[Weekly Compilation of Presidential Documents Volume 38, Number 10 (Monday, March 11, 2002)]
[Pages 359-363]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Memorandum on Action Under Section 203 of the Trade Act of 1974 
Concerning Certain Steel Products

March 5, 2002

Memorandum for the Secretary of the Treasury, the Secretary of Commerce, 
United States Trade Representative

Subject: Action Under Section 203 of the Trade Act of 1974 Concerning 
Certain Steel Products

    On December 19, 2001, the United States International Trade 
Commission (ITC) submitted a report to me that contained determinations 
pursuant to section 202 of the Trade Act of 1974, as amended (the 
``Trade Act''), that (a) certain carbon flat rolled steel, including 
carbon and alloy steel slabs, plate (including cut-to-length plate and 
clad plate), hot-rolled steel (including plate in coils), cold-rolled 
steel (other than grain-oriented electrical steel), and corrosion-
resistant and

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other coated steel (collectively, ``certain flat steel''); (b) carbon 
and alloy hot-rolled bar and light shapes (``hot-rolled bar''); (c) 
carbon and alloy cold-finished bar (``cold-finished bar''); (d) carbon 
and alloy rebar (``rebar''); (e) carbon and alloy welded tubular 
products (other than oil country tubular goods) (``certain tubular 
products''); (f) carbon and alloy flanges, fittings, and tool joints 
(``carbon and alloy fittings''); (g) stainless steel bar and light 
shapes (``stainless steel bar''); and (h) stainless steel rod are being 
imported into the United States in such increased quantities as to be a 
substantial cause of serious injury, or the threat thereof, to the 
domestic industries producing like or directly competitive articles. The 
ITC commissioners were equally divided with respect to the determination 
required under section 202(b) regarding whether (i) carbon and alloy tin 
mill products (``tin mill products''); (j) stainless steel wire; (k) 
tool steel, all forms; and (l) stainless steel flanges and fittings 
(``stainless steel fittings'') are being imported into the United States 
in such increased quantities as to be a substantial cause of serious 
injury, or threat of serious injury, to the domestic industries 
producing like or directly competitive articles. The ITC provided 
detailed definitions of the products included in categories (a) through 
(l) and their corresponding subheadings under the Harmonized Tariff 
Schedule of the United States (HTS) in Appendix A to its determination, 
set out at 66 Fed. Reg. 67304, 67308-67311 (December 28, 2001).
    The report of the ITC also contained findings pursuant to section 
311(a) of the North American Free Trade Agreement Implementation Act 
(the ``NAFTA Implementation Act'') as to whether imports from Canada and 
Mexico, considered individually, account for a substantial share of 
total imports and contribute importantly to the serious injury, or 
threat thereof, caused by imports. The ITC made negative findings with 
respect to imports from Canada of certain flat steel, tin mill products, 
rebar, stainless steel rod, and stainless steel wire; and also made 
negative findings with respect to imports from Mexico of tin mill 
products, hot-rolled bar, cold-finished bar, rebar, certain tubular 
products, stainless steel bar, stainless steel rod, and stainless steel 
wire. The ITC made affirmative findings with respect to imports from 
Canada of hot-rolled bar, cold-finished bar, carbon and alloy fittings, 
and stainless steel bar; and also made affirmative findings with respect 
to imports from Mexico of certain flat steel, and carbon and alloy steel 
fittings. The ITC commissioners were equally divided with respect to 
imports from Canada of certain tubular products. By February 4, 2002, 
the ITC provided additional information in response to a request under 
section 203(a)(5) of the Trade Act (``supplemental report'') made by the 
United States Trade Representative (the ``USTR'') on January 3, 2002.
    Having considered the determinations of both groups of commissioners 
with regard to tin mill products, tool steel, stainless steel wire, and 
stainless steel fittings, I have determined, pursuant to section 
330(d)(1) of the Tariff Act of 1930, as amended, to consider the 
determinations of the groups of commissioners voting in the affirmative 
with regard to tin mill products and stainless steel wire to be the 
determination of the ITC, and the determinations of the groups of 
commissioners voting in the negative with regard to tool steel and 
stainless steel fittings to be the determination of the ITC.
    By Proclamation signed today (the ``Proclamation'') and after 
considering all relevant aspects of the investigation, including the 
factors set forth in section 203(a)(2) of the Trade Act and the 
supplemental report, I have implemented actions of a type described in 
section 203(a)(3). I have determined that the most appropriate actions 
are safeguard measures in the form of an increase in duties on imports 
of certain flat steel, other than slabs (including plate, hot-rolled 
steel, cold-rolled steel, and coated steel), hot-rolled bar, cold-
finished bar, rebar, certain welded tubular products, carbon and alloy 
fittings, stainless steel bar, stainless steel rod, tin mill products, 
and stainless steel wire, as defined in paragraph 7 of the Proclamation, 
and in the form of a tariff rate quota (TRQ) on imports of slabs, with 
an increase in currently scheduled rates of duties for imports over the 
TRQ limits. I have implemented these safeguard measures for a period of 
3 years plus 1 day.

