[Congressional Record Volume 145, Number 41 (Tuesday, March 16, 1999)]
[House]
[Page H1303]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              STEEL CRISIS

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Indiana (Mr. Souder) is recognized for 5 minutes.
  Mr. SOUDER. Mr. Speaker, I want to speak briefly on the steel issue 
tonight because tomorrow during the debate we have several markups 
where I may be tied up and may not be able to give a statement on the 
floor, plus I couldn't give them as extended remarks.
  There will be much talk tomorrow about the question of free trade 
versus fair trade, and I wanted to register my opinions as somebody who 
is concerned about how to promote international trade and at the same 
time make sure that that trade is fair.
  As we are aware, since July of 1997, as a result of the collapse of 
numerous economies around the world, there has been a flood of imports 
into the United States. Foreign corporations from Japan, Korea, Russia 
and a host of other countries have been selling steel at as much as 
$100 a ton less than it costs them to produce it. Steel producers from 
Russia, one of the more egregious examples, were allowed to dump 47 
percent more steel on our market than was shipped in 1997. We simply 
cannot allow this to continue.
  We cannot have free trade if some people cheat. Russia is a 
particularly interesting case. Last fall, I was part of a Duma-House of 
Representatives' exchange where I spent a number of days in Russia. The 
steel industry was tremendously important and still is to the Soviet 
regime. It represents both an obvious source of the war machine there 
and reflected an almost excessive emphasis on manufacturing.
  Enormous resources were mobilized and poured into this industry, 
without regard for market forces or efficient use of capital. This 
awesome industrial effort transformed vast rural regions into major 
steel producers. By the 1970s, the Soviets created by far the largest 
steel industry the world had seen. For many years, the Soviet Union was 
the leading producer, about 186 million tons in 1986, but there still 
was and still is no reliable cost data, no standardized accounting 
practices and no interest in even thinking of market efficiencies. In 
fact, most of their business transactions were conducted in barter, 
even paying taxes with steel.
  The breakup of the Soviet Union has created a significant crisis for 
their steel industry. To say domestic demand has dropped is a laughable 
understatement. Russian steel's traditional market, especially the 
Soviet war machine, pales in comparison to what it once was. Russian 
GNP has fallen over 42 percent since 1989. Steel consumption, once 970 
pounds, per capita has fallen to 265 today.
  In 1997, it was estimated that they had nearly 5 times as much steel-
making capacity as was needed to meet domestic demand, yet production 
continued. By mid-1998, Russian mills exported about 65 percent of 
their output, some even 100 percent of their output, usually at prices 
well below market levels.
  In May 1998, Metal Bulletin reported that, incredibly, Russian plate 
and hot-rolled coils were being sold in some markets at less than half 
the prevailing domestic market price.
  By late 1998, at least 30 countries had imposed import restrictions 
against Soviet companies or were preparing to do so. In 1998, the U.S. 
bore the brunt of this tremendous Russian onslaught. The President 
proposed a suspension agreement that represented a 78 percent reduction 
from the 1998 level, a good start but nowhere near enough.
  Essentially, this still allows a significant amount of dumping to 
occur. We must do more.
  In the meetings with the Duma, I raised this issue of dumping and 
their response is particularly telling. For those who tell me that this 
is a free trade issue, it simply is not. When I raised the fundamental 
injustice of their subsidization of energy costs, in my district we 
have the lowest producing steel companies in the world, Steel Dynamics 
being the example, and they have seen their energy costs soar, and when 
I raised this problem they advised me that we should do like they do; 
they said, we own our energy producers. Therefore, our energy costs are 
nothing.
  That is a creative cost accounting way to get around the principle of 
free trade. This simply is not free trade. We in America cannot tell 
our foundries, we cannot tell our steel companies, that they have all 
these regulations, they have all of these energy prices, now go out 
there and compete freely, when we allow, contrary to free market 
principles, people to dump at below cost.
  The principle of free trade requires fair trade and equitable trade. 
The President cannot merely say we are going to kind of jawbone with 
these other countries that have had the problems in Asia, that have had 
the problems in South America, the problems in Russia and then make us 
promises to enforce the rule of law. We need to do it.
  I heard really moving stories about how in Russia and other countries 
steel workers have been laid off, how towns are being shuttered. Well, 
come to America. Whether it is in Pennsylvania or Indiana or all over 
this country, we have steel workers out of work, too. Only we have 
steel workers out of work because people did not follow the laws that 
are essential to making free trade work.
  This bill that we are going to consider tomorrow not only rolls the 
level of imports back to where it was before the illegal dumping came 
but also establishes a more effective steel import monitoring system. 
It is essential, if we are to have free trade, to make sure that it is 
fair.

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