[Congressional Record Volume 148, Number 14 (Thursday, February 14, 2002)]
[House]
[Pages H518-H521]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         AMERICA'S STEEL CRISIS

  The SPEAKER pro tempore (Mr. Cantor). Under the Speaker's announced 
policy of January 3, 2001, the gentleman from Pennsylvania (Mr. 
English) is recognized for 60 minutes as the designee of the majority 
leader.


                             General Leave

  Mr. ENGLISH. Mr. Speaker, I ask unanimous consent that all Members 
have 5 legislative days in which to extend their remarks on the subject 
of my Special Order.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Pennsylvania?
  There was no objection.
  Mr. ENGLISH. Mr. Speaker, I rise today as chairman of the 
Congressional Steel Caucus to bring before this body the grim crisis 
facing a major sector of our manufacturing base, a sector which if we 
allow it to be washed away, if we allow it to leave, if we allow it to 
go offshore will permanently affect our ability to manufacture within 
the United States. The crisis that is today facing the American steel 
industry is one that will be seen and has been seen in many other areas 
of manufacturing; and I believe in coming years if we do not resolve 
the steel crisis, if we do not resolve it to the satisfaction of all of 
those Americans who work in the industry, then I believe we run the 
great risk of seeing other industries challenged in a similar way.
  The domestic steel industry and its current workforce, retirees and 
their

[[Page H519]]

dependents are at a vital crossroads, Mr. Speaker. Thirty-one steel 
companies have declared bankruptcy since the steel crisis began in 
1998, creating an uncertain future for 62,000 American workers. 
Thousands of steel workers have already lost their jobs. Pension and 
health care benefits are in jeopardy for hundreds of thousands of 
retirees. And now is the time to address this issue and to provide 
relief for this beleaguered industry.
  I want to credit up front the Bush administration for being willing 
to directly take on this issue, as I will describe in a few minutes. 
Relief for this industry must be strong and swift in order to stave off 
a permanent liquidation of the domestic industry. Inaction or a weak 
action would silence many steel plants, destroy workers' livelihoods, 
affect their families and their communities while dealing a blow to our 
national economy and our national security.
  I want to applaud the Bush administration for developing a 
comprehensive steel policy that began with the initiation of a much-
needed 201 investigation, using a provision in our law which has been 
long recognized within the WTO framework. The Bush administration last 
year launched an investigation under the International Trade Commission 
to determine the causes and the likely consequences of the crisis 
facing domestic steel. I want to credit them for having done that, 
particularly since their predecessors had not been willing to launch a 
201 investigation.
  But the investigation part, which is now complete, is just the 
beginning. The 201 action needs to be followed by a concrete plan for 
reducing overcapacity and dealing with nonmarket forces. And the 
International Trade Commission's decision as it was handed down by the 
various commissioners gives the Bush administration the tools that it 
needs to deal with this problem. Again, I have to congratulate the 
President for his understanding of this issue and his foresight in 
bringing together under the OECD many of the producing nations with the 
objective of coming up with a way of rationalizing our global problem.
  But beyond that, we must look at ways to address the industry's 
legacy cost and clear the way for a renaissance in the American steel 
industry. Ensuring the viability of the domestic steel industry is 
going to require a continuation of the cooperative efforts that have 
developed between Congress and the administration working together with 
both management and labor.
  Let us take a look at the problem, Mr. Speaker. The fundamental cause 
of the current steel crisis is a massive global, but primarily foreign, 
overcapacity. The livelihoods of thousands of American steelworkers and 
their families have been devastated as 31 American steel companies have 
been forced into bankruptcy, largely as the result of this overcapacity 
and its effects. Massive foreign steel overcapacity, created and 
sustained by abusive government subsidies, protected markets and 
anticompetitive practices and nurtured by soft monetary policies have 
resulted in a diversion of excess steel products to the United States 
market. The American steel industry and its workers have over the past 
many years done a great deal to become more efficient, to become more 
productive, to become world class; and they have made the sacrifices 
and the capital investments necessary to do that.