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    Specifically, I have established the following safeguard measures:
(a)          certain flat steel: with regard to slabs, a TRQ of 4.90 
            million metric tons in the first year of the measure, 5.35 
            million metric tons in the second year, and 5.81 million 
            metric tons in the third year, with no increase in duties 
            for imports below the within-quota level and an increase in 
            duties of 30% ad valorem for imports above the within-quota 
            level in the first year of the measure, 24% in the second 
            year, and 18% in the third year; and with regard to certain 
            flat steel, other than slab (including plate, hot-rolled 
            steel, cold-rolled steel and coated steel), an increase in 
            duties of 30% ad valorem in the first year, 24% in the 
            second year, and 18% in the third year;
(b)          hot-rolled bar: an increase in duties of 30% ad valorem in 
            the first year of the measure, 24% in the second year, and 
            18% in the third year;
(c)          cold-finished bar: a increase in duties of 30% ad valorem 
            in the first year of the measure, 24% in the second year, 
            and 18% in the third year;
(d)          rebar: an increase in duties of 15% ad valorem in the first 
            year of the measure, 12% in the second year, and 9% in the 
            third year;
(e)          certain welded tubular products: an increase in duties of 
            15% ad valorem in the first year of the measure, 12% in the 
            second year, and 9% in the third year;
(f)          carbon and alloy fittings: an increase in duties of 13% ad 
            valorem in the first year of the measure, 10% in the second 
            year, and 7% in the third year;
(g)          stainless steel bar: an increase in duties of 15% ad 
            valorem in the first year of the measure, 12% in the second 
            year, and 9% in the third year;
(h)          stainless steel rod: an increase in duties of 15% ad 
            valorem in the first year of the measure, 12% in the second 
            year, and 9% in the third year;
(i)          tin mill products: an increase in duties of 30% ad valorem 
            in the first year of the measure, 24% in the second year, 
            and 18% in the third year; and
(j)          stainless steel wire: an increase in duties of 8% ad 
            valorem in the first year of the measure, 7% in the second 
            year, and 6% in the third year.
    Pursuant to section 312(a) of the NAFTA Implementation Act, after 
consideration of the report and supplemental reports of the ITC, I 
further determine that imports of certain flat steel, hot-rolled bar, 
cold-finished bar, rebar, certain tubular products, carbon and alloy 
fittings, stainless steel bar, stainless steel rod, tin mill products, 
and stainless steel wire that are products of Canada and Mexico either 
do not account for a substantial share of total imports of these 
products, or are not contributing importantly to serious injury or the 
threat of serious injury. Therefore, pursuant to section 312(b) of the 
NAFTA Implementation Act, the safeguard measure will not apply to 
imports of certain flat steel, hot-rolled bar, cold-finished bar, rebar, 
certain tubular products, carbon and alloy fittings, stainless steel 
bar, stainless steel rod, tin mill products, and stainless steel wire 
that are the product of Canada or Mexico. Similarly, the safeguard 
measures will not apply to imports of these products that are the 
product of Israel or Jordan.
    The safeguard measures also will not apply to imports of certain 
flat steel, tin mill products, hot-rolled bar, cold-finished bar, rebar, 
certain tubular products, carbon and alloy fittings, stainless steel 
bar, stainless steel rod, or stainless steel wire that are the product 
of a developing country that is a member of the World Trade Organization 
(WTO), as long as that country's share of imports into the United States 
of the product, based on a recent representative period, does not exceed 
3 percent, provided that all such developing country WTO members 
collectively account for not more than 9 percent of total imports of 
that product. For purposes of the safeguard measures established under 
the Proclamation, I determine that the beneficiary countries under the 
Generalized System of Preferences are developing countries. Subdivision 
(d)(i) of U.S. Note 11 to subchapter III of chapter 99 of the Harmonized 
Tariff Schedule of the United States (Note 11) in the Annex to the 
Proclamation identifies those developing countries that are WTO members, 
and subdivision (d)(ii) identifies

