a cycle of 
counterretaliation, which could harm working people and 
families in other sectors.
    The crisis is certainly not over yet. We still see a glut 
of steel on the domestic market. Imports remain at very high 
levels in a number of product categories. But we will be 
vigilant in implementing our action plan, and we will continue 
to work closely with the Subcommittee, with the industry, and 
with the steelworkers to ensure that we are successful. Thank 
you.
    [The prepared statement follows:]

Statement of Hon. Charlene Barshefsky, Office of the U.S. Trade 
Representative

    Chairman Crane, Congressman Levin, Members of the 
Subcommittee, I appreciate the opportunity to discuss with you 
today the steel import surge, its impact on the U.S. market and 
industry, and the Administration's response.

                              INTRODUCTION

    Last year, as we all know, steel imports rose sharply and 
rapidly, threatening, within a matter of months, the stability 
of our domestic industry and the jobs of many of its employees. 
In the April through November period, imports ran some 50 
percent over historic levels across the industry, and at much 
higher levels in several key product sectors.
    This import surge occurred in the context of the larger 
Asian and Russian financial crises, as a result of weakened 
demand for steel in Asian and other markets. Fairness demands 
that the U.S. steel industry, its workers, and their families 
not be asked to carry the burden of the financial crisis alone. 
Neither can the crisis become an excuse for our trading 
partners to adopt predatory export policies in steel or any 
other sector. Thus President Clinton is personally committed, 
as he has said both here and abroad, and as he repeated in his 
State of the Union Address, to ensure that our trading partners 
act fairly, and will enforce our domestic trade laws to ensure 
this.
    The Steel Report which the President sent to the Congress 
on January 7 provided a comprehensive and forceful set of 
actions to deal with the steel import surge and the associated 
unfair trade issues. This action plan is working and we are 
seeing the first signs of recovery. The Administration is 
determined to follow through until stability has been restored 
to the U.S. steel market. Our efforts to solve the steel crisis 
have been, and must remain, within the framework of our laws 
and our international commitments. First, we can and will lick 
this problem within this framework. Second, by sticking to the 
established rules, we can help ensure that the Asian crisis 
does not lead to a cycle of retaliation and protectionism which 
would badly damage our economy as a whole, and be especially 
dangerous to farmers, ranchers and manufacturing exporters who 
are already suffering due to weaker demand for our products 
abroad.

                      THE PRESIDENT'S ACTION PLAN

    The President's steel action plan was developed with the 
benefit of advice and suggestions from industry and labor. It 
can be found on the USTR web page at www.ustr.gov/reports/
steel99.pdf. The report outlines in detail steel import trends, 
their economic impact, and our response. This action plan 
includes four trade-related elements:
     Vigorous and expeditious enforcement of laws to 
counter trade practices;
     Bilateral efforts to address unfair trade 
practices at their sources;
     Support for a strong safeguards law and for 
expeditious Section 201 investigations;
     Creation of an early warning system for steel 
import monitoring.
    The initiatives are the foundation for a comprehensive 
resolution of the steel import crisis in a balanced manner 
which will not damage other U.S. industries and workers by 
exposing them to retaliation or supply shortages. These 
principles have been translated into specific actions which are 
beginning to provide meaningful relief. We are confident that 
continued vigorous implementation of the President's steel 
action plan will bring about the result we all desire: a stable 
and competitive U.S. steel market where U.S. and foreign 
producers can compete fairly. In the days, weeks and months 
ahead, we will follow through on progress being made and take 
additional targeted actions where market conditions and imports 
warrant, in a manner consistent with our nation's overall 
economic interest.
    Let me now turn to a more detailed review of the import 
surge, the current market situation, the status of our efforts, 
and next steps.

               STEEL IMPORT TRENDS AND MARKET CONDITIONS

A. The 1998 Import Surge

    I will begin by reviewing the trends in our steel trade and 
market over the past year.
    Last year, 1998, witnessed the largest level of steel 
imports, the largest and fastest import growth, and the largest 
import penetration in history. Based on recently released final 
import statistics for December, our 1998 steel imports were 
37.7 million metric tons (MMT)--an increase of 33.3 percent, or 
9.4 MMT over 1997. Steel import penetration rose from 23.8 
percent in 1997 to 30.1 percent in 1998. This level exceeded 
U.S. domestic needs, causing a glut in the market and severe 
price suppression. Between 1997 and 1998 U.S. steel shipments 
fell 3.5 percent, from 96 to 92.7 MMT. Labor statistics show a 
10,000 worker drop in steel employment, from 236,000 workers in 
January 1997 and 1998, to 226,000 in January 1999; employment 
levels had been steady from 1993 to 1997.
    Three countries--Japan, Korea, and Russia--accounted for 
the great bulk--76.4 percent--of this import surge. To update 
the information from the President's January Steel Report, in 
1998:
     Japan was the single largest source of steel 
imports at 6.1 MMT, up 163.4 percent or 3.8 MMT from 1997, 
accounting for 40.3 percent of the import growth;
     Russia was the second largest supplier at 4.8 MMT, 
up 58.9 percent or 1.8 MMT, accounting for 18.9 percent of the 
import growth; and
     Korea was the third largest source of the growth, 
with imports at 3.1 MMT, up 109.3 percent or 1.6 MMT, 
accounting for 17.3 percent of the import growth.
    While these three countries accounted for the bulk of the 
steel import growth, imports from a number of other countries 
also rose substantially. In 1998, the United States imported 
steel from 68 countries (albeit in very small quantities from 
some). Steel imports from a dozen or so ``second-tier'' 
suppliers reached between 100,000 and 900,000 metric tons, and 
have potential to increase further. Notable import growth 
occurred from: the United Kingdom, Australia, Ukraine, South 
Africa, China, Indonesia, Taiwan, India, Luxembourg, Moldova, 
Romania, Latvia, and Kazakstan. In addition, the European Union 
as a whole remains the single largest source of U.S. steel 
imports, supplying 6.6 MMT to our market in 1998, although 
overall steel imports from the EU were 4 percent below 1997 
levels.
    By product, carbon flat rolled steel was the single largest 
source of the import surge, accounting for 46.5 percent of the 
overall import increase. However, sharp import increases 
occurred in a range of other products, including heavy 
structurals, steel piling, light shapes, reinforcing bars, line 
pipe, pressure tubing, etc.
    In sum, we saw import and market disruption levels of 
unprecedented proportions in the U.S. steel market beginning in 
April of 1998. The first tentative signs of recovery are only 
now beginning to emerge.

B. First Signs of Recovery

    The December 1998 steel import data provided the first 
indication that market conditions may have bottomed out, and 
that recovery can be anticipated.
    At 2.6 MMT, December imports reflected a substantial 
decline from the average monthly import levels of 3.5 MMT from 
April through November 1998 import surge period. Although the 
December import figure remained 13 percent above the 2.3 MMT 
1997 monthly import average, it reflected a sharp turn-around.
    The December decrease was concentrated in carbon flat 
rolled products from Japan and Russia, which are subject to the 
ongoing antidumping investigation, indicating that actions 
taken by the industry, labor, and the Administration are 
bearing fruit. When compared to November levels, December 
imports of these products declined 67 percent. Declines were 
sharpest from the three countries under investigation, with 
imports from Japan down 77 percent, from Russia down 90 
percent, and from Brazil down 84 percent. Imports of this 
product from Japan and Russia have basically ceased. The 1998 
U.S. import increase of this product was 4.4 MMT (from 5.7 MMT 
in 1997 to 10.1 MMT in 1998). In 1998 U.S. imports of this 
product from Russia and Japan totaled 5.9 MMT. Therefore, a 
substantial reduction of imports from these two countries will 
more than offset the growth which has occurred. Nevertheless, 
imports of carbon flat rolled steel from a range of countries 
are increasing, and are being closely watched by the 
interagency import monitoring team with a view to ensuring fair 
trade.
    This type of short-term decline does not by any means 
resolve the entire steel problem. A glut of steel products is 
still evident in the U.S. market, and high import levels of 
other products persist. However, the December decline is a 
significant first step, and a clear indication that the steps 
outlined in the President's steel action plan are beginning to 
work.
    Several other market indicators are also positive. Steel 
demand in the United States remains strong and new orders are 
reportedly improving. In late January, a number of companies 
announced price increases of 5 percent to 8 percent per net ton 
($20 to $30) on hot-rolled, cold-rolled, and coated sheets for 
second quarter shipments. Analysts believe these increases will 
likely succeed, as prices for these products are already quite 
depressed (down an average of 21 percent since May 1998), and 
as the import supply is being reduced due to ongoing unfair 
trade cases.
    In January, U.S. raw steel production rose 5.1 percent from 
December while the capacity utilization rate rose to 77.2 
percent from 74.8 percent over the same months. The most recent 
data for capacity utilization for the week of February 20, 1999 
show another improvement to 80.0 percent. Nevertheless, these 
rates are still low when compared to the operating rates of 90 
percent in January 1998 and 86.3 percent in December 1997.
    Reflecting the drop in imports, import penetration (imports 
as a percent of apparent consumption) fell to 29.0 percent in 
December from 36.6 percent in November. Still, this level is 
far higher than the 20.6 percent level recorded in December 
1997.

                           TRADE ACTION PLAN

    These are some initial encouraging signs that the 
President's steel action plan is working. Continued forceful 
pursuit of the policies and actions announced, and active 
monitoring of import and market conditions with a view to 
additional, targeted action, where needed, will be key in 
reestablishing the health and stability of the U.S. steel 
market. Following is an update on the trade related aspects of 
the President's action plan.

A. Unfair Trade Laws

    The first and essential element of the steel action plan is 
vigorous and expeditious enforcement of the antidumping law and 
countervailing duty laws by the Commerce Department.
    As you know, fully one third of some 300 antidumping and 
countervailing duty orders now being administered by the 
Department of Commerce address steel products. This remedy is 
well suited for the steel sector, in which the industry's 
cyclical nature and the high level of government intervention 
and support overseas have led to a high incidence of unfair 
trade. The industry is a strong proponent of this trade remedy, 
and has used it effectively to gain relief from unfairly traded 
and injurious imports.
    That has been the case in this crisis. The Commerce 
Department's expedited investigations and the critical 
circumstances findings have resulted in relief for U.S. carbon 
flat rolled producers in record time, with retroactive effect 
to 90 days prior to the Commerce Department announcement of the 
preliminary dumping margins. Thus, in the case of Japan, the 
antidumping cash deposit and bonding requirements became 
effective only some six weeks from the joint industry and union 
filing of the dumping case. The trade laws have worked 
expeditiously to provide U.S. industry and workers with relief 
against unfair trade. Secretary Daley will elaborate on this 
element of the President's action plan.
    The U.S. steel industry and workers filed additional 
dumping and countervailing duty petition on February 16th with 
respect to carbon cut-to-length steel plate imports from eight 
more countries which may have taken advantage of antidumping 
relief applied to products from Russia, Ukraine, China and 
South Africa.
    In sum, the combined industry, labor, and Administration 
effort to pursue and implement actions to counter unfair trade 
are providing relief, in a manner fully consistent with U.S. 
international obligations.

B. Bilateral Action

    Another key element of the President's steel action plan 
provides for bilateral initiatives with countries which are the 
key sources of the steel import growth: Japan, Russia, and 
Korea. Substantial progress has been made on this front as 
well.
    1. Japan--The largest source of steel import growth last 
year was Japan. As reflected in the President's Steel Report to 
the Congress, in January the Administration informed the 
Japanese Government that we expect steel imports from Japan to 
revert to pre-crisis levels. We also informed Japan that, if 
such a roll-back does not occur in short order, the 
Administration would self-initiate trade action to ensure a 
reduction of imports and to prevent further injury to U.S. 
steel producers and workers. Thus, the roll-back will be 
enforced, if necessary, through Administration trade action. 
Our intent is to act forcefully if normal trade patterns are 
not promptly restored.
    Our interagency steel import team closely monitors and 
analyzes both Japanese monthly export data and U.S. monthly 
import data for all major steel categories. We are reviewing 
trends, levels, and U.S. market conditions, and in consultation 
with U.S. producers, we are assessing where trade action may be 
appropriate. Some of the trends are encouraging, but important 
concerns remain. Japan's exports of steel to the United States 
in December were 363,000 metric tons, and the preliminary 
export figure for January is 229,000 metric tons. This compares 
to the average monthly export rate of 680,000 tons from April 
through October 1998, and the peak of 908,000 tons in Japan's 
September exports to the United States. Japan's December steel 
exports of hot rolled sheet declined to a negligible level. 
Nevertheless, exports have not fully returned to pre-crisis 
levels. In particular, based on Japan's December export data, 
they remain substantially above traditional levels in several 
important product categories, such as structural shapes, and 
pipe and tube, as well as cut plate where a dumping case was 
filed on February 16.
    At the same time, in our broader trade and economic 
relationship with Japan, we are pressing for the creation of 
domestic demand-led growth in Japan through fiscal stimulus, 
broad deregulation, financial reform, and meaningful market-
opening measures. If fully implemented, these policies would 
create substantial opportunities for exporters and workers in 
America, other Pacific economies, and for Japanese workers and 
companies. Decisive action by the Government of Japan to 
implement such reforms are key to relieving global pressures 
which are at the root of the steel import crisis in the United 
States.
    2. Russia--On February 22 Secretary Daley announced the 
initialing of a comprehensive set of steel agreements with 
Russia--a suspension agreement on the carbon flat rolled 
dumping case, and a broader agreement under the market 
disruption article of the 1992 U.S. bilateral trade agreement 
with Russia. These agreements would roll back and cap steel 
imports from Russia, the second largest source of our 1998 
steel import surge.
    The suspension agreement would ensure that: a) there will 
be a zero quota--no imports from Russia of flat rolled products 
covered by the investigation for a period of six months, and b) 
the annual quota which goes into effect at that time, 750,000 
metric tons, is 78.4 percent below our 1998 imports of this 
products from Russia and 58.4 percent below our 1997 imports of 
this product from Russia. The quota basically rolls back 
imports from Russia to their 1996 level. In addition, there 
would be minimum price and strict monitoring provisions.
    The second, broad, steel agreement with Russia would cover 
imports of all other steel products as well as pig iron. It 
contains quotas on sixteen products which account for all of 
our imports from Russia, and rolls imports back to 1997 levels 
or below, reducing them by 68 percent from the 1998 import 
level.
    Both agreements will be subject to public comment, and all 
views will be heard and considered. The key objective here is 
to offset any unfair trade margins, and to help restore 
predictability and stability in the U.S. market. This 
comprehensive approach to the Russian issue is particularly 
appropriate because the Europan Union had already negotiated a 
similar agreement with the Russian government which may have 
caused diversion of Russian steel to the U.S. market, something 
U.S. industry was particularly concerned about. This 
comprehensive approach also envisages opportunities for regular 
dialogue between U.S. and Russian government and steel industry 
representatives which can be used to provide technical 
assistance in the transformation of the Russian steel sector to 
market-based principles, and to sound environmental and 
managerial practices. We welcome U.S. industry and labor 
involvement in this dialogue.
    3. Korea--The third largest source of our steel import 
growth was South Korea. The President's Steel Report announced 
that our dialogue with Korea on steel trade and policy issues 
would be expanded and expedited. A Korean government and 
industry steel delegation visited Washington in late January 
and provided an update on government and industry efforts to 
restructure and privatize Korea's steel sector. The 
Administration, as well as U.S. steel industry and members of 
Congress, have had a longstanding concern with the Korean 
government's involvement in the steel sector through industrial 
policies which have favored steel and steel-using industries, 
and encouraged their growth and export-oriented capacity 
expansion, through incentives and directed lending. Hanbo Steel 
is the best-known example, but there are other examples as 
well.
    In August of 1998 USTR exchanged letters with the Korean 
Ministry of Foreign Affairs and Trade which are aimed at 
ensuring that the sale of Hanbo Steel, which is in bankruptcy, 
is taking place through a market-driven, open, and transparent 
process in accordance with international practices. Hanbo's 
production of hot-rolled sheet has ceased pending its sale, 
Bankers Trust has been engaged to manage the sale.
    In addition, the Korean government has offered general 
assurances that steel-related practices which have resulted in 
excess capacity in Korea and have been the cause of 
longstanding trade friction between our countries, have been 
abandoned. Accordingly, we have included in our steel 
discussion with Korea a set of objectives to ensure that real 
and substantive progress is made toward permanently getting the 
Korean government out of the steel business. Our broad 
objectives in these discussions include:
    a) Having the Government of Korea address anticompetitive 
activity in the Korean steel sector and ensure open competition 
inside Korea and in international trade;
    b) Expeditious, complete, and market-based privatization of 
Korea's largest steel producer, POSCO ;
    c) Implementation of the Hanbo sale and operation of the 
company on arms-length terms outlined in our August exchange of 
letters with Korea, in a manner which will not engender 
government involvement (we sent a formal Report on this issues 
associated with Hanbo to Congress last December);and
    d) Fair trade in steel products.
    In our view, these are reasonable expectations. They are 
consistent with stated policies of the Korean government, and 
they must be implemented fully if we are to avoid continued 
trade friction in steel.

B. Section 201 Safeguards

    A third key element in the President's steel action plan is 
strong support for an effective safeguards provision in U.S. 
trade law, including his willingness to urge the ITC to 
expedite any section 201 safeguards investigations concerning 
steel.
    U.S. industry and workers filed a petition for relief on 
steel wire rod under Section 201 in December of last year. The 
International Trade Commission (ITC) is now conducting an 
inquiry to establish whether injury has occurred or is being 
threatened in this segment of the industry. If the ITC reaches 
an affirmative conclusion under its legal procedures, the 
President will have the option to decide whether relief is 
appropriate. If a remedy is appropriate, he will have wide 
discretion to fashion it in a manner which is appropriate for 
this industry.
    Because of its scope and flexibility, Section 201 is an 
extremely important and valuable trade remedy tool. As with the 
unfair trade remedies, the decision on when and whether to 
invoke it lies foremost with U.S. industry and workers. The 
Administration has met with steel industry and labor 
representatives to review market and import trends and to 
review assess relief options. Additional meetings will be held 
in light of the publication today of the preliminary import 
statistics for January.

C. Import Monitoring and Early Warning

    The fourth trade-related point in the President's steel 
action plan is the decision to release preliminary steel import 
data in order to create an early warning import monitoring 
system. Under this unprecedented new data release program, 
steel import statistics are made public almost a month sooner 
than the regular release schedule, some three weeks after the 
end of each month. Import trends are reviewed at senior levels 
of government and discussed with industry and labor 
representatives to assess their impact and options for import 
relief.
    These import data releases have been invaluable in 
providing both the government and the industry with a real-time 
sense of import trends. Each month's data are carefully 
analyzed by USTR and Commerce Department experts and the 
interagency import monitoring team to review trends by country 
and by product category in terms of volume and per unit import 
value. These trends are reviewed in light of most current 
information on U.S. market and industry developments.
    Our particular focus at this time is threefold: 1) to 
carefully monitor imports from Japan in light of the 
President's announcement that he expects imports from that 
country to revert to pre-crisis levels: 2) monitoring import 
trends for product categories that had been the subject of 
sharp import increases, to ascertain whether meaningful 
declines are underway; and 3) monitoring of imports from 
second-tier suppliers and the EU.

                        LEGISLATIVE INITIATIVES

    In summary, our action plan, and our trade laws are in 
place, and beginning to provide the relief needed and deserved 
by U.S. steel producers and workers. While some have proposed 
that the steel import issue be resolved through the legislated 
imposition of import quotas or even temporary import bans, we 
believe this may not be in our national interest, nor in the 
interest of our steel industry. While well intentioned, this 
type of action could create additional havoc in the U.S. market 
and undermine substantial progress we have made to date.
    Unilateral imposition of quotas or import bans would ignore 
the fact that we already have effective trade remedy tools 
which are producing results. As I have discussed above, we have 
seen a substantial decline in imports in December; we have 
announced preliminary dumping and countervailing duties against 
unfair trade in record time; we have seen a substantial drop of 
imports from Japan; and, we have initialed a comprehensive set 
of agreements with Russia. Additional trade cases, both under 
the unfair trade laws and under the safeguards mechanism 
(section 201) are pending, and the Administrations has affirmed 
its support for their fair and expeditious review. Our action 
plan, and our trade laws are working and they are providing the 
relief needed and deserved by U.S. steel producers and workers. 
The crisis is by no means over, but we are seeing signs of 
recovery. Continued implementation of the President's action 
plan will ensure further progress. In particular, we are 
determined to carry on with our active import monitoring 
program with a view to ensuring that these positive trends 
continue, and that other countries do not increase their 
exports to undermine progress we have made.
    Legislated imposition of trade remedies for steel outside 
of the established U.S. trade laws backfire by inviting trade 
retaliation by affected trading partners and causing damage to 
export-oriented U.S. industries and workers, some of which may 
already be adversely affected by reduced demand abroad. While 
trying to assist U.S. steel workers, quotas which are 
legislated outside of our trade laws could harm U.S. steel 
interests by prompting retaliation against export oriented US 
steel-using industries, such as autos and machinery.
    Finally, legislated solutions which do not arise from the 
type of careful ITC analysis and interagency and industry 
consultation process can create severe distortions in the 
market which can add to, rather than resolve, economic 
problems. When not carefully considered, quotas can create 
shortages for user industries or result in excessive price-
hikes. As our economy continues to grow, demand for steel 
products remains strong. Imposing quotas at this stage, when it 
looks like the market is beginning to stabilize could have the 
unintended effect of causing a panic in the market which could 
reverberate throughout the U.S. economy and undermine our 
nation's economic growth.
    Other legislative proposals to improve U.S. trade laws are 
being reviewed by the Administration. For example, we are 
currently in the process of reviewing the proposals concerning 
Section 201. Section 201 is one of our most important trade 
laws and is critical for ensuring that our industries can make 
a positive adjustment to import surges when they occur. We 
fully support a strong, effective safeguards law which is 
consistent with our international obligations.

                               CONCLUSION

    In conclusion, let me reiterate that prompt restoration of 
a stable U.S. steel market remains a top U.S. trade priority. 
We believe the President's steel action plan has begun to 
produce meaningful progress toward that end. Vigorous and 
expedited enforcement of U.S. trade laws has resulted in 
substantial relief from unfair trade. Imports from Japan have 
been rolled back almost to the pre-crisis levels. A 
comprehensive agreement has been initialed with Russia which 
will substantially roll back imports and prevent new surges. 
Progress has been made in our dialogue with Korea, and 
additional results are anticipated shortly. Active import 
monitoring is underway based on the unprecedented early import 
data releases. And, the Administration has committed to do more 
as market and import trends warrant. Prices and capacity 
utilization are creeping up.
    We are not ready to declare that the problem has been 
solved. We are fully aware of recessionary conditions and 
excess capacity abroad, and of the fact that the strong U.S. 
market will continue to act as a magnet, while the temptation 
to trade unfairly will persist. Nevertheless, we are pleased 
that actions taken to date have resulted in improvements, and 
we are committed to continue to vigorously enforce the 
President's comprehensive steel action plan. Working hand-in-
hand with U.S. industry, labor, and Congress, we believe 
positive results will be achieved without jeopardizing broader 
U.S. economic interests.
    Thank you for providing me with this opportunity to 
testify.
      

                                


    Chairman Crane. Thank you.
    Mr. Secretary, earlier this week the administration and 
Russia tentatively agreed to quantitative limits on a wide 
range of fairly traded Russian steel products, including 
products that Russia historically has not supplied to the U.S. 
market. By reducing supply, the limits could lead to price 
increases in the U.S. market, which will adversely affect 
domestic steel users.
    I understand that the administration consulted closely with 
the U.S. steel producers during the negotiations with the 
Russians. To what extent did the administration also consult 
with steel users in this process?
    Mr. Daley. Mr. Chairman, we hear from steel users on 
occasion. We have heard from a number of them over the last 
number of months as the discussion of the steel crisis has 
grown. We consult with them on a fairly regular basis. They 
have not been heard strongly at this point. There is a public 
hearing on Tuesday on the agreement that was reached with the 
Russians, the comprehensive agreement. I would assume at that 
hearing, we will have an opportunity to listen to those steel 
users.
    Chairman Crane. Ambassador Barshefsky, what is the 
administration's view on the Regula bill, H.R. 412, on the 
Visclosky bill, H.R. 506, Traficant bill, H.R. 502? I am 
concerned that the Regula bill cherry picks. It deletes 
reference to ``substantial'' in the causation standard because 
it doesn't appear in the WTO language.
    At the same time, the bill omits WTO language which says 
essentially the same thing, that increased imports cannot be 
the cause of injury when factors other than increased imports 
cause the injury at the same time.
    Do you agree with that?
    Ms. Barshefsky. The administration has not yet taken a 
position on the Regula bill, but it would certainly have to be 
examined for consistency with WTO rules. We have been quite 
clear that we will not support trade legislation that is 
inconsistent with our international obligations.
    I would note that the domestic steel wire rod producers 
have already filed a trade case under the current section 201. 
I would note further that the domestic carbon steel industry 
successfully brought a comprehensive section 201 case in the 
eighties, which is the same law as the law that we have now. So 
we will be examining the proposal by Mr. Regula, but at this 
juncture, at least the wire rod producers believe that section 
201 as currently written, is sufficient.
    Chairman Crane. How about the Visclosky bill?
    Ms. Barshefsky. We have some significant concerns with 
respect to the Visclosky bill. First, we have effective tools 
to combat unfair trade practices. As Secretary Daley's and my 
testimony indicate, we believe we are achieving important 
results.
    Second, our trade laws tend to be based on fair and 
transparent processes. They are not designed to favor one set 
of interests, producers or workers, at the expense of another 
set of interests, producers, or workers. It is very important 
that we not favor one constituency over another as we 
administer our laws.
    Third, we do have a concern that legislative quotas can 
create severe distortions in the market. They can add to, 
rather than resolve economic problems, potentially creating 
shortages, potentially leading to excessive price hikes.
    Fourth, the market is beginning, it is in its early stages, 
admittedly, but beginning to look as though it may stabilize. 
We don't want to disrupt that very important progress.
    Last, action outside our trade laws exposes U.S. producers 
and workers to retaliation. The United States is the single 
largest exporting nation on Earth. We have much to lose if 
foreign countries adopt protectionist practices against our 
exports. We have much to lose if foreign countries implement 
mirror legislation parallel to legislation we might propose. So 
we believe we must proceed cautiously in this area.
    We do believe we are making impressive progress on the 
steel issue. We plan to work with you, with the industry, with 
the steelworkers, as we have been doing very, very closely. 
Certainly we will be examining whether other actions are 
appropriate to take if this crisis does not soon abate. But we 
must also be very careful to protect overall our export 
interests, including in steel intensive sectors such as 
machinery, heavy electrical equipment, automobiles, as well as 
in our agricultural sector.
    Chairman Crane. Thank you. One final question to both of 
you. To what extent do our trading partners subsidize their 
steel industries? How can we pursue an agreement to lower the 
subsidies so as to better enable the U.S. steel industry to 
compete?
    Ms. Barshefsky. Well, of course for many years there has 
been a negotiation on a multilateral steel agreement, which 
would discipline steel subsidies, both as to carbon steel and 
as to specialty steel. Those negotiations have been running for 
many years, producing little result and problems identified 
early on in the negotiation have seemed to prove intractable 
over the years.
    We still think an agreement that would sharply discipline 
global subsidies would be important, but the United States will 
not give up its rights under U.S. trade law in order to achieve 
that goal.
    I think that, overall, global subsidization of steel has 
come down, particularly as countries realize money is not 
infinite. It is a finite resource, and there are many pressures 
on the public purse. But subsidization still does remain a 
significant issue with respect to steel.
    Mr. Daley. As I mentioned, Mr. Chairman, just one brief 
note. We did find in the case that was filed against Brazil 
subsidization, we take this issue very seriously. We are 
monitoring for subsidies around the world, our commercial 
service people and our import administration people are 
monitoring to make sure that as the Ambassador stated, 
subsidization, which was rather rampant a few years ago, 
continues to come down. In the case of Brazil, we did find 
subsidization.
    Chairman Crane. Thank you.
    Mr. Levin.
    Mr. Levin. Thank you. Well, I think the record is something 
like this, that in the last months, the administration did act. 
I think it acted more aggressively than was true under previous 
administrations or would have been true, and acted more 
aggressively than it probably would have in the first years of 
this administration.
    But at the same time, there was a substantial lapse between 
when the problem arose and when action became effective. It 
wasn't that jobs were threatened, they were lost. Right? Ten 
thousand? At least 10,000 people lost their jobs. Companies 
were put under very severe pressure, and some into bankruptcy.
    I think we have to ask ourselves about that response. 
Europe did not face the same kinds of pressures, though it did 
have some, being closer to Russia, for example. There was a 
dramatic impact here from the Asian crisis in steel and 
virtually none in Europe. I think we have to ask ourselves and 
I think our constituents, and I mean yours and ours here, want 
to know why.
    Ambassador, when you say on the first page, ``therefore we 
can and will lick this problem within this framework'' and 
second, ``by sticking to the established rules, we can help 
ensure that the Asian crisis does not lead to a cycle of 
retaliation and protectionism. I just think we want to be sure 
we are not frightened into inaction because some people call 
action protectionism.
    So I want to start, and we have talked about this before, a 
discussion with you about the rules of competition here and our 
reaction.
    Under what we have done on the antidumping rules, and Amo 
Houghton and I were proud to help lead the efforts to safeguard 
them in the WTO, but look, they raise certain problems. Right? 
We invoke them and countries can simply shift products. It took 
a number of months. We did not seem to have an effective 
trigger mechanism, effective monitoring system. So I think we 
have to ask ourselves whether our framework is adequate, 
whether the established rules respond.
    So just if you would respond to that. In the last pages of 
your testimony, there is an indication that you are willing to 
look at some further legislation, some changes. You have 
instituted a few of them yourself. I wanted to ask you, Mr. 
Secretary, about my suggestion that we give you more resources.
    But clearly there is something, there is a shortfall. There 
is something missing. There is something wrong. We can't, as 
problems shift from one product of steel to another or one 
country that decides to fill the gap to another, simply take 8 
to 10 to 12 months and lose another 10,000 jobs or begin to 
lose another chunk of an important industry because other 
countries are taking advantage of not free trade, but our open 
market.
    So if you would, just give us a preliminary response to 
that.
    Ms. Barshefsky. Let me say a few general things. First of 
all, as a general matter, the fact that imports are increasing 
does not necessarily mean they are unfairly traded. This 
administration, and I believe the Subcommittee have always 
understood----
    Mr. Houghton [presiding]. Madam Ambassador, I think we are 
all set now.
    Ms. Barshefsky. So I don't know where your tape ended, but 
first, the fact that imports increase is not necessarily an 
indication of unfairness, particularly given the growth rate of 
our economy relative to the growth rates of other world 
economies, and particularly given the fact that 40 percent of 
the world is in deep recession.
    Second, once cases were filed, which presented an 
indication that imports were unfairly traded, Secretary Daley 
acted in extremely aggressive manner to ensure that the 
investigations would be expedited, but also more importantly, 
to ensure that his department could reach back and be able to 
impose penalty duties on imports that had entered even as early 
as 6 weeks after the case had been filed. This is almost 
unprecedented, and went a long way I think toward the kinds of 
downturn in import figures we see now.
    Third, with the President's program, we have instituted a 
much more comprehensive monitoring scheme, including the early 
release of import data. I think we agree with you that our 
monitoring before this crisis had perhaps not been as carefully 
crafted as it should have been. The administration has taken 
steps to rectify that so that we can identify much earlier on 
problem areas, and attempt to deal with that on an expeditious 
bilateral basis, that obviously if the trade is unfair, it will 
be subject to treatment similar to the treatment to which the 
current crop of countries is subject.
    So we do think that we now have in place an effective means 
of dealing with the problem. There is no question that the 
surge itself is of unprecedented nature. There is absolutely no 
question about that. But we believe we have attended to it in a 
way that is effective and that at the same time, does not risk 
a retaliatory spiral against our exports, including our exports 
of steel intensive products.
    Mr. Levin. Mr. Secretary.
    Mr. Daley. I would just add a few comments to it, 
Congressman. I do think, I believe as the Ambassador stated, we 
have reacted very strongly and aggressively. I think we are 
having an impact, and it is a balance between overreacting too 
early and making sure that when you do act, you act in a 
concerted action, and we have done that.
    On your comments about additional resources, that is an 
issue that I would like to pursue with you because we have seen 
a substantially increasing caseload. We are trying to expedite 
these cases. We have numerous investigations going on, probably 
more today than we have ever had. It is putting quite a strain 
on our resources, so we would like to follow up with you on 
that issue.
    Mr. Levin. Thank you. My time is up.
    Mr. Houghton. OK. Well, I guess it is my turn next. Thanks, 
Sandy. I just forgot to repay the compliment. Sandy is a great 
advocate for fair trade, always has been, very articulate, and 
an enormous influence here, certainly with me.
    I would like to thank you very much for being here. You are 
our friends at the administration. You always have been. You 
are right to the point. You have been very, very, very helpful. 
So I want to thank you for being here and sharing your wisdom 
with us.
    I have a couple of questions. The first is, that you really 
sort of pick on the weak person. In other words, when you take 
a look at the shipments, the metric tons out of Russia versus 
Brazil and Korea and Japan, it is really not very much. I mean 
that Russia has gone from 150 approximately to about 45,000 
metric tons, January to January. Whereas Japan and Korea not 
only are huge, but also they have gone up about 200,000 tons. 
So you have sort of a neat program with Russia. It says 
something to them. It says something to the others. You are 
going to have a 6-month moratorium, you are going to have a 
quota, you are going to set minimum prices for Russian steel, 
like that.
    Why didn't you do that with the others? Now I realize that 
Russia is not part of the WTO, but it is a very specific tough 
hard message out there for Russia, but they are so small 
compared to the others. What about the big producers?
    Mr. Daley. Two reasons, Mr. Chairman. One, the Russians had 
asked for these discussions and they had asked for first of 
all, the comprehensive discussions, quite frankly, quite a 
while ago. Shortly after the cases were filed, they asked for 
discussions, negotiations on the hot-rolled cases sometime in 
late September. So they came forward. The other countries did 
not.
    We have gotten notice from Brazil within the last week that 
they have an interest to discuss the case. We have not had any 
discussions with them yet. But the Russians did come forward.
    In spite of the fact that their volume may be much less 
than the others, they were, in the opinion of industry and 
workers, were very much driving the price down rather 
substantially. It was the Russian steel that was playing a 
rather large part, and is shown by the margin range, close to 
200 percent on some of their steel coming in. So those were the 
two reasons why we moved forward with both the suspension 
agreement and a comprehensive deal with the Russians.
    Mr. Houghton. Would you like to answer that or is that it?
    Ms. Barshefsky. No. I think Secretary Daley has answered 
the question.
    Mr. Houghton. All right. Good.
    You know, the second point is you talk about a trade war. 
That is not good. Clearly we do not want to get into a match 
where we are just biting at each other's heels, because as we 
all know, that 95 percent of the world's customers are outside 
of the United States, and we want to get at them. Of course 
that is what you are trying to do with the fast track, the 
multilateral----
    Mr. Jefferson. Mr. Chairman.
    Mr. Houghton. Yes.
    Mr. Jefferson. Excuse me, please. Could you yield for just 
a moment? Those children who are leaving here from my district, 
they were here to see this hearing through. Apparently they are 
having to leave. But I wanted to recognize their presence and 
to say to them that we really are very pleased to have them 
here. Many of them are now into the hall.
    So I thank you for yielding for a moment. I hope some of 
them heard what I had to say. I was going to recognize them 
when it came my turn, but apparently they are having to leave. 
So glad to have you here.
    Mr. Houghton. Yes. Thank you.
    [Applause.]
    Mr. Jefferson. Thank you, Mr. Houghton.
    Mr. Houghton. But you know, various suggestions have been 
made that always just sort of fringe on retaliatory actions by 
other countries. But really so what? Japan has not been 
particularly sensitive to our needs, year after year after year 
after year, the trade imbalance. Brazil, through Mercosur wants 
to freeze us out anyway. Obviously we don't want to get into a 
trade war, but is that a real danger with those two countries?
    Ms. Barshefsky. First, let me say we have had a persistent 
trade surplus with Brazil. I think the United States has to be 
cautious in the way in which we respond to situations such as 
this. We are able to be cautious in part because we have an 
effective program to deal with the crisis.
    But we need to be cautious for a couple of reasons. One is 
that what we do is often a marker for what other countries 
believe they can or should do. Every change we make to our 
laws, we see now tends to be mirrored in foreign countries. We 
see this, for example, with respect to the dumping law. But 
foreign countries often don't have the due process protections 
and other forms of procedural rights that we grant foreigners 
here. That presents a significant problem for our exporters.
    Second, as I said, 40 percent of the globe is in deep 
recession. Six major economies have suffered negative growth 
rates of 6 percent or more this past year. That means first of 
all, the large economies like the United States, Europe, and 
Japan, have to do what they can to help the economies in deep 
recession recover. If they don't recover, obviously, that is 
not only destabilizing for them, it also means they can't buy 
what we sell.
    But apart from that, the United States, as the strongest 
economy in the world, does have something of a special 
obligation to help out where we can. We have done that, but as 
always, insist that any trade coming into this country be 
fairly conducted. The actions we have taken on steel I think 
underscore the point to our trading partners that we expect 
trade to be fairly conducted or we will take significant 
action.
    That action, while some might call it protectionist, is 
not. That is taking action under our legitimate international 
rights, under our domestic laws, and we intend to adhere to 
that kind of action quite firmly. But the bottom line is that 
we do have to be cautious about the way in which we proceed. We 
cannot dismiss out of hand the notion that other countries will 
take retaliatory action or might impose mirror legislation. As 
I said, we are the world's single largest exporter and we have 
a broad range of interests, economic in particular, that we 
need to protect.
    Mr. Levin. Would the gentleman yield?
    Mr. Houghton. Absolutely. Sure.
    Mr. Levin. I think Mr. Coyne wants to ask a question. You 
know, some of us have been on this Subcommittee for what, 13 or 
14 years. The term ``trade war'' has often been used to justify 
total inertness. I just hope that we will all be careful before 
we invoke it.
    If I might say so, in this case, for the steel companies 
and steelworkers, there is a kind of an economic war that they 
are victims of. No one is suggesting a trade war. I mean Europe 
hasn't engendered a trade war by shutting out steel almost 
completely. So for us to insist that we are going to act 
against dumping, I mean everybody knew from the word go they 
were dumping it here. We knew they were dumping because they 
were in economic trouble. These weren't just imports that were 
coming in here. I mean they were dumping. Now we will have an 
earlier monitoring system.
    Now I think we want to be careful, not cautious to the end 
of just taking so long to act on an issue that's so clear in 
terms of the impropriety of what they are doing. I mean we have 
to show a sense of injustice here, and balance it with the 
problems they have, but just not be taken for granted.
    So I just wanted to say that, and the status quo, we have 
to live within it, but we need to change it in terms of this 
kind of a problem. So I hope while you are proud of what you 
have done, to be much more active than I think you might have 
been or your predecessors for sure, we have to honestly look at 
the problem, how are we going to avoid just the replication of 
this by shifting countries or shifting products or shifting 
arenas all together from steel someplace else.
    So I hope you look upon your aggressiveness, and you have 
been aggressive, as something that sets a precedent and isn't 
something that we need to be ashamed of. Because I think you 
need to be proud that you invoke the law to move up, to move 
ahead when there would be an impact of duties. The duties have 
shown how right you were. Right? These are huge duties, aren't 
they? These are huge. It shows how abusive this practice was. 
Isn't that true, Mr. Secretary?
    Mr. Daley. Absolutely, Congressman. There is no doubt when 
you look at the margins, they are astronomical in the Russian 
situation.
    Let me just say we are very proud of the work we do in 
import administration. We are extremely proud of enforcing our 
laws. We make it very clear. I have been honored for 2 years 
now to be secretary. I can't tell you how many counterparts I 
have met from around the world, everyone of them in some way, 
shape, or form complains about our, quite frankly, our dumping 
laws. We are not at all anything but proud of them. We know 
they are WTO-consistent. We think they serve a very legitimate 
purpose. At the same time, we are also extremely proud of the 
fact that we do have the most open market in the world, and the 
fact is, our economy is doing better than anyone's. This is all 
interrelated, but in no way, shape or form, Congressman, are we 
anything but proud of the fact that we are enforcing the laws 
that you pass. We do it with an aggressiveness that most of our 
friends around the world think is a little over done, to be 
frank with you.
    Mr. Levin. Thank you.
    Mr. Houghton. Mr. Coyne.
    Mr. Coyne. Thank you, Mr. Chairman. I wonder if you could 
let the Subcommittee know who some of the major buyers are of 
this import surge that we have experienced?
    Mr. Daley. To be very honest with you, Congressman, I do 
not have the information. The industry probably would be in a 
better position to tell you that, who is actually buying this. 
We know the importers, but they aren't necessarily the final 
users of this steel that comes in.
    Mr. Coyne. Ambassador.
    Ms. Barshefsky. I would give the same response. I do think 
of course some industry members are in joint ventures and other 
arrangements with off-shore producers. There may be some 
imports into this country pursuant to those arrangements, but I 
am not privy to them and I don't know what the volumes might 
be.
    Mr. Coyne. Well, do we have any indication that some of the 
very companies that are complaining about these imports and 
this dumped steel are indeed the purchasers of that steel?
    Mr. Daley. We have heard that from different sources, but 
we have no proof of that.
    Mr. Coyne. You don't keep any statistics on that?
    Mr. Daley. No.
    Mr. Coyne. You have nowhere to recommend that we get that 
information?
    Mr. Daley. As I say, Congressman, it would probably be best 
to ask the industry itself. We have records, and the Customs 
Department has the records of the importers, but they generally 
are not the end users of the steel. They are basically go-
betweens.
    Mr. Coyne. Has the steel industry itself filed any 201 
actions?
    Ms. Barshefsky. The wire rod producers have filed. They 
filed in December. The International Trade Commission, which 
investigates section 201 cases, is now investigating that case. 
Our understanding is that the carbon steel producers in general 
have been looking at the question of a broad section 201 case, 
but I don't know that they have reached any decision to file 
one.
    Mr. Coyne. Well in your judgment, do you think that the 
steelworkers or the steel companies, and by extension, the 
steelworkers, could be advantaged by more actions, 201 actions 
by the steel companies?
    Ms. Barshefsky. I would say that is really for the 
companies and the union to decide. Obviously factoring into the 
consideration whether to bring cases is their likelihood of 
success, as well as the range of relief that might be 
obtainable. That is typically a decision that a complaining 
party and its lawyers make jointly. I assume that that kind of 
an analysis is going on within the steel industry today.
    Mr. Coyne. Thank you.
    Chairman Crane [presiding]. Mr. Jefferson.
    Mr. Jefferson. Thank you, Mr. Chairman. I believe that you 
have been appropriately praised for the work you have done on 
various antidumping provisions today to stem this problem. But 
I have also heard in some of your testimony and in other 
testimony before you came here that there are other factors 
that played into this problem, that the antidumping laws aren't 
designed to have any effect on.
    The question is whether with respect to structural 
overcapacity in the global steel industry, manufacturing 
industry or whether with respect to perhaps anticompetitive 
agreements, formal and informal, between steel producing 
nations, are causing, contributing to this problem. If so, the 
antidumping laws ought to affect those. Is there a need for 
other regimes in this regard? If so, what should they be? If 
you are looking at what Sandy said about looking down the road 
to a comprehensive way to deal with, perhaps stopping, this 
problem from occurring in the future.
    Ms. Barshefsky. It is a little bit hard to get your hands 
around legislating a solution, for example, to global 
overcapacity, whether in steel or in any other product. 
Certainly with respect to steel, there has been government-
directed lending. Korea is an example of this with respect to 
Hanbo Steel, with respect to POSCO. This is a phenomenon that 
is a phenomenon in general of government-directed lending to 
noneconomic enterprises that IMF programs are designed to alter 
because this is nonproductive use of scarce fiscal resources by 
these countries.
    Our push in Korea for the closing and privatization of 
Hanbo, our push for the privatization of POSCO and commitments 
by the Government of Korea not to direct lending to those 
companies, is one part I think of a longer term solution. Korea 
is not the only country. I use that though as an example.
    With respect to anticompetitive practices, this is also of 
some concern. There have long been allegations, as yet 
unproven, of formal or informal arrangements between European 
steel producers and their Japanese counterparts. It has long 
been observed that the United States takes about 10 times more 
steel from Japan than does Europe. People over the course of 
many years have questioned why is that.
    I think this is an issue that the European Commission has 
from time to time looked at. I don't believe at this juncture 
they have found evidence of that. But we have always had a high 
degree of confidence in the European Community's competition 
authorities, who for many, many years have been quite 
aggressive on issues of this sort. Nonetheless, we have asked 
Europe to continue to look into these allegations because 
obviously, to the extent Europe takes more steel, the United 
States will take less.
    Mr. Jefferson. Thank you.
    Chairman Crane. Mr. English.
    Mr. English. Thank you, Mr. Chairman. I appreciate the 
opportunity to participate in this inquiry. A couple of quick 
questions. Thank you for your testimony today.
    With regard to the suspension agreement with Russia, an 
agreement that will suspend the investigation of the 
unprecedented levels of dumped hot-rolled steel imports from 
Russia into the United States. My understanding, and I think 
this is everyone's understanding, is that the industry has been 
very clear to the administration that it strenuously objects to 
the suspension of these cases. Now, the Department of Commerce 
released preliminary dumping margins on hot-rolled Russian 
steel, ranging from 71 to 218 percent, and if finalized, these 
margins would effectively end imports of dumped Russian hot-
rolled steel.
    The suspension agreement is simply not as effective as U.S. 
trade laws, and arguably the so-called comprehensive agreement 
limiting Russian imports of other steel products can only be 
effective if it is part of a global solution, which it is not.
    Now, given that Federal law requires a 30-day period during 
which the initial suspension agreement with Russia will be open 
for public comment, and that the law also requires that 
government take these comments into consideration before 
finalizing the agreement, I am curious to know if the industry 
and the workers continue to oppose this agreement, will the 
administration take these objections into active consideration 
and consider not entering into a suspension agreement with 
Russia?
    Mr. Daley. Congressman, we will take the comments of the 
industry and the workers into consideration, as we have. We do 
believe though, to be frank with you, that a 90 percent cut in 
steel imports from Russia is a very positive step. Also giving 
certainty into the future of exactly knowing what amount will 
be coming to this country from Russia is a very positive step. 
We have cut back the quotas, the amount of imports to 1996 
levels, and at a price that we believe is a positive action, 
with also a 6-month moratorium.
    So we feel very good about this agreement. We think it 
serves a strong purpose. That is, to stop this tremendous 
surge. But we will take into consideration during this 30-day 
period.
    Mr. English. Mr. Secretary, on a different issue. I have 
become more sensitive to the impact of currency devaluations on 
commodity sectors as a result of our steel crisis. I am deeply 
concerned about the fact that the dramatic devaluation of Asian 
currencies, particularly the Korean won, has enabled exporters 
of steel products from those countries in the Pacific rim to 
reduce their prices to extremely low levels.
    The Department of Commerce has not been able to adjust its 
dumping calculations to take into account this devaluation. Let 
me ask, how does your department intend to address this issue 
in its final determination so as not to let Korean exporters in 
the case of stainless steel, to dump their products in the U.S. 
market with impunity.
    Mr. Daley. If I could, Congressman, get back to you with 
that answer, I would sure appreciate it.
    Mr. English. Certainly. And then one last quick question 
for Ambassador Barshefsky. I had understood your testimony a 
few minutes ago to be an offer to expedite 201 cases. I am 
curious if you would comment on why so far the administration 
has been unwilling to initiate section 201 actions in the case 
of steel. Would you care to comment on that? Is there a policy 
reason why you have been reluctant to use this tool?
    Ms. Barshefsky. Self-initiation of trade cases by this 
administration or any administration is something that is very, 
very rare indeed. We have indicated, and the President has 
indicated that to the extent Japanese import levels do not 
return soon to precrisis levels, the administration will self-
initiate trade action against Japan.
    But generally speaking, this administration, with previous 
administrations, favors the filing of trade cases by domestic 
industries which feel adversely impacted by imports. That is to 
say it is up to the industry to decide whether it is adversely 
impacted, and to put together an action.
    Our steel industry, of course, is very practiced at this, 
has brought section 201 cases in the past, has been successful 
in those cases in the past. The wire rod producers, as I have 
said, have initiated their own case. Certainly our carbon steel 
producers in general are well-positioned to do that.
    The President has indicated that if cases are filed, he 
will ask the International Trade Commission to expedite the 
investigation. I would note simply that the International Trade 
Commission is of course an independent regulatory body. Thus, 
the President can make a request of them, but of course cannot 
demand that they expedite. Nonetheless, he would urge them to 
expedite any such investigation, were such a case to be filed.
    Mr. English. Thank you for your testimony. I look forward 
to your response, Mr. Secretary.
    Chairman Crane. I want to express appreciation again to 
both of you for being here today, and giving of your time, and 
look forward to having constant ongoing communication with you. 
Any time that it is not solicited, but you think it is 
important, don't hesitate. You know where to get a hold of me.
    Thank you both.
    Ms. Barshefsky. Thank you so much.
    Chairman Crane. And I would now like to invite our next 
panel, Curtis Barnette, chairman and chief executive officer of 
Bethlehem Steel, Robert W. Cardy, vice chairman, Specialty 
Steel Industry of North America, George Becker, international 
president, United Steelworkers of America, and Mark Glyptis, 
president of Independent Steelworkers Union.
    And gentlemen, after you all get seated, will you please 
proceed in the order I called you? Mr. Barnette, Mr. Cardy, Mr. 
Becker, and Mr. Glyptis, and try and confine your oral 
presentation to as close to 5 minutes as possible. All written 
material will be made a part of the permanent record.
    Mr. Barnette, you are first.