                              {time}  1545

  They have taken dramatic steps to reduce capacity and modernize 
operations, to become a high quality, low cost and efficient steel 
producer. They have invested more than $60 billion in steel plant 
modernization to become among the most productive steel producers in 
the world, with fewer than two man hours needed per ton of steel 
produced.
  One of the red herrings I hear in discussion of steel issues has to 
do with the allegation by some of our trading partners, and even some 
among American opinion makers, that the whole problem is one of 
domestic inefficiency and inability to compete in the world market. 
That simply is not true. But what is needed is a leveling of the 
playing field and an opportunity for these companies to compete on a 
fair basis.
  Having made that kind of investment to achieve these advances in 
productivity, the U.S. steel industry closed numerous inefficient 
mills, significantly cut jobs and reduced capacity by over 23 million 
tons. As a result, U.S. productivity as measured by output per worker 
has nearly tripled since 1980, and that effectively debunks some of the 
conventional wisdom. But when competing with the unfair trading 
practices of our foreign competitors, even this is not enough.
  In 1999, foreign excess raw steel making capacity was more than two 
times greater than the total annual U.S. consumption of steel. That is 
an extraordinary disparity. Much of the world's major steel markets 
have formal steel import barriers to foreign steel or are subject to 
international market sharing arrangements by foreign steel exporters.
  As a result, the United States has become the dumping ground for the 
world's excesses of steel, effectively allowing many of our trading 
partners to export their economic problems to our shores. That is not 
fair.
  The United States, to understand, are, from the standpoint of the 
world market, the good guys. We let in foreign steel, and normally our 
market is designed so we would expect to normally import about 20 
percent of our steel needs. That is a good thing, and that has helped 
many of our trading partners. But under the current circumstances, we 
have seen the level of imports rise to the point that they constitute 
nearly one-third of our domestic market, and, in this context, the 
recession has been particularly painful.
  As domestic steel consumption has declined, the imports have become 
more worrisome, and between the Sylla of imports and the Caribdis of 
decline and consumption, many American steel companies have fallen 
victim.
  Obviously, Mr. Speaker, the steel industry is the victim of predatory 
trade practices, and we desperately need relief under Section 201 of 
the U.S. trade laws. The investigation, followed by a strong tariff 
ruling, represents a milestone in a shift toward a stronger trade 
policy that insists on a level playing field of trade for domestic 
producers. This is a huge shift in policy because this Section 201 was 
initiated by the administration. This initiative also gives the 
administration the big stick that it needs to bring those countries 
with excess steel capacity to the negotiating table to fix what is 
clearly a global problem and to rationalize the global steel market.
  I realize many hearing this will wonder, how does that tie in to free 
trade?
  Please, realize I am very strongly pro-trade, Mr. Speaker. But we 
need to realize that when it comes to steel, we are looking at one of 
the most distorted market places in the world, and the only place in 
steel where free trade has been in existence in recent years has been, 
in effect, in the classroom.
  Initiating a broad 201 investigation by the administration firmly 
underscores the commitment to protecting our steel industry from unfair 
imports. This administration has clearly shown its willingness to stand 
up for steel, and we are beginning to see the benefits of that.
  Section 201 of the Trade Act of 1974 was established to address cases 
where domestic industries have been seriously injured or are threatened 
with serious injury by increased imports. This is allowed under the WTO 
framework, and it is clearly one of our legitimate trade policy 
options.
  Once petitioned by the impacted industry, Congressional committee or 
segment of the administration, the ITC determines whether a product is 
being imported at levels that have or could harm the domestic industry. 
Section 201 does not require a finding of unfair trade practice, but, 
rather, depends only on a finding that increased imports are damaging 
the industry.
  In this case, the International Trade Commission determined that 
damage has indeed occurred and made recommendations for tariffs to the 
President. The President will make the final decision whether to 
provide relief and the nature of the relief, meaning granting relief is 
completely discretionary.
  The March 6 deadline for the Bush Administration to make that 
decision is fast approaching. I call upon the President to look at the 
needs of our domestic industry, recognize the scope of this problem, 
and recognize that if

