[Congressional Record Volume 145, Number 89 (Tuesday, June 22, 1999)]
[Senate]
[Pages S7379-S7382]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              STEEL QUOTA

  Mr. MACK. Mr. President, proponents of the quota legislation to be 
considered later today have spoken with vigor and passion regarding the 
``injury'' that was suffered by domestic steel companies and the threat 
imports pose to the workers at those companies.

[[Page S7380]]

  However, I am compelled to rise today to respond to many of the 
assertions raised regarding the steel industry specifically, and more 
generally I think it is important to speak to several other factors 
related to the bill. First, there are economic benefits all Americans 
enjoy as a result of lowering trade barriers; second, the harmful 
message a quota bill would send to our trading partners; and, third, 
the inappropriateness of Congress singling out a specific industry for 
special treatment.
  The first point I would like to make is that the import surge is 
over. According to the Department of Commerce, imports have returned to 
their traditional levels. In fact, overall steel imports in the first 4 
months of 1999 were below the ``pre-import'' surge level. Moreover, 
even with the import surge of 1998, U.S. steel producers reported 
profits of over $1 billion.
  Furthermore, in reviewing data provided by the Steel Manufacturers 
Association, I was surprised to find that U.S. steel production has 
increased over the last 10 years. The 1998 steel output of 107.6 
million tons was 10 percent greater than 1990 and the highest for any 
year since 1981.
  Additionally, I was interested to discover that since 1987, imports 
as a percentage of domestic consumption have remained constant at 
around 20 percent. Again, according to this data, no ground has been 
lost despite protestations to the contrary.
  Some have argued that the financial ill health of several specific 
companies such as Bethlehem Steel Corporation, Weirton Steel 
Corporation, Laclede Steel Company, Acme Metals Incorporated, and 
Geneva Steel Company are the direct result of last year's import surge. 
However, the fact is that many of the integrated steel mills have a 
history of declining financial health evident well in advance of the 
Asian crisis and the 1998 import surge. This is reflected in their 
stock performance which, without exception, shows a pronounced decline 
in the value of the stock over the last 5 years. Again, it has nothing 
to do with the surge in imports.
  Noting the declining employment figures in the steel industry, 
proponents of the quota bill suggest that the United States is losing 
market share, but the fact is imports have not led to a decrease in 
market share. U.S. steel production in traditional integrated mills has 
remained fairly flat. Import competition has merely forced U.S. steel 
to become more efficient. The growth in domestic production that has 
allowed U.S. steel to retain its domestic share has been almost 
exclusively a result of our Nation's mini-mills which now account for 
almost 50 percent of domestic steel production. Mini-mills use an 
innovative production technique to recycle scrapped steel. These highly 
efficient and environmentally friendly producers are transforming the 
steel industry, and I think here it is worth noting that the 
association of mini-mills is neutral with regard to the proposed quota 
legislation.
  Finally in this area, some argue our foreign competitors are playing 
by a different set of rules. This is exactly what our current 
antidumping laws are intended to address. The steel industry has shown 
itself to be intimately familiar with and more than willing to take 
advantage of these laws. Even though steel accounts for only 5 percent 
of our imports, the industry has generated 46 percent of the unfair-
trade complaints brought before the U.S. International Trade Commission 
during the last 2 decades. Our current laws provide appropriate 
protection for all industries. They should not be circumvented in order 
to provide extraordinary protection for a single industry.

  All too often we hear complaints of lost jobs and invariably the 
blame is laid on trade. This allegation has gone unanswered for far too 
long. Trade has given us far more jobs than would otherwise be 
available. The fact is that the size of the trade sector has grown 
steadily during the last 50 years. As a share of the economy, trade 
doubled between 1950 and 1980, and it has doubled again between 1980 
and 1998. Not surprisingly, employment has expanded from 99 million in 
1980 to 133 million today. And, the unemployment rate has fallen to 4.2 
percent, the lowest level in 30 years.
  Far from harming our economy, trade has been a major contributing 
factor to our growth and our prosperity. Real GDP is now 64 percent 
greater than it was in 1980 and we have experienced only 9 months of 
recession during the last 16 years. Moreover, our growth rate is now 
the highest and our unemployment rate the lowest among the G-7 nations.
  Trade makes it possible for us to focus on the production of the 
things we do best, and thereby produce a larger output and enjoy a 
higher standard of living. For goods and services that we produce 
cheaply, we can expand our output and sell abroad at attractive prices. 
And for things we do poorly, we can acquire them more economically from 
foreign producers. Thus, trade promotes prosperity.
  We have fought for open markets both through GATT and now the WTO. 
And we have been engaged in this fight, this battle for almost 50 
years. For some time, we have told the world that economic freedom and 
a market economy are key ingredients of prosperity. The steel quota 
bill undermines this message.
  Let me make four points with respect to the message.
  A quota bill would send the wrong message to the European Union. A 
quota bill would send the wrong message to the former Communist 
countries seeking to establish market economies. A quota bill would 
send the wrong message to investors. And a quota bill would send the 
wrong message to our trading partners.
  Let me just touch lightly on each of those.
  With respect to the European Union, we are currently in the midst of 
a trade dispute with the EU regarding their restrictions on both 
bananas and beef. The steel quota bill undercuts our position on these 
issues. How can we complain about the restrictions of others while we 
ourselves are erecting trade barriers?