 STATEMENT OF CURTIS H. BARNETTE, CHAIRMAN AND CHIEF EXECUTIVE 
                 OFFICER, BETHLEHEM STEEL CORP.

    Mr. Barnette. Mr. Chairman, thank you for the opportunity 
to discuss with you today the crisis in our industry. I come 
with the heaviest of hearts because truly this is a hearing 
that should never have been necessary to hold, because the 
American steel industry is an American success story.
    During the eighties until the present time, we have reduced 
our capacity by some 30 percent, some 50 million tons. Our work 
force as a result of that, and as a result of modernization, 
has been reduced by nearly 60 percent, 300,000 jobs. We have 
spent approaching $60 billion, and we have doubled, and in many 
cases, tripled our productivity. We are the low cost, the high 
quality, the world class producer of steel in this marketplace. 
Make no mistake of that. Yet today we face a crisis in our 
industry. Why is that? What is it about our trade laws and the 
administration of them that causes us to be before you today?
    Our trade policy, and in many of my remarks, Mr. Chairman, 
and Members of the Subcommittee, I can and must of course only 
speak for myself and for Bethlehem Steel, but our trade policy 
has been a very clear one. To have open markets, to have 
market-based trade, to have that trade based on national and 
international rules, and to cause those rules to be enforced 
when trade is unfair and injurious. Something is not working. 
For that reason, I would suggest, respectfully, in view of what 
is happening in steel and because of this massive foreign trade 
deficit that we have faced, that steel trade is at the 
crossroads. I would respectfully suggest that our international 
trade policy is at a crossroads. I would be pleased to comment 
more on that, and observe with respect to that.
    As an industry in this present situation, we have taken 
three basic actions. First, legal actions, relying on our trade 
laws, antidumping and countervailing duty laws. Second, we have 
engaged with the very effective assistance of leading steel 
companies and the United Steelworkers in an educational 
campaign, Stand Up For Steel, Stand Up for America. It has been 
enormously successful. It is an educational effort to talk 
about this American success story and the injury we are facing 
because of the unfair trade that is taking place.
    Third, we are working effectively with our government, 
State and local, and Federal, in order to bring about with 
their assistance, changes in our laws where appropriate and the 
effective and full enforcement of those laws where that is 
appropriate. We have made strong recommendations to the 
President and the administration, some 10 in number. They are 
covered in my statement. We strongly urge the Congress to look 
carefully at our trade laws and be sure, be sure that in no 
respect are we more restrictive in this enormously complex era 
that we are going through in trade, no more restrictive than 
certainly our international trade obligations require us to be. 
We have made some seven specific recommendations with respect 
to legislative direction.
    Finally, my concluding remark would be that we are at a 
crossroads. If our laws are not effectively dealing with the 
injurious trade, and if those laws are not amended to cause us 
to have effective remedies at least such as the rest of the 
world, then surely the need for different courses of action has 
conclusively been established.
    I appreciate very much the opportunity to appear before 
you, Mr. Chairman, and Members of the Subcommittee. My 
statement has been filed. I hope that can be made a part of the 
record.
    [The prepared statement follows:]

Statement of Curtis H. Barnette, Chairman and Chief Executive Officer, 
Bethlehem Steel Corp.

    This opportunity to appear before the Trade Subcommittee's 
very timely hearing on the steel import crisis is very much 
appreciated.
    Last Fall, despite the immense pressures of completing the 
legislative business for the year, Congress demonstrated its 
concern and support for the American steel industry and its 
workers and stressed the need for strong and effective 
government action to help stop the surge of heavily dumped and 
subsidized foreign steel imports. The enacted budget 
reconciliation bill included a Congressional Resolution urging 
the Administration to take the necessary and appropriate 
actions to combat the unfairly traded imports flooding our 
markets. Congress has sent a clear and important message that 
the U.S. government should not allow dumped and subsidized 
foreign steel to undermine our industry and American jobs.
    This statement will consist of four parts: an update on the 
steel import crisis, a summary of actions taken by the 
industry, a reaction to the Administration's January 1999 
Report to the Congress, and an outline of legislative 
initiatives that need to be enacted. A separate statement for 
the record, submitted by the American Iron and Steel Institute, 
addresses the specific questions of what can be done to promote 
increased foreign consumption of excess steel capacity. 

                      Steel Import Crisis Update 

    The American steel industry has gone through a painful 
restructuring since the 1980s--we have reduced inefficient 
capacity by 30%, reduced jobs by 60%, made massive capital 
investments of nearly 60 billion dollars, and more than doubled 
our productivity. We emerged as the world class steel industry. 
Our foreign competitors, however, did not make the painful 
decisions made by the American industry. There continues to be 
significant foreign overcapacity which has to land somewhere, 
and it has landed in the United States--the world's most open 
market. As we examine the data detailing the sharp increase in 
steel imports and its effect on our industry, it is essential 
to keep in mind the basic cause of the problem--uneconomic 
decisions by foreign producers leading to excess worldwide 
capacity that ultimately is unfairly traded in the United 
States and thereby undermines the American industry and its 
workers.
    Record levels of unfairly traded imports in 1998 pose an 
unprecedented threat to all that our world-class American steel 
companies and employees have achieved in recent years. The 
impact of the steel import crisis in the United States has 
become even more severe in the first quarter of 1999.
    Import volumes in 1998 reached unprecedented levels (see 
Attachment 1). The United States imported a record 18 million 
tons in the first half of 1998. Nevertheless, import levels in 
the second half were even higher. During the third quarter, a 
record 12.4 million tons of imports surged into the U.S. 
market, an increase of 56 percent over the same period last 
year. The July through November imports were the five highest 
monthly totals for imports in U.S. history (see Attachment 2). 
Although imports declined in December--reflecting the impact of 
the hot rolled sheet antidumping petitions--imports of steel 
mill products for 1998 set an all-time record for a single year 
of 41,519,000 net tons--a 33 percent increase over 1997, which 
itself was a record year.
    There is only one accurate description for America--we have 
become the World's Steel Dumping Ground. While average U.S. 
import values have declined by almost $100 per ton in the past 
year, total import volume has increased by over 70 percent (see 
Attachment 3). On October 28, 1998, the Executive Director of 
the steel importers association admitted to the Journal of 
Commerce that ``there's no place left to put the steel.'' The 
docks and warehouses are full. The inventories remain at record 
levels. Yet, unprecedented levels of unfair and disruptive 
steel imports continue to stream in from every corner of the 
globe.
    Comparing 1998 with 1997's record import levels, finished 
steel imports are up 144 percent from key Asian producers (see 
Attachment 4), and up 72 percent from Russia and two other 
nations of the Commonwealth of Independent States (CIS), not 
including cut-to-length plate, which is subject to a suspension 
agreement (see Attachment 5). Other examples of 1998 import 
surges include Australia (up 117 percent) and South Africa (up 
106 percent).
    More than half of the total import surge in 1998 has been 
concentrated in hot-rolled carbon steel flat-rolled products 
(see Attachment 6), which explains why this is the product area 
covered by the initial trade cases filed earlier this year by 
U.S. steel companies and the USWA. A closer look at the data 
shows that flat-rolled imports have surged sharply since the 
first quarter of 1998 (see Attachment 7), and significantly 
higher import volumes and substantially lower average unit 
values are especially pronounced for imports of hot-rolled 
carbon steel flat products from Japan, Russia and Brazil (see 
Attachments 8-10).
    It is important to emphasize, however, that this import 
surge is not limited to hot-rolled carbon products or to these 
three countries alone. With U.S. imports from nearly 40 
countries having exceeded their 1997 totals (see Attachment 
11), steel import market share is rising in several key product 
lines (see Attachment 12), and import surges, both by country 
and by product, are occurring across-the-board.
    In one dramatic example, U.S. imports of cut-to-length 
carbon steel plate from South Korea have skyrocketed since June 
(see Attachment 13), and more cut-to-length plate from Korea 
entered the United States in a 4-month period, from August 
through November 1998, than in the previous 7 years combined 
(see Attachment 14). And these are not the only examples. More 
plate in coil entered the U.S. from Japan in the last 3 months 
than in the previous 10 years combined (Attachment 15), and 
more cold rolled sheet entered the U.S. from Korea in the last 
4 months than in the previous 5 years combined (Attachment 16).
    This is a supply-driven crisis, in which an already 
enormous world steel overcapacity problem has been made much 
worse by major structural economic failures in Asia and the 
CIS. Today, we have over 300 million tons, or roughly one-third 
of total world steel capacity, desperate for new markets. This 
current crisis is deeply troubling, causing serious injury to 
American steel companies and employees, and it is unique in 
three respects:
     First, worldwide overcapacity and the failure of 
foreign producers to execute the difficult restructuring 
decisions made by the U.S. producers continues to undermine our 
industry and workers. The problems caused by this overcapacity 
have been exacerbated by the recent global macroeconomic 
developments, from extreme currency shifts to severe economic 
downturns abroad, which clearly are beyond the ability of U.S. 
producers and workers to control.
     Second, no one can recall a time when American 
steel prices fell as far as fast in a period of still 
relatively strong U.S. market demand. The stark truth is that 
dumped and subsidized imports are deriving most of the benefits 
of our own successful efforts to grow the demand for steel in 
the United States and North America.
     Third, and perhaps most troubling of all, the 
serious import injury this time is threatening to destroy an 
American success story of industrial revitalization, an 
industry that is once again the world leader in labor 
productivity and the application of state-of-the-art 
steelmaking technology. This time, unlike in the early-mid 
1980s, major structural economic failures abroad are 
threatening the viability of a world-class, highly competitive 
American steel industry--and with it, thousands of high skilled 
U.S. jobs.
    Recent press reports and public news releases detail the 
effects of this accelerating national crisis. Unprecedented 
levels of unfairly traded and disruptive steel imports have 
caused a large and growing number of American steelworkers to 
experience layoffs, short work weeks or reduced pay incentives. 
And for American steel companies, these surging levels of 
imports, at prices far below the cost of production, have 
resulted in lower shipments, large production cuts, significant 
declines in capacity utilization, lost orders, severe price 
depression, and significant financial losses. Attachment 17 is 
a listing of recent plant closings, layoffs and capacity 
reductions as of February 10, 1999.
    In addition, the adverse effects of this steel trade crisis 
are now spreading with equal intensity to key suppliers and to 
immediate downstream users, such as steel processors and 
fabricators. Steel companies and employees are taking private 
legal actions to address the crisis. However, public actions, 
including prompt, enhanced enforcement of trade laws and other 
effective actions by the Administration and the Congress, are 
needed now just to keep this crisis from getting even worse. 

                      Steel Industry Action Plan 

    In September, a three-part program was reviewed with the 
Senate and House Steel Caucuses that required both public and 
private sector responses.
    1. Trade Cases--On September 30, 1998, twelve domestic 
producers and two unions filed trade cases against hot-rolled 
carbon steel products from Russia, Japan and Brazil.
    a) On November 13th, all six members of the International 
Trade Commission voted affirmatively in the preliminary 
determination on the question of injury.
    b) On November 23rd, the Department of Commerce announced 
an affirmative preliminary finding of ``critical 
circumstances'' on the Japanese and Russian cases. The 
Department's finding means that antidumping duties may attach 
to entries of merchandise made up to 90 days prior to the 
Department's preliminary determination of dumping. This finding 
was based in part on the fact that imports from Russian and 
Japan had increased by about 100 percent during the period 
examined and, with respect to Russia, there is a history of 
dumping findings on Russian hot rolled steel in third 
countries. With respect to Japan, based on the size of the 
alleged margins and other factors, the Department found that 
importers of Japanese steel knew or should have known that the 
imports were dumped and were likely to cause injury to the U.S. 
industry.
    c) On February 12, 1999 (25 days ahead of the statutorily-
mandated time schedule), the Commerce Department made 
preliminary antidumping determinations against Japan and 
Brazil. The Japanese margins ranged from 25 to 60 percent, and 
the Brazilian margins ranged from 50 to 71 percent. The 
Department also made preliminary countervailing duty findings 
against Brazil ranging from 6 to 9 percent. These findings 
confirm the extraordinary level of unfair trade that is causing 
such serious injury to our industry, and we appreciate the 
Department's expedited handling of these cases.
    On February 22, 1999, the Department announced preliminary 
margins for Russia, and at this same time announced that it had 
reached a tentative suspension agreement with Russia on hot 
rolled products. It also announced that it had reached a more 
comprehensive steel export restraint agreement with Russia. The 
petitioners in this case have repeatedly stated their strong 
opposition to a negotiated settlement with Russia, and these 
negotiations have been conducted over our well-recognized 
objection. We are sympathetic to the importance of sustaining 
Russia's fragile market economy, but the burden of doing so 
must not fall disproportionately on one U.S. industry and its 
workers.
    Based on our understanding of the terms of the proposed hot 
rolled product suspension agreement with Russia, we do not 
believe that the agreement, if entered into, will meet the 
statutory criteria of being in the public interest and 
preventing the suppression and undercutting of prices for steel 
produced in American plants by American workers, and we have 
advised the Department and the Administration that we will 
immediately take our case to the Federal courts, and we will 
request the Congress to hold prompt hearings. Going beyond the 
strict legal criteria, we believe such an agreement undermines 
the Administration's stated commitment to strong and effective 
enforcement of our unfair trade laws and deprives our industry 
and our workers of the effective remedy to which we are 
lawfully entitled.
    Based on our understanding of the more comprehensive 
agreement with Russia, we do not believe that the agreement 
will achieve a reduction of imports of injurious and unfairly-
traded Russian steel, and would have the effect of undermining 
other legal remedies.
    d) On February 16, 1999, Bethlehem, four other domestic 
petitioners, and the USWA filed new antidumping petitions 
covering cut to length plate against the Czech Republic, 
France, India, Indonesia, Italy, Japan, Macedonia and South 
Korea. Countervailing duty petitions were also filed for six of 
these countries. There are two very significant aspects of 
these cases. First, the product involved is already the subject 
of eleven existing antidumping orders and four suspension 
agreements. It is a clear example of the phenomenon of 
international trading companies finding new sources of unfairly 
traded material to circumvent the effectiveness of our trade 
remedies and of the breadth of the world overcapacity problem. 
Second, the third largest American plate producer, Geneva 
Steel, is not a petitioner in these cases because it has 
already been forced into Chapter 11 Bankruptcy proceedings.
    We and others are actively reviewing additional state and 
federal legal actions, including additional antidumping and 
countervailing duty cases and Section 201 ``escape clause'' 
petitions. Additional cases will be filed when appropriate.
    2. Public Awareness Campaign--An informed public is 
essential as we request our government to take immediate 
actions to uphold our rights against these unfairly traded 
steel imports, and we believe we have made important progress 
in a joint industry-labor public awareness program. The USWA 
and America's leading steel companies have established a 
``Stand Up for Steel--Stand Up for America'' Campaign that 
reaches out to America and is designed to involve all 
interested parties. Numerous rallies and other public events, 
have taken place with significant community participation. 
Countless messages and letters have been sent to leading 
newspapers and other media, and a vigorous print, radio and 
television campaign to tell the public about the steel crisis 
is being conducted. And we will continue these efforts--this 
multi-steel company and USWA Campaign--as a means to educate 
the public until the crisis is resolved and fair trade 
restored.
    3. Governmental--Throughout the Fall we had a number of 
meetings with Cabinet level officers, including a meeting with 
the President and Vice President. We have recommended actions 
the Administration should take and they include:
    1) Forceful and publicly known bilateral discussions with 
all countries who are engaging in unfair trade to direct them 
to stop.
    2) Prompt and effective enforcement of trade cases brought 
by the industry.
    3) Willingness to self-initiate, or consider self-
initiating in consultation with the industry, as appropriate: 
AD, CVD, 201 and other cases.
    4) Willingness to deal with Russia by imposing a tariff on 
Russian shipments, utilizing the 1990 USSR-US agreement on 
Trade Relations and other Presidential authority.
    5) Willingness to deal with the Japanese Cartel under 301, 
by a WTO case or through the antitrust laws.
    6) Utilize CVD regulations to provide strong CVD remedies.
    7) Support for an effective steel import monitoring system.
    8) Support for trade legislation that will strengthen our 
trade laws in a manner consistent with the WTO.
    9) Have the highest qualified public servants in position 
or nominated to administer our trade laws.
    10) Have forceful statements about the crisis in the 
American steel industry made by the President, Cabinet Members 
and others to the effect that rules will be enforced when trade 
is unfair and injurious. 

                     The Administration Steel Plan 

    On January 7th, the Administration released its 
congressionally mandated report to the Congress on a 
comprehensive plan for responding to the increase in steel 
imports. The judgement from all quarters of industry and labor 
is that the plan falls short of what is required, and that has 
been forcefully communicated to the Administration. The plan is 
primarily a recitation of actions previously taken by the 
Administration. It contains four ``new'' items: a vague and 
unenforceable demand for Japanese export restraints; a ``300 
million dollar'' NOL carry back extension which was not 
requested and is of no use to Bethlehem or any other company we 
have talked to; accelerated release of steel import data which 
is helpful but falls far short of ``real time'' data provided 
by an import permit system; and trade adjustment assistance 
enhancements that are bitterly opposed by the USWA.
    Attachment 18 is a side-by-side analysis of the 
Administration's report as measured against the industry's 
requests enumerated in the previous section of this statement. 
One of the most serious deficiencies, from the industry's 
perspective, is the Administration's announced intention to 
seek a suspension agreement with Russia in the pending hot 
rolled sheet antidumping investigation. As noted above, we 
believe that such an agreement would seriously undermine the 
relief provided by law by permitting large quantities of 
unfairly-traded steel to be imported into the United States. We 
have advised the Administration that in the current 
circumstances such an agreement is inappropriate and 
unacceptable, and we will oppose it with every available 
resource.
    We continue to work with the Administration to encourage 
more meaningful action, and we believe that the January 7 
report should be viewed as a starting point rather than the 
final response to the steel import crisis. 

                           Trade Law Reform 

    In addition to what the Administration can and must do now 
under existing law to address the steel trade crisis, 
legislation is needed to cause our remedies against unfair 
trade to be more effective in these new economic conditions and 
to make sure those remedies continue to function effectively 
into the future.
    Bethlehem and the steel industry have long supported a 
trade policy based upon open, fair, rule-based and market-based 
trade, coupled with effective trade laws enforced as 
appropriate to handle unfair trade. These trade laws need to be 
firmly enforced to prevent unfairly traded imports from 
injuring U.S. industries. The trade laws, however, also must be 
improved and enhanced to the fullest extent possible consistent 
with WTO.
    It has been a full decade since the Congress last enacted 
an omnibus trade law reform bill, that was not related to the 
implementation of a trade agreement. In that decade, and 
especially in this most recent crisis period, we have learned--
with deep regret, and having suffered material and serious 
injury, that the existing laws do not provide the timely and 
effective remedies intended by Congress and permitted by WTO 
rules, and required to continue open and market-based trading.
    The steel industry has supported international agreements 
intended to open world trade. In particular, we supported the 
WTO agreements, which established new international rules for 
the trade remedies imposed from time to time by WTO Member 
governments. But we did so based on an understanding that the 
United States, with the world's largest open market, would have 
and enforce the strongest possible remedies consistent with the 
new rules. Congress intended that these laws provide remedies, 
and all too often they simply have not, and do not work.
    We intend to propose appropriate and necessary fair trade 
law reforms in the 106th Congress. Our preliminary 
recommendations include the following seven areas, and 
additional technical amendments are needed in each one of these 
areas.
    1. Section 201: Section 201 should be amended to reflect 
the standards in the WTO Safeguards Agreement, rather than the 
more restrictive standards currently in our law. There is no 
justification for the additional burden now imposed on U.S. 
industries seeking safeguard relief. In addition, in any case 
involving an ``upstream'' product that is both sold on the 
merchant market and ``captively consumed'' by domestic 
manufacturers who use it as feedstock, the statute should 
direct the ITC to measure the domestic industry's market share 
in a manner consistent with common commercial practices in the 
industry concerned.
    2. ITC injury analysis in AD/CVD cases: This is an area of 
particular and unnecessary difficulty for industries seeking 
relief against dumped and subsidized imports. Congress 
intended, and WTO rules allow, that such imports face 
offsetting duties whenever the domestic industry is injured to 
any measurable degree by the imports. Where there is an unfair 
trade practice, whether selling at less-than-fair-value or a 
subsidized product, no amount of injury should be tolerated. 
Any detectable injury should be remedied. That is the original 
intent of the Congress--but it is not what happens today. An 
industry should not have to suffer as much injury as we are 
suffering now in order to get relief. Likewise, it should not 
be necessary to wait until there is current injury in order to 
find threat of injury. To list just three of the many needed 
amendments, Congress should act this year to clarify that: (1) 
there is no need to show actual losses or layoffs in order to 
find present injury; (2) in cases where injury is developing 
rapidly, the ITC must focus primarily on the most recent 
information; and (3) any causal link between imports and injury 
is sufficient for an affirmative determination--whether or not 
there is evidence of one or more individual factors such as 
underselling.
    3. Antidumping calculations: Significant and unnecessary 
loopholes in the current law allow foreign exporters to avoid 
the law's full remedial effect by, for example, selling their 
goods through related parties in the United States. Amendments 
are needed to ensure that dumping margins are appropriately 
adjusted to prevent such manipulations. Congress should 
likewise amend the law to ensure that severe foreign currency 
depreciations do not put antidumping relief out of reach. We 
also believe that certain aspects of the current U.S. 
methodology for non-market economies need to be tightened and 
codified in the statute--especially as some of the larger non-
market economies move toward membership in the WTO.
    4. Countervailing duty calculations: The Commerce 
Department recently issued final countervailing duty 
regulations, and in doing so codified a number of balanced 
rules that can bolster the CVD remedy's effectiveness. 
Nevertheless, the Department failed to promulgate one very 
important rule that had been expressly sought by the Congress: 
a rule that changes in the ownership of subsidized factories, 
including privatizations, shall be treated as having no effect 
on the countervailability of previously received subsidies. 
This rule, along with a few other clarifications, should now be 
added to the statute.
    5. Section 301: The effectiveness of section 301 as a 
market-opening tool has waned significantly, both because of 
the WTO agreements and because of the proliferation of new and 
harder-to-reach types of foreign trade barriers. Closed foreign 
markets are an important part of the overall trade crisis in 
the steel industry. We urge that Congress update section 301 
with expanded authority for the President to address the new 
generation of private and joint public/private restraints on 
international trade. The USTR should have authority to act 
directly against foreign firms that participate in, or are the 
principal beneficiaries of, such restraints.
    6. Import Monitoring: The current delays in providing steel 
import information to the industry have been partially 
addressed through the Administration's plan, but legislation is 
necessary to implement a steel import licensing system that 
will provide ``real time'' data. Congressman Regula and others 
have introduced legislation (H.R. 412) to implement such a 
system and we commend and support that effort.
    7. WTO Dispute Settlement Review Commission: Unwarranted 
fear of future litigation in Geneva is emerging as a major 
problem in the administration of the U.S. trade laws. In large 
part, what is needed is simply a more resolute approach by the 
Federal agencies involved. However, Congress can help by 
establishing a blue-ribbon commission, comprised of federal 
judges, to review adverse WTO dispute settlement panel 
decisions. This proposal has been previously introduced by 
Senators Moynihan and Dole and publicly endorsed by the Clinton 
Administration. We believe its enactment would help to prevent 
U.S. officials from being intimidated, in carrying out the 
dictates of U.S. law, by the prospect of WTO litigation. We 
fully accept the new WTO rules and the jurisdiction of WTO 
panels to enforce those rules, but where panels stray outside 
those rules and invent new limitations on the use of U.S. trade 
remedies, some procedure must be in place to facilitate an 
appropriate Congressional response.
    These seven fair trade law reforms are a starting point to 
make more effective our existing trade law remedies. We will 
have additional suggestions as we move forward.
    In addition to H.R. 412, a number of other bills have 
already been introduced in the 106th Congress to address the 
steel crisis. They include H.R. 506, a bill to reduce import 
volumes to pre-1997 levels (which now has 160 bipartisan 
sponsors), H.R. 502, a bill to impose a 3-month ban on imports 
from four countries, and H.R. 327, a bill to provide for the 
assessment of additional retroactive antidumping duties. We 
appreciate and thank the sponsors and co-sponsors of these 
bills and others for their efforts to achieve a prompt, 
meaningful and comprehensive response to the steel import 
crisis.
    The situation described in this statement places our 
industry, and perhaps our nation, at a trade policy crossroads. 
We believe that a comprehensive and effective response can be 
based on WTO-consistent principles, but that course requires an 
Administration willing to fully utilize the remedies available 
to it under current law, and a Congress willing to make WTO-
consistent changes in our laws where they have been proven to 
be deficient. If we fail to be able to respond effectively 
within WTO rules, however, the need and requirement for an 
effective solution will surely have been established and may 
require a different course of action. The challenge is clear 
and real. Prompt, comprehensive and effective action to address 
the steel import crisis is absolutely essential if we are to 
continue our present trade policy.
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Attachment 17