[[Page H520]]

we do not draw a line in the sand here, if we do not stand up for our 
domestic manufacturers and demand for them a fair break, then steel is 
not going to be the last industry to be hollowed out.
  It is now up to the President to end the abuse of the American market 
by enacting a strong remedy such as those recommended by Commissioners 
Bragg and Devaney. Strong relief is necessary in order to return steel 
prices to their normal pre-crisis levels, and allow American steel 
companies to make the necessary investments to remain viable and 
competitive in the future, while providing good-paying jobs for the 
American worker.
  Tariff rates must be substantial in order to ensure that import 
prices return to market-based levels. The Section 201 remedy must be 
enforced for at least 4 years to allow the domestic steel industry to 
make the necessary adjustments to import competition. A shorter 
duration, I feel, will be ineffective.
  Section 201 relief must not replace existing orders under the anti-
dumping and countervailing duty laws. Those hard-won concessions under 
our laws, won by those domestic companies, need to be left in place. If 
these orders were set aside, any remedy will perversely reward those 
foreign producers that engage in unfair trade. That is something, Mr. 
Speaker, we do not in any case want to do.
  I believe that relief needs to be comprehensive. We need to apply a 
consistent tariff-based remedy across all that is essential to the 
domestic industry and as representing the only fair way to impose 
relief.
  Disallowing the continued abuse of the open U.S. market will give the 
President the leverage needed during multilateral steel talks and force 
foreign producers to cut back excess production capacity.
  The imposition of tariffs for a 4 year period will demonstrate to 
foreign producers and governments that the administration is serious 
about addressing the problem of foreign excess steel capacity. Any 
talks that are conducted without enforcement capabilities will lack the 
incentives needed to achieve measurable results.
  An effective remedy is the only way to stimulate foreign governments 
and steel producers to make the difficult decisions that U.S. producers 
already have made to modernize, eliminate inefficient capacity, and 
bring stability and balance to the global steel market.
  Increases in steel prices have minimal effect on the price of end 
products because steel constitutes only a small share of the total cost 
of most products that contain steel. Accordingly, we need not be overly 
concerned that by providing a measure of fairness to American steel, we 
are making steel products that we manufacture uncompetitive.
  For a typical American car, for example, the increase caused by the 
imposition of a 40 percent tariff would be about $60. For a 
refrigerator, the increase would be about $3. That is something that we 
can afford to pay.
  As measured by the Commerce Department, steel's share of total cost 
is 0.8 percent for construction, 3.4 percent for motor vehicles and 
parts, 5.4 percent for other transport equipment, 6.8 percent for 
household appliances, 4.6 percent for electrical industrial apparatus, 
and, for the highest of Commerce's categories, fabricated metal 
products, steel's share of total cost is only 15.9 percent.
  Since 1995, the price of finished goods has risen 11 percent, while 
the cost of steel mill products has declined 16 percent. The steel 
consuming industries who have suggested that relief under Section 201 
will not return profitability to the domestic steel industry by raising 
prices, while arguing that relief will raise consumer prices to 
prohibitive levels, I believe are arguing an inherent contradiction. 
But in fact this is simply not true at all.

