[Congressional Record (Bound Edition), Volume 148 (2002), Part 12]
[House]
[Page 16882]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        TARIFFS ON STEEL IMPORTS

  Mr. SMITH of Michigan. Mr. Speaker, I am going to make some comments 
on the tariff on steel imports. President Bush approved the new tariffs 
on steel imports, I think to help give the steel industry and our 
American steelworkers a chance to make changes so that they might 
compete in the long term. I suspect the President, who as a young man 
did physical work in the oil fields, wanted to give a chance to save 
some of the jobs of the people that do the hard physical work in the 
steel industry.
  However, the high tariff restrictions on steel imports have turned 
out to be a mistake with a potential of losing more jobs than they 
save. The price of steel in the United States has risen since March by 
30 to 50 percent. In addition to the large price increases, there has 
been a reduction in the amount of steel available. This has made it 
impossible for many steel-consuming industries to find sufficient 
supplies of steel. Domestic steel producers have in many cases reneged 
on long-term contracts now that the steel prices have leaped, with the 
result that the consuming industries have been forced to pay higher 
than agreed-on prices or have been forced into the volatile spot market 
for steel.
  This has harmed American workers in a number of ways. First, some 
American producers lose out because they are now competing with foreign 
companies that have access to cheaper steel. Their products become 
relatively more expensive because the steel in them costs our American 
producers more.
  Second, many American firms have had trouble securing supplies of 
steel sufficient in quantity to keep that factory operating. I have had 
layoffs in my district because plants have closed for lack of steel.
  Third, it gives American firms a powerful incentive to move 
production out of the United States to foreign plants where steel is 
available at the lower world market price. This is so that they can 
compete, so that they can survive as a company.
  There are 57 workers employed in steel-using companies for every one 
worker in the steel-making industry. Steel-using industries account for 
more than 13 percent of gross domestic product, while the steel 
industry accounts for about one half of 1 percent. Thus, the steel 
tariff has threatened many more jobs than it has protected.
  The Bush administration has recognized some of the distress that the 
steel tariffs are causing. It has issued rulings that exclude 727 
products from the tariff. And, of course, this has set off a frenzy of 
lobbying as some of the steel-using companies angle for exemptions. 
This causes distortions not only in the price of domestic and foreign 
producers but between competing domestic producers as well.
  Finally, the steel tariff encourages retaliation from our trading 
partners. The European Commission is now threatening retaliatory 
tariffs of 100 percent on a 22-page list of goods ranging from rice to 
grapefruit to shoes, brassieres, nuts, bib overalls, billiard tables, 
ballpoint pens, et cetera. The Japanese are also drawing up their steel 
payback list. Steel-exporting Russia has already retaliated by fencing 
out U.S. chicken. Hopefully that is going to be resolved.
  We can ask if the tariff has done that much for the steel industry. 
Over the past 30 years, the Federal Government has been implementing 
policies to keep the steel industry in business despite its 
inefficiencies. These policies include voluntary quotas, antidumping, 
countervailing duty measures. Some of the companies have moved up and 
are now competitive, but much of the industry, instead of resulting in 
a stronger manufacturing efficiency, these policies have allowed 
companies to continue with production methods and labor contracts that 
keep it perpetually at the risk of dissolution.
  Standard and Poor, for example, did not seem optimistic with the 
President's decision and responded to the tariffs by refusing to raise 
the industry's credit ratings.
  The steel tariff has turned out to be a mistake that is harming many 
industries both in my State of Michigan and across the country. It is 
having the result of losing American jobs. We need to repeal this kind 
of tariff restriction to allow our steel-using companies to be 
competitive. We need to start reviewing the kind of overzealous 
regulations and overzealous taxation that we have put on our steel 
industry and we need to assist in research and technology to help allow 
them to be more competitive in an international market.

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