                             RECENT PLANT CLOSINGS, LAYOFFS AND CAPACITY REDUCTIONS
                                            (as of February 22, 1999)
----------------------------------------------------------------------------------------------------------------
               Date                       Company          Product Affected                  Event
----------------------------------------------------------------------------------------------------------------
 1998............................  California Steel      All.................  Petitioner California Steel
                                    Industries.                                 Industries has lost 15 to 20
                                                                                percent of its sales volume so
                                                                                far this year.\1\ Consequently,
                                                                                it has had to reduce production
                                                                                operations by an equivalent
                                                                                percentage.\2\
 1998............................  LTV.................  All.................  Petitioner LTV has curtailed
                                                                                blast-furnace operations by 13
                                                                                percent.\3\ That translates into
                                                                                300,000 tons of lost production
                                                                                in the fourth quarter of this
                                                                                year.\4\
1998.............................  Steel Dynamics......  All.................  Petitioner Steel Dynamics started
                                                                                up a second caster in June, but
                                                                                is operating it at significantly
                                                                                less than its capacity.\5\
                                                                                Overall, Steel Dynamics is now
                                                                                operating at 75 percent of
                                                                                capacity even through it is one
                                                                                of the most efficient mills in
                                                                                the world.\6\
 1998............................  Gulf States Steel...  Hot Strip...........  Petitioner Gulf States Steel has
                                                                                shut down its hot-strip mill for
                                                                                one week, and plans henceforth
                                                                                to be operating the mill only
                                                                                four days a week.\7\
 9/10/98.........................  Gulf States Steel...  All.................  Gulf States Steel announces that
                                                                                it will lay off eight percent of
                                                                                its work force, and eliminate
                                                                                overtime for the remainder of
                                                                                its employees.\8\
9/98.............................  U.S. Steel..........  All.................  Petitioner U.S. Steel has reduced
                                                                                operations, and laid off 100
                                                                                workers at its Mon Valley Works
                                                                                near Pittsburgh in connection
                                                                                with a 12 percent reduction in
                                                                                output at that facility.\9\
                                                                                Additional layoffs at that
                                                                                facility are expected in the
                                                                                ``near future.'' \10\
 9/22/98.........................  U.S. Steel..........  All.................  U.S. Steel President Paul Wilhelm
                                                                                announces that the company has
                                                                                decided to keep out of operation
                                                                                indefinitely a blast furnace at
                                                                                its Gary, Indiana works with a
                                                                                capacity of 1 million tons.\11\
 9/28/98.........................  Geneva Steel Co.....  All.................  Petitioner Geneva Steel Co.
                                                                                announces that it will cut
                                                                                planned fourth quarter
                                                                                production by nearly 20 percent
                                                                                and lay off 350 workers.\12\
                                                                                This follows Geneva's lay off of
                                                                                270 workers earlier this
                                                                                year.\13\ Its corporate credit
                                                                                rating was downgraded because it
                                                                                missed an interest payment.
 9/7/98..........................  Nucor...............  All.................  Flat-Rolled Nucor announces that
                                                                                it cut production at its
                                                                                Hickman, Arkansas mill by more
                                                                                than 40 percent (i.e., by more
                                                                                than 800,000 tons) because of
                                                                                market turmoil in the wake of
                                                                                the flood of cheap imports.\14\
                                                                                Since then, Nucor announced that
                                                                                it was cutting back production
                                                                                at all of its flat-rolled
                                                                                facilities in the face of the
                                                                                import onslaught.\15\ Nucor
                                                                                announced that the effect of the
                                                                                cuts was ``10-15% reduction in
                                                                                sheet output, mostly HR coils.''
                                                                                \16\
 9/29/98.........................  Acme Metals, Inc....  All.................  Acme Metals, Inc. (``Acme''),
                                                                                files for protection from
                                                                                creditors under Chapter 11 of
                                                                                the U.S. Bankruptcy Code. Acme
                                                                                is a classic example of a U.S.
                                                                                producer that invested heavily
                                                                                in the expectation that strong
                                                                                demand would enable it to
                                                                                realize at least an adequate
                                                                                return on their business. In
                                                                                late 1996, it brought onstream a
                                                                                $370 million new slab caster
                                                                                designed to take advantage of
                                                                                its high-quality blast furnace
                                                                                operations, while linking it to
                                                                                low-cost, mini-mill style
                                                                                casting and rolling equipment.
                                                                                Acme attributed its downfall
                                                                                ``in large part to heavy volumes
                                                                                of cheap imports. . . .'' \17\
 10/98...........................  Steel Dynamics......  All.................  While Steel Dynamics does not
                                                                                plan to layoff workers, their
                                                                                compensation will be cut by 20
                                                                                percent.\18\
 9-10/98.........................  Gallatin Steel......  All.................  Petitioner Gallatin Steel is one
                                                                                of the industry's new mini-
                                                                                mills. In September and October,
                                                                                it reduced its production levels
                                                                                to 50 percent of capacity.\19\
 10/98...........................  IPSCO Steel Inc.....  Plate, Hot Rolled     Petitioner IPSCO Steel Inc.,
                                                          Sheet.                which only recently ramped up
                                                                                production at its new mill in
                                                                                Iowa (which makes both plate
                                                                                products and hot-rolled sheet),
                                                                                has scaled back operations from
                                                                                seven to five days a week.\20\
 10/98...........................  Weirton.............  All.................  According to Weirton Steel
                                                                                President Richard Riederer,
                                                                                employees of Weirton Steel are
                                                                                experiencing reductions in their
                                                                                take home pay ranging from 20 to
                                                                                50 percent.\21\
 10/19/98........................  National Steel......  All.................  Petitioner National Steel has
                                                                                announced the idling of a blast
                                                                                furnace producing 1.1 million
                                                                                tons of iron at its Great Lakes
                                                                                Division.\22\ As a result, the
                                                                                steelmaking capacity at that
                                                                                unit will be reduced by 25 to 30
                                                                                percent.\23\
 10/23/98........................  Weirton.............  All.................  Weirton announces that it is
                                                                                laying off 300 workers--nearly
                                                                                10 percent of its workforce--
                                                                                ``due primarily to a loss of
                                                                                orders and the continued surge
                                                                                of steel imports, primarily
                                                                                those being illegally dumped
                                                                                into the United States.'' \24\
 10/28/98........................  Wheeling-Pittsburgh.  ....................   Company announces 18 voluntary
                                                                                layoffs at its Martins Ferry
                                                                                plant.
 10/30/98........................  LTV.................  ....................   LTV announces a one-week
                                                                                shutdown of the Direct Hot
                                                                                Charge Complex at its Cleveland
                                                                                plant. 320 workers will be laid
                                                                                off or reassigned to lower
                                                                                paying jobs during the shutdown,
                                                                                scheduled to begin Oct. 31.\25\
 11/04/98........................  U.S.Steel...........  All.................  U.S. Steel announces that it will
                                                                                cut back operations at its
                                                                                steelworks in Fairless Hills,
                                                                                Pa. by about 70 percent. The
                                                                                company will shut down
                                                                                indefinitely its 80-inch
                                                                                pickling line, cold reduction
                                                                                sheet mill, sheet annealing line
                                                                                and sheet temper mill. Several
                                                                                hundred of the 850 workers at
                                                                                the plant will be laid off.
                                                                                President Paul Wilhelm remarks,
                                                                                ``The actions we're being forced
                                                                                to take at the Fairless plant
                                                                                are a direct result of the
                                                                                record tonnages of illegally
                                                                                dumped foreign steel reaching
                                                                                this country.'' \26\
 11/09/98........................  LTV.................  Cold-rolled.........  LTV announces that it will
                                                                                permanently close cold-roll
                                                                                finishing operations at the No 2
                                                                                Finishing Department at its
                                                                                Cleveland Works. Approximately
                                                                                320 jobs are eliminated. The
                                                                                company cites dumped imports as
                                                                                one reason for the unit's
                                                                                closure.\27\
 11/19/98........................  Bethlehem...........  Sheet...............  Bethlehem Steel announces that
                                                                                about 500 workers at its two
                                                                                Washington County, Pa. plants
                                                                                will be laid off for two weeks,
                                                                                starting Nov. 23, due to
                                                                                ``record levels of imported
                                                                                steel.'' The steelmaker also
                                                                                announces a two-week shutdown at
                                                                                its Massillon, Ohio plant.\28\
 11/20/98........................  Bethlehem...........  All.................  Bethlehem Steel issues press
                                                                                release detailing the impact of
                                                                                dumped steel on the company's
                                                                                operations. Announced production
                                                                                cutbacks include a planned one-
                                                                                week shut down of the Burns
                                                                                Harbor, Ind. hot strip mill as
                                                                                well as a mill in Steelton, Pa.
                                                                                beginning Nov. 23, shift
                                                                                cutbacks at Sparrows Point, and
                                                                                the idling of plate facilities
                                                                                in Coatsville, Pa. from Dec. 24
                                                                                to Jan. 2.\29\ The Coatsville
                                                                                shutdown requires that the
                                                                                company lay off 1,000
                                                                                workers.\30\
 12/1/98.........................  Laclede.............  ....................   Laclede Steel Co. files for
                                                                                bankruptcy, attributing losses
                                                                                primarily to a surge in
                                                                                imports.\31\
 12/3/98.........................  Weirton.............  All.................  Weirton announces that it will
                                                                                temporarily idle a blast furnace
                                                                                starting Dec. 15, causing the
                                                                                short-term layoff of about 415
                                                                                workers.\32\
 12/31/98........................  Geneva..............  ....................   A Standard & Poor's report
                                                                                speculates that Geneva will
                                                                                likely file for bankruptcy.
                                                                                While the company does not
                                                                                confirm the report, a spokesman
                                                                                states that it is in discussion
                                                                                with creditors, after missing
                                                                                January's interest payment on
                                                                                its 9.5-percent senior
                                                                                notes.\33\
 1/7/99..........................  Bethlehem...........  Stainless, cold-      Bethlehem announces that, due to
                                                          rolled.               ``unprecedented levels of
                                                                                unfairly traded imports,'' it
                                                                                will close two plants located in
                                                                                Washington, Pa., and Massilon,
                                                                                Ohio, and consequently eliminate
                                                                                340 jobs at the Washington mill
                                                                                and 200 in Massilon. The plants
                                                                                contained stainless sheet and
                                                                                strip operations, as well as
                                                                                cold-rolled and finishing
                                                                                facilities.\34\ On January 27,
                                                                                after a final effort to locate
                                                                                buyers for the Massilon mill,
                                                                                the company declares that the
                                                                                mill will be closed within a
                                                                                week.\35\
 1/14/99.........................  Gulf States Steel...  Flat-Rolled.........  Moody's speculates that Gulf
                                                                                States Steel, a small integrated
                                                                                flat rolled mill in Alabama,
                                                                                will file for bankruptcy ``in
                                                                                the near future.'' \36\
 2/1/99..........................  Geneva..............  All.................  Geneva Steel of Vineyard, Utah
                                                                                files for Chapter 11, citing ``a
                                                                                dramatic surge in steel
                                                                                imports'' as the cause of its
                                                                                financial distress. The company,
                                                                                which employs roughly 2,400
                                                                                workers in Utah, is the third
                                                                                U.S. steel manufacturer to
                                                                                declare bankruptcy since
                                                                                September 1998.
----------------------------------------------------------------------------------------------------------------
\1\ Tr. at 54 (Testimony of Jim DeClusin, Executive Vice President, CSI, Inc.).
\2\ Tr. at 54 (Testimony of Jim DeClusin, Executive Vice President, CSI, Inc.).
\3\ Tr. at 63 (Testimony of J. Vail).
\4\ Tr. at 63 (Testimony of J. Vail).
\5\ Tr. at 24 (Testimony of Keith Busse, President, Steel Dynamics, Inc.).
\6\ Tr. at 24 (Testimony of Keith Busse, President, Steel Dynamics, Inc.).
\7\ Tr. at 57 (Testimony of John Lefler, President and CEO, Gulf States Steel Co., Inc.).
\8\ Tr. at 57 (Testimony of John Lefler, President and CEO, Gulf States Steel Co., Inc.).
\9\ ``Layoffs at USX cited in talk of trade meeting,'' American Metal Market (Sept. 1, 1998); ``Imports keep
  Gary Furnace idle,'' American Metal Market at 1, 12 (Sept. 23, 1998) (``Gary Furnace Idle'').
\10\ Tr. at 63-64 (Testimony of J. Vail).
\11\ See ``Gary Furnace Idle'' at 1.
\12\ ``Geneva joins list of production cuts citing import woes,'' American Metal Market at 1 (Sept. 29, 1998).
\13\ ``Geneva joins list of production cuts citing import woes,'' American Metal Market at 1 (Sept. 29, 1998).
\14\ ``Low prices force Nucor to cut production,'' Metal Bulletin at 33 (Sept. 7, 1998).
\15\ ``Nucor cuts sheet production by 15%,'' Metal Bulletin at 37 (Sept. 28, 1998).
\16\ ``Nucor cuts sheet production by 15%,'' Metal Bulletin at 37 (Sept. 28, 1998).
\17\ See ``Acme blames cheap imports for bankruptcy,'' Metal Bulletin at 15 (Oct. 1, 1998).
\18\ Tr. at 24 (Testimony of Keith Busse, President, Steel Dynamics, Inc.).
\19\ Tr. at 56 (Testimony of John Holditch, President, Gallatin Steel Co.).
\20\ ``American producers cut output as stocks mount and imports surge,'' Metal Bulletin at 19 (Oct. 8, 1998).
\21\ Tr. at 60 (Testimony of Richard Riederer, President, Weirton Steel Corp.).
\22\ ``National set to join ranks of cutbacks,'' American Metal Market at 1 (Oct. 19, 1998).
\23\ ``National set to join ranks of cutbacks,'' American Metal Market at 1 (Oct. 19, 1998).
\24\ Weirton Press Release, October 23, 1998.
\25\ ``Steel company will shut down part of Cleveland plant next week,'' AP State and Local Wire (Oct. 30,
  1998).
\26\ ``U.S. Steel, citing imports, to idle most Fairless lines,'' AP State and Local Wire (Nov. 5, 1998).
\27\ ``LTV axes Cleveland unit; 320 jobs to go,'' American Metal Market at 1 (Nov. 11, 1998).
\28\ ``Imports bring 500 more steel layoffs,'' Pittsburgh Post-Gazette (Nov. 19, 1998).
\29\ ``In Response to Inquiries,'' Press Release, Bethlehem Steel Corporation (Nov. 20, 1998).
\30\ ``Bethlehem shaves output, idles staff,'' American Metal Market (Nov. 25, 1998).
\31\ ``Laclede Steel and Two Units in Chapter 11,'' The New York Times (Dec. 1, 1998).
\32\ ``Weirton to idle blast furnace,'' American Metal Market (Dec. 4, 1998).
\33\ ``Geneva comment called `speculation','' American Metal Market (Jan. 5, 1998).
\34\ ``Bethlehem closes two plants,'' American Metal Market (Jan. 7, 1999).
\35\ ``Bethlehem moves to shut Massilon,'' American Metal Market (Jan. 28, 1999)
\36\ ``Gulf States named as candidate for bankruptcy,'' Metal Bulletin at 18 (Jan. 14, 1999).


Attachment 18

      Comparison of Administration Steel Plan and Industry Requests
------------------------------------------------------------------------
                                                   January 7, 1999
             Industry Requests                   Administration Plan
------------------------------------------------------------------------
Bilateral Discussions: Forceful and         Bilateral discussions with
 publicly known bilateral discussion with    some countries engaging in
 all offending countries.                    unfair trade have occurred.
                                             However, these discussions
                                             have not resulted in clear
                                             and enforceable commitments
                                             to stop unfair trade.
                                             Further, such bilateral
                                             discussions have not
                                             occurred with all countries
                                             engaging in unfair trade.
                                             The Administration states
                                             that it has ``told the
                                             Japanese government that we
                                             expect Japan's exports to
                                             return to appropriate pre-
                                             crisis levels.'' This U.S.
                                             government request has been
                                             rejected by the Government
                                             of Japan.
Prompt and effective enforcement of trade   The Administration has
 cases: (1) critical circumstances; (2) no   expedited current cases. It
 suspension agreement.                       also has made a critical
                                             circumstances finding.
                                             However, the Administration
                                             suggests that it will seek
                                             a suspension agreement in
                                             the Russia case, which is
                                             directly contrary to the
                                             industry's stated position.
Willingness to self-initiate AD, CVD, 201,  The Administration makes no
 and other cases.                            specific commitments
                                             regarding self-initiation
                                             of cases, under the
                                             antidumping, countervailing
                                             duty, Section 201 or other
                                             trade laws except with
                                             respect to Japan, where the
                                             Administration will
                                             consider self-initiation if
                                             Japan does not reduce
                                             exports. To be successful
                                             in current circumstances,
                                             full Administration support
                                             will be necessary along
                                             with a commitment to
                                             specific relief.
Willingness to deal with injurious Russian  The Administration ignores
 trade by imposing a tariff on Russian       the industry requests to
 shipments: (1) 1990-USSR-US Agreement on    address the Russia steel
 Trade Relations because of market           crisis through existing
 disruption--1990 Agreement; and (2) 19USC   authority under the
 2135--authority for President to impose a   existing bilateral
 duty of up to 40-45% of value.              agreement and under Section
                                             125(c). The Administration
                                             indicates, however, that
                                             despite industry
                                             opposition, it may seek a
                                             suspension agreement with
                                             Russia in the pending hot-
                                             rolled case.
Japan's Cartel: Willingness to deal with    While the Administration
 Japan's cartel activities.                  ``remains concerned about
                                             allegations by U.S.
                                             producers,'' it ignores
                                             completely the industry's
                                             requests to act against
                                             Japan's cartel through Sec.
                                              301, WTO or antitrust
                                             laws.
CVD Regulations: Utilize CVD regulations    The Administration issued
 to provide strong CVD remedies.             CVD regulations in November
                                             consistent with the
                                             Commerce Department draft
                                             regulations which did not
                                             add any further weakening
                                             provisions.
Import Monitoring System: Establishment of  The Administration proposes
 an effective import monitoring system.      to accelerate the issuance
                                             of import data, however,
                                             only when the
                                             Administration deems that
                                             there are extraordinary
                                             circumstances. The
                                             Administration does not
                                             establish a system like
                                             Canada's, nor does it state
                                             that it will seek any
                                             legislative changes
                                             necessary to establish such
                                             a system.
Trade Legislation: Support for trade        The Administration ignores
 legislation to strengthen trade laws.       completely the industry's
                                             request for support for
                                             legislation to enhance the
                                             trade laws and even fails
                                             to state its support for
                                             WTO-consistent 201.
Effective Enforcement of Trade Laws: Have   The Administration does not
 the highest qualified public servants in    address this request.
 position or nominated to administer our
 trade laws.
Presidential Statements: Forceful           There have been statements
 statements from the President regarding     of concern, but the plan
 the steel crisis.                           does not recognize that the
                                             crisis is caused by more
                                             than a few major exporters.
Tax Policy: No request....................  The Administration proposes,
                                             without having consulted
                                             the industry, extending the
                                             tax law net operating loss
                                             carry back for steel from 2
                                             to 5 years. This proposal
                                             will not benefit any U.S.
                                             steel company which is
                                             currently being injured by
                                             the unfairly traded
                                             imports. Further, it
                                             creates the false
                                             impression that the
                                             industry is being
                                             subsidized by the
                                             government.
Trade Adjustment Assistance Program: No     The Administration plans to
 request.                                    appoint a White House
                                             official to coordinate
                                             adjustment assistance for
                                             workers who lost their jobs
                                             due to unfairly traded
                                             imports. This proposal is
                                             premised on the industry
                                             losing jobs. The industry,
                                             however, is proud of its
                                             highly-skilled, capable
                                             workers and adjustment
                                             assistance is not an
                                             appropriate response to the
                                             import crisis.
World Economic Reform: Global economic      The Administration is
 reform, while critically important, is      working toward restoring
 not a steel-specific issue.                 global economic growth and
                                             ensuring market-based
                                             reform. The industry
                                             supports such efforts,
                                             however they do not address
                                             the immediate steel import
                                             crisis.
------------------------------------------------------------------------

    Chairman Crane. Mr. Cardy.

 STATEMENT OF ROBERT W. CARDY, VICE CHAIRMAN, SPECIALTY STEEL 
 INDUSTRY OF NORTH AMERICA; AND CHAIRMAN, PRESIDENT, AND CHIEF 
    EXECUTIVE OFFICER, CARPENTER TECHNOLOGY CORP., READING, 
                          PENNSYLVANIA

    Mr. Cardy. Good afternoon. My name is Bob Cardy. I am 
chairman, president, and chief executive officer of Carpenter 
Technology Corp., based in Reading, Pennsylvania since 1889.
    I am appearing before you today in my capacity as the vice 
chairman of the Specialty Steel Industry of North America. 
SSINA is a Washington, DC-based trade association, representing 
15 companies that employ over 25,000 workers. Specialty steels 
are high-technology, high-value, stainless and other special 
alloy products sold by the pound rather than by the ton. While 
shipments of specialty steel account for only about 2 percent 
of all steel produced in North America, annual revenues of 
approximately $8 billion account for about 14 percent of the 
total value of all steel shipped.
    Our industry has long been recognized as extremely modern 
and efficient, and second to none in the world. We have a 
strong history of continuous investment in plant and equipment. 
We are a world-competitive industry facing an import problem 
based solely on unfair trade. We cannot afford to in essence 
continue to subsidize our customers who are benefiting from 
predatory import pricing, unless of course, the end objective 
is the further decimation of the domestic steel industry.
    Three years ago, SSINA did a study in which we examined the 
anticipated growth in worldwide stainless capacity. We 
projected that by mid1998, new capacity would come on stream 
around the world at twice the size of the U.S. stainless 
market. At the same time, we sought a multilateral specialty 
steel agreement to reduce subsidies and encourage fair trading. 
But our efforts were rebuffed by foreign interests. To no one's 
surprise, with no MSSA in place, much of the new capacity that 
came online was built with foreign government subsidies. Even 
though market demand for stainless steel has been and remains 
strong, we knew there was simply no way that world markets 
could ever absorb the new capacity, and prices were going to be 
depressed.
    Then came the Asian crisis, and the issue of exporting 
deflation to the United States. Prices today are off about 30 
to 40 percent compared to just 3 years ago. Stainless steel 
producers recently have filed 34 trade cases against 45 
producers in 14 countries on four different product lines. We 
are finally beginning to see some improvement in some of the 
stainless prices as a result of those trade cases. However, 
real relief under our trade laws can take from two to 3 years 
from the time that exports rise to the filing of the cases, to 
the determinations by the Commerce Department and the ITC, to 
the issuance of the dumping orders, and finally, to the working 
down of the inventories that have accumulated during this 
process. The additional duties collected don't even come back 
to the damaged companies.
    Where do we go from here? The evidence is clear. Foreign 
manufacturers are willing to do anything to sell at any price 
to make a sale. Modern and efficient industries like ours must 
aggressively attack these unfair trade practices in order to 
preserve our markets. We are actively considering additional 
cases.
    The Commerce Department should recognize the devastating 
effect of the Asian financial crisis on the U.S. marketplace. 
In the past year, we have seen imports of certain stainless 
steel products from Korea surge over 50 percent. At the same 
time, the Korean won lost more than 60 percent of its value. 
Yet the Commerce Department has refused to take this dramatic 
currency devaluation into account when making its preliminary 
dumping determinations. In fact, Korean stainless steel 
producers have continued dumping their products into the United 
States with impunity. Commerce should recognize the effect of 
drastic exchange rate changes in administering the dumping 
laws.
    SSINA respectfully urges Congress to work with us and the 
administration to develop a comprehensive policy to address 
these issues. Pressure these foreign governments to discourage 
obvious unfair trade practices, and support H.R. 412, the Trade 
Fairness Act of 1999, which would improve the timeliness of 
import information and make relief under section 201 more 
readily available.
    We also support legislation to pay the dumping duties over 
to the injured U.S. industries. And finally, improve the trade 
laws to provide more effective relief to the injured 
industries. We must address the significant delay that occurs 
between the time a sector of industry begins to experience the 
impact of unfairly priced imports and the actual granting of 
relief under the trade laws. It takes too long, too much damage 
results.
    We appreciate your help in assuring that competitive, 
efficient industries such as ours are given the opportunity to 
compete in a marketplace free of cutthroat practices which 
violate both U.S. laws and the international rules of the World 
Trade Organization.
    Thank you, Mr. Chairman, for holding this timely meeting.
    [The prepared statement follows:]

Statement of Robert W. Cardy, Vice Chairman, Specialty Steel Industry 
of North America; and Chairman, President, and Chief Executive Officer, 
Carpenter Technology Corp., Reading, Pennsylvania

    Good afternoon. My name is Bob Cardy, Chairman, CEO and 
President of Carpenter Technology Corporation. I am appearing 
before you today in my capacity as the Vice Chairman of the 
Specialty Steel Industry of North America.
    SSINA is a Washington, D.C.-based trade association 
representing 15 companies which employ over 25,000 workers. 
Specialty steels are high technology, high-value stainless and 
other special alloy products sold by the pound rather than the 
ton. While shipments of specialty steel account for only about 
2 percent of all steel produced in North America, annual 
revenues of approximately $8 billion account for about 14 
percent of the total value of all steel shipped.
    Our industry has long been recognized as extremely modern 
and efficient and second to none in the world. We have a strong 
history of continuous investment in plant and equipment.
    We are a world-competitive industry facing an import 
problem based solely on unfair trade. We cannot afford to, in 
essence, continue to subsidize our customers who are 
benefitting from predatory import pricing. Our basic 
responsibility to our shareholders and employees requires that 
we file dumping and countervailing duty suits to seek 
restoration of fair pricing in the U.S. marketplace. We greatly 
appreciate the opportunity to talk about our situation today.
    Three years ago, SSINA did a study in which we examined 
anticipated growth in worldwide stainless capacity. At that 
time, we projected that by mid-1998, new capacity would come on 
stream around the world at twice the size of the U.S. stainless 
market. At the same time we sought a Multilateral Specialty 
Steel Agreement (MSSA) to reduce subsidies and encourage fair 
trading, but our efforts were rebuffed by foreign interests.
    To no one's surprise, with no MSSA in place much of the new 
capacity that came on line was built with foreign government 
subsidies. Even though market demand for stainless steel has 
been and remains strong, we knew that there was simply no way 
that world markets could ever absorb the new capacity--and 
prices were going to be depressed.
    While we knew that global capacity was increasing 
dramatically, we could not predict the second contributing 
factor to the current crisis--disastrous economic developments 
in Asia which began in mid-1997. You know the story: the 
currencies of the Asian ``tigers'' were severely weakened, 
their consumers panicked and refused to buy, and their steel 
mills, desperate for hard currency, began the sale of the 
decade--with no thought of profitability or even costs of 
production.
    As a result of excess capacity funded by government 
subsidies and the unpredicted effect of the Asian crisis, the 
price crunch was much more severe than we anticipated. Prices 
today are off about 30 to 40 percent compared to just three 
years ago.
    To counter the surge of unfairly traded specialty steels 
entering the country, we knew it would be necessary to begin 
the long, arduous and expensive task of filing antidumping and 
countervailing duty trade cases. Over the last 35 years, SSINA 
has all too regularly found it necessary to challenge the 
unfair international trading practices of our trading partners 
around the world. In the past 18 months, stainless steel 
producers have filed 34 trade cases against more than 45 
producers in 14 countries on four different product lines. A 
summary is attached to my statement. It has been a difficult 
process. But, we are finally beginning to see some improvement 
in some stainless prices as a result of our trade cases. Bear 
in mind that it takes about a year and a half from the decision 
to launch cases to final decisions by the Department of 
Commerce and the ITC.
    So where do we go from here? The evidence is clear--foreign 
manufacturers are willing to do anything and sell at any price 
to make a sale. Modern and efficient industries like ours must 
aggressively attack these unfair trade practices in order to 
preserve our markets. We will continue to closely monitor 
imports. We will continue to actively pursue the trade cases 
already filed to their successful conclusion. We will fight to 
preserve existing cases as the ``sunset'' review process moves 
through the Commerce Department and the International Trade 
Commission. And, we are actively considering additional cases 
on specialty steel products and producers.
    The Administration is beginning to recognize the severity 
of the steel import situation, as highlighted when the 
Secretary of Commerce personally announced the antidumping 
margins in the stainless steel wire rod cases last summer. The 
message Secretary Daley delivered was directed squarely at 
foreign producers of all products--dumping cannot be the answer 
to the economic crisis in Asia or elsewhere. Our companies and 
employees should not be the scapegoats for other nations' 
economic mismanagement.
    The Commerce Department should recognize the devastating 
effect of the Asian financial crisis on the U.S. marketplace. 
In the past year, we have seen imports of certain stainless 
steel products from Korea surge over 50 percent. At the same 
time, the Korean won lost more than 60 percent of its value. 
Yet, for reasons that puzzle me, the Commerce Department has 
refused to take this dramatic currency devaluation into account 
when making its preliminary dumping determinations against 
Korea. In fact, Korean stainless steel producers have continued 
dumping their products into the U.S. market with impunity. Both 
Secretary Daley and Undersecretary Aaron have stated numerous 
times that they will enforce U.S. trade laws to the fullest 
extent, yet if foreign exporters are allowed to take advantage 
of a weak currency to dump product into the United States, they 
will be beyond the reach of our dumping law--clearly not what 
Congress intended. The Commerce Department should recognize the 
effect of drastic exchange rate changes in administering the 
dumping law.
    We simply will not allow our efficient, technologically-
superior U.S. specialty steel industry and the valued jobs of 
our dedicated workforce to be destroyed by illegal foreign 
trade practices. I urge you to join us in protecting the 
sanctity of our trade laws and to oppose at every opportunity 
any attempt to weaken them.
    SSINA joins with other steel trade associations in urging 
the Congress to work with us and the Administration to develop 
a comprehensive policy to address these issues. We urge that 
the following steps be taken:
     Administration pressure on foreign governments to 
discourage unfair trade practices such as dumping and 
subsidization;
     Expeditious handling of trade cases on specialty 
steel products;
     Ways and Means Committee support for H.R. 412, the 
``Trade Fairness Act of 1999,'' and legislation to pay the 
dumping duties over to injured U.S. industries; and
     Legislation to improve the trade laws to provide 
more effective relief to injured industries.
    We are working with our colleagues in the steel industry 
and other industries to develop specific legislative proposals. 
These will be provided to you shortly.
    The specialty steel industry is on full alert in monitoring 
specialty steel imports and reported foreign efforts to 
circumvent U.S. trade laws. We appreciate your help in assuring 
that competitive, efficient industries such as ours are given 
the opportunity to compete in a marketplace free of cutthroat 
practices which violate both U.S. laws and the international 
rules of the WTO. Thank you, Mr. Chairman, for holding this 
timely hearing.
      

                                


ATTACHMENT

  Stainless Steel Producers and Unions--Status of Unfair Trade Cases by
                Major Product Line Filed in 1997 and 1998
------------------------------------------------------------------------

------------------------------------------------------------------------
Product...........................  Stainless Steel Rod
Date Filed........................  July 30, 1997
Named Countries...................  Italy, Germany, Japan, Korea, Spain,
                                     Sweden, Taiwan
Status............................  The case concluded with the issuance
                                     of final antidumping and
                                     countervailing duty (CVD) orders by
                                     the Commerce Department on 9/15/98.
                                     The duties range up to 34%, with
                                     penalties extending back to 3/5/98.
                                     The International Trade Commission
                                     (ITC) voted on final injury
                                     determination on 9/1/98. Excluding
                                     Germany, ITC concluded that imports
                                     from six of the seven named
                                     countries caused injury to
                                     producers.
Next Step.........................  On 10/15/98, appeals were filed with
                                     Court of International Trade.
                                     Successful appeals would result in
                                     a significant increase in the
                                     antidumping duties levied on
                                     imports from Korea and the
                                     assessment of antidumping duties on
                                     imports from Germany. The industry
                                     will vigorously pursue the appeals
                                     process with the hope of a decision
                                     by year-end 1999.
Product...........................  Stainless Steel Round Wire
Date Filed........................  March 27, 1998
Named Countries...................  Canada, India, Japan, Korea, Spain,
                                     Taiwan
Status............................  On 6/4/98, ITC preliminarily
                                     determined that imports from the
                                     named countries are injuring the
                                     domestic industry. In 11/13/98,
                                     Commerce set preliminary
                                     antidumping duties ranging up to
                                     36% on imports from the subject
                                     countries.
Case Concludes....................  The ITC and Commerce will conclude
                                     their investigations and final
                                     antidumping duty orders will be
                                     announced in early April 1999.
Product...........................  Stainless Steel Plate In Coils
Date Filed........................  March 31, 1998
Named Countries...................  Belgium, Canada, Italy, South Korea,
                                     South Africa, Taiwan
Status............................  On 5/15/98, the ITC voted
                                     preliminarily that imports from the
                                     named countries are injuring the
                                     domestic industry. On 9/1/98,
                                     Commerce issued preliminary CVD
                                     determinations against Korea,
                                     Italy, Belgium, and South Africa
                                     ranging up to 15%. On 10/27/98,
                                     Commerce announced preliminary
                                     antidumping duties ranging up to
                                     68% on imports from the six named
                                     countries. Subsequently, on 12/3/
                                     98, Commerce published a revised
                                     preliminary determination on
                                     imports from Taiwan and took the
                                     extremely unusual step of finding
                                     that Taiwanese producer Ta Chen
                                     Stainless Pipe and its U.S.
                                     subsidiary, Ta Chen International,
                                     engaged in ``middleman dumping'' of
                                     coiled stainless steel plate
                                     produced by Yieh United Steel Corp.
Case Concludes....................  Commerce will issue final dumping
                                     and CVD determinations on March 22,
                                     1999; the ITC will issue its final
                                     report by May 7, 1999.
Product...........................  Stainless Steel Sheet and Strip in
                                     Coils
Date Filed........................  June 10, 1998
Named Countries...................  France, Germany, Italy, Japan,
                                     Mexico, South Korea, Taiwan, United
                                     Kingdom
Status............................  On 7/24/98, the ITC voted
                                     preliminarily that imports from the
                                     named countries are injuring the
                                     domestic industry. On 10/30/98,
                                     U.S. producers requested that
                                     Commerce apply the ``critical
                                     circumstances'' provision of U.S.
                                     trade laws to combat recent import
                                     surges. An affirmative finding
                                     would impose antidumping duties
                                     retroactively to 9/18/98. On 11/10/
                                     98, Commerce announced preliminary
                                     CVD rates ranging up to 29% against
                                     France, Italy and South Korea. On
                                     12/18/98, Commerce announced
                                     preliminary antidumping duty
                                     margins ranging up to 59%; and
                                     decided favorably on ``critical
                                     circumstances'' as to Germany,
                                     Japan (Nippon Metals, Nippon Yakin,
                                     and Nisshin only) and Korea (Taihan
                                     Electric Wire Co. only). ``Critical
                                     circumstances'' were not found for
                                     Italy and Taiwan.
Case Concludes....................  Commerce will issue its final
                                     dumping and CVD determinations on
                                     May 20, 1999; the ITC will issue
                                     its final report by July 5.
------------------------------------------------------------------------

      

                                


    Chairman Crane. Thank you.
    Mr. Becker.

  STATEMENT OF GEORGE BECKER, INTERNATIONAL PRESIDENT, UNITED 
                    STEELWORKERS OF AMERICA

    Mr. Becker. Thank you, Mr. Chairman. Without a clear 
linkage to the global solution to the crisis of American steel, 
the Steelworkers Union cannot support the recently concluded 
agreements with Russia. The Steelworkers would be prepared to 
support a suspension agreement and comprehensive steel 
agreement, provided they were part of a global solution. In the 
absence of such a linkage, there is no justification for 
entering into a suspension agreement with Russia, particularly 
in light of the Commerce Department's finding that Russia 
engaged in an egregious level of dumping of hot-rolled steel. 
The crisis facing the American steel industry cannot be dealt 
with on a country-by-country or product-by-product basis.
    It took over 15 months of suffering before the flow of one 
steel product from three countries was restricted. It is also 
far too easy for the dumped steel to be moved from one country 
to another, and from one type of product to another. For 
example, a year ago there was a suspension agreement with 
Russia, the Ukraine, China, and South Africa to cut the link on 
carbon steel plate. These countries virtually dropped out of 
the market. Just last week, however, the Steelworkers and the 
industry had to file trade cases against eight new countries 
that have now moved into the market and dumped, and subsidized 
steel plate.
    There is also no protection against the foreign producers 
such as those in South America from purchasing Russian 
semifinished steel products and finishing them, and then 
dumping the finished products into our market. These agreements 
with Russia must either be linked to an administration-
initiated and supported 201 action on all steel products, which 
would result in global, quantitative restraints, minimum 
prices, and adequate enforcement mechanism and a moratorium on 
further shipments until the inventory of dumped steel has been 
cleared. Or two, become part of H.R. 506, this is the Visclosky 
quota bill, and Senate bill 395, which is Senator Rockefeller's 
bill, which would roll back all steel imports to the precrisis 
levels.
    The comprehensive steel agreement, while flawed as 
described above, does have the virtue of clearly demonstrating 
that the administration can if it wishes use its authority to 
limit the flood of foreign steel into this country. We call on 
the administration to demonstrate the same resolve, broaden 
their focus, and address the problem in its entirety. We call 
upon this Subcommittee to move the quota bill, H.R. 506.
    Mr. Chairman, I would add though that the Steelworkers 
Union and its members are losing confidence and trust in this 
process. We played by the rules for 15 months while processing 
the trade cases. We lost over 10,000 steelworkers. Three 
companies have been bankrupt. Then finally winning the cases to 
Japan, Brazil, and Russia, only to find that the government 
tells Russia that they will not be held accountable for the 
illegal dumped steel.
    Today I find that the government is initiating the same 
kind of action with Brazil on a suspension agreement. I would 
question is Japan next. I think it is essential that we move to 
solve this problem. These countries control that the rollback 
in steel, the quantitative amounts of steel that showed up in 
January, this is controlled just like it was controlled when 
they dumped huge levels into the market, the huge surges. They 
have rolled them back. They can ship it just as easily to 
another country and they can increase it. They can ship product 
lines. We need to solve this before we virtually lose the steel 
industry that we know in America today.
    Thank you very much.
    [The prepared statement follows:]

Statement of George Becker, International President, United 
Steelworkers of America

                          I. THE STEEL CRISIS

    Mr. Chairman and distinguished members of the Ways and 
Means Subcommittee on Trade, thank you for inviting me to 
appear before you today to discuss what is truly a crisis in 
the American steel industry and for steelworkers all across the 
country.
    Today, the jobs and future of steelworkers all across 
America are being threatened by a flood of foreign steel, much 
of which has been illegally dumped into our market. Already, 
over 10,000 steelworkers' jobs in basic steel, iron ore mining, 
and coke production have been lost. Thousands more have seen 
their work hours and their paychecks cut as their employers 
have adjusted to the grim reality of empty order books and lost 
customers. The list of companies where steelworkers have lost 
their jobs or had their work hours and paychecks cut grows 
longer every day. Gulf States Steel in Gadsden, Alabama; Geneva 
Works in Provo, Utah; Bethlehem Steel's Lukens Division plants 
in Houston and Washington, Pennsylvania, and their Sparrow's 
Point plant in Baltimore, Maryland; WCI, Inc., in Warren, Ohio; 
USX's Fairless Works in Bucks County, Pennsylvania; North Star 
Steel in Texas, and LTV's Cleveland Works in Ohio. The list 
goes on and on. Several steel companies have already been 
forced into bankruptcy as a result of the current crisis, 
including Geneva, Laclede, and Acme.
    Perhaps worst of all, the crisis we are in today was both 
predictable and preventable. We are in a crisis today because 
for over a year, our policymakers ignored our warnings as 
foreign producers dumped millions of tons of steel into the 
U.S. market.
    When the Asian currencies collapsed in late 1997 and early 
1998, we warned that if decisive action was not taken that 
foreign-made steel would be dumped into the American market. We 
warned that the International Monetary Fund's (IMF) insistence 
upon export-based solutions to the economic problems facing 
nations in Asia, eastern Europe, Latin America, and Russia 
would be a prescription for disaster for our own manufacturing 
industries. We warned that the longer action was delayed, the 
more damage would be done, and the more difficult this problem 
would be to solve. Our warnings fell on deaf ears.
    Unfortunately, our predictions have now been realized.
    1998 was a disastrous year for the steel industry and our 
steelworkers. Last year, the U.S. imported a record 41 million 
tons of steel. That's an increase of one-third over the volume 
of imports the preceding year of 1997. From July through 
November last year, each month's steel import figures were the 
highest monthly totals in history. In fact, our total volume of 
steel imports in 1998 was nearly half of the total volume of 
shipments by the entire U.S. steel industry.
    Almost a year ago, in March 1998, the U.S. steel industry 
was operating at 93 percent of capacity. Today, in February 
1999, the industry is operating at only 74 percent of capacity 
despite a strong U.S. economy and a correspondingly strong 
demand for steel. This decline in domestic capacity has 
occurred simultaneously with the huge flood of steel imports, 
which has arrived on American shores since the summer of 1997. 
While the volume of imported steel has surged, average import 
values fell by almost $100 per ton last year.