  With respect to the leaders of the former communist countries, this 
bill says when we think it is convenient, it is all right to substitute 
political manipulation for markets. I can assure you, the leaders of 
the former communist countries are watching. If a prosperous America 
with a low unemployment rate is willing to bail out troubled firms, how 
can we expect them to refrain from such action.
  With respect to investors, while much of the world has been in 
recession, investment flowed into the United States and the U.S. 
economy remained strong. In no small degree, this confidence of 
investors was due to the openness of our economy and our reliance on 
markets rather than politics.
  Again, with respect to our trading partners, our trading partners--
most of which have lower and slower rates of growth and higher 
unemployment--are unlikely to stand idly by while we impose trade 
barriers. Retaliation and escalation of trade barriers are likely side-
effects.
  Finally, it bears mentioning that it is a serious mistake for 
Congress to play favorites. This is precisely what is involved here.
  This bill imposes a tax on steel-users in order to subsidize steel-
producers. A substantial share of the U.S. steel industry refines raw 
steel into finished and specialty goods. The U.S. steel industry is 
therefore a major purchaser of imported steel. Higher steel prices 
which will surely accompany import quotas will increase the cost of 
refined steel and make these products less competitive than would 
otherwise be the case.
  Moreover, this bill would treat the steel industry different than 
other industries. Steel is not the only industry that has been 
adversely affected by currency devaluations and weak demand due to the 
Asian crisis and recession in several parts of the world. The sales of 
many firms were affected as the result of these factors. Why should 
this industry be singled out for special treatment?
  In conclusion, I want to stress that the legislation we will be 
considering later today proposes that the Congress intervene in the 
market, risk a trade war, and endanger the future health of our economy 
in order to insulate a segment of out steel industry from competition. 
I maintain there is already sufficient legislation on the books to 
protect industries against unfair competitive practices. Quotas and 
trade barriers are the wrong path. The world has already gone down this 
``trade

[[Page S7381]]