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the products of such countries to which the safeguard measures shall not 
apply.
    I instruct the USTR to review data on imports of products listed in 
paragraph 7 of the Proclamation from countries listed in subdivision 
(d)(i) of Note 11 on a quarterly basis. If imports of such a product 
from such a country increase by a material amount, I instruct the USTR 
to initiate consultations with the country regarding the circumstances 
under which the increase occurred and whether the country plans to take 
action to reduce imports to historical levels. If, on the basis of the 
information exchanged during consultations, data on imports, domestic 
steel demand, growth in the U.S. economy, shifts in other countries' 
trade patterns, and any other relevant factors, the USTR determines that 
the increase in imports of such product from such country undermines the 
effectiveness of the pertinent safeguard measure, he is authorized, upon 
publication of a notice of such determination in the Federal Register, 
to modify subdivision (d)(ii) of Note 11 in the Annex to the 
Proclamation to include such product from such country. I also authorize 
the USTR, upon publication of a notice in the Federal Register, to 
change the list of developing countries to which the safeguard measures 
do not apply.
    The steel products listed in clauses (i) through (ix) of subdivision 
(b) of Note 11 in the Annex to the Proclamation were excluded from the 
determinations of the ITC described in paragraph 2 of that Proclamation, 
and are excluded from these safeguard measures. I have also determined 
to exclude from these safeguard measures the steel products listed in 
the subsequent clauses of subdivision (b) of Note 11 in the Annex to the 
Proclamation. The Trade Policy Staff Committee (TPSC) is currently 
evaluating requests, submitted in response to 66 Fed. Reg. 54321, 54322-
54323 (October 26, 2001), that particular products be excluded from any 
safeguard measure with regard to certain steel products. I instruct the 
USTR to determine whether these particular products should be excluded 
and, if so, within 120 days of the date of the Proclamation, to publish 
in the Federal Register a notice to modify subchapter III of chapter 99 
to exclude them from the safeguard measures. In making this 
determination, the USTR shall consider any advice rendered by the TPSC.
    Similarly, I instruct the USTR, after receiving advice from the 
TPSC, to determine whether any particular products should be added to 
the list of those excluded from the safeguard measures and, if so, to 
publish a notice in the Federal Register in March of any year in which 
he receives such a recommendation to modify subchapter III of chapter 99 
to exclude such particular products from the measures. I further 
instruct the USTR, no later than 90 days from today, to publish in the 
Federal Register a notice of the procedures by which interested persons 
may request the TPSC to recommend whether to exclude a particular 
product.
    I also instruct the USTR, prior to the effective date of the 
safeguard measures established in the Proclamation, to conduct 
consultations under Article 12.3 of the Agreement on Safeguards with any 
WTO member having a substantial interest as an exporter of a product 
subject to such safeguard measures, provided that the WTO member 
requests such consultations in a timely fashion. I instruct the USTR to 
report to me on the results of such consultations. I instruct the 
Secretary of the Treasury, pursuant to section 505(a) of the Tariff Act 
of 1930 (19 U.S.C. 1505(a)), to prescribe by regulation a date no later 
than 45 days after today at which estimated duties for merchandise 
entered, or withdrawn from warehouse for consumption, on or after 12:01 
a.m., EST, March 20, 2002, and up to the 30th day after today, shall be 
deposited.
    I instruct the Secretary of the Treasury and the Secretary of 
Commerce to establish a system of import licensing to facilitate the 
monitoring of imports of certain steel products. Pursuant to the 
authority granted me by section 203(g) of the Trade Act to provide for 
the efficient and fair administration of all actions taken for the 
purpose of providing import relief under section 203, I further instruct 
the Secretary of Commerce, within 120 days of the effective date of the 
safeguard measures established by the Proclamation, to publish 
regulations in the Federal Register establishing such a system of import 
licensing.

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    I have determined that the safeguard measures will facilitate 
efforts by the domestic industries to make a positive adjustment to 
import competition and will provide greater economic and social benefits 
than costs. If I determine that further action is appropriate and 
feasible to facilitate efforts by the pertinent domestic industry to 
make a positive adjustment to import competition and to provide greater 
economic and social benefits than costs, or if I determine that the 
conditions under section 204(b)(1) of the Trade Act are met, I shall 
reduce, modify, or terminate the safeguard measures. In making this 
determination, I shall consider the pertinent factors set out in section 
203(a)(2) of the Trade Act and, in particular, changes in capital and 
labor productivity in the domestic industries; actual and planned 
permanent closures of inefficient steel production facilities in the 
United States and in other countries; consolidation of United States 
steel producers; capital expenditures in the domestic industries; prices 
for certain steel products in the United States; and the overall effect 
that maintaining the measure will have on consuming industries, workers, 
and the United States economy as a whole.
    The United States Trade Representative is authorized and directed to 
publish this memorandum in the Federal Register.
                                                George W. Bush

[Filed with the Office of the Federal Register, 11:04 a.m., March 6, 
2002]

Note: This memorandum was published in the Federal Register on March 7.