                          II. THE HUMAN IMPACT

    Mr. Chairman, there is a human face behind all of these 
cold statistics about import levels, unused capacity, and 
import values.
    Steelworkers work hard for a living. They work in some of 
the hottest, noisiest, and most dangerous work places anywhere 
and yet they take great pride in what they do. Many come from 
families where their fathers, grandfathers, and even great 
grandfathers worked in this industry. They are the people who 
have helped to build America. They have made the steel that has 
built our skyscrapers and our bridges and they are the same 
people who have made the steel used to defend America 
throughout its history. They are proud people. They have 
repeatedly shown their willingness to compete in the world 
market, but they cannot compete if the rules of international 
trade are not fair or if our trade laws are being violated with 
no sanctions.
    Many of us have bitter and painful memories of the last 
steel crisis in the late 1970s and early 1980s when over 
350,000 steelworkers lost their jobs. Four hundred forty-seven 
(447) steel making facilities were shut down. Twenty-five steel 
producers went into bankruptcy.
    While many found other jobs, many more never worked again. 
The economic and social costs of that crisis were staggering. 
Many steelworkers lost homes, automobiles, health insurance, 
and maybe worst of all, lost hope. There were increased 
incidents of substance abuse, mental health problems, marital 
problems, and even suicides. Communities in large steel-
producing states, such as Pennsylvania, Ohio, and Indiana, saw 
a large portion of their tax base disappear as steelworkers 
went from being taxpayers to being recipients of unemployment 
insurance, food stamps, and welfare payments from federal, 
state, and local governments.
    Just look at the steel industry in Pennsylvania in 1980 and 
where it is today in 1999. In the Mon Valley near Pittsburgh in 
1980, 6,500 steelworkers were employed at the USX Homestead 
mill. Another 700 were employed at the Carrie Furnace. The 
Duquesne Works employed about 2,200. National Tube had 
approximately 5,000 steelworkers on the job. Today, in 1999, 
all of those plants have closed and all of those jobs are gone. 
The remaining steel mills in Pennsylvania and across the 
country have significantly scaled back their work forces, in 
many instances by more than half.
    In the iron ore mining industry in northeastern Minnesota, 
employment fell from 16,000 jobs in 1980 to 1,500 in 1982. In 
fact, northeastern Minnesota saw its gross domestic product 
plunge by 50 percent as 28,000 people left the region during 
the 1980s. This same scenario was repeated in scores of other 
steel communities in Pennsylvania, Ohio, New York, Indiana, and 
Illinois.
    We simply cannot go through this same experience again. If 
we do not act decisively in the present crisis, there will be 
no American steel industry in the 21st century.
    When steelworkers lose their jobs, the consequences go far 
beyond just the steel industry. Unemployed steelworkers cannot 
afford to buy homes, cars, appliances, or much of anything 
else. Businesses, which depend upon steelworkers bringing home 
a paycheck find that their business is also hurt when 
steelworkers lose their jobs. Likewise, state and local 
governments that depend upon the income tax revenue from 
steelworkers' earnings and sales tax revenues from their 
purchases find that the revenues, which they need to finance 
fire protection, law enforcement, education, highways, and more 
for the benefit of the entire community, decline when 
steelworkers lose their jobs.
    When a steelworker permanently loses his or her job, that's 
usually another name, or several family members' names, added 
to the list of some 42 million Americans who have no health 
insurance in the richest country in the world.
    Two decades ago, the experts said that the American steel 
industry had become bloated, inefficient, and noncompetitive 
with foreign-made steel from countries like Japan, Korea, and 
Germany. After cutting 350,000 jobs and after investing over 
$50 billion in modern electric furnaces, continuous casters, 
and other modern steel making technologies, the American steel 
industry was reborn.
    American steelworkers have become the most productive 
steelworkers in the world. Since 1980, productivity has 
increased by 169 percent, or 5.5 percent each year. In fact, 
the productivity of steelworkers has increased far faster than 
that of other workers in other industries. While the price of 
an automobile has increased by 50 percent since 1980, the 
consumer price index has increased by 97 percent since 1980, 
and a ticket to a baseball game has increased by 200 percent, a 
ton of American-made steel costs no more today than it did in 
1980. By any measure, this has truly been one of the greatest 
comeback stories of all time.
    While some downstream users and consumers of steel products 
may not share our alarm about the collapse of steel prices, 
this cannot be a healthy economic development in the long run. 
While a ton of American-made steel costs no more today than it 
did 19 years ago, and in spite of the recent collapse in steel 
prices, auto makers, appliance makers, and other downstream 
users have not cut the prices of their products for consumers. 
They are not passing on their cost savings to consumers.
    The hard reality of economics is that many domestic steel 
producers will not survive if they cannot earn a reasonable 
profit. No business can operate indefinitely by losing money. 
When those companies go out of business, the industry becomes 
more concentrated and such concentrations inevitably lead to 
higher prices in the long run. Such higher prices will not be 
beneficial to consumers of steel products.
    Make no mistake about it, the domestic steel industry is 
not in a crisis today because it is unproductive, inefficient, 
or overpriced. It is not in a crisis because it provides its 
workers with decent pay and benefits. It is in a crisis because 
of illegal dumping, ineffective trade laws, and because our 
government has not embraced a policy of preserving this 
nation's industrial manufacturing base.

                   III. THE ADMINISTRATION'S RESPONSE

    On January 7, 1999, the Clinton Administration announced 
what it called ``A Comprehensive Plan for Responding to the 
Increase in Steel Imports.'' As I said in my January 8 letter 
to the President, ``Unfortunately, this plan is neither 
comprehensive nor terribly responsive.'' The four key points in 
the Administration's plan were: 1.) a vague and unenforceable 
demand for export restraints by Japan; 2.) the accelerated 
release of import data; 3.) a new $300 million tax credit for 
the steel industry; and 4.) trade adjustment assistance for 
displaced steelworkers.
    Let me be clear: threats against Japanese exports are 
meaningless unless such threats are enforceable. While the 
accelerated release of steel import data is helpful, unless 
further steps are taken, this only ensures that we will be 
getting bad news about steel dumping and import surges sooner 
rather than later. Three hundred million dollars ($300 million) 
of tax relief for the steel industry and more money for trade 
adjustment assistance will do nothing to save the market for 
American steel companies and save the jobs of steelworkers here 
at home. In fact, in the absence of further effective measures, 
these proposals represent a surrender of our markets, the 
surrender of steelworkers' jobs, and a further step toward the 
dismantling of our domestic industrial manufacturing base.
    On a more positive note, the United Steelworkers of America 
is pleased with the February 12, 1999 preliminary decision by 
the Commerce Department in the anti-dumping and countervailing 
duty investigations on hot-rolled steel from Japan and Brazil. 
In the case of Japan, anti-dumping margins ranged from 25 
percent to 67 percent. For Brazil, margins ranged from 50 
percent to 71 percent. The International Trade Commission (ITC) 
will make a determination on the issue of injury to the 
industry. Clearly, these preliminary anti-dumping margins 
confirm what the Steelworkers union and the industry have 
alleged; illegally dumped steel is destroying our domestic 
steel industry and taking the jobs of American steelworkers.
    Steel and the steel industry are vital to protecting 
America's national security interests. I would remind you that 
it is American-made steel that is built into the aircraft 
carriers and Navy ships built by steelworkers at Newport News 
Shipbuilding Company in Newport News, Virginia. What would have 
happened in 1941 if America had no steel industry and was 
instead dependent upon Japan or Germany for its steel? Can we 
afford to permit this industry to fail and to become reliant 
upon foreign steel producers from Russia, China, Korea, and 
elsewhere for such a vital product?

                     IV. THE CONGRESSIONAL RESPONSE

    Several bills have been introduced in the 106th Congress to 
address the plight of steelworkers and the steel industry. 
These bills have attracted broad bipartisan support.
    H.R. 327 by Representative Aderholt, provides for the 
assessment of anti-dumping duties on entries of steel products 
made prior to the effective date of any anti-dumping order 
issued in the current investigation.
    The Chairman of the House Steel Caucus, Representative 
Regula, has introduced H.R. 412, the ``Trade Fairness Act of 
1999.'' This bill would amend the injury test for a safeguard 
action by eliminating the current requirement in the trade law 
that imports be a ``substantial'' cause of injury to a U.S. 
industry in order for the International Trade Commission (ITC) 
to recommend relief to the President. Additionally, H.R. 412 
would establish a steel import permit and monitoring program so 
that the U.S. Government can obtain and analyze import data 
more promptly. A similar bill, S. 261, by Senator Specter, has 
been introduced in the Senate.
    Representative Traficant has introduced H.R. 502, the 
``Fair Steel Trade Act,'' to impose a three-month ban on 
imports of steel and steel products from Japan, Russia, South 
Korea, and Brazil.
    All of these bills highlight the distress that the steel 
industry faces and propose actions which would be helpful. One 
bill in particular, however, deserves strong bipartisan 
support.
    H.R. 506, the ``Stop Illegal Steel Trade Act of 1999,'' by 
Representatives Visclosky, Ney, Kucinich, and Quinn, would 
require the President to take action, including the imposition 
of temporary import quotas, tariff surcharges, or negotiated 
voluntary export restraint agreements, or other measures, so 
that the volume of steel products coming into the U.S. does not 
exceed the average volume of monthly steel imports during the 
36-months preceding July, 1997 when the current crisis began.
    To date, over 164 House members have become cosponsors of 
H.R. 506. Also, a similar measure, S. 395, has been introduced 
in the Senate by Senators Rockefeller and Specter.
    It is our view that H.R. 506 provides the most effective 
opportunity for bringing a quick end to the current steel 
crisis. We are hopeful that the threat of implementing this 
legislation will help to curtail the continuing surge in 
foreign steel imports into the U.S. Drastic circumstances call 
for a drastic response. H.R. 506 will give the steel industry 
and steelworkers time to get back on their feet and will give 
our government time to negotiate a worldwide agreement on steel 
imports into the U.S. The bill would expire three years after 
enactment.

        V. THE INADEQUACY OF THE WORLD TRADE ORGANIZATION (WTO)

    Mr. Chairman, many critics, including those in the 
Administration and here in Congress, have argued that some or 
all of these proposed bills violate U.S. commitments to the 
World Trade Organization (WTO) or other international trade 
agreements. The Europeans have also filed an action before a 
WTO tribunal seeking to bar the application of the 1916 Anti-
Dumping Act. If the Europeans' view of our anti-dumping law is 
upheld, it will mean that when the U.S. entered into the WTO 
global trade arrangement, we unwittingly wiped long-standing 
legislation off our own statute books and willingly agreed to 
wear handcuffs that prevent our addressing massive, industry-
threatening trade law violations. Certainly, this could not 
have been Congress' intent in originally approving U.S. 
participation in the WTO.
    If, as we are constantly being told by our critics, our 
commitment to the WTO prevents us from effectively addressing 
the crisis caused by illegally-dumped foreign steel in the U.S. 
market, then it is time for Congress and this Administration to 
reconsider that commitment at the earliest possible 
opportunity.
    Ironically, while the Administration has insisted that they 
cannot take more forceful action without running afoul of the 
WTO, it is the Administration's own proposal for $300 million 
in tax credits for the American steel industry that is now 
being challenged by our trading partners as an illegal 
government subsidy under the WTO. Apparently, it is the view of 
some of our trading partners that there is literally nothing 
that the President or Congress can do, or should do, to stop 
this catastrophe for steelworkers and the steel industry. Such 
a view is preposterous.
    None of our trading partners would allow such a vital 
industry in their own country to be destroyed in the name 
adherence to the WTO or any other international trade 
agreement. Indeed, our trading partners have erected many 
barriers to the import of American-made products into their 
markets in order to protect their own domestic industries.
    December 8, 1999 will mark the fifth anniversary of the 
Uruguay Round Agreements Act and U.S. participation in the 
World Trade Organization. The Act mandates a review by the 
Administration and Congress of the effects of the WTO on 
domestic interests and the costs, as well as the benefits, to 
the United States of its past participation. Most importantly, 
Congress must consider the matter of this nation's continued 
participation in the WTO. Should Congress conclude that 
continued participation in the WTO is not in the national 
interest, it can, under the law, require the withdrawal from 
the WTO by enacting a joint resolution this year. What's more, 
if Congress does not act, we must remain in the WTO until the 
next opportunity for review and withdrawal, which does not 
occur again until December 2004.
    These issues of our sovereignty and the enforcement of our 
laws to prevent or stop irreversible economic injury to vital 
industries must be carefully examined if Congress is to make a 
sound decision about our continued participation in the WTO.

                         VI. THE NAFTA DISASTER

    Mr. Chairman, it would be bad enough if the only recent 
crisis we faced was from foreign steel being illegally dumped 
in our market. Other events, however, have magnified the impact 
of the current crisis for steelworkers.
    The implementation of the North American Free Trade 
Agreement (NAFTA) has been an unmitigated disaster for 
steelworkers and working people all across the United States as 
well as workers in Canada and Mexico. By our government's own 
admission, over 8,000 steelworkers have lost their jobs and 
been certified as eligible for NAFTA trade adjustment 
assistance. Nationwide, nearly half a million workers have lost 
their jobs because of NAFTA.
    NAFTA has transformed the U.S.' $1.7 billion trade surplus 
with Mexico in 1993 into a nearly $15 billion trade deficit 
last year in 1998. During the five years from 1993 to 1998, 
other developed countries--such as those in the European 
Union--have maintained their trade surpluses with Mexico, even 
during the 1995 devaluation of the peso. Likewise, the U.S. 
trade deficit with Canada for 1998 was over $18 billion.
    The so-called ``free trade'' system that NAFTA established 
across North America has given predatory corporations a license 
to hunt for the cheapest labor and the lowest environmental and 
safety standards on the continent. To make matters worse, the 
twisted logic of NAFTA encourages even socially responsible 
corporations to join this hunt in order to remain competitive.
    No working person in Canada, Mexico, or the U.S., should be 
forced to trade hard-earned economic security for the 
``opportunity'' to work harder and longer for less. And no 
community anywhere should have to accept lower health and 
safety standards and environmental protection standards to keep 
some of its citizens working. But it is precisely this kind of 
blackmail which has ravaged workers in all three countries.
    As a result of NAFTA, thousands of companies have moved 
their U.S. operations to Mexico. They include many familiar and 
prominent names: RCA television sets, Oshkosh overalls, 
American Standard plumbing fixtures, TrueTemper hardware 
products, Fruit of the Loom t-shirts and underwear, Farah 
pants, Woolrich coats, Smith-Corona typewriters, Goodyear 
tires, and the list goes on and on.
    NAFTA has failed workers and not just here in the U.S. It 
has also failed in Mexico where workers have seen their wages 
drop by at least 27 percent since NAFTA was implemented. And 
it's failed in Canada, which has lost more than 137,000 highly 
paid industrial and manufacturing jobs.

           VII. THE LOSS OF OUR MANUFACTURING INDUSTRIAL BASE

    The current steel crisis, the inadequacy of the WTO, and 
the negative effects of NAFTA are all symptoms of a profound 
long-term problem facing America: the loss of our industrial 
manufacturing base.
    While most economic observers have noted the overall strong 
performance of the U.S. economy, these observers often overlook 
a very different story of what is happening in manufacturing. 
According to the Bureau of Labor Statistics (BLS), from 
December 1997 to December 1998, our nation lost 237,000 
manufacturing jobs.
    Why does this matter? Because many of these lost 
manufacturing jobs are the kind of jobs that pay decent living 
wages which can support a family and which allow families to 
buy homes, cars, clothing, and the necessities of life. They 
are also the kind of jobs that provide workers and their 
families with health insurance and pensions so that workers 
need not fear living out their older retirement years in 
poverty. The loss of manufacturing jobs also guarantees that 
the continuing and widening disparities in incomes between the 
highest income earners in America and those at the lower end 
will only continue to get wider in the future.
    The Commerce Department recently announced that the trade 
deficit for 1998 hit a record $168.6 billion, and may go even 
higher this year. I was dismayed to read that Mr. Robert J. 
Shapiro, the Undersecretary of Commerce for Economics and 
Statistics stated, ``We believe the trade deficit represents 
the strength of the U.S. economy compared to the weakness 
abroad.'' I strongly disagree with Mr. Shapiro's assessment. 
This $168 billion trade deficit represents lost industries and 
lost jobs for America's workers. The Economic Policy Institute 
has estimated that a $100 to $200 billion increase in the trade 
deficit would mean the loss of 700,000 to 1.5 million jobs in 
manufacturing and other industries producing tradable goods.
    The issue before us is not whether there's going to be a 
global economy. The global economy is a reality. The real issue 
is what kind of global economy are we going to have?
    Is it going to be a global economy that truly lifts the 
wages and living standards of all workers, or is it going to be 
a global economy that only works for the benefit of those with 
great capital, wealth, and political power? Is it going to be a 
global economy that accelerates the destruction of our 
environment and natural resources for the benefit of a few, or 
is it going to be a global economy that protects our natural 
resources for everyone? These are fundamental questions which 
we as a nation must address.
    A recent Wall Street Journal/NBC News Poll indicated that 
58 percent of the public thinks that foreign trade has been bad 
for the U.S. economy because cheap imports have taken U.S. 
jobs. The American public has spoken up repeatedly in favor of 
fair trade. Yet our policymakers seem to have a tin ear when it 
comes to this issue. If we don't move to stop violations of our 
trade laws and if we don't ensure that trade agreements will be 
mutually beneficial for all Americans, then there will continue 
to be this deep antipathy about trade.
    Mr. Chairman, steelworkers believe in America and the 
American dream. Steelworkers have made the steel that has built 
America and defended this nation throughout its history. We are 
not asking our government for any special favor here. We are 
asking the President and this Congress to stand up for us just 
as we have stood up time and time again for our country. Please 
do not wait too long to act or there will be no steelworkers 
and no steel industry to stand up for.
    Thank you.
      

                                


    Chairman Crane. Thank you, Mr. Becker.
    Mr. Glyptis.

STATEMENT OF MARK GLYPTIS, PRESIDENT, INDEPENDENT STEELWORKERS 
                 UNION, WEIRTON, WEST VIRGINIA

    Mr. Glyptis. Thank you for the opportunity to appear here 
today. As a brief introduction, I am president of the 
Independent Steelworkers Union, which represents 4,000 members 
at Weirton Steel Corp., in Weirton, West Virginia.
    I would like to focus on the impact of the illegal steel 
dumping of foreign steel on American steelworkers. Weirton 
Steel has been an employee-owned company since 1984. We 
currently have approximately 800 employees on layoff status. 
That is nearly 25 percent of our work force. For many of those 
800 employee-owners, time is running out. It is mind-boggling 
to me how we can sit here today and talk about how things are 
getting better. Things are not getting better. The potential 
for additional layoffs exists. Weirton Steel just announced the 
number 4 blast furnace, we have a two furnace operation. One of 
our furnaces that has been idle since December will stay idle 
for an additional 6 months. That is because we are losing our 
orders to foreign countries.
    The Clinton administration is more concerned about the 
steelworkers in Russia, Japan, and Brazil, than they are about 
American steelworkers. Our people are out of work at a time 
when the demand for steel in America is at an all-time high. 
There has never been, the demand for steel has never been 
higher than it is today in this country. There are 10,000 
American steelworkers out of work, as you have heard a number 
of times here this afternoon. The potential exists if we do not 
solve this problem, for an additional 100,000 steelworkers to 
lose their jobs in this country. That is absolutely pathetic. 
Our government has betrayed the American steelworkers. As 
President Becker has indicated, there has been three steel 
companies that have gone bankrupt already. There are a number 
of other steel companies that we believe are near bankruptcy. 
We need action and we need action quickly.
    I know those numbers, those may just seem like numbers to 
you, but let me put a face to those figures. There is Rob and 
Tammy Elliot, a couple in their early thirties with two 
children. Both Rob and Tammy work at Weirton Steel. They are 
laid off from their jobs. Their State unemployment benefits and 
health care benefits run out at the end of May. You have Kevin 
Tassey, a laid off maintenance employee in the tin mill. His 
unemployment benefits and health care benefits expire at the 
end of April. That is about 3 weeks before his wife is 
scheduled to deliver their second child. Then there's Andy 
Kimerik, another laid-off employee-owner, who will be without 
unemployment benefits and healthcare benefits by May 1. Andy 
has a daughter with a brain tumor. His medical problems won't 
end when his benefits expire. Those are just a few examples of 
the many faces at Weirton Steel who need congressional help.
    You have been provided with reports and statistics citing 
the pros and cons of the illegal steel imports by other 
witnesses. I am here to ask you, ask this Subcommittee, to look 
around America and ask if we are ready to put our own 
steelworkers out of work in order to protect and provide 
steelworkers jobs around the world. Are you ready to give up 
the American steel industry? I am here to ask you, no, I am 
actually here to beg you on behalf of the men, women, and 
children of the Ohio Valley, please find a way to save Weirton 
Steel from being the latest casualty of the global economic 
war.
    If we go down, the Ohio Valley goes down. We become another 
Homestead, Pennsylvania, or Youngstown, Ohio. We cannot let 
that happen. Are we ready to give up on America? There are many 
Ohio Valleys in this great country of ours. We are all looking 
for help from our government. Our government seems more willing 
to bail out, to come up with bail out schemes in failing 
foreign economies that are designed to benefit Wall Street 
instead of the Ohio Valleys throughout this Nation. The 
American steel industry cannot be sacrificed or abandoned.
    The Independent Steelworkers Union strongly supports quota 
legislation. The Visclosky bill will ensure the volume of steel 
imports does not exceed the average monthly volume of such 
imports during the 36 months preceding July 1997. There are 
parts of other bills along with this bill that I believe could 
solve this issue. I think we could resolve this issue in a 
timely fashion if we combine a number of the bills together. 
There is the Regula bill, the Traficant bill, and other bills 
that pieces of it make a great deal of sense.
    The ISU will continue to oppose any suspension agreement. 
It is contrary to applicable laws, and is inconsistent with the 
administration's own critical circumstances findings back in 
November. Further, it is contrary to a plan to respond to steel 
imports, which the President submitted in Congress in July.
    We also oppose a comprehensive steel agreement negotiated 
with the Russians. I think George Becker covered that subject 
very well. We also strongly oppose any suspension agreement 
that does not involve a comprehensive global solution. Finally, 
we will continue to work closely with the administration and 
Congress to stop serious injury being caused to our industry 
and to restore fair trade to steel.
    I would like to thank you, Mr. Chairman, for giving me the 
opportunity to appear today. I would like to invite you to come 
down to Weirton and just see the devastation that we are facing 
today. It is significant. If we do not solve this problem, that 
valley is going to die. It is going to die. We didn't do 
anything wrong. We are the most efficient steelworkers in the 
world today, as Mr. Barnette testified. Sixty billion dollars 
has been invested in the steel industry. Unions did the right 
things and negotiated flexibly within the work force to become 
the most efficient steelworkers in the world. Something is 
wrong with our government when they would rather eliminate our 
jobs, and we are the most efficient steelworkers in the world, 
and give our jobs to Brazil, Russia, Japan, and in the case of 
Russia, they are most inefficient steelworkers in the world.
    The suspension agreement is an insult to the American 
steelworker. We need to solve this problem. We are willing to 
work with you. We want to help in solving this problem. We are 
going to solve it.
    I would like to just close and say we are proud Americans. 
We still believe in the American way of life. Please help us 
keep that American dream. Thank you.
    [The prepared statement follows:]

STATEMENT OF MARK GLYPTIS, PRESIDENT, INDEPENDENT STEELWORKERS UNION, 
WEIRTON, WEST VIRGINIA

    GOOD AFTERNOON. I WOULD LIKE TO THANK YOU FOR THE 
OPPORTUNITY TO BE HERE TODAY TO TALK ABOUT THE STEEL IMPORT 
CRISIS AND THE EFFECT THE CRISIS IS HAVING ON THE WORKING MEN 
AND WOMEN AT WEIRTON STEEL.
    AS SOME OF YOU MAY KNOW, OUR EMPLOYEE-OWNED COMPANY IS 
LOCATED JUST 30 MINUTES FROM DOWNTOWN PITTSBURGH IN WEIRTON, 
WEST VIRGINIA.
    IN 1984, THE WEIRTON STEEL CORPORATION WAS CREATED BY THE 
SACRIFICES AND EXTREMELY HARD WORK OF THE PEOPLE OF THE OHIO 
VALLEY IN GENERAL, AND THE EMPLOYEES OF WEIRTON STEEL IN 
PARTICULAR.
    THE SACRIFICES NECESSARY TO CREATE THE LARGEST EMPLOYEE 
STOCK OWNERSHIP PLAN IN THE COUNTRY REQUIRED SUBSTANTIAL PAY 
CUTS, WORK RULE CHANGES, AND A CAN DO ATTITUDE THAT CREATED THE 
MOST EFFICIENT STEELWORKERS IN THE WORLD.
    AS WE ENTERED THE 90'S, THE INDEPENDENT STEELWORKERS UNION 
CONTINUED TO TAKE THE LEAD IN NEGOTIATING THE TOUGH LABOR 
AGREEMENTS TO MAKE OUR WORKFORCE LEAN, BUT STILL HIGHLY 
COMPETITIVE.
    DURING THE PAST 15 YEARS, THE INDEPENDENT STEELWORKERS 
UNION AND WEIRTON STEEL HAVE SEEN GOOD TIMES AND BAD TIMES. WE 
HAVE PROSPERED AND SUFFERED, BUT WE SURVIVED.
    HOWEVER STARTING IN 1998, ILLEGAL FOREIGN STEEL IMPORTS 
FROM RUSSIA, JAPAN, AND BRAZIL HAVE FORCED WEIRTON STEEL AND 
THE AMERICAN STEEL INDUSTRY IN A CRISIS THAT MAY LEAVE US 
DESPERATE FOR JUST A CHANCE OF SURVIVAL.
    THE ILLEGAL HOT ROLL IMPORTS HAVE LITERALLY FLOODED OUR 
COUNTRY DRAWING DOWN PRICES AND HURTING OUR STEEL COMPANY'S 
ORDER BOOK.
    WE HAVE BEGGED THE CLINTON ADMINISTRATION TO STOP THE 
ILLEGAL DUMPING, BUT THE ADMINISTRATION APPEARS MORE CONCERNED 
ABOUT THE JOB PROSPECTS OF STEELWORKERS IN ASIA AND SOUTH 
AMERICA.
    THIS IS THE SAME PHILOSOPHY THAT LEAD TO THE NAFTA 
AGREEMENT WHICH RESULTED IN NEARLY 400,000 JOBS GOING TO MEXICO 
SINCE 1994. OUR OWN GOVERNMENT HAS ADMITTED NAFTA HAS COST US 
4,000 AMERICAN STEELWORKER JOBS.
    RECENTLY, THE COMMERCE DEPARTMENT ISSUED ITS FINDINGS 
AGAINST JAPAN AND BRAZIL. BUT THE GOVERNMENT HAS DECIDED TO 
WORK OUT A PRIVATE DEAL WITH RUSSIA AND NOT IMPOSE TARIFFS ON 
ILLEGAL RUSSIAN STEEL IMPORTS. THE CLINTON ADMINISTRATION HAS 
REFUSED TO TAKE EXECUTIVE ACTION TO STOP THE ILLEGAL IMPORTS.
    THE SUSPENSION AGREEMENT ALLOWS THE RUSSIANS TO SELL THEIR 
HOT-ROLL FOR $255 PER METRIC TON WHICH MEANS CONTINUED DUMPING 
AND INEFFICIENT RUSSIAN PRODUCERS BEING ALLOWED TO UNDERCUT 
EFFICIENT U.S. PRODUCERS WHOSE AVERAGE COST IN 1998 (AS 
PUBLISHED BY THE ITC) WAS $345 PER METRIC TON.
    WE ARE NOT BLIND TO THE SERIOUS ISSUES FACING RUSSIA. 
HOWEVER, WE BELIEVE RUSSIA CAN SOLVE ITS OWN PROBLEMS WITH 
ASSISTANCE FROM THE IMF AND OTHERS AS APPROPRIATE. WE DO NOT 
BELIEVE SACRIFICING THE JOBS OF THE AMERICAN STEELWORKERS WILL 
SOLVE THE RUSSIAN DILEMMA.
    THE RUSSIAN DEAL SHOULD INCLUDE QUANTITATIVE RESTRICTIONS, 
MINIMUM PRICES, AND ADEQUATE ENFORCEMENT MECHANISMS, AS WELL AS 
A MORATORIUM ON FURTHER SHIPMENTS UNTIL THE INVENTORY OF DUMPED 
STEEL HAS BEEN CLEARED.
    INSTEAD OF DEFINITIVE ACTION, ADMINISTRATION OFFICIALS TELL 
US WE NEED TO PUT A HUMAN FACE TO THE STEEL CRISIS.
    AS PRESIDENT OF NEARLY 4,000 UNION MEMBERS, LET ME TAKE A 
MOMENT TO PUT A FACE TO THE STEEL IMPORT CRISIS AND WEIRTON 
STEEL.
    WE HAVE TOM KAMAREC, A FIVE YEAR EMPLOYEE WHOSE DAUGHTER 
RECENTLY HAD BRAIN SURGERY. TOM'S HEALTH CARE BENEFITS RUNS OUT 
IN TWO MONTHS. UNFORTUNATELY HIS DAUGHTER'S MEDICAL PROBLEMS 
WILL CONTINUE.
    THERE'S KEVIN AND MARIA TASSEY. KEVIN WAS HIRED IN 1995. 
JUST SIX MONTHS AGO, MARIA LEARNED SHE WAS EXPECTING THEIR 
SECOND CHILD. THREE MONTHS AFTER RECEIVING THEIR NEWS, KEVIN 
WAS LAID OFF FROM WEIRTON STEEL. HIS HEALTH CARE BENEFITS WILL 
EXPIRE BEFORE THEIR BABY IS BORN.
    ALAN BROWN IS A 13 YEAR EMPLOYEE. HE ORIGINALLY STARTED AT 
WEIRTON STEEL IN 1978, WAS LAID OFF AND EVENTUALLY LOST ALL OF 
HIS SENIORITY BEFORE BEING HIRED AT THE STEEL MILL AGAIN IN 
1986.
    ALAN WAS LAID OFF LAST DECEMBER, AND THE 47 YEAR OLD FATHER 
OF THREE HAS A VERY UNCERTAIN FUTURE.
    HIS OLDEST DAUGHTER WOULD LIKE TO GO TO COLLEGE IN THE NEXT 
COUPLE OF YEARS, BUT ALAN ISN'T SURE THAT WILL NOW BE POSSIBLE.
    ROB AND TAMMY ELLIOTT BOTH WORKED AT WEIRTON STEEL. ROB IS 
A NINE YEAR EMPLOYEE IN THE BLAST FURNACE, WHILE TAMMY IS IN 
THE CLERICAL DEPARTMENT WITH FIVE YEARS OF SERVICE.
    THESE PARENTS OF TWO YOUNG CHILDREN ARE BOTH LAID OFF NOW, 
AND ROB IS DESPERATELY LOOKING FOR A JOB SO HE CAN SUPPORT HIS 
FAMILY.
    THOSE ARE JUST A FEW OF THE NEARLY 800 FACES AT WEIRTON 
STEEL WHO ARE CURRENTLY ON LAYOFF.
    WE SAW MANY OF THOSE FACES IN WASHINGTON, D.C. LAST MONTH 
WHEN WE RALLIED AT THE CAPITOL AND THE WHITE HOUSE IN ORDER TO 
SAVE AMERICAN STEELWORKERS' JOBS.
    LET ME TELL YOU SOMETHING ABOUT THE STEELWORKERS OF 
WEIRTON, WEST VIRGINIA.
    IN 1984, WE FOUGHT ATTEMPTS TO TURN WEIRTON STEEL INTO A 
FINISHING MILL AND CREATED THE COUNTRY'S LARGEST ESOP.
    IN 1984, WE HAD THE SUPPORT OF STATE AND FEDERAL OFFICIALS. 
SENATOR ROCKEFELLER, IN HIS ROLE AS GOVERNOR OF WEST VIRGINIA, 
PLAYED A KEY ROLE IN SUPPORTING THE ESOP AT WEIRTON STEEL AS 
DID SENATOR ROBERT BYRD.
    WE WERE SUCCESSFUL IN 1984 BECAUSE ALL OF US WANTED TO SAVE 
AMERICAN JOBS.
    NOW, IN 1999, WE ARE NOT ONLY FIGHTING TO SAVE WEIRTON 
STEEL, WE ARE FIGHTING FOR THE SURVIVAL OF THE ENTIRE DOMESTIC 
STEEL INDUSTRY.
    WE ARE NOT GETTING THE HELP WE SHOULD FROM THE CLINTON 
ADMINISTRATION. INSTEAD OF POSITIVE ACTION, WE ARE AT THE 
RECEIVING END OF MEANINGLESS RHETORIC.
    THE SAME MAN WHO CAMPAIGNED IN WEIRTON IN 1992 AND PROMISED 
TO SUPPORT FAIR TRADE LAWS FOR THE STEEL INDUSTRY IS NOW 
CAMPAIGNING FOR STEELWORKERS IN RUSSIA, JAPAN, AND BRAZIL.
    THE CLINTON ADMINISTRATION AND TREASURY SECRETARY ROBERT 
RUBIN ARE READY TO LET THE DOMESTIC STEEL INDUSTRY WITHER AWAY 
AND DIE.
    PRESIDENT CLINTON AND SECRETARY RUBIN ARE BETRAYING THE 
AMERICAN STEEL INDUSTRY.
    THEY KNOW THERE ARE MORE THAN 800 UNION STEELWORKERS AT 
WEIRTON STEEL WHO ARE OUT OF WORK TODAY BECAUSE OF THE CLINTON 
PHILOSOPHY OF GLOBAL ECONOMICS.
    WE WILL CONTINUE TO ASK THE CLINTON ADMINISTRATION TO HELP 
THE AMERICAN STEEL INDUSTRY. BUT WE ARE REALISTIC IN WEIRTON, 
WEST VIRGINIA. WE KNOW THE PRESIDENT WHO WAS SO WORRIED ABOUT 
HIS JOB HAS NO INTEREST IN OUR JOBS.
    I CAN TELL YOU THE STEELWORKERS AT WEIRTON STEEL ARE MAD.
    WE ARE MAD AT A GOVERNMENT WHICH APPEARS READY TO SACRIFICE 
OUR STEEL INDUSTRY FOR THE GOOD OF RUSSIAN, JAPANESE, AND 
BRAZILIAN STEELWORKERS.
    WE ARE MAD AT OUR GOVERNMENT THAT HAS WRITTEN US OFF, 
OFFERING A FEEL GOOD PROGRAM TO US AS WE LOSE OUR JOBS.
    THE OHIO VALLEY IS CURRENTLY ON LIFE SUPPORT AND WE ARE 
AFRAID THE CLINTON ADMINISTRATION IS READY TO PULL THE PLUG.
    WE ARE MAD AT THE CLINTON PHILOSOPHY THAT IS READY TO 
SACRIFICE THE AMERICAN STEEL INDUSTRY AND RELY ON FOREIGN 
STEELMAKERS FOR OUR NEEDS IN THE FUTURE.
    THIS COUNTRY WAS BUILT WITH AMERICAN STEEL.
    THIS COUNTRY NEEDS AMERICAN STEEL.
    THIS COUNTRY MUST MAINTAIN A STRONG STEEL INDUSTRY.
    THE INDEPENDENT STEELWORKERS UNION SUPPORTS COMPREHENSIVE 
LEGISLATION THAT WILL DEAL IMMEDIATELY AND DECISIVELY WITH THE 
STEEL IMPORT CRISIS.
    WE NEED A COMPREHENSIVE PROGRAM THAT WILL PROVIDE A LEVEL 
PLAYING FIELD AND ALLOW US TO COMPETE.
    THERE ARE SEVERAL PIECES OF LEGISLATION NOW BEFORE YOU AND 
YOUR COLLEAGUES IN THE HOUSE OF REPRESENTATIVES. I URGE YOU TO 
CONSIDER JOINING YOUR LANGUAGE INTO THE BEST BILL THAT WILL BE 
GIVEN THE MOST SERIOUS CONSIDERATION IN THE CONGRESS. LET'S 
AGREE ON A FAIR TRADE PROGRAM THAT CAN BE ACCEPTABLE TO THE 
ADMINISTRATION BUT WORKABLE FOR THE STEEL INDUSTRY.
    THE AMERICAN STEELWORKERS ARE THE MOST COMPETITIVE IN THE 
WORLD. JUST ALLOW US TO HAVE THE CHANCE TO COMPETE.
    WE ARE NOT ASKING FOR PROTECTIONIST LEGISLATION JUST THE 
OPPORTUNITY TO COMPETE IN A FAIR MARKET. OUR FEDERAL GOVERNMENT 
WOULD HAVE YOU BELIEVE THE AMERICAN ECONOMY IS AT AN ALL TIME 
HIGH WITH JOBS AVAILABLE FOR ANYONE WHO WANTS ONE.
    I CAN TELL YOU WE HAVE 800 STEELWORKERS AT WEIRTON STEEL 
WHO WANT THEIR JOBS BACK.
    IT'S TIME TO STOP WORRYING ABOUT THE STANDARD OF LIVING IN 
THIRD WORLD COUNTRIES AND START WORRYING ABOUT MAINTAINING 
DECENT JOBS FOR AMERICAN WORKING MEN AND WOMEN.
    I AM HERE TO ASK THIS SUB-COMMITTEE TO LOOK AROUND AMERICA 
AND ASK IF WE ARE READY TO PUT OUR OWN PEOPLE OUT OF WORK FOR 
THE GOOD OF WORKERS IN ASIA AND SOUTH AMERICA.
    ARE WE READY TO GIVE UP THE AMERICAN STEEL INDUSTRY?
    ARE WE READY TO GIVE UP ON AMERICA?
    I DON'T THINK SO AND I AM HERE TO ASK YOU TO JOIN ME AND 
STAND UP FOR STEEL AND STAND UP FOR AMERICA.
    I WOULD LIKE TO THANK YOU AGAIN FOR INVITING ME TO APPEAR 
HERE TODAY AND I WOULD LIKE TO INVITE YOU TO COME TO WEIRTON, 
WEST VIRGINIA AND MEET THE PEOPLE OF THE OHIO VALLEY WHO MAKE 
STEEL.
    WE ARE AMERICANS WHO STILL BELIEVE IN THE AMERICAN WAY OF 
LIFE. PLEASE HELP US KEEP THAT DREAM ALIVE.
    THANK YOU VERY MUCH.
      

