Warning that voluntary quotas would only "camouflage the true problems" of the world steel crisis, Common Market industry commissioner Etienne Davignon today proposed that the United States, Japan and European countries open urgent talks to seek long-term remedies for their sagging steel industries.
Speaking to journalists on his return from the World Steel Conference in Rome, Davignon expressed dismay over a plan suggested by European steel producers to restrain their exports to the United States voluntarily.
He claimed such methods would not affect the real problems of excess capacity and slack demand that plague world steel industries and aggravate the threat of full-scale trade war.
At the Rome meeting last weekend, Jacques Ferry, chairman of European Economic Community steel makers, said EEC firms would reduce their steel sales in the United States if Japan would follow suit.
The European producers took the initiative to ward off anti-dumping complaints that U.S. steel companies are preparing to lodge against them.
Reiterating what he told steel producers in Rome, Davignon said, "I do not believe that you can solve problems by restricting markets. That will only lead to commercial wars. We need to find international solutions."
Structural problems are at the core of the world steel crisis, he asserted. He pointed out that European firms are operating at 60 per cent capacity, while U.S. steel companies are at just below 80 per cent of capacity and Japanese steel firms are believed to be working around 70 per cent capacity.
American companies began planning anti-dumping suits against European steel producers after recent reports showed steel imports jumped 16 per cent this year and now account for one-fifth of annual U.S. requirements of 110 million tons.
Davignon noted that the current rise in U.S. imports of European steel only compensated for the heavy losses incurred since 1974 by EEC firms selling in the American market.
Limiting European steel sales in the United States only would mask the in-efficiencies of American companies while causing havoc in other markets and building new pressures for global protectionism in steel trade, Davignon added.
Davignon wants to focus on measures that would revamp the West's steel industries, eliminating weak firms and streamlining others so that a more efficient global structure would emerge. Retraining programs for laid off workers also would be discussed at the meeting.
Asked if his plan would evoke criticism from Japan and the United States for being too "dirigiste." Davignon remarked that he was only seeking the best path between "an excessive laissez faire system and ineffective government intervention."
The Western world's demand for steel this year will fall at least 10 per cent short of expectations, according to the International Iron and Steel Institute. The excess supply has intensified pressures to "dump," or sell below cost in foreign markets.
U.S. steel companies believe the Europeans are more guilty of dumping in the American market than Japanese steel makers, who were absolved of wrong-doing last week in a report issued by the Council of Wage and Price Stability.
Davignon anticipates the wrath of American steel firms will be reflected in future talks with U.S. Special Trade Representative Robert S. Strauss, but ducked any hint of a duel by describing Strauss as "friendly, flamboyant and always interesting to talk to."