  Their own study has found the complete opposite. A tariff rate quota 
would artificially set import lids of foreign steel and apply a tariff 
on any imports above the set limits. Such a remedy would be detrimental 
to the domestic carbon steel industry and its workers.
  Let us look at the impact overall on the industry of this crisis. 
Entire American communities have been devastated by this import crisis, 
and we have seen that in Western Pennsylvania. In my district, which is 
one of the cradles of the modern steel industry in the world, we have 
seen a significant loss of jobs and other jobs very much at risk. 
Regions already experiencing hardship as a result of the current 
recession are being dealt a devastating blow by the massive levels of 
low-priced imports.
  The ripple effect of each lost job in the steel sector is simply 
tremendous in these communities. The loss of good-paying steel industry 
jobs directly impacts thousands of workers in other sectors that depend 
on the steel industry.
  The steel industry's use of goods and services in its production 
process generates considerable economic activity at the intermediate 
levels. The multiplier effect, for example, the U.S. manufacturing 
sector, including the steel industry, has one of the highest multiplier 
effects. For every $1 of a manufactured product sold to an end user, an 
additional $1.19 of intermediate activity is generated. The multiplier 
effect for the service sector is a mere 77 cents for every $1 sale.
  The steel industry is a major consumer of computers and other high-
tech equipment. It is also a major user of transportation industries, 
such as rail, trucking and shipping, and we have seen a direct impact 
resulting from the decline of steel on those industries.
  Steel-generated demand for key raw materials, coal, coke, iron ore 
and limestone, provides employment in a number of regions where other 
jobs are scarce.
  Mr. Speaker, the steel industry is also a major contributor to the 
U.S. tax base, including the tax base of State and local governments.
  There is another issue here that is all too frequently overlooked. 
The steel industry is a significant asset to our national security. At 
a time when we are effectively at war, this ought to be central to many 
of our considerations. A healthy domestic steel industry is a 
cornerstone of our national defense. Steel is an indispensable 
component of many weapons and weapons systems, as well as the ships, 
tanks and other vehicles that carry these systems and carry our 
dedicated troops into battle.

                              {time}  1600

  In my district, as an example, Erie Forge and Steel is the sole 
producer of propeller shafts that are used in Navy ships. They have had 
a bout with chapter XI bankruptcy, and I am glad to see they have a 
purchaser; and they appear ready to move on and survive. But many 
others are facing immediate liquidation.
  The President and many other U.S. Government leaders recognize that 
steel and national security go hand in hand. It is vital to U.S. 
national economic security, and as well to our homeland security, that 
America does not become dangerously dependent on offshore sources of 
supply. For steel, for example, that goes into our energy 
infrastructure, such as petroleum refineries, oil and gas pipelines, 
storage tanks, electricity, power generating plants, electric power 
transmission towers and utility distribution; for steel that goes into 
our transportation security infrastructure, such as highways, bridges, 
railroads, mass transit systems, airports, seaports, and navigation 
systems. For the steel that goes into our health and public safety 
infrastructure such as dams and reservoirs, waste and sewage treatment 
plant facilities, and the public water supply system, and for the 
steel, Mr. Speaker, that goes into our commercial, industrial and 
institutional complexes such as manufacturing plants, schools, 
commercial buildings, chemical processing plants, hospitals, retail 
stores, hotels, houses of worship, and government buildings. We must 
maintain a viable domestic steel industry if our Nation is truly to be 
secure.
  There is another issue, and we need to recognize it, and it is 
central to this crisis and that is the issue of legacy costs, one that 
does not fall evenly on all parts of the steel industry but, 
nevertheless, is important and vital and central and necessary to be 
addressed. Two decades of downsizing have created a domestic steel 
industry that is highly efficient with modern facilities; but the 
downsizing that occurred to achieve this goal has placed an enormous 
burden on the industry. That burden includes legacy costs.

[[Page H521]]