                                


    Chairman Crane. Thank you. Were you here when Secretary 
Daley was here, made his presentation?
    Mr. Glyptis. Yes. I was.
    Chairman Crane. Because he mentioned that imports from 
Russia fell from over 600,000 metric tons in November of last 
year to less than 11,000 tons in January of this year. So that 
has got to be some consolation, moving in the right direction.
    Mr. Barnette. It is no consolation. Forgive me for reacting 
so promptly. I find it little or no consolation. In fact, one 
of the most deeply distressing events in the administration 
trade policy is to have this suspension agreement entered into 
and a comprehensive agreement entered into with Russia over the 
objection of the very petitioners who have won these cases, won 
them by 71 to 218 percent margins. It is simply inexplicable 
that this kind of agreement could be entered into.
    We have the deepest of sympathy for Russia, Mr. Chairman, 
but surely if we are going to help them, let's help them from 
the Federal Treasury. Please do not sacrifice the steel 
industry to help the cash flow of Russia. It has desperate 
problems, and we want to help them. We should help them. We 
will help them as an industry. But to say that this modest 
decline in import levels should be a consolation is simply like 
saying we took 100 percent of your property last year. Now we 
are only going to take 25 percent of your property this year, 
and expect that to be a remedy. This is simply illustrative of 
the problem.
    Chairman Crane. It doesn't sound like a modest decrease. He 
points out that if you take Russia, Japan, and Brazil, the 
three countries combined fell by 96 percent from the record 
levels in November.
    Mr. Barnette. That is because of the cases, Mr. Chairman. 
They should have fallen. Look at the dumping margins. That is 
what we want to be imposed. Let's impose the margins against 
Brazil of 51 to 71 percent, against Russia from 71 to 218 
percent, and against Japan from 25 to 68 percent. That is what 
the trade laws were meant to do, to bring fair pricing into the 
marketplace.
    We would stand very much behind that kind of remedy. That 
has been taken away from us in the case of Russia.
    Mr. Becker. Mr. Chairman, if I could add something in this. 
These countries watch each other during the same period of 
time, from November, I think it was what you are quoting from 
November to January, during that period of time, a lot of the 
smaller countries that have smaller exporting steel countries 
into the United States, we just sit and ran a total on five of 
them. They increased by 129,000 tons during that same period of 
time.
    Now that may not sound like much up against the other, but 
how long is it going to take for them to fill the gap? They all 
have the capacity. South Korea has the capacity. India has the 
capacity. Australia has the capacity. They will fill in, and 
fill this as quickly as they can. There is nothing to stop 
these countries that are under the trade cases from shifting to 
other products, Brazil and Japan, they do this. They watch 
this. This is the marketplace of the world. They are going to 
take this market if we let them.
    Mr. Glyptis. One other comment. The pricing on that 
suspension agreement, $255 to $280 per metric ton. If you 
translate that back to a short ton or a net ton, that pricing 
is about $231, plus freight on board. That is a dumped price. 
The suspension agreement with the Russians, at least from my 
viewpoint, legalized illegal dumping. It is a dumped hot-rolled 
price. Two hundred thirty one dollars is far, far below I 
believe the cost of production.
    Chairman Crane. Let me ask you all a question. In addition 
to quotas on hot-rolled and cold-rolled steel, the 
administration has also tentatively agreed to a quota on 
Russian semifinished steel. At the same time, the Visclosky and 
Traficant bills in the House would limit or ban imports of 
semifinished steel. The U.S. domestic industry has long been 
unable to meet more than a fraction of demand for steel slab. 
In 1997, for example, the U.S. industry shipped 1.8 million 
tons of semifinished steel, while imports equaled 5.4 million 
tons.
    Isn't the domestic integrated steel industry concerned 
about the pending agreement and the proposed legislation that 
potentially could limit your ability to obtain the inputs you 
need to produce your finished product?
    Mr. Barnette. We are, Mr. Chairman, but for a very 
different reason. Semifinished imports increased in 1998 versus 
1997 by only 400,000 tons, some 6 percent. Finished imports 
increased in the marketplace by more than 40 percent. So it is 
true from time to time that domestic producers do need 
semifinished steel because they may have a repair in their 
operations, they may have an equipment failure, they may have a 
very strong market, they may need to have that opportunity. But 
in the case of Russia, it is a comprehensive agreement, Mr. 
Chairman. It covers all Russian products. It is taking away 
from the American industry and the American workers the right 
to have our laws enforced. that is what is so very, very 
disturbing. That is, without regard to the need to help Russia, 
we don't want to be identified with being misunderstanding of 
that. We do want to help them. They need help. But surely the 
flow of that help should not be at the cost and the expense of 
a single private sector or industry.
    Mr. Becker. Mr. Chairman, if I could. We have not advocated 
ever to build a fence around America and to say that we didn't 
want to share any of our marketplace. We are a trading Nation. 
We have historically had imports since the mideighties, coming 
into the United States at about the level of 18 to 20 percent. 
We have advocated a quota bill that would be set at the 
precrisis level. You listen to Ambassador Barshefsky. She said 
this was a global problem. I agree with her. It is a global 
problem. There is vast overcapacity out there. A lot of it was 
built for the U.S. market to take our market. I think it 
requires a global solution. That is what we are really saying.
    You know this didn't just jump on us. Here we are sitting 
here 15 months after the crisis arguing about this thing. The 
Steelworkers Union started going before the administration 
before cabinet-level positions advocating something to be done 
at the beginning of 1998, and at every level they acknowledged 
that a crisis was there. They acknowledged that something was 
going on. They said they were sensitive to it. They said they 
were studying it. We were kicked from one cabinet level 
secretary to another one. We met with Treasury. We met with 
Barshefsky. We met with Daley in Commerce. We met with all of 
these people. They were very courteous, very kind. They 
listened to us, but nothing was ever done. We had economic 
models run before we went in on the first meeting that showed 
we were going to lose 1.1 million jobs in the United States, 
and that 70 percent of these were in manufacturing jobs. These 
were our jobs. We knew this was going to happen because of the 
policies that the IMF advocated with these countries in 
curtailing their domestic spending and concentrate on exports. 
We are the only market. So we knew it was coming here. There 
was no surprise. At every level, we told them that if you don't 
do something now, the next time we see you it is going to be 
worse, and it was. In August, there was 4.4 million tons 
shipped into the United States. You annualize that, that is 
over 50 percent of our capacity, I mean our market in the 
United States. They can run it up. They can run it down. Any 
time they want it all, they can take it all.
    So it is no surprise. We knew they were going to roll it 
out. When we got close to the trade cases coming up for 
settlement, we knew they were going to cut back. The people who 
import steel and distribute it in the United States told them 
to do that. They sent them letters to do that. We know that. 
That is predictable. There is an old saying, that evil people 
plot, good people plan. We know that there are people that are 
planning or plotting how in the hell to get our market and get 
back into it, and move it into different categories or 
different countries.
    We are pleading with you to save a very vital institution 
in the United States. Why do you think that Congress is so 
upset about this just as their constituencies back there. We 
have got 191 signers, cosponsors right now on the Visclosky 
bill. I mean they are outraged over this. Now after winning 
this, what I don't understand after winning these three cases, 
in essence, waiting and suffering and winning them, now the 
government is cutting deals to give it back to them.
    Chairman Crane. Mr. Levin.
    Mr. Levin. Well, I think when you talk about timeliness and 
you talk about comprehensiveness and the lack thereof, I think 
you are so compelling. You all agree with each other, so I want 
to ask a question that will be raised in the next panel. I 
think I will ask you, Mr. Barnette, as the executive of a large 
company, to respond, because it is really targeted at you.
    In the next panel, Mr. Griswold is going to say this. He is 
the associate director of CATO, trade policy studies. I am 
going to quote, so I don't in any way want to misrepresent his 
position. I think his position goes way beyond. It dismisses 
timeliness issues, dismisses comprehensiveness issues, and 
essentially challenges the basic assumption that you start with 
and I start with, that we can't just let it all happen helter-
skelter. Here is how he puts it.
    ``Many other U.S. industries have been hit by the effects 
of the Asian crisis. Exporters have seen sales slump while 
import competing industries have faced stiffer competition at 
home. There is no reason why the steel industry should receive 
special treatment at the expense of its customers and American 
consumers just because it is experiencing temporarily 
unfavorable conditions.'' That is at the beginning of the 
statement.
    Toward the end of the statement, ``U.S. antidumping law has 
become nothing more than a protectionist weapon for industries 
feeling the heat of global price competition.''
    Mr. Barnette.
    Mr. Barnette. Yes. I would be pleased to respond to that. I 
would say first that the steel industry is requesting no 
special treatment. We want the laws upon which trade 
liberalization has been based to be enforced. If they cannot be 
enforced effectively, and if this serious injury continues to 
decimate our industry, then we must as a country reexamine the 
very rules-based nature on which our trading system is 
operating.
    Second, for that statement to be made, Mr. Levin, about the 
operation of the laws which this Congress has enacted and which 
is the very heart of trade liberalization, it ignores that 
trade must be rules based. I would suggest that with the force 
and vigor of your responsibility, that you question how one 
could have the audacity to suggest that the proper 
administration of antidumping and countervailing duty laws is 
anything other than the very heart of trade liberalization 
itself.
    Mr. Levin. Thank you.
    Mr. Cardy. Congressman, if I might, although I represent a 
much smaller segment of the steel industry than my friend, Mr. 
Barnette?
    Mr. Levin. Yes, please.
    Mr. Cardy. I find it a little bit ludicrous how we can 
spend so much time talking about an issue that has been proven 
through the agencies of government to be a violation of the 
law. In the case that is being represented here with Russia, 
the case was presented, the determination was found, and the 
case was then thrown out. Here we stand now today saying that 
we have a steel industry in the United States both, specialty 
and carbon, that due to economic perturbations all over this 
globe, is under attack and is bleeding badly. We have turned to 
this government, not to do anything extraordinary really, just 
to help us enforce the trade laws that you have already put in 
place. We are using the laws that you folks have given us, and 
we are using them very legally, to say help us keep this steel 
industry from disappearing from this country. It has been 
decimated, in all segments. And it will continue.
    In addition to all of the other issues we must face, we now 
have this Pacific rim economic issue that our government is 
trying to address. In the way they are doing it, not monetarily 
or through the IMF only, it is really coming back to haunt the 
manufacturing sector of this country.
    I would suggest to you, sir, that though the economics of 
the United States appear to be just wonderful--low interest 
rates, low inflation, full employment, everything is 
wonderful--the manufacturing sector of this country is under 
attack and it will not take very long for that to be reflected 
in the overall economic vitality of this country. I think the 
government is deceiving itself when it looks at the vitality of 
the stock market and some of these segments of the economy and 
does not look specifically at manufacturing and what is 
happening there. It is under attack. Thank you.
    Mr. Levin. Mr. Becker.
    Mr. Becker. I couldn't agree more, that industrial workers 
in America, industrial America is under attack. We lost 285,000 
industrial jobs in America last year. But more specific to 
steel, there are studies we know by groups that are 
interlocked, multinationals and what have you, that believe 
that we could just let the steel industry go. I believe this 
would be tragic. I mean forget about the stock market. Forget 
about the bond market and the high financiers. I think we need 
to be concerned about workers and their families and 
communities in America.
    More specifically, though, to this Committee, I mean this 
is the Ways and Means Committee, and I think it requires your 
support if we are going to be able to get the Visclosky bill 
passed. I am asking you of what we would suggest from the 
Steelworkers Union, that we move this bill, that you get behind 
this and champion this, make it your bill, get it out there, 
and let's get the job done for once and for all.
    Mr. Glyptis. Do you realize, just my testimony, that 
100,000 steelworkers could lose their jobs if this crisis is 
not solved. We are getting rid of the better jobs in America. 
We are creating jobs that cannot support a single family. Of 
all new jobs being created today, 74 percent cannot support a 
single family. Can't pay the telephone bill or the heating 
bill. Something is wrong with that. We need your support, 
please.
    Mr. Levin. Thank you.
    Mr. Barnette. I would just, if I might simply state again, 
Congressman Levin, that the central question is do we have a 
rules-based trading system, and do we believe, as a matter of 
trade policy, in a rules-based trading system?
    Mr. Levin. Thank you very much.
    Mr. Houghton [presiding]. Mr. English.
    Mr. English. Thank you, Mr. Chairman. I will keep my 
comments brief. What has struck me about this panel is you have 
come forward not asking for anything extraordinary or unusual. 
You are simply asking for an enforcement of existing trade 
laws. Maybe I would expect a strengthening of them within the 
context of the rules-based order. That is perhaps unusual, 
given the way some editorial pages have mischaracterized your 
situation. I think you come here today with a very positive 
view of a basic industry that can be internationally 
competitive, has striven to be internationally competitive, has 
accepted a lot of sacrifices in its work force in order to 
become much more capital intensive and become the most 
productive in the world. My hat is off to all of you.
    I guess my one question is starting with Mr. Barnette. We 
have heard some rosy observations coming from the 
administration here today. I realize that is probably the role 
of the Secretary of Commerce and the U.S. Trade Representative. 
I respect them very much. Has the abatement of steel imports 
that they seem to be describing improved the financial 
prospects of the industry in the near-term? Is this something 
you can bounce back from very quickly? Or is a major part of 
your industry actually very much at risk?
    Mr. Barnette.
    Mr. Barnette. The answer is the injury, the serious injury 
is continuing, Congressman English. It continues in five or 
more different dimensions. Shipments continue to be lost. 
Production continues to be reduced. The pricing of the product 
is reduced. Force levels are reduced, many on layoff. Indeed, 
we have closed two facilities, in Massillon, Ohio, and in 
Washington, Pennsylvania. All of that affects profitability and 
liquidity.
    So the injury continues. To the extent there is some modest 
improvement, month to month, it is a little like being at the 
bottom of a 100-foot swimming pool and you are on the bottom 
right now, and you move up one foot and say things are 
improving. You are not back to the top yet. That is the injury 
that has been the cost to us. The price depression alone--and 
that again is what is so disturbing about this Russian 
agreement--it sets a price to bring Russian steel in here FOB 
at a price that is about what it costs an efficient American 
producer today to make the steel.
    So the answer is the injury continues. That injury is 
irreparable. It has happened, and it will be forever with us.
    Mr. English. Mr. Becker.
    Mr. Becker. Congressman, we did not come here asking that 
the laws be enforced that we have on the books. I am here to 
tell you that the laws are not working. It took 15 months to 
process one issue, the hot-rolled steel, with three countries. 
During this period of time, when we repeatedly asked the 
administration to take some action while they were going 
through these cases which they refused to do, we have lost over 
10,000 steelworker jobs. We have lost three companies into 
bankruptcy. We have got another half a dozen of them that are 
on the verge. The laws are not working.
    I am here to tell you that we are losing faith in this 
process. We can't stand more trade cases to be filed and go 
through this process while they switch from country to country 
and product line to product line. We need some definitive 
action. That is why we had the Visclosky bill out there. We 
need this. You are signer to this. I know you understand what I 
am talking about. We need to process this, but we need the Ways 
and Means Committee to move this.
    Mr. Cardy. If I could, Congressman English.
    Mr. Houghton. I think we have got to move along here. Could 
you make it fast?
    Mr. Cardy. Fast. That is exactly what I want to talk about. 
The fact of the matter is, the process isn't necessarily at 
fault, but the pace of the process is ridiculous. While we are 
bleeding, conversations are taking place. The speed needs to be 
fixed. The process, the laws aren't bad. The process is OK if 
it works fast. The issue of foreign currency devaluation has to 
be considered in the decisionmaking process as well.
    Mr. English. Well, and quickly said. Thank you.
    Mr. Houghton. Thanks very much.
    Mr. Coyne.
    Mr. Coyne. Thank you, Mr. Chairman. I would like to follow 
up with Mr. Becker relative to Ambassador Barshefsky's 
statement earlier. I think you were here when she made the 
statement that if 201 cases were filed, the administration 
certainly would lend its support to that effort once they are 
filed. It seems to me that what you are testifying to is that 
over the past 15 months when those cases were filed, and when 
you asked the administration for help, you didn't get it. Is 
that accurate?
    Mr. Becker. That's absolutely right. After the cases were 
settled, they didn't like the answer. They come back and they 
give relief in there. We won the cases. In other words, it was 
upheld. Everybody admits that dumping took place. But the 
findings they thought were too harsh, so they go in and cut 
them. So why file a 201? Why go through this 15-month process 
and all the expense involved when you don't know what the 
administration is going to do with it anyway?
    Mr. Coyne. Well, they seemed to take a new track today 
saying they would be supportive. But the record is that they 
weren't supportive. Is that accurate?
    Mr. Becker. Well, I didn't--I am sorry. There is something 
I missed then in what she said.
    Mr. Coyne. Yes. Well, she indicated that, in the future, 
the 201 cases were filed, they would be supportive by letter or 
by intervening some way without violating any laws or 
regulations. But I just want to make it clear that your history 
is, in these cases, that when you asked them for help, you 
didn't get it.
    Mr. Becker. That is right.
    Mr. Barnette. We have asked them, Congressman Coyne, as one 
of the recommendations in my testimony, to self-initiate--to 
consider self-initiation--by the administration. This is an 
administration action. The ultimate remedy in 201 is decided 
upon by the President of the United States.
    It is not entirely accurate to say that we were successful 
in the eighties in the 201 case. We brought the case and we 
were successful at the International Trade Commission, but we 
had a contrary remedy imposed by the then-administration. So it 
is very much an administration-controlled remedy and we believe 
they should be the moving party in this process.
    Mr. Glyptis. Sir, what is the appropriate 201 action by the 
government, by the President? If he is willing to write a 
letter, OK, then why wouldn't he put his name on a 201 action? 
Because you don't know what he is--if he could write a letter, 
what you need is his name in support of that action. That is 
where the power is really at, in my view.
    Mr. Coyne. OK. Earlier in a question that I asked Secretary 
Daley about U.S. steel companies purchasing some of this dumped 
steel that comes into the country, he said he had heard about 
it; that was his response to that question. Is Bethlehem Steel 
or your company, Mr. Cardy, are you purchasing any dumped steel 
in the country?
    Mr. Cardy. No. It is not an issue with my company. There 
are companies in the steel industry that have supply 
arrangements between them with steel being around to 
accommodate capacity shortfalls or whatever the issue might be. 
I can't believe that the companies that are in front of you 
today talking about this issue are also the culprits in 
creating the dumping situation.
    Mr. Coyne. So that is not the case in either of your 
corporations.
    Mr. Cardy. Not the case in our company. It is not, Mr. 
Coyne. We may, from time to time, purchase, as many other 
companies purchase, foreign, particularly some Finnish steel, 
at a fairly traded basis. And to the extent that there have 
been Finnish steel purchases, those too were at a fairly traded 
basis.
    Mr. Barnette. Congressman.
    Mr. Coyne. Oh, go ahead.
    Mr. Becker. I wanted to--I think it has finally sunk into 
me the gist of what you were talking about with Ambassador 
Barshefsky. I was relating this to our request for some kind of 
quantitative restraint that we were asking for while these 
trade cases were being filed so that we wouldn't go through 
this hemorrhaging while we were in the decisionmaking process. 
And that is what we were refused. We were told repeatedly that 
they felt this was problematic with the WTO; that we used to 
maybe be able to do something like that, but we can't do it 
anymore under the GATT and the WTO.
    But, in truth, on the 201 aspect of it, they have always 
said that they would expedite cases on the 201. The problem is, 
though, is what they would do with it once you went through the 
process.
    Mr. Coyne. Thank you.
    Mr. Houghton. Thanks very much, gentlemen, for being here. 
Again, you know, we are all in this together. We want to be of 
help and somehow we have got to pull this idea together to make 
some sense. I think the speed is something which I have always 
worried about. And you talked about this, Mr. Cardy. I guess 
everyone has mentioned this. You know, is there a will or is 
there a structure, but, really, is there a way of getting at 
this thing?
    Mr. Becker. Mr. Chairman.
    Mr. Houghton. Senator Specter. Can I just finish?
    Mr. Becker. If I could.
    Mr. Houghton. Can I just finish in just a second?
    Mr. Becker. All right.
    Mr. Houghton. Senator Specter suggested taking this out of 
the governmental process and putting it into the private right 
of action so that it would go through the court system rather 
than going through the laborious process of either 301 or 201 
or the ITC and the President and things like that. I want to 
know what you think about that. But go right ahead, please.
    Mr. Becker. OK. There's one thing that--what we were 
talking about with Weirton, about jobs and the human faces the 
President talks about putting on trade, which I agree with very 
much. When we talk about other countries taking our jobs, I 
like to remind everybody that we literally, truly, don't have 
enough jobs in the steel industry that we can give away to keep 
the steel industries going in Russia and Japan and Brazil and 
South Korea and India. We don't have that many jobs.
    We have lost over 350,000 jobs in the eighties that we 
never got back. We have 150,000 in the United States and 
100,000 of them we believe are at risk now. We just don't have 
enough jobs to keep those countries going.
    Mr. Houghton. Yes. The question is what do we do about this 
whole thing. We understand the condition and you describe it 
very well. But what specifically do we do? And I would like to 
ask again--were you here when Senator Specter talked? It was 
just an interesting idea. It has to go through Congress in 
order to be adopted.
    Mr. Becker. About being able to file----
    Mr. Houghton. Yes, right. About doing injunctives correctly 
and an injunction that----
    Mr. Becker. It sounds very good to me because the way he 
was putting it is that the steelworkers themselves or their 
representatives would be able to file for injunctive relief. It 
is very attractive to me. I think we could have moved along a 
lot quicker than it took to move these strike cases, these ones 
against Brazil and Japan and Russia.
    Mr. Houghton. Right. Yes, go ahead, please.
    Mr. Cardy. I think I would just add that the specialty 
steel industry would support that approach. Personally, I find 
it unfortunate that we are spending an immense amount of money 
on the fees necessary to pursue all of these cases, that we 
can't turn to the government of the same country we all live in 
to get proper recourse to these issues and we have to resort to 
going to the courts. I mean, if that is the way it has to be 
done because of the inactivity and the ineffectiveness of the 
government, then so be it. But it is unfortunate from my point 
of view that we have to resort to that. But we will if we have 
to.
    Mr. Houghton. Well, in theory it is. But, in practice, we 
want to get something done.
    Mr. Glyptis. Perhaps the answer lies with ingredients from 
a number of bills: Senator Specter, Visclosky, Regula. Maybe 
there are bits of pieces of other bills that can all 
incorporated into a solution, an immediate solution, a very 
quick solution. And maybe that is where the answer lies. But, 
once again, we are going to need your support to get there.
    Mr. Barnette. One of the very troubling things, 
Congressman, is, for example, in a critical circumstances 
finding by the Department of Commerce, they found there is a 
reasonable basis to believe or suspect that the importers, 
these are from Russia and Japan, knew or should have known 
material injury from the dumped merchandise was likely. That is 
the very stuff of which U.S. district judges make findings and 
order injunctive relief. So I believe that, as he often does, 
that Senator Specter has an idea that is well worth the full 
consideration by the Congress.
    Mr. Houghton. OK. Well, thank you very much. We certainly 
appreciate it and we will follow up here.
    The next panel is George Mischenko, vice president and 
general manager for Co-Steel Raritan of New Jersey; Mr. Woltz, 
who is president and chief executive officer for Insteel 
Industries; Jon Jenson, president of Precision Metalforming 
Association; Dan Griswold--I hope all you gentlemen are here--
is associate director of the Center for Trade Policy Studies at 
the CATO Institute; and Greg Mastel, who is vice president and 
director of studies, Economic Strategy Institute.
    So the panel that is leaving, thank you very much. The new 
panel, would you please take your seats. Well, gentlemen, thank 
you very much.
    Mr. Mischenko, would you like to go ahead?

   STATEMENT OF GEORGE MISCHENKO, VICE PRESIDENT AND GENERAL 
  MANAGER, CO-STEEL RARITAN STEEL CO., PERTH AMBOY, NEW JERSEY

    Mr. Mischenko. Good afternoon, Mr. Chairman. My name is 
George Mischenko. I am vice president and general manager of 
Co-Steel Raritan in Perth Amboy, New Jersey. We are the largest 
single-site producer of steel wire rod in the country. I began 
at Raritan in the maintenance department during the plant's 
construction 20 years ago and today serve as general manager 
for the entire operation. Previously, I worked for U.S. Steel 
for 10 years. We make rod by recycling scrap steel. This wire 
rod is fabricated into many kinds of wire and wire products 
such as fasteners and automotive parts.
    Let me get right to the point, Mr. Chairman. We agree with 
Chairman Crane's conclusion in his statement announcing this 
hearing, ``There is no question that the U.S. steel industry is 
facing competition from foreign producers that has intensified 
since the onset of the global financial crisis. I believe that 
the United States should strongly enforce its existing trade 
laws, which are designed to deal with such competition.''
    I am here today on behalf of U.S. wire rod producers to 
make the same point. We also believe that the existing trade 
laws should be enforced to enable American business to cope 
with the dramatic increase in imports brought on by the global 
financial crisis. Consequently, on December 30, 1998, we filed 
a section 201 petition with the ITC alleging that wire rod 
imports are a substantial cause of serious injury and 
requesting relief under the safeguard law.
    We believe section 201 is the appropriate remedy for our 
situation for four reasons. First, we believe we meet the law's 
threshold of serious injury. Over the last 5 years, and 
especially during the last 18 months, an onslaught of wire rod 
imports has devastated our industry. Imports have increased 
more than 60 percent since 1993, capturing over one-third of 
U.S. consumption and causing a collapse of prices. The industry 
as a whole has not made a profit for three consecutive years 
now. Despite modern facilities and excellent productivity, the 
wire rod industry's financial results have fallen significantly 
below that of the overall steel industry. At my company, we had 
to reduce shifts and permanently eliminate 15 percent of our 
management and hourly work force. We also canceled plans for a 
25-percent increase in our mill's capacity that would have 
enabled us to serve our customers better.
    Second, the 201 approach is a flexible one. The President, 
after receiving the ITC recommendations, can fashion a remedy 
to meet specific needs while taking into account the impact on 
customers and the U.S. economy.
    Third, section 201 is appropriate because, as our lawyers 
emphasized, it is fully consistent with the international 
obligations of the United States.
    Fourth, and finally, section 201 is especially appropriate 
when inflationary pressures are in check. Fed Chairman Alan 
Greenspan recognized just this week that our economy has become 
less inflation-prone than in the past.
    Later you will hear from our customers in the wire products 
industry. They plan to oppose our petition. We had many candid 
discussions with them and made clear our intentions to work 
with them to achieve a remedy that considers their interests, 
for example: Excluding certain products from our petition; 
leaving Canadian and Mexican imports out of any remedy; 
agreeing to fashion the remedy to avoid increases in downstream 
product imports; and, finally, working with the wire producers 
as we develop the specific remedy plan. We are sorry they have 
elected to oppose our petition. Fortunately, we understand 
their door is still open. A rod industry that defers 
investment, shutters capacity, and is financially weakened is 
not in the long-term interest of the U.S. wire producers or the 
U.S. economy.
    In conclusion, Mr. Chairman, we believe the existing trade 
laws are designed to address the flood of imports that the 
steel industry is facing. We have set out to put those 
safeguards to the test for wire rod to determine if they will 
live up to Congress's design. If section 201 remedies are 
denied, then I may be back before this Subcommittee very 
quickly asking for changes in the law because if the U.S. 
International Trade Commission thinks we are not seriously 
injured, then I don't know who is. Thank you.
    [The prepared statement follows:]

Statement of George Mischenko, Vice President and General Manager, Co-
Steel Raritan Steel Co., Perth Amboy, New Jersey

    Good afternoon, Mr. Chairman, my name is George Mischenko, 
Vice President and General Manager of Co-Steel Raritan in Perth 
Amboy, New Jersey. Co-Steel Raritan is the largest single-site 
producer of steel wire rod in the country. Steel wire rod is a 
hot-rolled, coiled steel product produced from scrap steel, and 
is fabricated into a wide array of wire and wire products such 
as fasteners, fencing, coat hangers, and automotive parts. I 
have worked at Raritan since it was built nearly twenty years 
ago, and was there when the President of the United States 
donned a hard hat and helped us melt one of our first heats of 
steel. I began in the maintenance department during 
construction, and am now General Manager for the entire 
operation. Previously I worked for U.S. Steel for ten years.
    Let me get right to the point, Mr. Chairman. We agree with 
the conclusion you made in your statement several days ago 
announcing this hearing, and I quote:

          ``There is no question that the U.S. steel industry is facing 
        competition from foreign producers that has intensified since 
        the onset of the global financial crisis. I believe that the 
        United States should strongly enforce its existing trade laws, 
        which are designed to deal with such competition. . .'' 
        (emphasis added)

    I am here today on behalf of Co-Steel Raritan and other 
U.S. wire rod producers,\1\ to make the same point. We also 
believe that the existing trade laws should be enforced to 
enable American business to cope with the dramatic increase in 
imports brought on by the global financial crisis, such as we 
in the wire rod industry have experienced. Consequently, on 
December 30th we filed a Section 201 petition with the U.S. 
International Trade Commission (``ITC''), alleging that 
increased quantities of wire rod imports are a substantial 
cause of serious injury, and requesting relief under the 
safeguard law. We urge you and your colleagues to support our 
case.
---------------------------------------------------------------------------
    \1\ Companies filing the petition are: Birmingham Steel Corp., 
Birmingham, Alabama (headquarters), Cleveland, Ohio, Memphis, 
Tennessee; Connecticut Steel Corporation, Wallingford, Connecticut; Co-
Steel Raritan, Perth Amboy, New Jersey; GS Industries, Inc., Charlotte, 
North Carolina (headquarters), Georgetown, South Carolina, Kansas City, 
Missouri; Keystone Steel & Wire Co., Dallas, Texas (headquarters), 
Peoria, Illinois; North Star Steel Company, Minneapolis, Minnesota 
(headquarters), Beaumont, Texas, Kingman, Arizona; Northwestern Steel & 
Wire Co., Sterling, Illinois; Atlantic Steel Industries, Inc., Atlanta, 
Georgia. The United Steelworkers of America AFL-CIO (representing 
workers at GS Industries, North Star Steel Texas, Northwestern Steel & 
Wire, and several other domestic producers) is a petitioner. Also, the 
Independent Steel Workers Alliance representing the workers at Keystone 
Steel & Wire's Peoria, Illinois plant is a petitioner.
---------------------------------------------------------------------------
    We believe Section 201 is the appropriate remedy for our 
situation for four reasons:
    First, we believe that we meet the law?s threshold of 
``serious injury.'' Over the last five years and especially in 
the last 18 months, imports of steel wire rod have devastated 
our industry. Imports have increased more than 60 percent since 
1993, capturing a growing percentage of the market and causing 
a collapse of prices. The onslaught of low-priced imports--now 
accounting for over one-third of U.S. consumption--has 
seriously harmed the U.S. industry. The industry as a whole has 
not made a profit for three consecutive years now. Despite 
modern facilities and excellent productivity (worker hours per 
ton are among the lowest in the industry worldwide), the wire 
rod industry's financial results have fallen significantly 
below the average performance of the U.S. steel industry.
    At my own company, the import pressure has forced us to 
reduce shifts in our melt shop and rolling mill, and on 
December 1st of last year we permanently eliminated 75 jobs--or 
15% of our management and hourly workforce--the first layoffs 
in our history. In 1998, import pressures also led us to cancel 
plans to raise our mill's capacity to 1.1 million tons--a 25 
percent increase that would have enabled us to serve our 
customers better.
    Let there be no mistake about the level of serious injury 
the wire rod producers are now suffering. The sea of red ink 
has led to production shutdowns, delayed or abandoned 
investment, and laid-off or unemployed workers throughout the 
industry.
    We recognize that the Administration has reached an 
agreement with Russia to limit steel exports to the United 
States, including wire rod. However, the agreement does not 
appreciably affect our situation. The decrease in Russian steel 
imports is more than offset by increases from non-traditional 
suppliers like India, Indonesia, South Africa and Moldova. 
Indonesian imports alone went from zero in 1997 to a level 
nearly five times that of Russia in 1998.
    Second, the Section 201 approach is a flexible approach to 
a serious problem that can be remedied while taking into 
account the impact on customers and the U.S. economy. The 
President, after receiving the recommendations of the ITC, can 
fashion a remedy to meet specific needs. The 201 remedy is 
particularly suitable in this case where more than 20 countries 
export wire rod to the United States. Wire rod mills are found 
all over the world, and there are additional foreign suppliers 
who are undoubtedly targeting this market as I speak. Adverse 
conditions abroad and measures taken in a number of countries 
to protect their home markets make the United States the export 
destination of choice. Moreover, the Section 201 remedy may be 
molded in appropriate circumstances to accommodate the supply 
and product needs of wire rod customers. For example, it can 
reflect the existence of a more integrated North American 
market so that imports from Canada and Mexico, as NAFTA 
countries, can continue flowing as normal into the U.S. market. 
On the other hand, non-traditional suppliers who have flooded 
the market with low-priced imports can be dealt with 
decisively.
    Third, the Section 201 approach is appropriate because, as 
our lawyers emphasize, it is fully consistent with the 
international obligations of the United States. Those 
obligations require that safeguard actions conform to GATT 
1994, in particular Article XIX, and the World Trade 
Organization agreement implementing that Article. So what we 
are seeking is a remedy that is consistent with our 
international trade rules, and one that must gradually phase 
down during the adjustment period.
    Finally, use of Section 201 is appropriate at this time in 
our nation's economic history when inflationary pressures are 
in check. As Federal Reserve Chairman Alan Greenspan said just 
this week, ``. . . recent experience does seem to suggest that 
the economy has become less inflation prone than in the past, 
so that the chances of an inflationary breakout arguably are, 
at least for now, less than they would have been under similar 
conditions in earlier cycles. . .'' Other economic observers 
note that our economy is flexible and resilient, currently 
reaping the benefits of productivity increases from years of 
technological investments, of decades of deregulation, of 
advances in telecommunications and distribution, and cheap 
energy costs. This makes it a particularly opportune time for 
the ITC to recommend, and for the President to impose, 
safeguard remedies without risking any significant inflationary 
impact on the overall U.S. economy.
    Mr. Chairman, so far I have only referred to existing law 
and I know you're interested in our views on the bills pending 
before this Committee. We decided months ago to file our 
Section 201 petition under current law because we believe that 
the dismal conditions in our industry fit the injury criteria 
of the law. If you insist on my providing specific 
recommendations on the proposed legislation, then I would ask 
for your indulgence--let me tell you what I think after July 
12th when the ITC must make a final decision on our petition. 
If Section 201 remedies are not recommended in our situation, 
then I may be back before this Committee very quickly asking 
for changes in law because if we're not ``seriously injured,'' 
I don't know who is.
    Later this morning, you will hear from our customers in the 
wire products industry, who plan to oppose our Section 201 
petition before the ITC. We had hoped that our customers would 
understand our predicament. We had many candid discussions with 
the American Wire Producers Association (``AWPA'') leadership 
about our plans to file a petition. We made clear our intention 
to work with them to achieve a remedy that would alleviate the 
wretched financial condition of the rod producers, yet take 
into account the interests of the rod consumer. We made a 
number of adjustments to accommodate the wire industry:
     We acknowledged customer needs and excluded 
certain products from our petition such as wire rod for tire 
cord, valve spring wire, and pipe wrap;
     We will not request that imports from Canada and 
Mexico be covered by any remedy;
     We have agreed to work with the wire producers to 
find appropriate ways to avert any possible downstreaming if 
relief is granted on wire rod; and
     We proposed to work with the wire producers as we 
develop the specific remedy plan.
    Having taken these steps, and made these commitments, we 
are sorry that the AWPA has elected to oppose the petition. At 
the same time, we understand that the AWPA door ``is still 
open'' to us. For our part, we are prepared to continue the 
dialogue and will follow through with our commitment to work 
with the AWPA throughout the process.
    The wire rod industry needs a remedy that will enable it to 
climb out of a sea of red ink and to resume making the kind of 
investments that will maintain state-of-the-art facilities. A 
rod industry that defers investments, shutters capacity, and is 
financially weakened is not in the long-term interest of the 
U.S. wire producers and the U.S. economy as a whole. The 
flexibility of Section 201 will permit the President to fashion 
a remedy that accommodates the interests of both producer and 
consumer. As the President's Steel Plan notes, Section 201 is a 
legitimate and essential tool for addressing the type of world 
conditions we now face.
    In conclusion, Mr. Chairman, we believe the existing trade 
laws are designed to address the flood of imports that the 
steel industry is facing. In the case of the wire rod sector, 
we have set out to put those safeguards to the test to 
determine if they will live up to Congress' design. We hope 
that you and the Members of this Committee will support us in 
this effort. Thank you.
      

                                


    Mr. Houghton. Thank you. Thank you very much.
    Mr. Woltz.

  STATEMENT OF H.O. WOLTZ III, PRESIDENT AND CHIEF EXECUTIVE 
OFFICER, INSTEEL INDUSTRIES, INC., MOUNT AIRY, NORTH CAROLINA; 
AND VICE PRESIDENT, AND CHAIRMAN, GOVERNMENT RELATIONS ADVISORY 
  COMMITTEE, AMERICAN WIRE PRODUCERS ASSOCIATION, ALEXANDRIA, 
                            VIRGINIA

    Mr. Woltz. My name is H.O. Woltz III. I am president and 
chief executive officer of Insteel Industries, which is 
headquartered in Mount Airy, North Carolina. I am also the vice 
president of the American Wire Producers Association and 
chairman of the association's government relations advisory 
committee.
    As the only purchaser of hot-rolled steel speaking today, 
you will find my testimony in sharp contrast to much of what 
you have heard today. The 102 members of the AWPA employ 42,000 
workers in 38 states and 138 congressional districts. Our 
members make wire and wire products such as nails, garment 
hangers, springs, wire fencing, and steel reinforcing products.
    As independent wire producers, the AWPA active members 
depend on U.S. steel producers to provide sufficient quantities 
and qualities of wire rod. However, because domestic wire rod 
capacity is substantially lower than domestic demand, imports 
are critical to our survival. This economic reality was 
recently recognized by the U.S. International Trade Commission 
when it concluded that the domestic industry could supply only 
about 80 percent of the domestic demand for wire rod.
    As a significant consumer of steel wire rod, I am alarmed 
at the news from Washington with regard to steel trade issues. 
Underlying the many recent proposals to restrict trade is the 
notion that imported steel is ruining the domestic industry. I 
would like to provide another perspective on this issue.
    Our raw material, hot-rolled steel wire rod, accounts for 
more than half the total cost of our products. Through 1997, 
and until early 1998, supplies of wire rod were being allocated 
to consumers by domestic mills because of limited domestic 
supply. Transaction prices rose more than 10 percent in the 
year 1997, reflecting strong demand. Without the availability 
of foreign steel during this period, Insteel would have been 
unable to meet its commitments and would have idled its plants.
    In 1998, demand climbed as the Asian financial crisis 
impacted world markets. Wire rod supply problems disappeared 
and prices fell due to heightened import competition. 
Significantly, prices for many of my companies' products 
declined by double-digit percentages as new import competition 
in our markets had an adverse effect on selling prices.
    Contrary to the mantra of big steel and big labor, steel 
producers are not the only companies to experience heightened 
levels of competition due to the Asian crisis. It will take 
time for our markets to adjust to the events of 1998, but they 
will recover. Until they do, restricting the availability of 
raw materials to companies like Insteel will result in reduced 
competitiveness of our products and job losses in our industry.
    While about 170,000 people are employed in the domestic 
steel production, literally millions of workers owe their 
livelihoods to the availability of competitively priced steel 
that allows their employers to compete in the global economy. 
History shows that restrictions on imported wire rod inevitably 
result in increased imports of downstream wire and wire 
products. Consider the thousands of jobs in steel-consuming 
industries that may be put at risk by arbitrary restrictions on 
imports of hot-rolled steel.
    With this background in mind, the AWPA and its members 
oppose legislation that would adversely affect our ability to 
obtain wire rod in the quantities we need in order to meet our 
customers' requirements. H.R. 327, 412, 502, and 506 threaten 
the viability of a large segment of American industry. These 
proposals are either contrary to our national trade laws, 
violate our obligations under the WTO, or require the creation 
of even more bureaucracy for purposes of administration and 
oversight. Significantly, one or more of these resolutions may 
have the impact of reducing the availability of imported wire 
rod, despite recent ITC rulings that these imports do not 
injure the domestic industry.
    There are, however, legislative changes that the AWPA 
believes would improve the administration of our trade laws and 
the fairness of their application. Most importantly, the 
current law discriminates against U.S. purchasers by denying 
them the same access to information as other parties in trade 
cases. In injury investigations before the ITC, consumers of 
the imported product are not interested parties and their 
counsel are excluded from reviewing proprietary information in 
accordance with an administrative protective order. It should 
be an overriding goal of the trade laws to provide due process 
to purchasers and to encourage the involvement of U.S. industry 
that purchases and uses the product under investigation. More 
informed findings and more equitable remedies will result.
    In conclusion, it would be a tragic mistake for the United 
States to adopt protectionist measures to address short-term 
market dislocations created by the Asian financial crisis. The 
current proposals to limit steel trade will inevitably lead to 
shortages, skyrocketing prices, and an erosion of 
competitiveness of vital steel-consuming industries. Thank you 
for this opportunity to share my opinions.
    [The prepared statement follows:]

Statement of H.O. Woltz III, President and Chief Executive Officer, 
Insteel Industries, Inc., Mount Airy, North Carolina; and Vice 
President, and Chairman, Government Relations Advisory Committee, 
American Wire Producers Association, Alexandria, Virginia