war'' road once before with the Smoot-Hawley Law of 1930. Let's not 
make that same mistake again.
  Additionally, I should note that Chairman Greenspan recently has 
sounded the dangers of protectionism. He now believes that rising 
protectionism is the single most dangerous threat to our future growth 
and prosperity. I share his concern.
  Make no mistake about it--important principles are at stake here. We 
should be reducing trade barriers rather than increasing them. We have 
no business playing favorites. As our recent High-Tech Summit 
indicated, trade in both goods and ideas has made an enormous 
contribution to our prosperity. We must not allow this misguided effort 
to assist some at the expense of others and endanger American 
prosperity.
  With that, I yield the floor, Mr. President.
  Mr. GRAMM addressed the Chair.
  The PRESIDING OFFICER. The Senator from Texas.
  Mr. GRAMM. Mr. President, I congratulate our dear colleague from 
Florida, the distinguished chairman of the Joint Economic Committee, 
for his remarks. I identify myself with what he said.
  The steel quota bill is a trade war starter and a job killer. It is 
imperative that this bill be defeated on the floor of the Senate today. 
Let me just try to outline a few reasons why I think that is absolutely 
essential.
  First of all, America is the world's largest steel user. We have 40 
times as many jobs in America using steel as we have jobs in making 
steel, so if we decide we are going to effectively, through this quota, 
impose a tax on steel, for every 1 worker we help we are going to hurt 
40 workers. In fact, it has been estimated that to save one job through 
protectionism in steel it will cost Americans about $800,000.
  How can it make sense to impose a cost of $800,000 to save a $50,000 
or $60,000 job? It makes absolutely no sense. It would be an irrational 
decision for an individual or a family to make such a decision. And 
what is wisdom for an individual or family cannot be folly for a great 
nation.
  You might ask yourself, if, in fact, everybody knows we have 40 
steel-using jobs for every 1 steel-producing job--and we are debating 
imposing a quota on imports which will hopefully protect a few jobs 
while destroying many jobs--why are we doing it? We are doing it 
because the steel workers are very organized and are very tied in 
politically. That is what this is about.
  The important thing to remember, however, is it costs not only about 
$800,000 per worker to protect a steel job, but because the steel quota 
is World Trade Organization illegal, it means that our competitors 
around the world, who will find these quotas being imposed on their 
steel, will be able to impose similar quotas and tariffs on American 
manufactured products, American agricultural products, American 
services that we sell around the world.
  So the first point I want people to understand is that, by the most 
conservative estimate, when you take into account 40 jobs in steel 
using for every 1 job in manufacturing, when you take into account that 
this steel quota is illegal and therefore will produce countervailing 
quotas and tariffs against American products where we clearly are 
competitive on the world market, we are going to end up paying, as 
American consumers, over $1 million for every job in steel we might 
protect under this quota.
  The next point I want to make is that the problem in steel is largely 
not imports. In 1980, we had 459,000 people employed in the steel 
industry. Today, we have 163,000 people employed in the steel industry.
  You would think, in looking at these numbers, that steel production 
in America had fallen right through the floor; but, in fact, steel 
production since 1980 is up 56 percent. In fact, steel production in 
America was at an all-time high in 1997, even though we had reduced the 
number of people working in steel production from 459,000 to 163,000.
  How do you reduce the number of workers from 459,000 to 169,000 and 
have production go up by 56 percent? You have that occur because of 
modernization and because of the implementation of new technology. In 
fact, since 1980, on average, America has reduced the number of people 
working in steel production by 9,000 a year, and they have done that 
not because of foreign competition but because of the implementation of 
new, modern technology.
  Senator Mack mentioned it, but we have trade law section 201 that 
allows an industry that is suffering from foreign competition, where it 
can prove that job loss is due to the foreign competition, to get 
granted relief under current law. The steel industry, which has a 
record of filing more unfair trade practice suits and more complaints 
under the trade laws than any other industry in America, has not 
availed itself of 201. Why? Because if you look back to 1980, the 
primary reason they are losing jobs is not foreign competition.
  In fact, in 1997 we had a record level of steel production in 
America--105 million tons. We had a record level of demand; hence we 
had a surge in imports and we had the demand because we are producing 
more cars, more trucks, more heavy equipment, and we are producing more 
washing machines, more dryers, more dishwashers than ever in history. 
And I can't think of a happier time, in terms of the economy, than we 
are looking at today.
  In fact, in 1998--the last year we had data--steel production in 
America was near the all-time record, at 102 million tons. So the 
second point is that there is not a lot of data to suggest that the 
problem is with imports.
  The third point I want to make is that the import crisis, if there 
ever was one, has passed. Steel imports are down from November 1998 to 
April of 1999--the last month we have data--by 28 percent. So if this 
ever was a problem, it is a problem that has largely been eliminated.
  Finally, where is the evidence that the steel industry is on its 
back? The steel industry earned $1.4 billion in 1998. Of the 13 largest 
steel makers, 11 earned a profit in 1998. The bankruptcy of the three 
steel companies that are largely discussed as part of this bill, most 
analysts estimate, would have happened without regard to imports 
because of their high level of debt and because of the failure of 
investment that they made in new technology.
  Now, no one is unconcerned when 10,000 Americans lose jobs in a year. 
That is a very real human story, and to be opposed to the quota bill is 
not to say that you don't care about the 10,000 people who lost their 
jobs. But it is important to remember that 9,000 people a year have 
lost their jobs due to technological change since 1980, and nobody 
wants to stop that change because it has created more jobs; it has 
produced better products; and it has produced products at lower prices, 
which have raised the real wages and living standards of every working 
family.
  Finally, we are creating 7,500 jobs a day in America. We are the envy 
of the world. We are the world's most open market. We are the world's 
largest importer and, as a result, every day in America we are creating 
7,500 new permanent, productive, taxpaying jobs for the future. We are 
creating them in industries that are going to grow and prosper, where 
these jobs represent jobs that will be there 20, 25, 30 years from 
today. Why in the world would we, the greatest beneficiary of 
international trade, want to start a trade war over 10,000 jobs when 
9,000 of them were probably lost due to technological change, and in 
the process, jeopardize the creation of 7,500 jobs a day?
  So the question we have to ask ourselves is: Do we want to risk 7,500 
jobs a day in job creation in America due to being the world's greatest 
trading Nation? Do we want to put those jobs at risk for 10,000 jobs in 
the steel industry that will cost us over a million dollars, in terms 
of consumer cost, individually to protect? And, finally, there is no 
guarantee that technological improvement will not end up eliminating 
these jobs in any case.

  I think our choice is clear. I think we have to reject this bill. 
This bill will kill jobs. This bill will start a trade war, and since 
we are the greatest trading Nation in the history of the world, we will 
lose more than anyone else. So I urge my colleagues to vote no on this 
bill, and to vote no because we are the richest, freest, and happiest 
people in the history of the world because we are the one Nation in the 
world that believes in trade and practices it every day.

[[Page S7382]]

  Why we would want to change our minds on trade in the midst of an 
economic boom that is virtually unprecedented in the history of the 
world is a great mystery to me. Why this bill is even on the floor of 
the Senate is a testament to the level of economic illiteracy in 
America. Why it would make any sense whatsoever to impose an effective 
tax on steel and destroy 40 jobs for every one job that you save is a 
great mystery, and only politics can explain it.
  This is a bad bill. It could not come at a worse time. It is totally 
unjustified. It threatens the economic future of America, and I urge my 
colleagues to reject it.

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