  Health and pension liabilities for steel workers who lost their jobs 
or who retired and lost their jobs in some cases as a result of the 
massive industry downsizing which occurred especially during the 1980s. 
Legacy costs have put the industry overall at a competitive 
disadvantage versus foreign competitors whose governments assume these 
same costs and continue to assume these same costs through socialized 
medical systems. Congress, the administration, and the industry must 
continue to work together to address these costs which serve as a 
critical barrier to industry consolidation. What company is going to 
buy out and fold into another company if huge legacy costs come with 
it?
  While this is a time of enormous crisis for the industry, it is also 
a time of unique opportunity. The government often played a part in the 
initial negotiation of the contracts that build up legacy costs, and so 
the government should be willing to play a constructive role today in 
addressing this problem. This is a chance to facilitate important 
restructuring, allow for significant capacity reduction, and help 
create an industry poised to compete over the long run with any 
competitor in the world.
  The administration needs to take the lead in developing a plan to 
address these critical legacy costs which are preventing the industry 
from restructuring. As chairman of the steel caucus, I think I can 
fairly say that on a bipartisan basis, we are prepared to work with 
this administration to try to address that problem.
  In conclusion, we have reached a pivotal point in stabilizing the 
American steel industry and ensuring good-paying jobs for its workers. 
The Bush administration took the monumental first step, standing up for 
steel, by initiating a section 201 investigation, which is a critical 
first step in its overall steel policy. Now, I urge the administration 
to enact tough tariffs that will truly provide relief for a besieged 
industry and its struggling employees.
  Many of our manufacturers face growing and cumulative competitive 
disadvantages in the international market. The plight of the steel 
industry is grim, but both Congress and the administration need to work 
together and work hard on a bipartisan basis to give employers the 
tools that they need to be competitive in the global market. 
Unfortunately, nothing will solve, quote unquote, today's steel crisis, 
because the damage is already done. Instead, we must seek to apply the 
lessons learned in today's crisis, put reforms into place so that 
nothing like this can ever happen again with steel or any other part of 
our manufacturing base.
  Mr. Speaker, I look forward to working with the administration. I 
hope the President will look at this issue; and I challenge the 
administration to join us, come up with a creative policy for making 
this industry viable in the 21st century.
  Mr. EHRLICH. Mr. Speaker, I want to commend my Steel Caucus 
colleagues, especially Phil English and Pete Visclosky, for their 
efforts to resolve the steel import crisis. This is an issue of great 
importance to me, my constituents, and the domestic steel industry.
  On June 5, 2001, domestic steel producers finally received some good 
news in their struggle to remain a viable, competitive industry. On 
that day, President George W. Bush announced a comprehensive initiative 
to resolve the steel crisis. As part of this important initiative, 
President Bush directed USTR Representative Bob Zoellick to initiate an 
investigation under Section 201 of the Trade Act of 1974 regarding the 
impact of steel imports on the U.S. steel industry.
  After conducting an extensive investigation, the International Trade 
Commission (ITC) confirmed what I and many others have been observing 
for years: illegal steel imports have caused substantial injury to the 
American steel industry. Now that the ITC has made its recommendations 
(most by a unanimous vote), President Bush must decide by March 6, 
2002, on the appropriate remedies for our domestic industry.
  As a free trader who recently voted for Trade Promotion Authority, I 
believe the steel crisis provides President Bush with a unique 
opportunity to save an important American industry, and to put the 
world on notice that free trade with America does not confer the right 
to violate U.S. trade laws with impunity. Further, President Bush's 
enormous credibility and free trade credentials make him the only 
person capable of resolving the steel import crisis. Accordingly, I 
have strongly urged President Bush to impose appropriately high 
tariffs.
  In addition to illegal steel imports, the domestic industry must also 
address legacy costs--the health care obligations of steelworker 
retirees.
  Mr. Speaker, overwhelming retiree health care costs are a result of 
the massive layoffs that occurred during the 1970s and 1980s. During 
this time, labor accepted a series of downsizing agreements in exchange 
for commitments on health care for retirees. In addition, technological 
advances, which have played a part in making the U.S. steel industry 
more efficient, have also served to diminish the workforce. 
Accordingly, more steel is produced today than during World War II, 
with only 10 percent of the labor pool.
  Today, integrated steel producers in the U.S. are at a competitive 
disadvantage against foreign manufacturers whose governments subsidize 
health care as well as other elements of their business plans. Equally 
important is the fact that legacy costs pose a major impediment to the 
consolidation and restructuring needed for our domestic steel industry 
to survive.
  In sum, under the current financial situation, our domestic steel 
industry cannot remain competitive in the global market while 
sustaining its health care commitments. Hopefully, the International 
Trade Commission's (ITC) recent finding that foreign steel has been 
illegally imported into America and the expected imposition of high 
tariffs will provide a foundation for the ultimate resolution of this 
legacy cost issue.
  Mr. Speaker, illegal foreign trade has helped drive 31 American steel 
companies into bankruptcy causing 16 of them to shut down, and 
eliminating more than 46,000 jobs. Now more than ever, I urge my 
colleagues to stand up for the steel industry.

                          ____________________