    My name is H. O. Woltz III, and I am President and CEO of 
Insteel Industries, Inc., with its headquarters in Mt. Airy, 
North Carolina. I am also Vice President of the American Wire 
Producers Association and Chairman of the Association's 
Government Relations Advisory Committee.
    The American Wire Producers Association (AWPA) is a 
national trade association which represents the vast majority 
of independent manufacturers of carbon, alloy and stainless 
steel wire and wire products. The 102 members of the AWPA 
operate more than 210 plants that provide good paying jobs to 
over 42,000 American workers. Those plants are located in over 
38 states and 138 congressional districts.
    AWPA members produce a vast array of steel wire and wire 
products which are used in the automotive, agricultural and 
construction industries as well as directly by consumers. AWPA 
member companies purchase hot rolled carbon steel wire rod from 
domestic and foreign sources. We process this wire rod into 
wire and fabricate a wide variety of end products and 
semifinished products from this wire. Examples of wire and wire 
products produced by our members include nails, wire strand, 
chain link fence, springs, garment hangers, agricultural 
fencing, and steel reinforcing products for concrete 
structures. AWPA members supply between 85 and 90 percent of 
the total domestic demand for these products with an annual 
value in excess of $19 billion.
    Given the almost infinite variety of wire and wire 
products, the common denominator for the manufacturers in this 
sector of the steel industry is their raw material--hot rolled 
carbon steel wire rod. In fact, the stated goal of the AWPA is 
``to undertake programs and activities that assure wire 
producers free and fair access to an adequate supply of wire 
rod. This includes the encouragement of an increase in North 
American capacity for the manufacture of wire rod.'' To this 
end, the AWPA's active members, who constitute the largest 
group of consumers of domestic wire rod in the United States, 
have supported the domestic rod industry's initiatives to 
develop and expand the availability of American-made wire rod. 
As independent wire producers, the AWPA's active members have 
no affiliations with their rod sources. Hence, we depend on our 
main suppliers--the US rod manufacturers--to provide sufficient 
quantities and qualities of rod for our wire-drawing 
operations. Despite this strong and mutually beneficial 
commercial relationship with the domestic rod industry, 
independent wire producers still must purchase imported rod to 
meet their requirements. The domestic rod industry is not 
capable of satisfying all of the domestic demand, either in 
terms of over all quantities or the variety of grades of wire 
rod used by AWPA members. This economic reality was recognized 
recently by the US International Trade Commission(ITC) in its 
antidumping and countervailing investigations of Certain Alloy 
and Carbon Steel Wire Rod from Canada, Germany, Trinidad & 
Tobago and Venezuela. In those investigations, the ITC found 
that the domestic rod industry was able to supply approximately 
80 percent of the domestic demand for rod. The remaining 20 
percent must be obtained from other sources.
    It is also significant that most domestic producers of hot 
rolled wire rod own, or are affiliated with, downstream wire 
producers. These integrated producers, therefore, compete in 
the marketplace with AWPA's independent wire producers for 
sales of wire and wire products. The AWPA believes that this 
encourages the domestic hot rolled wire rod producers to 
restrict supply of wire rod in order to improve the 
profitability of the steel mills and to improve the 
competitiveness of their downstream operations vis-a-vis 
independent producers of wire products. Potentially damaging 
cost-price squeezes for independent wire producers can result 
under these circumstances, thus sapping the vitality of an 
important and efficient industry. Adequate competition for hot 
rolled wire rod is, therefore, essential to the viability of 
independent producers of wire and wire products.
    In order to protect its members' access to an adequate 
supply of wire rod, the AWPA has opposed measures to limit, 
artificially, the availability of wire rod. Such artificial 
restrictions lead to shortages, allocations and inflated 
pricing. Furthermore, restrictions on the importation of hot 
rolled wire rod inevitably result in increased imports of 
downstream wire and wire products. As foreign producers are 
foreclosed from the US rod market, they shift their exports 
downstream into wire and wire products. In other words, 
restrictions on the importation of hot rolled wire rod leads to 
increased imports of wire and wire products such as nails, 
strand and springs. This downstreaming not only affects the 
employment levels and vitality of the wire industry, but also 
that of the hot rolled wire rod producers as demand for 
domestically produced wire rod is reduced by downstreaming.
    As a significant consumer of hot rolled steel wire rod, I 
personally am alarmed at the news from Washington with regard 
to steel trade issues. I read of proposed legislation calling 
for a moratorium on steel imports, proposals for drastic 
decreases in the importation of steel from Japan, Korea and 
Brazil, agreement on quotas for steel imports from Russia, and 
a host of other protectionist proposals. Underlying these 
proposals is the notion that imported steel is ruining the 
domestic industry and that dumping and other unfair trade 
practices are rampant. I would like to provide you with another 
perspective on this issue.
    My company, Insteel Industries Inc., is a leading producer 
of steel wire and wire products. Our company operates eight 
manufacturing facilities in Delaware, North Carolina, South 
Carolina, Tennessee, Texas and Virginia. Insteel employs 
approximately 1,100 people. Insteel is a state of the art 
manufacturing company serving the appliance, construction, and 
home furnishing industries with products such as nails, wire 
for springs, reinforcing wire for tires, and concrete 
reinforcing products.
    Our raw material, hot rolled carbon steel wire rod, 
accounts for more than half the total cost of our products. We 
source our raw material domestically and internationally. In an 
ideal world, all of our raw material would come from steel 
producers located in the United States. The world is not ideal, 
however, and therefore we must rely on imported steel for a 
portion of our requirements.
    Speaking from Insteel's experience, through 1997 and until 
early 1998 supplies of hot rolled steel wire rod were being 
allocated to consumers by domestic mills because of limited 
domestic supply. Transaction prices rose more than 10 percent 
during 1997, reflecting strong demand. The availability of 
foreign steel was critical to our ability to meet our 
commitments to our customers during this period of time. 
Without it, our plants would have been idle, our employees 
would have been on short weeks, and our customers would have 
suffered delays and disruptions of supply.
    It is a fact that imports of steel products rose 
substantially in 1998. However, if you go beyond the self-
serving arguments of the steel companies and their labor 
unions, you will see that the facts are much different than 
they would have you believe. Literally millions of tons of 
steel products have been imported by the domestic steel 
producers themselves. During 1997, and 1998 steel companies 
imported semi-finished steel products and hot rolled steel 
because their business was strong and they were unable to fully 
satisfy demand from their own capacity. Without these imports 
there would have certainly been a steel shortage, accompanied 
by rapidly increasing prices.
    Market conditions for much of the world steel industry 
changed in 1998. The Asian financial crisis took its toll on 
demand world wide, and prices declined. It is interesting to 
note, however, that the cost of inputs to make steel also 
declined significantly. Steel scrap and pig iron both plummeted 
in price during 1998. After a period of adjustment during which 
the new, lower prices worked their way through the inventory 
pipeline, many steel makers found that they still had adequate 
margins to operate profitably, despite the heightened 
international competition brought on by the financial collapse 
in Asia. This is quite a tribute to the vitality of the 
domestic steel industry--a vitality to which they apparently do 
not want to admit.
    The lead times for importing steel are long. Sometimes we 
are required to make commitments as far as nine months ahead in 
order to have steel produced and delivered to us from overseas 
sources. With the strong demand that the steel industry 
experienced in 1997, the pipeline was full when the Asian 
crisis began to affect demand. Logically, the pipeline took 
time to adjust in 1998 following the robust conditions of 1997. 
As orders and commitments worked their way through the pipeline 
during 1998, imports began to decline at the end of the year. 
The steel companies, however, are using the increased import 
figures of 1998 to bolster their arguments for more protection 
from competition. Steel is a cyclical business, and the 
disequilibrium of supply and demand that was witnessed during 
1998 will likely correct itself in 1999. By mischaracterizing 
the events of 1998, ``Big Steel'' hopes during 1999 to alter 
significantly the trade playing field to their advantage, 
assuring tight supplies and high prices--and reduced 
competitiveness of steel consumers--for years to come.
    The world steel markets, and indeed many world markets, 
have been destabilized by the Asian crisis. Insteel and the 
other members of the AWPA are facing heightened competition 
from imported wire products as a result of market disruptions 
worldwide. Prices for our finished products, such as nails, 
tire reinforcing wire, and prestressed concrete strand, have 
fallen significantly in the past twelve months because of 
heightened import competition. It will take time for our 
markets to adjust to these new realities, but they will 
recover. In the meantime, restricting the availability of raw 
materials to companies like Insteel through protectionist 
legislation will result in reduced competitiveness of our 
products and job losses in our industry. Those jobs will be 
lost to producers of wire products in foreign countries that 
have access to world market steel.
    The AWPA and its members are concerned about proposed 
legislation which would adversely affect our ability to obtain 
wire rod in the quantities and qualities that we need in order 
to meet our customers' demanding requirements. As I have 
already noted, the domestic rod producers are the principal 
source of our raw material. However, the domestic producers 
themselves have acknowledged that they cannot meet all of our 
needs--either in total volume or in certain important grades 
and types. We must rely on foreign mills for these 
requirements. Legislative proposals to impose rigid quotas 
would severely disrupt our operations and undermine our ability 
to compete in the domestic and international marketplace. Rigid 
quotas can not possibly keep pace with the dynamic changes that 
occur in our market places. Accordingly, the AWPA opposes the 
recent trade bills which have been introduced in this Congress.

          (1) House Resolution 327 would enable the Secretary of 
        Commerce to impose antidumping duties retroactively for a 
        period of up to one year prior to the filing of the original 
        antidumping petition. The AWPA believes that this proposal is 
        not only contrary to our national trade laws but that it also 
        violates our obligations under the World Trade Organization. 
        The existing system of the retroactive assessment of dumping 
        duties already creates uncertainty and often results in 
        unfairness for American importers and customers. The proposal 
        to extend that uncertainty and unfairness for an additional 
        period of more than a year is abusive, as well as unnecessary.
          (2) House Resolution 412 would, among other things, establish 
        a permit and monitoring system for steel imports. The AWPA 
        believes that the proposed system would be cumbersome, cause 
        delays in the entry of legitimate merchandise, and impose 
        significant administrative burdens and costs on the Department 
        of Commerce (Commerce) and the US Customs Service. The permit 
        system appears to be a thinly disguised trade barrier for the 
        benefit of one group of domestic companies.
          (3) House Resolution 502 would prohibit the importation of 
        steel products from four countries: Brazil, Japan, Korea and 
        Russia. Not only is this proposal contrary to our international 
        trade obligations, but it affects imports of steel wire rod 
        which the US Government has previously found not to be a cause 
        of injury to the domestic rod producers. How can the United 
        States ban the entry of products which its agencies have 
        determined are not causing economic harm?
          (4) House Resolution 506 would establish quotas on imports of 
        wire rods and other steel products at levels which are 
        equivalent to or lower than those during 1995 through 1997. 
        This rigid formulation does not take into account the dynamic 
        nature of our industry and the growth in the demand for wire 
        rod. Equally as important, this formulation does not consider 
        the negative effect on imports of the antidumping and 
        countervailing investigations which were pending during part of 
        this period. As the members of this Subcommittee know, the mere 
        filing of a trade case disrupts and often depresses imports 
        during the course of the investigation. Even in the cases 
        involving wire rod--where the US International Trade Commission 
        found no injury--rod imports from the subject countries were 
        adversely affected during the course of those investigations.

    There are, however, two legislative changes which the AWPA 
believes would improve the administration of our trade laws and 
the fairness of their application.
    First, the current trade laws discriminate against US 
companies which purchase imported raw materials, by denying 
them the same access to information as other parties in an 
investigation before the ITC. In injury investigations by the 
ITC, the antidumping and countervailing duty laws limit the 
disclosure of business proprietary information to counsel for 
``interested parties,'' in accordance with an administrative 
protective order. The term ``interested parties'' includes 
domestic and foreign manufacturers, US importers, labor unions, 
and foreign governments.
    However, industrial consumers in the United States--such as 
the members of the AWPA--do not meet this definition of 
``interested parties.'' As a result, counsel for AWPA are not 
permitted to review the same proprietary information that is 
available to counsel for the domestic industry or the 
importers. This places the AWPA and other consumers at a 
serious--and completely unfair--disadvantage. Other parties' 
counsels have access to the information submitted by AWPA 
members, but AWPA's counsel cannot examine the entire record. 
In fact, in the recent antidumping and countervailing duty 
investigations of steel wire rod, counsel for the domestic rod 
industry responded in a confidential submission to many of the 
points raised by the AWPA. Counsel for the AWPA were not 
allowed to see that response, effectively denying the AWPA due 
process and the right to answer the arguments of its opponents.
    Not only is this result unfair, it also discourages 
customers from participating in these and other trade 
proceedings. The same rule applies in Section 201 
investigations. The AWPA knows from its experience that the 
active participation of industrial consumers enhances the 
amount and the quality of information available to the 
decision-makers at the ITC. It should be an overriding goal of 
the trade laws to encourage the involvement of the US industry 
that purchases and uses the product under investigation. This 
goal would be advanced by recognizing the interests of 
customers to the same extent as the law now recognizes the 
interests of domestic and foreign producers and their agents.
    Second, the AWPA also supports legislation to suspend, on a 
temporary basis, the assessment of antidumping and 
countervailing duties on products which are in short supply or 
otherwise unavailable from domestic suppliers. Such legislation 
would address the unintended effect of the antidumping and 
countervailing duty laws to prevent the importation of products 
which are not available domestically. Under the present law, 
there is no procedure which permits the temporary suspension of 
antidumping or countervailing duties for products which the 
domestic industry cannot supply.
    The AWPA is not attempting to weaken the antidumping and 
countervailing duty laws. On the contrary, the AWPA has long 
supported the rigorous enforcement of US trade laws, and its 
members have used these laws in order to respond to unfairly 
traded or subsidized imports which have caused serious economic 
harm to the steel wire and wire products industry. Moreover, 
AWPA members rely primarily on US manufacturers of steel wire 
rod for their raw material. The AWPA members have worked 
closely with the domestic rod industry--now composed entirely 
of world-class and efficient mini-mills--to develop and expand 
the availability of American-made wire rod. The temporary 
suspension of duties would be invoked only if the specific 
product were not available from US producers. There can be no 
injury to these domestic producers if they cannot supply the 
needed product to their customers in the US market.
    Independent wire producers of the AWPA have had 
considerable experience with the unintended effect of 
antidumping and countervailing duty proceedings on the 
availability of certain types of wire rod. During the 
investigations of carbon steel wire rod in 1993-94, and again 
in 1997-98, the imposition of preliminary dumping and 
countervailing duties prevented US manufacturers of steel wire 
and wire products from obtaining certain types of wire rod 
which were unavailable from domestic producers. In addition, 
there were severe shortages of even basic types of wire rod, 
leading to significant price increases, allocations, canceled 
orders and delayed deliveries. The unavailability of wire rod 
threatened severe economic harm to a vigorous and profitable US 
industry, and it encouraged foreign competitors to target the 
US market for steel wire and wire products. Although the ITC 
eventually made findings of no injury and these investigations 
were terminated, this experience demonstrates the necessity for 
a mechanism to provide relief in cases when domestic industries 
cannot obtain essential raw materials from sources in the 
United States.
    The members of the AWPA have also had experience with the 
administration of a program which successfully dealt with the 
non-availability of certain types of steel products from 
domestic producers. During the Steel Voluntary Restraint 
Agreements Program (VRAs), steel wire drawers were able to 
obtain a positive short supply determination for rod products 
which were unavailable from domestic mills. For six consecutive 
calendar quarters, AWPA members that produce stainless steel 
wire, requested and obtained permission to import specific 
grades of stainless steel wire rod, which were not available 
from domestic producers. In fact, domestic producers of 
stainless steel wire rod confirmed to the US Department of 
Commerce that such rod was not available in the US market in 
sufficient quantities to meet domestic demand. Commerce was 
able to make these determinations in a prompt and fair manner 
without placing an undue burden on its resources.
    In conclusion, let me say it would be a tragic mistake for 
the United States to adopt ill-advised protectionist measures 
to address the short term market dislocations created by the 
Asian crisis. The market is recovering even as we meet here 
today. We are already seeing domestic announcements of price 
increases for hot rolled steel products, indicating that demand 
is firming and import competition is moderating. We are also 
seeing significantly reduced levels of imported steel in the 
domestic market, particularly from Japan. The current proposals 
to limit steel trade will inevitably lead to shortages and 
skyrocketing prices in the near term because the markets are 
now recovering on their own. We should allow this recovery to 
continue and the market to adjust to recent events, as it has 
in the past.
    The steel companies claim that 10,000 steelworkers have 
lost their jobs due to increased steel imports. This is, at 
best, misleading, and certainly only part of the story. Most 
reliable sources estimate the total employment within the steel 
producing industry in the United States at about 170,000 
people. In contrast, there are literally millions of workers 
whose livelihoods depend on access to high quality, 
competitively priced hot rolled steel. Automakers, parts 
suppliers, construction workers, appliance manufacturers, and 
general industrial employees all depend on adequate supplies of 
competitively priced steel. These jobs will be at risk if 
Congress enacts legislation that arbitrarily restricts the 
importation of foreign steel in order to provide protection to 
the weakest of the domestic steel producers.
    Thank you for considering these facts as you deliberate on 
these issues concerning steel trade. If I can provide any 
further information to you, please call on me.
      

                                


    Mr. English [presiding]. Thank you, Mr. Woltz. Mr. Jenson, 
good to see you again. We would welcome your testimony.

 STATEMENT OF JON E. JENSON, PRESIDENT, PRECISION METALFORMING 
                ASSOCIATION, INDEPENDENCE, OHIO

    Mr. Jenson. Thank you and good evening. Thank you for the 
opportunity to appear before you today on behalf of Precision 
Metalforming Association and the $36 billion metalforming 
industry it represents. Most of PMA's nearly 16,000 member 
companies are dispersed throughout 38 states and 248 
congressional districts.
    As you know, the metalforming industry employs more than 
380,000 American workers and uses about a quarter of the steel 
produced in North America, mainly flat-rolled products. Our 
industry is just one of the many steel-using industries in this 
country, the so-called downstream manufacturers. Together these 
downstream manufacturers employ more than 40 American workers 
for every worker in the steel industry.
    A strong and competitive steel industry is important to the 
United States. We depend on it. Most of our member companies 
use mostly domestic steel, and steel is our essential raw 
material. It represents from 40 to 70 percent of the cost of 
manufacturing our products. So steel prices are critical. They 
are all the more critical because our members compete globally 
with businesses abroad. If our members have to pay more for 
steel than our foreign competition, our members will lose 
orders and be forced to cut back or cease production.
    Why are we concerned about trade measures that would 
threaten the availability of steel? Because history tells us 
what happens when the steel market tightens. Three things 
happen: Prices go up, delivery lead times lengthen, and quality 
deteriorates, every time. We know that restraints on steel 
imports during the eighties and early nineties hurt the 
American economy. The ITC found that quotas increased imports 
of steel-containing products, costing U.S. companies billions 
of dollars in sales. The ITC also found that quotas reduced 
American exports by as much as $5.6 billion in 1989, nearly 2 
percent of exports. Quotas today would do the same. Why roll 
back history and our economy to relive a failed trade remedy?
    At current levels of demand, U.S. steel producers cannot 
supply more than about 75 percent of our needs, leaving a 
shortfall of about 30 million tons. Imports are absolutely 
necessary for the survival of American manufacturers, and this 
is the key reason why we urge a balanced view of the trade 
situation. Existing U.S. trade law provides remedies for 
dumping or subsidization of steel or import surges of steel. 
While not perfect, these remedies are, for the most part, 
consistent with international trading rules. They should be 
allowed to work and there are early indications, as we heard 
earlier this afternoon, that they are indeed working.
    Regarding the four pieces of legislation introduced in the 
House, we oppose them for various reasons. H.R. 327 provides 
for the retroactive assessment of antidumping duties that 
changes the rules after the game is over. Regarding H.R. 412, 
we oppose the proposed changes in the injury test because it 
would make trade restrictions easier than at present and is 
probably inconsistent with WTO requirements. While we favor a 
more timely release of import statistics, we do not favor 
charging a fee for import licenses or the extraction of 
confidential business information, which would stifle imports.
    H.R. 502 would impose a 3-month ban on steel imports from 
several nations. It indiscriminately shuts off imports of 
various steels without regard for the consequences, exactly the 
type of trade restraint that harms downstream manufacturers. 
And some feel it is a blatant violation of our WTO obligations.
    H.R. 506 would impose quotas. We oppose the bill because 
quotas do not work. It will harm consumers and steel-consuming 
industries to a much greater extent than it would ever help 
steel producers or steelworkers. Import quotas of less than 2.4 
million tons per month are simply inadequate for 1999's steel 
demand. If quotas were administered on a country-specific 
basis, as is the apparent intent, the quotas will be even lower 
and do even more harm to the U.S. economy.
    In summary, we recommend that the U.S. Government take no 
extraordinary action that may endanger the availability of 
steel, harm downstream manufacturers and consumers, and 
threaten our international trade relationships. We urge that 
the trade cases and other actions already underway be allowed 
to work, as there is evidence that the import surge is easing. 
A good way to increase American exports of steel is in the form 
of manufactured steel-containing products. And this can happen 
only if American manufacturers can obtain the right steel when 
it is needed at world competitive prices.
    [The prepared statement follows:]

Statement of Jon E. Jenson, President, Precision Metalforming 
Association, Independence, Ohio

    Good afternoon. My name is Jon E. Jenson, President of 
Precision Metalforming Association (PMA), headquartered in 
Independence, Ohio. I am appearing before you today on behalf 
of PMA and the $36 billion metalforming industry that it 
represents. Most of PMA's nearly 1,600 member companies are 
dispersed throughout 38 states and 248 congressional districts.
    As you know, the metalforming industry transforms sheet 
metal into intermediate and final products--precision parts, 
components and assemblies--using stamping, fabricating and 
other value-added processes. The industry employs more than 
380,000 American workers, and uses about a quarter of the steel 
produced in North America--mainly flat-rolled products.
    The industry serves virtually all segments of the North 
American economy, and sales abroad are increasing. Our largest 
market is automotive, but our products are found in wide range 
of industrial and consumer products--from dozens of components 
in computers, telephones, TVs and other communications devices, 
to kitchen and laundry appliances, to food and beverage 
containers, to hundreds of components in cars, trucks, aircraft 
and other conveyances, to residential, commercial and 
industrial structures and their heating, air conditioning, 
electrical and people-moving systems. The products of our 
industry are part of everyone's life, every day.
    Our industry is just one of many steel-using industries in 
this country--the so-called ``downstream'' manufacturers. 
Together, these downstream manufacturers employ more than 40 
American workers for every worker in the steel industry. These 
jobs are important to the welfare of our country. We can't 
protect them if our government makes these producers non-
competitive by hiking prices for our inputs, while our 
competitors enjoy low prices.
    A strong and competitive steel industry is important to the 
United States, to our industrial economy and to our industry. 
We depend on it. Most of our member companies use mostly 
domestic steel, and we clearly recognize the need for a viable 
steel industry in this country.
    Steel is the essential raw material in our products. It 
represents from 40 to 70 percent of the cost of manufacturing 
our products. So steel prices are critical. They are all the 
more critical because our members compete globally with 
businesses abroad. If our members have to pay more for steel 
than our foreign competition, our members will lose orders and 
be forced to cut back or cease production.
    Being relatively small companies, most of our members buy 
steel through service centers, rather than mill direct. They 
have little leverage with the mills. We know that small steel 
purchasers, like our members, will feel the brunt of quota-
induced price increases.
    But steel availability is not just about price. It is 
important to remember that steel is not a monolithic commodity. 
It is a series of many specific products, each with particular 
mechanical and physical properties, dimensional tolerances, 
processing characteristics, surface qualities, and so forth.
    This variety is essential because our production processes 
are becoming more sophisticated, more demanding, more precise 
and more specialized. One type or size of steel does not fit 
all.
    So ``availability'' is first of all about having the right 
steel. And it should be pointed out that some steels are not 
always available domestically. When manufacturers have to seek 
foreign steel to meet specific product requirements, the 
purchase decision may have little or nothing to do with price.
    Second, availability is about having the right steel on the 
plant floor ready for processing when it is needed. Not on a 
rolling schedule a week away, or on a truck somewhere. ``Just 
in Time'' manufacturing is making this more important--as are 
trends toward small production quantities, shorter product life 
cycles and smaller inventories.
    And the third element of availability is, of course, price. 
Having the right steel, available at the right time, at a 
world-competitive price is the practical real-world definition 
of availability. If all three elements are not in place, steel 
is simply not ``available''--although some would have you 
believe otherwise.
    Why are we concerned about trade measures that would 
threaten the availability of steel? Because we've been there, 
done that. History tells us what happens when the steel market 
tightens. Three things happen. Prices go up, delivery lead 
times lengthen and quality deteriorates. Every time.
    We know that restraints on steel imports during the 1980s 
and early 1990s hurt the American economy. The U.S. 
International Trade Commission found that quotas increase 
imports of steel-containing products, costing U.S. companies 
billions of dollars in sales. The ITC also found that quotas 
reduced American exports by as much as $5.6 billion in 1989, 
nearly two percent of exports. Quotas today would do the same. 
Why roll back history--and our economy--to relive a failed 
trade remedy?
    For several reasons, the U.S. is a net steel-importing 
nation. Despite significant investment in new state-of-the-art 
steelmaking and rolling facilities, the US steel industry has 
been unable to keep pace with the growing needs of American 
downstream manufacturers. At current levels of demand in this 
country, U.S. steel producers cannot supply more than about 75 
percent of our needs, leaving a shortfall of about 30 million 
tons. Imports are absolutely necessary for the survival of 
American manufacturers. They play a vital role in keeping 
America as a whole a strong international competitor--and they 
help to sustain our economic growth. This is a key reason why 
we urge a balanced view of the trade situation.
    In the past several months we have heard much about the 
condition of the U.S. steel industry--particularly the effects 
of imported steel. It is essential that the U.S. government's 
review of proposals for trade action be informed by a balanced 
and dispassionate understanding of the forces affecting the 
marketplace.
    The consensus outlook for the U.S. steel industry is for 
long-term growth. Production by domestic steel mills is at 
near-record levels, and domestic demand for steel is breaking 
records. In 1998, U.S. steel mills shipped an estimated 105.5 
million tons--a level reached only once before in the history 
of the industry.
    The consensus forecast is for a very slight decline in U.S. 
production in 1999 (less than one percent), and for four-
percent growth in 2000--to a new record level. Continued steady 
growth with continued low inflation is predicted for the U.S. 
economy as a whole. Not surprisingly, many investment advisors 
are recommending steel stocks to their clients.
    Steel producers do face a short-term problem--in the second 
half of 1998 there has been significant pressure on steel 
prices in the U.S. market, especially in commodity grade 
steels. November 1998 prices of commodity grade hot-rolled 
steel were about 12.5 percent lower than year-earlier prices, 
and prices of other flat-rolled products also have declined 
significantly. At the same time, U.S. hot-rolled prices are not 
low by world market standards. In fact, despite the decline, 
current U.S. hot-rolled prices are significantly higher than 
spot prices in most foreign markets.
    Price pressure is focused most directly on spot sales of 
commodity products; there is considerably less pressure on 
higher value-added steel products sold under contract. Major 
buyers of high-grade steels buy under multiple-year contracts 
that assure both buyer and seller of future volumes, and have 
the effect of smoothing out market price fluctuations.
    Four principal factors help explain current steel market 
conditions: a rapid expansion of U.S. production capacity; the 
effect of the GM work stoppage; an increase in imports; and the 
decline of demand in Asia.
    1. Heavy investment by U.S. steel mills has greatly 
increased production capacity in the United States and has 
reduced production costs. This puts strong competitive pressure 
on mills that have not upgraded their facilities.
    For example, the U.S. market for hot-rolled steel is 
slightly less than 22 million tons. In 1997 and 1998 U.S. mills 
added 4.9 million new tons of capacity, and another 4.1 million 
is scheduled to come on stream in 1999. This 9 million tons of 
efficient new capacity -40 percent of the merchant market--is a 
huge increment. It puts pressure on prices and older mills that 
have not kept pace. Cold-rolled and galvanized sheet capacity 
has also been increased.
    2. A temporary excess of flat-rolled steel supply in mid-
1998--caused largely by the GM strike--is being rapidly worked 
off.
    The work stoppages at GM caused a loss of 548,000 vehicles 
scheduled for production, and reduced U.S. demand for steel by 
about 685,000 tons. With GM now operating at full capacity 
demand is back at high levels.
    3. Import levels in 1998 have been unusually high.
    At the beginning of 1998 there were steel shortages in the 
U.S. market, with smaller customers being most affected. Unable 
to satisfy their requirements from U.S. mills, many of these 
small customers welcomed steel from foreign mills. U.S. steel 
mills also increased their foreign purchases for use as 
feedstock, accounting for as much as 25 percent of imports. 
Imports were particularly price competitive in light of the 
currency devaluations in several major steel-producing 
countries. Imports of finished steel in 1998 reached very high 
levels -28.8 million tons through October.
    However, the situation appears to be correcting itself. 
Preliminary import numbers for December show a decline of more 
than 30 percent from November levels. There are also 
indications that ship loadings of steel products bound for the 
U.S. have fallen significantly. Loadings in Japan fell 22 
percent in October.
    4. Worldwide demand for steel is down, making pricing more 
competitive.
    The sharp contraction of large parts of Asia, Russia and 
countries in Latin America has led to a decline in steel 
demand, and has put pressure on steel prices globally. While 
U.S. mills have not been impacted directly by declining 
overseas demand because they are not significant exporters, 
they are facing increasing competition in the U.S. from foreign 
mills seeking sales in the strong U.S. market. The impact of 
this increased competition is most evident in the spot market 
where prices have declined sharply. It is important to note 
that much of the steel sold in the U.S. is covered under long-
term contracts where prices reflect long-term supply and demand 
conditions, and are not as significantly impacted by short-term 
disruptions in the market.
    The current situation does not justify ``extraordinary'' 
U.S. government action. Existing U.S. trade law provides 
remedies for the dumping or subsidization of steel, or import 
surges of steel. While not perfect, these remedies are, for the 
most part, consistent with international trading rules. They 
should be allowed to work--and there are early indications that 
they are working. No extraordinary intervention in the market 
seems justified.
    The effects of the GM strike are being worked off, and 
there are early indications that foreign exports to the United 
States are declining. And, while the construction of new 
production capacity in the United States has placed competitive 
pressure on older mills that have not made capital 
improvements, that investment, on balance, is a positive 
development--it is making the U.S. steel industry, as a whole, 
more competitive.
    In making steel trade policy decisions the government is 
wise in considering the implications for the overall economy. 
If steel prices in the U.S. move further out of line with those 
in the world market, then American-made products that use 
steel--autos, heavy equipment, and a host of other products--
become less competitive. Jobs are lost. Production moves 
offshore. And much of the steel would still be imported, but in 
the form of vehicles and equipment that capture market share 
from American manufacturers. The U.S. cannot afford to become 
an island of high steel prices.
    In the 106th Congress, four pieces of legislation have been 
introduced in the House of Representatives in response to the 
increase in U.S. steel imports. Apart from the possibility that 
actions already taken and those in prospect may already have 
adequately addressed the import situation, our general concern 
with these new legislative proposals is twofold.
    First, we are concerned with any proposal that would 
threaten the availability of steel--risking disruption of the 
import lifeline that many American manufacturers and consumers 
depend on.
    Second, we are concerned that some of the provisions may 
not be consistent with international trade rules. We think it's 
important to abide by our international obligations, not just 
because it is right, not just because to do otherwise may 
invite trade retaliation, but also because it is in our own 
national interest. Users and consumers of products benefit from 
being able to choose quality products at low prices. Why 
penalize the American public with self-inflicted trade 
dislocations?
    Our more specific comments on the four legislative 
proposals:
    H.R. 327 provides for the assessment of antidumping duties 
on entries of steel products made prior to the effective date 
of any antidumping order issued in the current investigation.
    We oppose the bill because:
     It is anti-consumer.
     It is inconsistent with our international trade 
obligations.
     It changes the rules after the game is over
    H.R. 412 would change the causation standard for Section 
201 cases by eliminating the requirement that imports be a 
``substantial'' cause of injury to U.S. industry in order for 
the ITC to recommend industry relief to the President. (The 
word ``substantial'' is defined as an ``important'' cause, no 
less important than any other single cause.) The bill would 
also require importers to purchase import licenses and allow 
for disclosure of import information on a weekly basis.
    We oppose the proposed changes in the injury test because:
     It would be anti-consumer, making trade 
restrictions easier than at present. At the same time it may 
not be of much benefit to the steel industry because the 
current low prices are due chiefly to increased imports. 
Therefore, ``substantial cause'' is not the problem. The 
problem is serious injury.
     The proposed change is probably inconsistent with 
WTO requirements. WTO rules say the imports must be increasing 
under such circumstances as ``to cause'' serious injury or to 
threaten it. But the proposed change would fall below this 
standard: ``a cause'' is not the same as ``to cause.''
     A change that goes too far, as this one seems to, 
will hurt U.S. consumers and U.S. exporters.
    We oppose the imposition of import licenses because:
     While we favor a more timely release of 
information on imports, we do not favor charging a fee for 
import licenses. Such a scheme is anti-consumer and 
unnecessary.
     The Department of Commerce already has instituted 
an effective system of reporting imports.
     If more rapid dissemination of information is 
needed, sampling can be done and released.
     The bill calls for release of business 
confidential information, which will stifle imports that 
American industry needs.
    Any change to Section 201 should safeguard U.S. consumers 
by: (1) assuring that import-dependent manufacturers in the 
U.S. have access to imported material that is not available 
domestically when needed and in the specifications needed; and 
(2) assuring that import relief under Section 201 does not 
increase effective U.S. prices above world-competitive price 
levels.
    H.R. 502 would impose a three-month ban on steel imports 
from Japan, Russia, South Korea and Brazil.
    We oppose the bill because:
     It is anti-consumer.
     It indiscriminately shuts off imports of various 
steels without regard for the consequences--exactly the type of 
trade restraint that harms downstream manufacturers.
     It is a blatant violation of our WTO 
responsibilities.
    H.R. 506 would impose quotas on steel imports equal to the 
monthly average of imports for the three years ending with June 
1997.
    We oppose the bill because:
     Quotas do not work. They will harm consumers and 
steel-consuming industries to a much greater extent than they 
could ever help steel producers or steelworkers.
     Import quotas of less than 2.4 million tons per 
month are inadequate for 1999's steel demand.
     If quotas are administered on a country-specific 
basis, as is the apparent intent, the quotas will be even lower 
and do even more harm to the U.S. economy.
    In summary, we recommend that the U.S. government take no 
extraordinary action that may endanger the availability of 
steel, harm downstream manufacturers and consumers, and 
threaten our international trade relationships. We urge that 
the trade cases and other actions already underway be allowed 
to work, as there is evidence that the import surge is easing. 
A good way to increase American exports of steel is in the form 
of manufactured steel-containing products. And this can happen 
only if American manufacturers can obtain the right steel, when 
it is needed, at world-competitive prices.
      

                                


    Mr. English. Thank you, Mr. Jenson.
    The Chair recognizes Mr. Dan Griswold, the associate 
director of the Center for Trade Policy Studies at the CATO 
Institute. Welcome.

STATEMENT OF DANIEL T. GRISWOLD, ASSOCIATE DIRECTOR, CENTER FOR 
              TRADE POLICY STUDIES, CATO INSTITUTE

    Mr. Griswold. Thank you, Mr. Chairman, and Members of the 
Subcommittee for allowing the CATO Institute to testify here 
this afternoon.
    The difficulties facing the steel industry today are not 
unique. Increased competition and lower prices are the bane of 
every industry's bottom line. Many other U.S. industries have 
been hit by the effects of the Asian crisis. Exporters have 
seen sales slump while importing competing industries have 
faced stiffer competition at home. There is no reason why the 
steel industry should receive special treatment at the expense 
of its customers and American consumers.
    The viability of the U.S. domestic steel industry is not 
threatened by recent increases in imports. Domestic steel 
producers continue to supply more than two-thirds of the steel 
consumed in the United States. Domestic steel shipments reached 
102 million tons last year, down slightly from 1997, but still 
the second highest level of production in the last two decades. 
U.S. domestic producers actually increased their share of world 
steel output last year from 12.3 percent to 12.6 percent.
    The big steel companies and their unions point to the 
10,000 jobs lost in the last year. That number needs to be put 
in perspective. In that same period, the U.S. economy as a 
whole created 2.5 million jobs. Representative Visclosky 
pointed out that one steelworker is losing their job per hour. 
The U.S. economy is creating 250 new jobs in that same hour, 
the same time span.
    Since 1980, the domestic steel industry has cut two-thirds 
of its production workers. Most of those layoffs were not 
caused by imports but by rising productivity within the 
industry. With productivity outpacing domestic demand, the 
industry has required fewer workers. The resulting decline in 
employment has been relentless with the number of employed 
steelworkers falling in 15 of the last 18 years. Employment has 
moved steadily downward whether imports have been rising or 
falling as a share of new domestic supplies.
    Raising barriers against steel imports will impose a real 
cost on the American economy. Millions of American workers and 
tens of millions of American consumers will be made worse off 
so that the domestic steel industry can enjoy temporary 
benefits. Consumers will pay more than they would otherwise for 
products made from steel, such as household appliances, cars 
and trucks. If protectionist measures succeed in raising the 
average price of steel, new products by $50 a ton, Americans 
will pay the equivalent of a $6 billion tax on the more than 
120 million tons of steel they consume a year.
    Steel protection will impose a heavy cost on the huge 
segment of American industry that consumes steel as a major 
import to its production process. The major steel-using 
manufacturing sectors--transportation equipment, fabricated 
metal products, and industrial machinery and equipment--employ 
a total of 3.5 million production workers. Workers in those 
industries outnumber steelworkers 20 to 1.
    Despite complaints from the big steel mills that Congress 
and the administration are not doing enough, the system is 
already stacked in favor of domestic producers. U.S. 
antidumping laws are already punishing foreign producers for 
engaging in practices that are perfectly legal and common in 
the domestic American market. U.S. firms, including steel 
makers, routinely sell the same product at different prices in 
different markets or temporarily sell at a loss in order to 
liquidate inventories and recover fixed costs.
    It has become obvious in recent days that the aim of the 
steel industry's antidumping provisions has not been to restore 
some mythical ideal of fair trade, but to lock out--and that 
was a phrase used last week by a steel company executive--to 
lock out steel imports altogether. On top of protection already 
in place, an array of proposals in Congress threatens American 
access to imported steel and you've heard much about those 
today. None of the offered legislation would increase general 
economic welfare in the United States and much of it would be 
in violation of U.S. international commitments.
    Quotas are one of the most damaging forms of trade 
restrictions. They redistribute wealth from consumers to 
domestic producers and to those foreign producers lucky enough 
to get quota rights. Recent worldwide economic developments 
have produced conditions that at present are unfavorable for 
American steel producers and favorable for domestic steel 
users. In such a circumstance, it is not the business of the 
U.S. Government to intervene in the marketplace and favor one 
U.S. industry at the expense of other U.S. industries.
    And you have just heard from representatives from two of 
those industries whose industries, in particular, it makes no 
sense to penalize the industries that, in terms of employment 
and value-added, are of much greater significance to the 
overall national economy. The Federal Government should not use 
its power to confer special benefits on a small but vocal 
segment of producers at the expense of the Nation's general 
welfare. Thank you.
    [The prepared statement follows:]

Statement of Daniel T. Griswold, Associate Director, Center for Trade 
Policy Studies, Cato Institute

    First, let me thank Chairman Crane for the leadership he 
has shown on trade issues, and let me also thank the other 
members of the committee for allowing the Cato Institute to 
testify at this afternoon's hearing.
    The difficulties facing the steel industry today are not 
unique. Increased competition and lower prices are the bane of 
every industry's bottom line. Layoffs, falling profits, and 
industry restructuring can be seen today in the oil industry, 
where import prices have fallen 40 percent in the last year. 
Yet just about everyone understands that lower oil prices are 
good for our economy and that duties on imported oil would drag 
down living standards and damage our national interest. The 
same is true for steel protection.
    The primary cause of rising steel imports and falling 
prices during 1998 was the Asian economic crisis, which 
resulted in (1) a collapse in demand for steel in that region 
and (2) a realignment of currency values that makes foreign 
steel much more price-competitive in the United States. In 
light of those circumstances, it is only natural that that 
prices fell and that the still vibrant U.S. market pulled in 
extra imports.
    Many other U.S. industries have been hit by the effects of 
the Asian crisis: Exporters have seen sales slump while import-
competing industries have faced stiffer competition at home. 
There is no reason why the steel industry should receive 
special treatment at the expense of its customers and American 
consumers, just because it is experiencing temporarily 
unfavorable conditions.
    The viability of the U.S. domestic steel industry is not 
threatened by the recent increase in imports. According to 
Commerce Department figures, imports of steel mill products 
peaked in the fall of 1998 and have been declining since then. 
Normal marketplace reactions, compounded by the threat of 
retroactive antidumping duties, caused December steel imports 
to fall by one-third compared to November, including a 47 
percent plunge in imports from Japan and a 79 percent fall in 
imports from Russia.
    For all of 1998, imports of steel mill products were up 33 
percent from 1997, but most of the net increase in imports went 
to meet strong domestic demand. In terms of tons of steel 
shipped, the U.S. domestic steel industry had one of its best 
years ever in 1998. Domestic steel shipments reached 102 
million tons last year, down 3 percent from 1997, but still the 
second highest level of production in the last two decades. 
Domestic steel production in 1998 was still 20 percent above 
production in 1989, at the peak of the last expansion. With 
world steel production falling, U.S. domestic producers 
actually increased their share of world steel output last year, 
from 12.3 percent in 1997 to 12.6 percent.
    Prospects for the U.S. steel industry remain positive 
despite current problems. Domestic demand is expected to remain 
strong, especially in the automotive sector, and exports could 
pick up in 1999 as demand in East Asia begins to recover. After 
bottoming out in the fourth quarter of 1998, steel prices are 
expected to rise in 1999; indeed numerous U.S. mills have 
announced price hikes in the past few weeks. Despite the recent 
increase in imports, domestic steel producers continue to 
supply more than two-thirds of the steel consumed in the United 
States.

                       The Futility of Protection

    The big steel companies and their unions point to the 
10,000 jobs that have been lost in the industry in the last 
year, but that number needs to be put in perspective. First, 
total job losses in the steel industry are relatively small 
when compared to the 2.5 million net new jobs created in the 
whole U.S. economy in 1998. U.S. economic policy should not be 
driven by an industry whose job losses in the last year are 
being overwhelmed by an expanding economy that, during the same 
period, created nearly that many net new jobs on an average 
business day.
    Second, falling employment in the steel industry is nothing 
new. Since 1980, the domestic steel industry has shed two-
thirds of its production workers. Most of the layoffs in the 
steel industry have not been caused by imports, but by rising 
productivity within the industry. In 1980, a ton of 
domestically produced steel required 10.1 man-hours to produce; 
today the industry average is 3.9 man-hours. With productivity 
rising faster than domestic demand, the industry has required 
fewer workers. The resulting decline in employment has been 
relentless, with the number of employed steelworkers falling in 
15 of the last 18 years. Employment has moved steadily downward 
whether imports have been rising or falling as a share of 
domestic supply. For example, imports as a percent of new 
supply (shipments plus imports) fell from a peak of 26.2 
percent in 1984 to a low of 16.7 percent in 1991. Yet during 
that same period, employment in the steel industry fell by more 
than 70,000. (See the attached graph.)
    Foreign competition has helped to spur this progress in 
productivity, but the most ferocious competition has come from 
within our borders, from so-called mini-mills. The more 
efficient of these smaller mills can produce a ton of steel in 
under two man hours, and are relentlessly expanding the scope 
of products they can make. In 1981, mini-mills accounted for 15 
percent of U.S. steel production; today they account for nearly 
half of the steel-making capacity in the United States. With or 
without protection, the industry will continue to consolidate 
and shed workers, with production shifting from the larger 
integrated mills to the smaller, more flexible and efficient 
mini-mills.
    Steadily declining employment has come despite three 
decades of government import protection. Beginning with import 
quotas in 1969, protection has been the rule rather than the 
exception for the steel industry. Quotas were followed in the 
late 1970s by the Carter administration's ``trigger price'' 
mechanism and then in the 1980s by the Reagan administration's 
``voluntary'' import quotas. U.S. ``fair trade'' laws seem to 
have been written primarily for the steel industry. About a 
third of the antidumping orders in the last two decades have 
been directed at imported steel. The latest round of 
protection--with preliminary antidumping rates ranging from 25 
to 71 percent, and a suspension agreement with Russia--
threatens a severe disruption in U.S. industry access to needed 
steel supplies.
    The Steel Manufacturers Association, the trade group 
representing the mini-mill sector, recognizes the futility of 
protection. According to an official statement, its members 
``note the deterioration of artificially protected industries 
and markets. They have seen artificially nurtured industries 
sink into excessive complacency and stagnation. They believe 
that competition has fostered a revolution in the U.S. steel 
industry.'' These words are as true today as ever.

                         Costs to U.S. Economy

    Raising barriers against steel imports will impose a real 
cost on the American economy. Millions of American workers and 
tens of millions of American consumers will be made worse off 
so that the domestic steel industry can enjoy temporary 
benefits. Consumers will pay more than they would otherwise for 
products made from steel, such as household appliances, trucks, 
and cars. (The average five-passenger sedan contains $700 worth 
of steel.) Artificially propping up the domestic cost of steel 
will only raise the cost of final products to U.S. consumers. 
If protectionist measures succeed in raising the average price 
of steel mill products by $50 a ton, Americans will pay the 
equivalent of a $6 billion tax on the more than 120 million 
tons of steel they consume each year.
    Steel protection will impose a heavy cost on the huge 
segment of American industry that consumes steel as a major 
input to its production process. The major steel-using 
manufacturing sectors--transportation equipment, fabricated 
metal products, and industrial machinery and equipment--employ 
a total of 3.5 million production workers. Production workers 
in manufacturing industries that use steel as a major input 
outnumber steelworkers by 20 to 1.
    A prime example is General Motors Corp., which buys 4.7 
million tons of steel directly each year and another 2.5 
million tons indirectly through independent suppliers. GM buys 
most of its steel through long-term contracts, and is thus 
insulated from short-term price fluctuations, but any price 
increase caused by protection will eventually filter through 
when contracts are renegotiated. In a brief filed with the 
International Trade Commission in October 1998, GM warned that 
antidumping duties against steel imports could negatively 
affect its ability to compete in global markets. GM's domestic 
operations ``become less competitive in the international 
marketplace to the extent those operations are subjected to 
costs not incurred by offshore competition, and to the extent 
that U.S. import barriers impede access to new products and 
materials being developed offshore, or remove the competitive 
incentives to develop new products in the United States.''
    Another company hurt by steel protection is Caterpillar of 
Peoria, Ill., which buys 600,000 tons of steel annually to make 
earth-moving equipment. While three-quarters of Caterpillar's 
production facilities are located within the United States, one 
half of its sales are abroad. Higher steel prices in the 
domestic market will eventually cause its products to become 
less price competitive compared to products made in other 
countries. Sales, profits, and employment will suffer.
    One of the largest direct consumers of steel is the 
construction industry, which accounts for about 35 percent of 
domestic steel consumption. Duties and tariffs against imported 
steel will filter through to higher prices for homes and 
commercial office space. The jobs of thousands of construction 
workers could be put in jeopardy. When construction and other 
non-manufacturing industries are included, the total number of 
employees in steel-using industries dwarfs the number of 
steelworkers by 40 to 1.
    Especially vulnerable to rising import prices are workers 
in smaller companies that manufacture metal products. These 
firms typically buy on the spot market rather than on long-term 
contracts, and are the first to feel the pinch of higher steel 
prices. Many of them also act as suppliers to larger 
corporations, and are thus less able to pass along a hike in 
steel costs in the form of higher prices for their final 
products. The result of higher domestic steel prices to these 
companies will be lower sales, declining profits, and fewer 
jobs created.
    If the steel industry succeeds is gaining protection from 
imported steel, an even larger gap will open between domestic 
and international prices for steel mill products. This will 
give an advantage to foreign firms competing against American 
steel-using industries. Faced with artificially high steel 
prices at home, Americans will simply buy their steel 
indirectly by importing more finished products made abroad from 
steel available at cheaper global prices. If the federal 
government blocks the import of steel mill products through the 
front door, steel will come in the back door in the form of 
automobiles, industrial equipment, machine tools, and other 
steel-based products.
    Besides being economically self-defeating, steel protection 
would be at odds with America's foreign policy interests. The 
best thing America can do to encourage growth and stability in 
the world economy is to keep our markets open. It makes no 
sense to hector Japan to stimulate its domestic economy or to 
underwrite IMF loans to Brazil and Russia while denying 
producers there the opportunity to earn valuable foreign 
exchange by selling steel to willing American buyers.
    One recent study suggested that restrictions on steel 
imports will enhance overall U.S. economic welfare. 
Specifically, the Economic Strategy Institute published a study 
earlier this month which purports to show that steel dumping, 
however that term might be defined, reduces U.S. economic well-
being, and that antidumping duties are needed to prevent this 
harm. ESI's findings rest ultimately on the fact that wages in 
the steel industry are higher than average and that displaced 
steel workers frequently are forced to accept lower paying 
jobs. Thus, according to the ESI study, net U.S. welfare is 
reduced by dumping that causes job losses in the steel sector; 
antidumping is good for us because it prevents those job 
losses.
    First, this argument gets causation backwards: it assumes 
that high-paying jobs are the cause of economic welfare, rather 
than the consequence of it. If applied across the board, the 
ESI analysis would mean that public policy generally should 
protect our high standard of living by discouraging or even 
outlawing layoffs from high-paying jobs. This is basically the 
European approach, and its effects are all too visible in low 
growth and chronic double-digit unemployment.
    Second, and more narrowly, the ESI analysis assumes that 
job losses in the steel sector wouldn't occur in the absence of 
low-priced import competition--an assumption refuted by the 
industry's steadily declining employment over the past 20 
years.
    Third, the study fails to adequately account for the 
offsetting production and employment gains that the lower 
prices would stimulate in the far larger steel-using sectors. 
Even if one accepts the study's methodology, the hypothetical 
gains from imposing antidumping duties against foreign steel 
are tiny--less than .005 percent of annual GDP--and not worth 
the far more real danger that the law will be used for 
protection.

                 America's Unfair ``Unfair Trade'' Laws

    Despite complaints from the big steel mills that Congress 
and the administration are not doing enough, the system is 
already stacked in favor of domestic steel producers. U.S. 
antidumping law has become nothing more than a protectionist 
weapon for industries feeling the heat of global price 
competition.
    These laws punish foreign producers for engaging in 
practices that are perfectly legal, and common, in the domestic 
American market. U.S. firms, including steel makers, routinely 
sell the same product at different prices in different markets 
depending on local conditions, or temporarily sell at a loss in 
order to liquidate inventories and cover fixed costs. Any steel 
company that lost money in the third or fourth quarters last 
year was selling its goods at below total average cost and was 
consequently ``dumping'' its products on the domestic market 
according to the definition contained in U.S. law. If every 
domestic sale was required to be at a ``fair'' price according 
to the antidumping law's definition, most American companies 
would be vulnerable to government sanction, and U.S. consumers 
would find far fewer bargains.
    It is a misnomer to say that steel is being ``dumped'' on 
the U.S. market. Virtually every ton of steel that enters the 
United States has been ordered by a willing American buyer, 
often months in advance of its actual delivery. Antidumping 
duties not only stop foreign producers from selling in the U.S. 
market; they stop American citizens from buying the type and 
amount of steel they need at prices that benefit them most as 
shareholders, workers and consumers.

             Proposed Legislation Would Compound the Damage

    On top of antidumping protection already in place, an array 
of new protectionist proposals in Congress threatens U.S. 
producers' access to imported steel. None of the offered 
legislation would increase general economic welfare and much of 
it would be in violation of U.S. international commitments.
    1) H.R. 506/S. 395, Stop Illegal Steel Trade Act, sponsored 
by Rep. Visclosky and Sen. Rockefeller. This bill would limit 
steel imports from all nations to 1997 levels on a monthly 
basis for a period of three years. Although SISTA says that the 
import limits could be accomplished by ``quotas, tariff 
surcharges, or negotiated enforceable voluntary export 
restraint agreements, or otherwise,'' it is in essence a quota 
bill that would set strict limits on the volume of foreign 
steel U.S. companies would be allowed to purchase. SISTA is a 
clear violation of our institutional obligations under the 
GATT.
    Quotas are one of the most damaging forms of trade 
restrictions. They redistribute wealth from consumers to 
domestic producers and to those foreign producers lucky enough 
to get quota rights, while the U.S. government does not receive 
tariff revenues. In other words, SISTA would tax U.S. steel 
users to benefit major steel companies, both here and abroad. 
Moreover, SISTA would endanger the ability of U.S. steel-using 
industries to obtain the materials they need. According to 
calculations by the Precision Metalforming Association, for 
example, SISTA quota levels would leave U.S. manufacturers 
nearly 4 million tons short based on 1998 levels of demand.
    2) H.R. 502, Fair Steel Trade Act (FASTA), sponsored by 
Rep. Traficant. FASTA would impose a 3-month ban on imports of 
steel and steel products from Japan, Russia, South Korea, and 
Brazil, in disregard for the needs of American consumers and 
steel-using industries. A trade ban--even a limited one--would 
seriously damage private business relationships and undermine 
the global competitiveness of dynamic U.S. companies. This bill 
would deprive the U.S. economy of all the gains from steel 
trade and offer only temporary benefits to domestic steel 
companies. It would, in short, be a disaster.
    3) H.R. 412/S. 261, Trade Fairness Act of 1999, sponsored 
by Rep. Regula and Sen. Specter. This legislation would create 
a permit and monitoring program that would require all steel 
importers to register with the Commerce Department and report 
information on the cost, quantity, source, and ultimate 
destination of all steel shipments. The bill authorizes 
Commerce to collect ``reasonable fees and charges'' to defray 
the costs of issuing permits.
    More significantly, the bill would amend the Trade Act of 
1974 to make an injury finding easier under Section 201. First, 
it would drop the requirement that imports be a ``substantial 
cause'' of serious injury (i.e., ``not less than any other 
cause'') and instead require that imports be only a cause of 
injury, however insignificant. Second, the bill would detail 
the factors to be considered by the ITC to determine whether 
U.S. industry has suffered serious injury.
    The Trade Fairness Act is the most subtle of all the 
current proposals, and thus the most dangerous. Its import-
reporting regime, in addition to being an unfair burden that 
falls only on steel importers, has the potential to choke off 
beneficial steel trade through paperwork. The Section 201 
amendments, however, are its most ominous provision. By making 
201 cases much easier for petitioners to win, this bill 
threatens to open the floodgates of protectionism in the 
future. It is clearly a step in the wrong direction.
    4) Voluntary Export Restraints. The administration is 
attempting to jawbone foreign governments--especially Japan--
into reducing steel exports ``voluntarily.'' Of course, a VER 
is in reality an informal quota that is hardly voluntary. Like 
all quotas, VERs distort the economy and reduce national 
welfare. The Institute for International Economics has 
estimated that steel quotas in the 1980s imposed a net loss on 
the U.S. economy of $6.8 billion a year.

                               Conclusion

    Unfortunately, changes in steel prices are invisible to 
ordinary Americans. Those changes show up, eventually, in the 
price of an automobile, or a plane ticket, or rental space in 
an office building--but the causal connections are complex and 
subtle. The effect of a tax on foreign steel just doesn't show 
up in the average family's budget in any direct or immediate 
way. As a result, steel producers are free to equate their 
interest with the national interest without generating much in 
the way of grass-roots opposition.
    The campaign for steel protectionism thus highlights a 
classic problem of political economy known as concentrated 
benefits and dispersed costs. The benefits of restrictions on 
foreign steel are concentrated in the relatively small steel-
producing sector, while the costs are dispersed throughout the 
entire economy. Steel producers therefore have a very clear and 
powerful incentive to lobby for protectionism, while most of 
the rest of us who stand to lose don't have a big enough or 
clear enough stake to oppose them with any vigor.
    Worldwide economic developments have combined to produce 
conditions that at present are unfavorable for U.S. steel 
producers and favorable for American steel users. In such a 
circumstance, it is not the business of the U.S. government to 
intervene in the marketplace and favor one U.S. industry at the 
expense of other U.S. industries. In particular, it makes no 
sense to penalize the industries that in terms of employment 
and value-added are of much greater significance to the overall 
national economy. So if you think an import tax to help out the 
oil companies sounds like a bad idea, you ought to come to the 
same conclusion about steel protectionism. Just because the 
costs are better hidden doesn't mean they're not there.
    The federal government should not use its power to favor 
one industry over another, or to confer special benefits on a 
small but vocal segment of producers at the expense of the 
nation's general welfare. Congress should reject calls for 
steel protection and reform the antidumping law to prevent 
future abuse.
[GRAPHIC] [TIFF OMITTED] T7306.017

      

                                


    Mr. Houghton [presiding]. Thanks. Mr. Mastel.

   STATEMENT OF GREG MASTEL, VICE PRESIDENT AND DIRECTOR OF 
              STUDIES, ECONOMIC STRATEGY INSTITUTE

    Mr. Mastel. Good afternoon, Mr. Chairman. When the steel 
industry's problems with dumped imports became apparent some 
months ago, the Economic Strategy Institute undertook a 
rigorous analysis of the global steel industry, dumping as a 
commercial tactic in the steel industry, and the application of 
U.S. antidumping laws as a remedy. That study, which is 
entitled ``Leveling the Playing Field and Anti-Dumping and the 
U.S. Steel Industry'' was supported by a grant from the Kearny 
Foundation, a nonprofit foundation whose purpose is to assess 
problems and opportunities of trade and business with Asia.
    In the limited time I have, I would like to briefly 
summarize two important conclusions from the study. First, the 
world steel market is deeply distorted by various subsidies, 
trade barriers, cartels, and numerous government-industrial 
policies. The global steel market is the most distorted 
industrial market in the world economy.
    Many countries, notably Japan and Korea, have built 
domestic steel industries with industrial policies that rely 
heavily upon closed home markets, which ensure high domestic 
prices. Over the years, former government trade barriers that 
were once the backbone of this strategy have been replaced by 
the operation of cartels. This is especially true in Japan. 
Companies from Brazil to Sweden have followed with their own 
versions of Japan strategy over the years and domestic steel 
industries have proliferated.
    Recently, the global steel market has been further 
complicated by the emergence of two partly reformed nonmarket 
economies, Russia and China, as, respectively, the world's 
largest exporter and the world's largest manufacturer of steel. 
In most of the world's steel market, the key decisions are made 
by the government, not by the market. As the OECD has 
documented, the cumulative result is the world has a great 
excess production capacity in steel.
    For the United States, the world's only truly open major 
market for steel, dumping is the common result. Backed by 
subsidies or profits from closed home markets, steel companies 
from many countries dump steel on the world market to dispose 
of overproduction. Through dumping, these companies export 
steel and their home governments keep their steelworkers 
employed and, effectively, export unemployment to open-market 
countries. As the world's major open-market country, the United 
States absorbs much of both.
    Certainly, the Asian and Russian economic crises pushed 
these dumped steel exports to higher levels in 1998 than had 
been previously experienced. Still, were it not for many years 
of systematic market distortion, there would be far less excess 
production capacity in the world and efficient steel 
industries, like that of the United States, would suffer far 
less from dumped imports.
    Second, dumping is damaging for the U.S. economy.
    Some observers have naively argued that dumping should be 
viewed as a gift to consumers and happily accepted. This view 
simply ignores the competitive realities in world industrial 
markets and cannot withstand a rigorous analysis. As documented 
in my recent study of dumping in the steel industry, dumping is 
a periodic phenomenon that greatly impacts the U.S. industry, 
on average, only once every several years. Consumers only 
benefit in the year the dumping is actually taking. Steel 
manufacturers, however, feel the negative impact over a period 
of many years. Investment and production decisions continue to 
be affected by the threat of dumping even after dumping has 
ceased.
    Without vigorous use of antidumping laws, the result would 
be a U.S. steel industry which, despite being otherwise 
competitive, would shrink dramatically in response to dumping. 
The cost to the U.S. economy in lost wages, production, and 
investment rapidly outweighs the transient consumer benefits 
from dumping. Over the course of a 10-year simulation of the 
steel market, uncountered dumping resulted in a $30 billion 
decrease in U.S. steel shipments.
    Further, the potential costs to steel consumers of 
countering dumping are small. Even if dumped imports were 
entirely eliminated, the U.S. steel market would still be quite 
competitive and open, with more than a dozen U.S. companies 
competing vigorously among themselves and with fairly traded 
imports. Under these conditions, countering dumping is highly 
unlikely to produce prices above normal market prices.
    In conclusion, let me turn to one last point I want to 
emphasize for you, including observations. Countering dumping 
also has the secondary benefit of bolstering public support for 
free and open trade. Simply put, free trade will not long be 
politically viable without fair trade. The founders of the 
world trading system, now known as the WTO, were well aware of 
this political reality and that is why the WTO fully endorses 
the operation of U.S. antidumping laws.
    Those who want to ensure an open U.S. market and pursue 
further trade negotiations would be well advised to ensure that 
U.S. laws, like antidumping laws, are rigorously enforced. For 
without the operation of those trade laws, trade problems like 
those now being experienced by the steel industry, would likely 
shatter public support for free trade. I think the wide support 
for some of the legislation that has been talked about today is 
the clear evidence that that is exactly what is happening. 
antidumping laws are a very important political safety valve 
and the steel industry's recent experience demonstrates they 
are still needed very much. Thank you, Mr. Chairman.
    [The prepared statement and attachment follow:]

Statement of Greg Mastel, Vice President and Director of Studies, 
Economic Strategy Institute

    My name is Greg Mastel and I am currently vice president 
and director of studies at the Economic Strategy Institute 
(ESI).
    For a number of years, I have been interested in the 
operation of U.S. trade laws and the international economic 
problems that make them necessary. I authored a book a year ago 
on the operation of U.S. antidumping laws, which impose duties 
on imported products sold at less than their cost of production 
or less than their price in the home market. When the steel 
industry's problems with dumped imports became apparent some 
months ago, ESI undertook a rigorous analysis of the global 
steel industry, dumping as a commercial tactic in the steel 
industry, and the application of U.S. antidumping laws as a 
remedy. This study was supported by a grant from the Kearny 
Foundation, a non-profit foundation whose purpose is to assess 
problems and opportunities of trade and business with Asia.
    With your permission, Mr. Chairman, I would like to include 
the executive summary of this study, titled Leveling the 
Playing Field: Antidumping and the U.S. Steel Industry, with my 
testimony in the hearing record.
    In the limited time I have, I would like to briefly 
summarize two important conclusions from the study.
    First, the world steel market is deeply distorted by 
various subsidies, trade barriers, cartels, and numerous 
government industrial policies. The global steel market is the 
most distorted industrial market in the world economy. Many 
countries, notably Japan and Korea, have built domestic steel 
industries with industrial policies that rely heavily upon 
closed home markets, which ensure high domestic prices. Over 
the years, the formal government trade barriers that were once 
the backbone of this strategy have been replaced by the 
operation of cartels. Countries from Brazil to Sweden have 
followed their own versions of the ``Japan strategy'' over the 
years and domestic steel industries have proliferated.
    Recently, the steel industry has been further complicated 
by the emergence of two partly reformed non-market economies, 
Russia and China, as respectively, the world's largest exporter 
and the world's largest manufacturer of steel.
    In most of the world's steel market, the key decisions are 
made by the government, not by the market. As the OECD has 
documented, the cumulative result is the world has a great 
excess production capacity in steel.
    For the United States, the world's only truly open major 
market for steel, dumping is the common result. Backed by 
subsidies or profits from closed home markets, steel companies 
from many countries dump steel on the world market to dispose 
of overproduction. Through dumping, these companies export 
steel and their home governments keep their steel workers 
employed and, effectively, export unemployment to open market 
countries. As the world's major open market, the United States 
absorbs much of both.
    Certainly, the Asian and Russian economic crises pushed 
these dumped steel exports to higher levels in 1998 than 
previously had been the case. Still, were it not for many years 
of systematic market distortion there would be far less excess 
production capacity in the world and efficient steel 
industries, like that of the United States, would suffer far 
less from dumped imports.
    Second, dumping is damaging to the U.S. economy. Some 
observers naively argue that dumping should be viewed as a gift 
to consumers and happily accepted. If other countries are 
willing to subsidize and dump steel, we should benefit from 
their mistake and enjoy the lower prices.
    This view simply ignores the competitive realities in world 
industrial markets and cannot withstand rigorous analysis. As 
documented in my recent study of dumping in the steel industry, 
dumping is a periodic phenomenon that greatly impacts the U.S. 
industry on average only once every several years. Consumers 
only benefit in the year the dumping is actually taking place. 
Steel manufacturers, however, feel an ongoing negative impact. 
Investment and production decisions continue to be affected by 
the threat of dumping even after dumping has ceased. Without 
vigorous use of antidumping laws, the result would be a U.S. 
steel industry, which despite being otherwise competitive, 
would shrink dramatically in response to dumping. The cost to 
the U.S. economy in lost wages, production, and investment 
rapidly outweighs the transient consumer benefits from dumping. 
Over the course of a ten-year simulation of the steel market, 
uncountered dumping resulted in a $30 billion decrease in U.S. 
steel shipments.
    Further, the potential costs to steel consumers of 
countering dumping are small. Even if dumped imports were 
entirely eliminated, the U.S. steel market would still be quite 
competitive and open, with more than a dozen U.S. companies 
competing vigorously among themselves and with fairly traded 
imports. Under these condition, countering dumping is highly 
unlikely to result in prices above normal market prices.

                               CONCLUSION

    Mr. Chairman, no one would dispute that other factors, such 
as increased productivity, and demand disruptions, have had an 
impact on the steel industry. That said, however, the U.S. 
steel industry has made enormous competitive strides in recent 
years and, if dumping is countered, stands well positioned to 
generate high-paying jobs and contribute many billions of 
dollars to the U.S. economy in coming years.
    By countering dumping, the U.S. government attempts to re-
establish the level playing field that has been distorted by 
subsidies, cartels, and government industrial policies. On a 
level playing field, investment and production decisions will 
be made on a rational basis, which will greatly benefit the 
U.S. economy in the long term.
    Countering dumping also has the significant secondary 
benefit of bolstering public support for free and open trade. 
Simply put, free trade will not long be politically viable 
without fair trade. The founders of the world trading system 
were well aware of this political reality and that is why the 
WTO fully endorses the operation of U.S. antidumping laws.
    Those who want to ensure an open U.S. market and pursue 
further trade negotiations would be well advised to be certain 
that U.S. trade laws, like antidumping laws, are vigorously 
enforced. For without the operation of those trade laws, trade 
problems, like those now being experienced by the U.S. steel 
industry, would likely shatter public support for free trade.
    Thank you, Mr. Chairman.
      

                                


Leveling the Playing Field: Antidumping and the U.S. Steel Industry by 
Greg Mastel and Andrew Szamosszegi

                           Executive Summary

    Driven by mercantilist trade distortions that underlie the 
global economic crisis, foreign exports of steel to the United 
States have hit record levels in 1998 and are continuing at 
high levels in 1999. This sudden flood of steel into the United 
States has forced U.S. steel mills to close or slow production 
and put thousands of steel workers out of work. These problems 
have, in turn, sparked a debate over what response, if any, the 
U.S. government should pursue. This paper analyzes the causes 
and impact of the surge in steel imports and analyzes the 
appeal of various policy responses, including U.S. trade laws 
aimed at countering unfair trade practices, such as 
subsidization and dumping.
    The world steel market is perhaps the most distorted 
industrial market in the world. To achieve economic and 
political objectives, many countries have pursued industrial 
policies aimed at nurturing a steel industry with trade 
protection and subsidies.
    In contrast, the United States steel industry has generally 
not been the recipient of such special treatment. The U.S. 
economy is open and subsidies have been very limited, 
especially when compared to those of other major industrial 
countries. In the 1970s and 1980s, the U.S. steel industry had 
serious competitive problems, but $50 billion in new investment 
has built an industry with some of the highest productivity 
levels and lowest costs in the world.
    Success in today's highly distorted world steel market, 
however, often has less to do with investment, adoption of new 
technology and increased labor productivity than with the 
industrial and trade policies of foreign governments. The 
combined result of the numerous steel industrial policies is 
that the world has tremendous excess production capacity in 
steel. In such a situation, the high-fixed cost structure of 
the steel industry encourages fierce price competition during 
downturns. The involvement of governments, which press for 
keeping production lines open and workers employed, greatly 
accentuates this tendency. Dumping--sales in export markets 
below cost or sales below the price in the home market--is the 
frequent result.
    The United States has frequently used antidumping laws, 
which counter dumping with offsetting duties, and 
countervailing duty laws, which counter unfair subsidies, to 
level the international playing field in steel. Since 1980, 
there have been 46 successful antidumping (AD) cases involving 
steel and 27 countervailing duty (CVD) cases. In response to 
the recent surge of steel imports, the U.S. steel industry has 
filed a number of new AD/CVD cases. These complaints allege, 
with considerable factual support, that companies from a number 
of countries, including Russia, Japan, South Korea, and Brazil 
are again receiving subsidies or are engaged in injurious 
dumping in the U.S. market, which are illegal under both U.S. 
and international law. If these allegations are upheld by U.S. 
authorities, offsetting duties will be imposed to counter the 
injurious impact of these practices on U.S. steel manufacturers 
and workers.
    However, the economic desirability of imposing AD/CVD 
duties has been questioned. Some argue that the United States 
would be better off simply accepting dumped and subsidized 
products as ``gifts to consumers.'' While this line of analysis 
is superficially attractive, it cannot withstand rigorous 
analysis.
    The long term costs to producers and workers of failing to 
counter the dumped and subsidized steel in the U.S. market 
substantially outweigh the transient consumer benefits arising 
from short term price cuts. Without an assurance that action 
can and will be taken against trade distorting and illegal 
commercial practices, investment in and production of steel and 
many other manufactured products in the United States will 
become an unattractive proposition. Over time, the losses to 
the U.S. economy in terms of lost production, investment, and 
high-wage jobs, mount to painful levels.
    This paper will demonstrate this point by using a dynamic 
partial equilibrium economic model to simulate the economic 
impacts of unrestrained steel dumping on the U.S. economy. 
Based upon historical experience, injurious dumping is modeled 
as an intermittent or periodic practice that is employed by 
foreign companies in only some years. Also based upon 
historical experience, scenarios for 5 percent to 15 percent 
price cuts due to dumping were considered. The results suggest 
that if the United States had not imposed antidumping duties in 
the 1990s, the economic costs of dumping would have outweighed 
the benefits of low prices to consumers within several years. 
In 1997, the total net costs of failing to counter dumping--
lost economic activity, lower wages, etc.--would have totaled 
between $71 and $338 million, depending upon the level of 
dumping.
    Based upon this simulation and related analysis, the paper 
concludes that the United States has a strong interest in 
countering dumped and subsidized steel imports. The alternative 
of simply accepting these market distortions would harm the 
U.S. industrial base, erode high-wage employment, and impose 
considerable net costs on the U.S. economy. Additionally, 
political support for free trade in the United States would 
likely erode in response to an obviously unlevel playing field.
    Without question, the global steel market is entering a 
period that will require substantial adjustment. There is 
simply too much production capacity in the world and some of it 
must close. By employing AD/CVD duties, the U.S. government can 
ensure that efficient, competitive U.S. capacity will not be 
driven out of business by unfair foreign trade and industrial 
policies. By imposing duties on the imports that are most 
heavily subsidized or dumped, AD/CVD laws also encourage the 
closure of the least competitive steel mills around the world--
a desirable and efficient market outcome.
    An alternative approach that is often suggested, limiting 
imports through a Voluntary Restraint Agreement (VRA) may also 
preserve the U.S. industry. This approach is far less 
attractive, however, because governments, not markets, 
determine VRA market shares, and because quota rents would go 
to foreign governments or companies.
      

                                


    Chairman Crane [presiding]. Thank you. Hold on just a 
second. Thank you and I apologize, gentlemen, for being absent 
during your presentations but I had to go make a trade talk to 
the Latin American Foundation and their plight is of concern to 
us too, beyond just Brazil's export of steel.
    At any rate, let me ask one question of those of you--and 
Mr. Woltz and Mr. Jenson, I understand that you folks are steel 
users. And, as representatives of steel users, can you tell me 
the extent to which the administration consulted with your 
companies during the negotiations with the Russians to ensure 
that you would not be adversely affected by any agreement 
limiting Russian steel shipments to the United States?
    Mr. Jenson. Well, to my knowledge, we were not consulted at 
all. And one of our concerns with the supplemental agreement, 
the comprehensive steel agreement, is that consumers and users 
are not mentioned as parties, affected parties.
    Chairman Crane. Well, that was one of the concerns I had 
too on hearing some of the arguments that were presented and 
some of the charges.
    But, Mr. Woltz, do you have any comment?
    Mr. Woltz. Insteel Industries was not consulted either.
    Chairman Crane. All right. Mr. Levin.
    Mr. Levin. I have got to thank you. Your testimony is 
interesting. I don't think we will ever get, for example, Mr. 
Griswold and Mr. Mastel to agree. But it is good to hear such 
divergent views.
    I take it, Mr. Griswold, you would--just so I am clear--you 
would abolish all of our antidumping laws now?
    Mr. Griswold. I think the antidumping laws, certainly as 
they are currently written, serve no national interest. They 
certainly serve the interests of selected industries. The steel 
industry has filed, as I understand, about one-third of the 
antidumping cases in recent years and makes heavy use of it. 
They do protect selected industries at the overall expense of 
the U.S. economy. There is no economic justification for them 
and they are primarily a political tool as they are written 
today.
    Mr. Levin. So I think that you would repeal them?
    Mr. Griswold. I would. I think if we are going to have 
antidumping laws, they should be based, as they originally were 
when they were written in 1916, which was to counter predatory 
pricing. Today's law has nothing to do with predatory pricing. 
That is not a threat in steel. No particular country or steel 
company overseas is going to corner the U.S. market. It is too 
diversified an industry.
    If it was based strictly on protecting consumers from 
predatory pricing, I could support that in theory.
    Mr. Levin. When you say predatory, you are saying 
consumers. So that if an industry is injured seriously, that 
isn't enough.
    Mr. Griswold. No. The original intent of----
    Mr. Levin. I mean for your--forgetting the original intent, 
but if there is selling here below cost of production there, 
you would simply let it be.
    Mr. Griswold. I would, as I----
    Mr. Levin. OK, sir. That is a good answer. I mean, you 
don't really need to--I mean, I will say this about CATO, it is 
consistent.
    Mr. Griswold. I will take that as a compliment.
    Mr. Levin. No, and I mean that somewhat charitably. I mean, 
you are predictable and consistent. I don't know that it is 
fair to label it, as you do, nothing more than a protectionist 
weapon for industries feeling the heat of global price 
competition. You don't really care what the basis of that 
competition is. If it is subsidized overseas, if it is 
controlled by the country, it really doesn't matter.
    Mr. Griswold. Well, of course, with subsidized, we have the 
whole CVE.
    Mr. Levin. Well, but you would, I take it, abolish that 
too.
    Mr. Griswold. It is a whole different question. But 
antidumping laws as currently written serve no national 
interest.
    Mr. Levin. All right. I think my time is going to evaporate 
quickly. I think I wanted to just say a word--look, it is clear 
you have different interests. Those of you who produce products 
have a different interest than those who produce the raw 
material. That is somewhat built in.
    Mr. Woltz, you don't say you support--I think you said in 
your testimony you support our antidumping laws, basically.
    Mr. Woltz. Yes. Our association is made up of members who 
have made active use of the dumping laws and they all feel that 
it is appropriate to do so.
    Mr. Levin. Right. So, and I think you said it, Mr. Jenson, 
you said that you wouldn't object to more effective monitoring?
    Mr. Jenson. Right, as long as it didn't involve fees and 
the extraction of information.
    Mr. Levin. Right. And how about accelerating the process by 
which determinations are made? Would you object to that?
    Mr. Woltz. From Insteel's point of view and from the point 
of view of the AWPA, much of the time that is expended in these 
processes is time that is devoted to gathering the facts 
surrounding importation of various products. And, to the extent 
that the process can be collapsed and more time effective but 
still have a high degree of integrity, I am sure that 
expediting the process is a good move. But, to the extent that 
we sacrifice quality of the facts and the underlying 
investigation is compromised, I don't think it serves the 
interests of producers or consumers to expedite the process 
just for that purpose.
    Mr. Levin. OK. But as long as the quality of the product 
isn't impinged on seriously or significantly, you don't object 
to an acceleration of the determination process?
    Mr. Woltz. No.
    Mr. Levin. And how about the question of the 
comprehensiveness of those determinations, so that a 
determination isn't undermined by having a country simply shift 
from one product to another?
    Mr. Woltz. Well, as a member of a downstream industry, we 
see all of these actions as potentially exposing downstream 
industries to additional competition. We saw it in the VRA 
program. We have seen it with every round of dumping and 
countervailing cases that have been initiated by our supplier 
base; that restrictions on the importations of wire rod lead, 
every time, to additional imports of downstream products that 
affect our markets. And that is of great concern to us.
    Our markets are not large markets like wire rod, which is, 
in the United States, merely a 7-million-ton market. Insteel's 
markets are made up of 200,000- and 300,000-ton-per-year 
consuming businesses and, generally, it is very difficult to 
make effective use of the dumping laws in markets of that size. 
So the downstreaming issue is of great concern and it will 
remain so through the processes that are underway now with the 
201 that has been filed.
    Mr. Levin. My time is up. Thank you.
    Chairman Crane. Mr. Houghton.
    Mr. Houghton. Thank you, Mr. Chairman. A big problem. Very 
difficult to put your arms around this.
    If you assume--you may not--but if you assume what Mr. 
Barnette, who is chairman of Bethlehem, says, that the U.S. 
steel industry is the lowest cost, highest quality, best 
service steel industry in the world, something isn't right. 
Here you have our imports going up year by year by year. The 
only reduction really is, in terms of over the last years, 
Brazil and Russia, more than made up for by increases in other 
countries, particularly Japan and Korea. You take a look at our 
exports. Our exports--and I have got the numbers here for hot-
rolled carbon steel--they are going down year by year by year.
    So imports are going up, our exports are going down, and we 
have got the greatest industry in the world. What is happening? 
What do we do about it?
    Mr. Griswold. If I could try to respond to that, Mr. 
Congressman.
    Mr. Houghton. Go ahead.
    Mr. Griswold. One, exports have been going up and down. 
They peaked in 1984 and then came down to a trough in 1991 and 
then it has kind of been up and down. So it hasn't been a 
steady rise up.
    The second thing is, you can't----
    Mr. Houghton. Exports have been in steady descent.
    Mr. Griswold. Exports----
    Mr. Houghton. Exports from the United States.
    Mr. Griswold. They have taken a hit in the last year, as 
exports have----
    Mr. Houghton. They had in 1996, 1997, and 1998.
    Mr. Griswold. But I think it is a mistake to look at the 
steel industry as monolithic. You have the integrated----
    Mr. Houghton. I am not. I am just looking at it as--there 
is no monolithic when I take a look at hot-rolled carbon steel 
and that is just a product classification.
    Mr. Griswold. Well, I think some mills will have difficulty 
in the current environment. Other mills will do just fine. The 
productivity figures vary widely. Industry average of four man 
hours per ton, but some of the minimills can produce steel in 
one to two man hours per ton. So the whole industry is not 
going to close up under certain conditions, but there will be 
some segments of the industry that will not survive the current 
conditions.
    Mr. Houghton. Does anybody else have any comments?
    Mr. Mastel. If I could add to that. I think the point here 
that I made in my testimony is that the global steel industry 
is so heavily subsidized, cartelized, and otherwise steeped in 
government intervention, that the decisions are made by 
governments, not by the marketplace.
    Mr. Houghton. All right.
    Mr. Mastel. I mean, the fact that we import in one 
direction, even though the economic realities would tend to 
push the other way, it only proves that, in fact, it is not the 
market, it is the various government decisions that are 
influencing movement in the steel market.
    Mr. Houghton. Right. But now let me just interrupt here. 
And I appreciate your other comments, as long as the green 
light is on. What do we do? I mean, you know, this is not just 
steel. We had a session in here on the oil industry, 
semiconductors, television, lot film, all sorts of things. So 
you not only have the predatory pricing, either concocted by a 
company, an industry, or a government, but also you have 
exclusion from the foreign markets, which then make it 
impossible for us to retaliate. What do we do? Do we let it go?
    Mr. Mastel. I think it is too expensive to let it go. I 
mean, what we have seen in the steel industry, as you say, is 
an experience that can be repeated in any other sector. In 
fact, any sector that a foreign government takes an interest in 
right now, there is a risk of dumping in that sector which 
would then drive the U.S. industry ratcheted down over time. So 
I think we can't afford either economically or politically to 
ignore dumping and subsidies as a problem.
    Unfortunately, our laws, antidumping laws, really treat the 
symptoms. Now they treat a symptom when it is already underway. 
They don't get to the core of the problem, which tends to be a 
closed-door market, a government-industrial policy, or a 
subsidy, or cartel. Those are harder to get at and we rely, so 
far, on the WTO as our primary mechanism to sort of break down 
those barriers. But it seems to me if we are trying to solve 
the ultimate problem, you have to accelerate that approach. But 
it is difficult one.
    Mr. Woltz. Sir.
    Mr. Houghton. Right. Right. Well, maybe we could have one 
more comment on this thing, because my time has run out. It has 
been a long hearing. Would you like to----
    Mr. Woltz. If I may, speaking for the wire rod business and 
the wire business, I think, as you reflect on the cause of an 
imbalance of imports and exports and what first appear to be 
adverse trends in exports, consider the wire rod market. 
Roughly 7 million tons of consumption in the United States, 
domestic capacity to produce closer to 5 million tons. Under 
any circumstance, wire rod consumers must import wire rod to 
have sufficient supplies. I would suggest that the incentive 
for the wire rod producers to export is low when the deficit of 
domestic capacity exists as it does.
    Mr. Houghton. Yes, but it is sort of a self-fulfilling 
prophecy. The economics aren't right because of foreign 
competition, people go out of business, and, therefore, there 
is an undercapacity for the need when the next upswing comes. 
So, you know, it is a very difficult situation. Look, we could 
philosophize on this forever. I appreciate it very much.
    Chairman Crane. Well, we appreciate your participation and 
your patience. This has gone longer than we had anticipated 
and, again, I apologize to you for missing your presentations, 
but I have got the written comments. And I thank you and, with 
that, the Committee stands adjourned.
    [Whereupon, at 5:37 p.m., the hearing was adjourned.]
    [Submissions for the record follow:]

Statement of American Iron and Steel Institute

    The following statement is submitted by the American Iron 
and Steel Institute (AISI) on behalf of its U.S. member 
companies, who together account for approximately two-thirds of 
the raw steel produced in the United States. Because other 
witnesses and submissions are providing the House Ways and 
Means Trade Subcommittee with a general overview of the U.S. 
steel trade crisis, AISI would like to offer this statement to 
address only a single aspect of the present crisis--namely, the 
Subcommittee's interest in addressing ``ways to seek greater 
foreign consumption of excess steel.''
    It is correct that depressed steel demand and major 
structural economic failures abroad--in the Commonwealth of 
Independent States (CIS), in Asia, in Brazil and elsewhere--
have contributed in important ways to the crisis in world steel 
markets today. The collapse of domestic steel demand in Russia 
and in parts of Asia has significantly exacerbated world steel 
overcapacity conditions and led in turn to unprecedented levels 
of steel dumping in the U.S. market. It is also the case that 
AISI, through its market development programs, has had success 
in promoting the use of steel--at least here, in the U.S. and 
NAFTA region. The question is: are there lessons to be learned 
from this AISI experience when it comes to promoting steel 
demand in the CIS and other world markets? AISI's statement is 
divided into two parts--(1) our market development views and 
experience and (2) our observations on lessons to be learned.

             AISI's Market Development Views and Experience

    With respect to the worsening global steel oversupply 
problem caused by the world financial crisis and the collapse 
of domestic steel demand in the CIS and Asia, AISI views the 
situation in two ways: first and foremost, as an immediate, 
unprecedented steel trade crisis, which must be addressed 
through a combination of private and public actions; and 
second, as a long term problem, where renewed efforts to 
promote domestic steel demand in other regions must--along with 
restructuring and modernization--be a part of any long term 
solution.
    AISI also views the issues of trade and market development 
as closely linked. The current U.S. steel trade crisis is being 
driven by an excess of supply over demand caused by record 
levels of unfairly traded imports. One of the most frustrating 
aspects of this crisis is that it is occurring against the 
backdrop of continued strong U.S. steel demand. Indeed, there 
has been a remarkable rise in U.S. steel consumption in the 
1990s, due to U.S. steel producers' significant investment, 
working closely with customers, to establish world class 
practices and product applications. The problem is, record 
levels of unfairly traded imports have taken an increasing 
share of this growing market (see attached chart). Accordingly, 
it remains a top market development goal for AISI and its 
members to increase the North American share of the steel 
market and to ensure that the benefits of AISI's successful 
efforts to grow the markets for steel in North America do not 
go to dumped and subsidized imports.
    AISI has repeatedly made the point to foreign steel 
producers and governments that, while there may always be trade 
disputes, if steel's customers ever stop thinking of steel as 
their material of choice, the steel industry world-wide loses. 
Put another way, AISI and its member companies believe strongly 
that, to be successful in promoting the use of steel, both the 
steel industry and steel the material must be innovative, 
competitive, high tech and environmentally responsible.
    AISI and its member companies also know that it is 
necessary not only to think defensively, but to think about 
growth. Steel today is a high quality, low cost engineering 
material--one that offers strength and safety, while being 
recyclable, affordable, durable and versatile. As such, steel 
is and should be poised not only to defend and strengthen its 
role in current or traditional markets but to grow new steel 
market applications and to pursue aggressively new 
opportunities in such growth markets of the future as (1) 
residential construction, (2) commercial and industrial 
construction, (3) infrastructure and (4) transportation.
    AISI believes that, whether it is the CIS or elsewhere, it 
is important that offshore steel producers look at their own 
situations and consider carefully whether AISI's basic approach 
to market development makes sense for them. To summarize, 
AISI's efforts aim to strengthen and expand current steel 
markets, identify new steel markets and create innovative 
approaches to increasing steel demand. We try to anticipate the 
future needs of the market, solve critical issues and partner 
with engineers, designers, architects, builders and other 
companies, especially key customers and suppliers.
    What AISI has learned is that it takes a good business 
plan, research and effective ways to ``benchmark'' or measure 
progress to drive the investment of key consuming markets 
toward steel. Simply put, it takes a lot of time, hard work and 
money to grow steel markets. Just in 1998: (1) AISI budgeted 
$16 million on specific market development activities; (2) $10 
million more went to related programs that we co-fund and 
support--programs such as the International Iron and Steel 
Institute's (IISI's) ``ULSAB'' project, the Auto-Steel 
Partnership, the Steel Recycling Institute, the North American 
Steel Framing Alliance and the Metal Roofing Alliance; and (3) 
on top of this, U.S. and Canadian producers spent another $20 
million on a TV ad campaign about ``the new steel''--this as 
part of a five-year $100 million investment to get the consumer 
to think more favorably about steel than about competing 
materials.
    AISI and its members know, too, that it is always important 
to keep in mind the critical role of steel's customers. Thanks 
not just to the efforts of U.S. and North American steel 
producers but even more to the efforts of North America's world 
class steel-consuming industries, steel intensity has increased 
in the United States and throughout the NAFTA region in recent 
years. As a result, the IISI has announced that its ``estimate 
for annual consumption in the year 2005 in the NAFTA (region) 
has been reassessed upwards by 20 million tons.''

              Lessons to Be Learned from AISI's Experience

    The IISI's recent announcement shows that it is possible to 
grow steel markets in the NAFTA region. But the question 
remains: are there lessons here that can translate into other 
markets? On that subject, we would like to conclude with five 
observations:
    First, it is important to recognize that Asia and the CIS 
are two very different situations. While Asia until 1997 had 
the world's largest and fastest growing steel consumption, 
efforts to rebuild domestic steel demand from the ground up in 
the CIS will require special measures.
    Second, until there is political and economic stability in 
the CIS, nothing will work.
    Third, AISI believes that, with a return to stability, much 
is possible, and steel could indeed play a significant role in 
meeting the pressing current--and future--needs of the CIS with 
respect to housing, industry, infrastructure and 
transportation.
    Fourth, as AISI also knows, it will take a long term 
commitment to grow steel markets, and there is a real question 
about how much steel producers themselves can do. After all, it 
is steel's customers who will need to invest again in the CIS, 
and it is they who will probably need to become the leading 
force behind any successful efforts to grow steel markets in 
the CIS.
    Fifth, AISI believes that there are some lessons to be 
learned from our market development activities and that one of 
them, clearly, is the need for ``partnering.'' CIS steel 
producers especially will need not only to modernize but to 
downsize substantially. This will be painful, and the U.S. and 
other OECD governments might need to assist them in this 
process. The OECD Steel Committee recently recognized this when 
it urged its members to consider a cooperative program aimed at 
facilitating multilateral solutions to specific aspects of this 
crisis, including the CIS steel demand problem. In this regard, 
AISI believes that, while, there should be national and 
multilateral efforts to help the Russian economy and its steel 
industry (e.g., by providing market development assistance), 
the U.S. government should not be helping Russia by depriving 
U.S. petitioners of the remedies due them under U.S. trade 
laws, i.e., by providing a guaranteed U.S. market share to 
dumped steel from Russia.

                  Conclusions--With a Focus on the CIS

    The CIS should begin by recognizing that, as a major world 
steel exporter, it has a responsibility to avoid dumping 
practices that export serious injury and unemployment to other 
markets. Steel producers elsewhere can help only in small but 
important ways by, for example, providing technical and 
marketing assistance. The steel framed house demonstration 
project that AISI participated in last year in Moscow was a 
start.
    But there should be no illusions by anyone: first recovery, 
and then growth in the CIS, will take many years and a 
sustained, concerted effort by many players.
    In the meantime, there can be no substitute for the full, 
strict enforcement of U.S. trade laws. This remains the most 
effective way to restore market forces, promote the necessary 
adjustment and rebuild domestic steel demand in the CIS and 
elsewhere.
    AISI appreciates this opportunity to comment to the Trade 
Subcommittee on ways to seek greater foreign consumption of 
excess steel.
[GRAPHIC] [TIFF OMITTED] T7306.018

      

                                


Statement of Hon. Jerry F. Costello, a Representative in Congress from 
the State of Illinois

    I appreciate the opportunity to present testimony before 
this panel today.
    The United States has built a steel industry that has one 
of the highest productivity levels and lowest costs in the 
world. Unfortunately, our commitment to new technology and 
increased labor productivity is of little worth in a global 
marketplace that favors illegal trade and commercial practices. 
Our domestic markets are being flooded with cheap imports from 
Asia, Russia and Brazil who continue to defy international 
trade policies in order to prop up their own markets. We can 
ill afford to be the world's dumping ground for unfairly-traded 
steel. While I am concerned by the financial disasters in Asia, 
Russia and elsewhere, these countries should not be allowed to 
export their problems here. We must find other means to help 
our trading partners deal with their economic challenges; 
allowing unfairly-traded steel to flood our markets creates an 
imbalance that helps no one.
    As a member of the Congressional Steel Caucus, I have 
worked diligently with my colleagues to urge the Administration 
to take a strong stand against illegally-dumped steel. The 
proposed agreement with Russia to reduce Russian imports of 
steel products by almost 70 percent is a good first step. 
However, it must be followed by continued pressure on other 
nations to reduce their dumping of illegally-subsidized steel. 
I am pleased the Administration has responded to those of us in 
Congress who continue to make steel a high-profile issue. The 
U.S. must continue to be vigilant in providing relief to our 
steel industry and its workers, after they have suffered from 
an unfair flood of foreign imports. However, let me be clear 
about this: the Administration's efforts to date are not 
enough. We must do more and we must do more immediately.
    In my own district in Southwestern Illinois, steelworkers 
and their families and communities have stood up strongly for 
steel. Workers at Laclede Steel in Alton and National Steel in 
Granite City have faced difficult times since the surge in 
steel imports flooded our markets. Laclede is facing bankruptcy 
and efforts are underway just to keep the plant open. Orders 
have been down and prices have fallen at both plants. 
Unfortunately, these steel companies like others across the 
nation, have been unable to avoid layoffs. Mr. Chairman, I 
represent approximately 4,000 USWA union members in my 
district. I cannot in good conscience report to them that we 
have done enough here.
    I strongly support legislative remedies--specifically 
measures introduced by my colleagues Rep. Visclosky and Rep. 
Regula--to end the flood of illegal foreign steel imports. I 
hope the Leadership of this House will expedite consideration 
of legislative remedies to put an end to the steel crisis. The 
U.S. steel industry, steel workers and their families, and 
American consumers of steel products and its derivatives 
deserve a fair market for U.S. steel. Foreign dumped steel not 
only has immediate negative consequences on the steel industry, 
over time the impact on the U.S. economy in terms of lost 
production, high-wage jobs, and investment is irretrievable.
    I hope this Congress and the Administration will take 
immediate action to end illegal foreign imports of steel.
      

                                






      

                                


Statement of Hon. John P. Murtha, a Representative in Congress from the 
State of Pennsylvania

    FIRST I WANT TO ACKNOWLEDGE THE EFFORTS OF STEEL LABOR AND 
INDUSTRY IN WORKING TOGETHER ON THE ISSUE OF THE STEEL IMPORT 
SURGE. THE STEEL CAUCUS HAS ALWAYS PRIDED ITSELF ON ITS 
BIPARTISAN APPROACH TO SAVING THE STEEL INDUSTRY, EVER SINCE 
RALPH REGULA AND I HELPED TO FOUND THE STEEL CAUCUS IN 1983 TO 
SAVE OUR U.S. STEEL INDUSTRY FROM FOREIGN SUBSIDIZED STEEL 
IMPORTS. BY CONVINCING THEN PRESIDENT REAGAN TO SUPPORT 
VOLUNTARY RESTRAINT AGREEMENTS, THE ONLY PROTECTIONIST MEASURE 
HE EVER SUPPORTED, WE WERE ABLE TO GIVE OUR STEEL INDUSTRY THE 
CHANCE TO MODERNIZE AND BECOME COMPETITIVE. MORE RECENTLY, AT 
THE START OF THE CURRENT CRISIS, THE UNION AND THE INDUSTRY 
CAME TOGETHER TO FORM A COALITION AND SPEAK AS ONE VOICE ON THE 
ISSUE. THEIR UNIFIED MESSAGE WAS STRONG AND CLEAR. I WOULD LIKE 
TO ACKNOWLEDGE THAT BECAUSE I THINK IT'S IMPORTANT IN NOTING 
HOW MUCH MORE WE CAN ACCOMPLISH WHEN WE WORK TOGETHER.
    RONALD REAGAN WAS THE MOST FREE-TRADE ORIENTED PRESIDENT 
WE'VE SEEN IN MODERN TIMES. HE WAS ABSOLUTELY DEAD SET AGAINST 
PROTECTING INEFFICIENT U.S. INDUSTRIES, AND COMMITTED TO 
BREAKING DOWN TRADE BARRIERS AROUND THE WORLD. YET EVEN 
PRESIDENT REAGAN RECOGNIZED THAT THE STEEL INDUSTRY OF THE 
UNITED STATES IS UNIQUE. IT'S UNIQUE BECAUSE WITHOUT IT, OUT 
NATION WILL NOT BE ABLE TO MOBILIZE FOR MAJOR MILITARY 
CONFLICT. OUR NATIONAL SECURITY IS JEOPARDIZED IF WE ALLOW OUR 
STEEL INDUSTRY TO BE CRIPPLED OR PERHAPS EVEN DIE BECAUSE OF 
FOREIGN SUBSIDIES. SO THE PLAN THAT PRESIDENT REAGAN INSISTED 
ON WAS ONE THAT REQUIRED OUR STEEL INDUSTRY TO MODERNIZE AND TO 
BECOME THE MOST COMPETITIVE IN THE WORLD.
    WE HAVE DONE THAT. WE DEVELOPED THE MOST MODERN, 
COMPETITIVE STEEL INDUSTRY IN THE WORLD, AND TODAY WE STILL 
HAVE THE MOST MODERN AND COMPETITIVE STEEL INDUSTRY IN THE 
WORLD. THE ISSUE TODAY CLEARLY IS NOT ABOUT COMPETITIVENESS--
THE ISSUE IS ABOUT UNFAIR SUBSIDIES THAT VIOLATE ALL THE FAIR 
TRADE POLICY DEVELOPED AND ACCEPTED IN INTERNATIONAL ACCORDS.
    THE BOTTOM LINE IS THAT NO ONE CAN CLAIM THEY'RE AGAINST 
WHAT WE PROPOSE BECAUSE THEY ARE ``FREE TRADERS.'' NOTHING WE 
PROPOSE HERE IS COUNTER TO THE FREE TRADE MENTALITY. EVERYTHING 
WE PROPOSE IS COMPLETELY CONSISTENT WITH THE COURSE ESTABLISHED 
BY FORMER PRESIDENT REAGAN.
    TO UNDERSTAND THE CURRENT CRISIS, WE NEED TO UNDERSTAND THE 
CRISIS OF THE 1980'S. THAT CRISIS PRODUCED A LOT OF CASUALTIES. 
WE HAD DOZENS OF PLANTS CLOSE AND LOST THOUSANDS AND THOUSANDS 
OF JOBS. THE COMPANIES THAT SURVIVED WENT THROUGH RADICAL 
RESTRUCTURING. IN THE DISTRICT I REPRESENT THE ECONOMY HAS 
NEVER FULLY RECOVERED. IN THE JOHNSTOWN, PENNSYLVANIA MARKET 
ALONE, WE WENT FROM OVER 12,000 STEEL JOBS IN 1983 TO ABOUT 
2,000 TODAY. THE UNEMPLOYMENT RATE HAS REMAINED AT NEARLY TWICE 
THE NATIONAL AVERAGE. WE DON'T NEED ANY MORE LAYOFFS IN THE 
OPERATIONS WE HAVE LEFT.
    THE CURRENT CRISIS BEGAN OVER A YEAR AGO WHEN WE STARTED TO 
SEE THAT THE EXTREME DISTRESS OF THE ASIAN ECONOMY WAS SPURRING 
ASIAN COUNTRIES TO TRY TO USE THEIR SUBSIDIZED STEEL PRODUCTION 
TO EXPORT THEIR WAY OUT OF ECONOMIC DISTRESS. THEY, AS WELL AS 
OTHER COUNTRIES LIKE BRAZIL, FOUND DEMAND FOR STEEL IN ASIA 
EVAPORATING, SO THEY SENT IT HERE AT PRICES AS LOW AS TWO 
THIRDS OF THE MARKET PRICE. THE LATEST FIGURES SHOW THAT IN 
1998 WE IMPORTED MORE STEEL INTO THIS COUNTRY THAN IN ANY OTHER 
YEAR IN HISTORY. IT REPRESENTED A 33% INCREASE OVER 1997, WHICH 
ALSO HAD BEEN A RECORD-BREAKING YEAR. ALMOST A THIRD OF ALL THE 
STEEL CONSUMED IN THE UNITED STATES LAST YEAR WAS IMPORTED 
STEEL. IN THE LAST QUARTER OF 1998, JAPAN AND RUSSIA EXPORTED 
TO THE U.S. TWO AND A HALF TIMES THE AMOUNT OF STEEL THEY SENT 
HERE DURING THE SAME PERIOD IN 1997.
    NOW, LET ME ALSO SAY I THINK THE RECENT ADMINISTRATION 
EFFORTS HAVE BEEN HELPFUL AND HAVE HOPEFULLY AT LAST BEGUN TO 
STEM THIS TREMENDOUS FLOOD OF IMPORTS, WHICH HAVE TO-DATE 
CAUSED AT LEAST TEN THOUSAND LAYOFFS DOMESTICALLY. THESE 
LAYOFFS HAVE CERTAINLY BEEN FELT IN MY AREA OF SOUTHWESTERN 
PENNSYLVANIA, WHERE THE EFFECT OF THE IMPORT SURGE HAS TRICKLED 
ALL THE WAY DOWN FROM THE BIGGER PLANTS TO THE MELTING 
FACILITIES, TO THE SMALLEST MACHINE SHOPS.
    HOWEVER, MY CONCERN, AS RALPH REGULA AND I RECENTLY 
EXPRESSED IN A LETTER TO U.S. AMBASSADOR TO JAPAN TOM FOLEY, IS 
THAT THIS DROP IN IMPORT VOLUME WILL ONLY BE TEMPORARY UNLESS 
WE KEEP UP THE PRESSURE ON THESE ASIAN COUNTRIES TO REFORM 
THEIR MARKETS. WE NEED TO SEE MORE THAN ONE OR TWO MONTHS OF 
RELIEF. THE NUMBERS HAVE TO STAY DOWN. WE NEED TO SEE PEOPLE 
WHO HAVE BEEN LAID OFF OVER THE PAST YEAR RETURNING TO WORK.
    SO, WHILE I AM ENCOURAGED BY THE ADMINISTRATION'S EXPEDITED 
FINDINGS IN THE CASES AGAINST JAPAN AND BRAZIL, ITS STRONG 
MESSAGE TO JAPAN, AND THE AGREEMENT IT HAS REACHED WITH RUSSIA, 
I FEEL WE NEED A MORE COMPREHENSIVE AND LONGER-TERM SOLUTION 
THAT WILL ENSURE THE IMPORT NUMBERS DON'T JUMP RIGHT BACK UP, 
EITHER IN THE HOT-ROLLED CATEGORY OR IN ANY OF THE OTHER STEEL 
PRODUCT CATEGORIES. I AM ALSO CONCERNED THAT THERE MAY YET BE 
MORE LAYOFFS UNDER THIS SCENARIO, ESPECIALLY GIVEN THE GLUT OF 
STEEL THAT IS ALREADY ON THE MARKET AND THE UNCERTAINTY THE 
INDUSTRY STILL FACES.
    ONE OF THE MEASURES I'VE COSPONSORED IS THE BILL 
CONGRESSMAN VISCLOSKY HAS AUTHORED TO RETURN ALL STEEL IMPORTS 
TO 1997 LEVELS. THIS IS A COMPREHENSIVE, IMMEDIATE, EMERGENCY 
STEP THAT CONGRESS COULD TAKE AND NEEDS TO TAKE TO MAKE SURE 
THAT WE DON'T LOSE MORE JOBS AND MORE PLANTS IN THE STEEL 
INDUSTRY IN THE NEAR TERM.
    ALLOWING THIS CRISIS TO CONTINUE ANY LONGER CAUSES A NUMBER 
OF PROBLEMS. IT PLAYS HAVOC WITH THE LIVES OF STEELWORKERS AND 
THEIR FAMILIES, WHO'VE BEEN THROUGH SO MUCH TURMOIL ALREADY. IT 
SENDS ANOTHER ROUND OF SHOCK WAVES THROUGH LOCAL ECONOMIES IN 
AREAS THAT NEVER FULLY RECOVERED FROM THE LOSS OF STEEL JOBS IN 
THE '80S--ECONOMIES THAT ARE STILL STRUGGLING DESPITE THE 
STRONG NATIONAL ECONOMY. WE CANNOT LET ENTIRE PLANTS SHUT DOWN 
WITH THE EXPECTATION THAT THEY CAN START RIGHT BACK UP AGAIN 
WHEN THE CRISIS IS OVER. THE STEEL INDUSTRY DOES NOT HAVE THAT 
KIND OF FLEXIBILITY. THE COSTS INVOLVED IN SHUTTING DOWN 
OPERATIONS AND STARTING THEM BACK UP MAKE THE STEEL INDUSTRY 
DIFFERENT THAN MOST OTHER INDUSTRIES. IF WE LET THIS GO ON 
LONGER, WE'LL NEVER GET THESE PEOPLE BACK TO WORK BECAUSE THE 
PLANTS JUST WON'T BE THERE ANYMORE. THE U.S. STEEL INDUSTRY 
WILL SUFFER MORE PERMANENT DAMAGE AND THAT IS UNFAIR. IT'S 
UNFAIR BECAUSE OUR STEEL INDUSTRY IS THE MOST EFFICIENT IN THE 
WORLD AND THESE COUNTRIES WITH INEFFICIENT MARKETS AND 
SUBSIDIZED INDUSTRIES NEED TO MAKE A SERIOUS COMMITMENT TO 
REFORM. OUR STEEL INDUSTRY HAD TO DO THIS IN THE 1980'S. THESE 
COUNTRIES NEED TO DO IT NOW. OUR STEEL INDUSTRY AND THE 
STEELWORKERS HAVE ALREADY GIVEN UP OUR POUND OF FLESH TO THE 
WORLD MARKET. AFTER WHAT WE WENT THROUGH IN THE 1980'S TO 
MODERNIZE, WE SHOULD NOT BE ALLOWING COUNTRIES WITH 
INEFFICIENT, SUBSIDIZED ECONOMIES TO PUT OUR STEEL INDUSTRY 
UNDER. WE DIDN'T GO THROUGH ALL THAT IN THE 1980'S AND COME 
THIS FAR ONLY TO SEE OUR STEEL INDUSTRY WITHER AND DIE IN THE 
MIDST OF A BOOMING U.S. ECONOMY.
    CONGRESS CAN AND SHOULD ALSO TAKE STEPS NOW TO ENSURE FOR 
THE LONGER TERM THAT OUR TRADE LAWS WILL ENABLE US TO ACT MORE 
SWIFTLY TO PREVENT THIS KIND OF CRISIS FROM HAVING SUCH A 
SEVERE IMPACT ON OUR DOMESTIC INDUSTRY AND OUR STEELWORKERS 
AGAIN IN THE FUTURE.
    I THEREFORE ALSO URGE THE COMMITTEE TO SUPPORT ``THE TRADE 
FAIRNESS ACT,'' CONGRESSMAN RALPH REGULA'S BIPARTISAN BILL, OF 
WHICH I AM A COSPONSOR, THAT WOULD AMEND THE 1974 TRADE ACT TO 
LOWER THE INJURY STANDARD FOR A SECTION 201 CASE TO A LEVEL 
CONSISTENT WITH THE WORLD TRADE ORGANIZATION RULES. THIS WOULD 
ENABLE THE U.S. TO INITIATE A CASE UNDER SECTION 201 SOONER AND 
STOP THE IMPORT FLOOD SOONER. THE BILL WOULD ALSO ESTABLISH AN 
IMPORT MONITORING SYSTEM SIMILAR TO THAT OF CANADA AND MEXICO 
TO GIVE OUR INDUSTRY MORE IMMEDIATE ACCESS TO IMPORT DATA, 
WHICH WILL ALSO HELP TO ENABLE THE U.S. INDUSTRY TO REACT MORE 
QUICKLY TO IMPORT SURGES.
    SO, IN CLOSING, WHILE WE STILL NEED TO KEEP UP THE PRESSURE 
ON THE ADMINISTRATION TO PRESS THESE COUNTRIES TO REFORM, AS 
WELL AS TO BRING ALL OF OUR TRADE LAWS TO BEAR ON THIS CRISIS, 
THERE ARE ALSO STEPS AS I'VE MENTIONED THAT CONGRESS CAN----AND 
SHOULD-----TAKE IMMEDIATELY THAT WILL SAVE OUR STEEL INDUSTRY 
IN THE SHORT TERM AND STRENGTHEN OUR TRADE LAWS IN THE LONGER 
TERM AS WELL AS SEND A MESSAGE TO FOREIGN COUNTRIES THAT THEY 
MUST MAKE GOOD ON THEIR PROMISES TO REFORM THEIR MARKETS.
    I APPRECIATE THE COMMITTEE'S ATTENTION TO THIS ISSUE AND AM 
READY TO WORK WITH THE MEMBERS IN ANY WAY I CAN TO ACCOMPLISH 
THE GOAL OF ENDING THIS CRISIS IN A LASTING WAY AND PUTTING OUR 
STEEL INDUSTRY BACK ON FIRM FOOTING.
      

                                


Statement of Hon. Robert W. Ney, a Representative in Congress from the 
State of Ohio


    Let me first say, this issue today on steel must be framed 
correctly. It is not about free trade versus fair trade versus 
protectionism, it is about illegal dumping. As you know, steel 
producers in Japan, Russia, Brazil and others are facing 
drastically reduced demand both in their home markets and their 
traditional export markets. Their solution has been to unleash 
an unprecedented barrage of exports on the U.S. market. 
Unfortunately, these practices have placed America's domestic 
steel producers in peril. As a result, several U.S. steel 
industries have filed antidumping cases against Russia, Japan 
and Brazil. The cases have been filed because dumped and 
subsidized imports have surged in the last year, driving down 
prices and profits while stealing sales from U.S. producers.
    With many economies around the world in disarray, many 
steel producing countries are trying to export their way out of 
their economic problems by illegally dumping steel onto the 
market. Unfortunately, these practices have placed America's 
domestic steel producers in peril. Now is the time to put the 
interests of American working families ahead of foreign 
governments.
    Within the last few months, thousands of steelworkers have 
lost their jobs, small businesses are shutting down and local 
communities are being brutalized because our government refuses 
to put the interest of working people ahead of foreign 
governments. Every other country has taken measures to protect 
their steel market from these predatory and illegal dumping 
practices. It is long past time for our government to do the 
same.
    With each passing day, more steelworkers lose their jobs, 
more local governments face declining tax bases, and more 
families face financial hardships. This needs to stop now. Our 
families deserve better from their government than being told 
to wait for further rulings in accordance with World Trade 
Organization laws. Let me be clear, the President could have 
stopped this months ago, and should do so now.
    After several letters, meetings, and phone calls with the 
Administration, some action has been taken. Never the less, the 
response should have been taken in October of 1998. The United 
States Department of Commerce ruled on critical circumstances 
that Japan and Russia have been illegally dumping imported 
steel into our market. This ruling is not the official ruling 
of the original cases filed from the steel industries, however, 
it is a significant separate ruling that should now deter Japan 
and Russia from continuing their illegal dumping. This is only 
one little piece of the puzzle.
    Second, the Commerce Department announced a tentative 
agreement with Russia on reducing their imports of Russian 
steel. Although, again this is another piece of the puzzle, 
this does not drastically help our steelworkers and steel 
industry. In all actuality, this agreement does not do much at 
all. The Russian Suspension deal limits the amount of steel it 
can ship here, however, the agreement enables Russia to 
continue to sell the steel below their costs and U.S. industry 
prices. In addition, the U.S. is suspending the trade case 
filed against them by the industries in exchange for the 
following:
     Stop hot rolled shipments to the US for six months
     Reduce hot rolled shipments to 825,000 tons per 
year for the next five years
     Sell hot rolled at prices ranging from $231 to 
$254 per ton
    While reducing imports sounds good, it really is not. 
Before the agreements, Russia was selling hot rolled around 
$210 per ton. Before the crisis, U.S. producers were selling 
hot rolled for $315 to $325 per ton. Russia will still continue 
to dump steel. The agreement also limits the amount of imports 
on 16 other Russian steel products. The amounts are based on 
1997 levels which was a huge year for Russian exports. In 1997, 
Russia sent 3.3 million tons of steel to the U.S., double of 
what they shipped in 1995 and 1996, normal trading years. 
Virtually every steel company and union in the country is 
opposed to this agreement with Russia.
    On February 2, 1999, I joined Congressman Peter Visclosky, 
Jack Quinn, and Dennis Kucinich in introducing legislation to 
freeze steel imports at pre-July 1997 levels. This legislation 
will do what President Clinton has not done, and that is stand 
up for our steelworkers and put America's interests first for a 
change. For too long, President Clinton has refused to take 
action as our steelworkers, our communities and our families 
have been brutalized by a flood of illegal steel imports. By 
freezing our level of steel imports at pre-1997 levels, we will 
tell the world that the United States refuses to be their 
dumping ground.
    The Stop Illegal Trade Act (SISTA) has the support of 
nearly 200 Members of Congress including Democrats, 
Republicans, and Independents. If this bill is passed, the U.S. 
Customs Service will be required to stop the flow of steel into 
the U.S. market once the pre-1997 level of steel imports has 
been reached. The SISTA bill would go into effect immediately. 
It would limit steel imports from all nations on a monthly 
basis. These quotas will be phased out within three years. In 
addition to the SISTA bill, I have also co-sponsored other 
pieces of legislation to address the flood of illegal steel 
imports. This is a bipartisan effort within the House and the 
Senate.
    In closing, I would like to say our trade policy should be 
based on putting America's interest first. For months and 
months, our steelworkers, their families and their communities 
have been paying the price for irrational trade policies that 
put foreign governments and international financial interests 
ahead of America's working families. We have begun to make 
progress, but much more needs to be done. Under current law, 
President Clinton has the power to stop the flow of illegal 
imports and should act immediately. By placing tariffs or 
imposing a moratorium on illegally dumped foreign steel, our 
workers will be our top priority and have a level playing field 
against these unfair trade practices. I understand the 
President has concerns about the united States' perception 
around the world, but that should take a back seat to our 
responsibility to the working families of this country. Waiting 
for an international trade organization to rule on what we all 
know are blatantly illegal trade policies will destroy the 
lives of too many families for too long. If the President will 
not take action, then Congress must step forward. I urge the 
Committee to please consider and pass the Visclosky-Quinn-Ney-
Kucinich resolution.
      

                                


Statement of Hon. Jack Quinn, a Representative in Congress from the 
State of New York

    Mr. Chairman and distinguished members of the Subcommittee 
I thank you for the opportunity to speak to you about the 
situation in which the Nation's Steel Industry now finds 
itself, due to the illegal dumping of foreign steel into the 
United States. The American Steel Industry is under attack. 
Illegal imports are flooding into our country at record 
breaking levels. No industry can compete against the flood of 
steel that has been dumped in our markets in the past year.
    I represent the 30th District of New York (Buffalo and 
Western New York). My district still relies on the steel 
industry as a source of employment for thousands of hard 
working men and women. Over the past 20 years, Western New York 
has lost tens of thousands of jobs due to the closing of steel 
related industries. Before being elected to Congress, I served 
as the Supervisor of the Town of Hamburg. We lived through the 
closing of Bethlehem Steel, one of Western New York's number 
one employers. The closing of Bethlehem Steel and similar 
facilities in the Buffalo are had a very detrimental impact on 
our economy. People in Western New York are still feeling the 
affects of those shutdowns.
    Buffalo is not alone. Similar communities throughout this 
great country of ours have experienced the same economic 
difficulties. We need to learn from our mistakes and stop this 
steel crisis before it has a more severe affect upon our 
industries, communities, and working families. Let what we 
learned yesterday in Buffalo and Western New York be lessons 
for us all today. We must end the unfair and illegal dumping of 
foreign steel into the United States before the damage becomes 
to great to repair.
    This year alone, steel imports from Japan rose by 113%, 
from Korea by 90%, and from Russia by 45%. These are alarming 
numbers. Some foreign corporations in these countries are 
selling steel at $100 per ton less than it cost them to make 
it.
    The crisis has resulted in a 30% surge in steel imports and 
the loss of at least 10,000 jobs between the months of January 
and October. This number represents roughly 12% of all union 
steel workers, but does not reflect the many non-union or 
salaried workers who have also lost their jobs. Twenty-four 
workers lose their jobs everyday.
    The steel industry lost 350,00 thousand jobs during the 
last steel crisis when it took 10 man hours to make one ton of 
steel. The industry modernized its plants and equipment and 
downsized. Now it takes 2 man hours for America's 170,000 
steelworkers to make one ton of steel. The steel industry has 
greatly improved it's productivity. Since 1980 the steel 
industry's productivity has risen 240%. The industry and its 
workers have made strides to be the best steel producers in the 
world. We must not allow foreign countries to ruin the steel 
industry and cause the loss of thousands of jobs due mainly to 
the illegal dumping of steel into the United States.
    The steel crisis re-emerged in July of 1997. In 1998, 18 
million tons of steel was imported into the United States. As a 
matter of fact, 56% more steel was poured into the United 
States in the third quarter of 1998 than during that same time 
in 1997. In comparison, the U.S. exported only 5.5 million tons 
of domestic steel. These numbers pail in comparison to each 
other.
    The Administration may tell you that steel imports have 
gone decreased. They have fallen only slightly, yet still 
remain above pre-crisis levels. Hot rolled steel imports have 
increased 500% since 1995. Hot rolled steel imports from 
Russia, Japan, and Brazil captured over 25% of the domestic 
market in 1998. That is up almost 15% from 1997. The problem is 
not getting better it seems to be getting worse.
    The U.S. Steel Industry adds $70 billion to the Gross 
Domestic Product (GDP). If the steel industry continues on the 
course it is presently there will be no doubt the GDP be 
affected. The negative consequences of this massive surge in 
dumped imports is evident in the market. Spot prices for hot 
rolled steel fell nearly 16%. Average prices from Russia, 
Japan, and Brazil were 10% to 27% below average prices of 
domestic producers, in the first half of 1998. For these 
reasons the United States Steel Industry net income declined 
nearly 60%.
    What has been done to stop these imports from being dumped 
into the United States. The answer is not much. Section 201 of 
the Trade Act of 1974 gives the administration the ability to 
set quotas for each exporting nations guilty of violations such 
as the unfair dumping of steel. The Commerce Department has 
recently reached an agreement with Russia, that would reduce 
Russian steel imports by almost 70%. The suspension on Russian 
hot rolled steel is a step in the right direction and I applaud 
the administration for taking such strides.
    However, further action must be taken. H.R. 506, the Stop 
Illegal Steel Trade Act (SISTA) would accomplish the goal of 
stopping illegal steel imports from entering the United States. 
I have become the lead Republican on this quota bill to help 
resolve the crisis. This bipartisan bill would stop the flood 
of illegally dumped foreign steel by freezing monthly steel 
imports at July 1997 levels. By rolling back the amount of 
still imported to pre-crisis levels, U.S. Steel companies can 
compete fairly in the domestic market and thousands of jobs 
would be saved.
    Congressman Regula has also introduced legislation, the 
Trade Fairness Act of 1999(which I have co-sponsored), which 
will provide safeguards in current trade laws, specifically 
section 201. This bill will allow the president to impose 
duties and quotas, when an industry is injured by a surge of 
imports. The Trade Fairness Act will also establish a Steel 
Monitoring Program. The Steel Monitoring Program would more 
closely monitor the amount of foreign steel coming into the 
U.S. on a more timely basis and determine if the marketplace is 
being disrupted by unfair imports.
    H.R. 506 is an immediate and short-term solution to the 
steel crisis. It has received bipartisan support in the House. 
Congressman Regula's bill also provides relief from the crisis. 
The Trade Fairness Act of 1999 is a long-term solution to the 
problem. It provides many safeguards against this happening in 
the future. The future is now and we must act immediately.
    Once again, Mr. Chairman I thank you for allowing me the 
time to speak on such an important matter. I look forward to 
working with you on this issue.

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