The U.S. steel industry, suffering from more layoffs, slack demand and a generally slumping economy, has again called upon its old adversary to take the blame--imports.
U.S. Steel Corp., Bethlehem Steel Corp., and others have threatened to file dumping or subsidy complaints against foreign steelmakers if the government doesn't. U.S. Steel has kept open its investigation of import practices by European steelmakers since it withdrew dumping complaints against steelmakers in seven countries last year, and Bethlehem said it is updating some dumping and subsidy cases.
The Reagan administration, pressured by U.S. steel firms and the Europeans, said it may initiate action against European steelmakers after completing in two weeks its investigation of surges in imports. The result of the investigation could be the filing of dumping or countervailing duty cases by U.S. firms or the administration against the European steelmakers.
Dumping requires proof of injury to the domestic industry by the sale of imports at prices below the cost of producing them. Countervailing duty complaints must show the U.S. industry was hurt because imports were subsidized by their governments. Both types of cases are investigated by the International Trade Commission and the Commerce Department, and could result in stiff duties levied on the imports.
The last successful steel dumping case in 1979 caused the withdrawal of Taiwan from the U.S. market because of stiff duties. Taiwan, an emerging steel exporter with about 10 percent of the U.S. market, had been shipping 90,000 tons of steel plate here. Now they are selling none, a U.S. trade official said.
Some steel analysts, however, feel the U.S. industry may not have strong dumping or countervailing duty cases this time.
Nevertheless, the European Economic Community isn't happy about the threat of dumping charges. "If the government initiates an action the very fact that it does so is considered a hostile gesture," said an EEC official who did not want to be identified. As far as U.S. Steel's threats, he said, "We don't appreciate the clamor for war being waged by them." The European steelmakers are having a tough time too, he added.
The steelmakers contend the Europeans are dumping--injuring domestic steelmakers by selling steel here at prices below the cost that they would sell it in their home markets. They also claim that the European steel companies are being subsidized by their governments, giving their steel an unfair advantage in U.S. markets.
The steel issue, Europe's No. 1 trade problem with the United States, according to the EEC official, is politically sensitive to both sides because thousands of jobs are at stake. The United States and Europe are in constant consultation to head off serious trade frictions on the issue, officials said.
The Senate Steel Caucus, a bipartisan group of senators from steel-producing states, last week fired off a letter to Commerce Secretary Malcolm Baldrige asking the administration to get tough by initiating dumping or subsidy cases against European producers, particularly France and Belgium, in the areas of sheet and plate products.
The next stage in the controversy could be reached Wednesday, when import figures for September will be announced. If imports jumped as they did in August, when they were 62 percent higher than the previous August, the steelmakers say they will have more fuel for their complaints. Wednesday also is the end of the comment period for the Commerce Department's investigation of increases in steel imports from Europe, although Commerce officials said it would be a few more days after that until their investigation is complete.
If the September imports are high, "that's like spraying gas on the fire," a steel industry analyst said. The fire has been smoldering for some time, at least since last fall when the Carter administration attempted to strengthen the trigger price system which monitors steel import prices and triggers an investigation if steel is imported at prices below certain levels. And since March, imports have increased steadily from 12.3 percent of the U.S. market to 24.7 percent in August at the same time total consumption has dropped.
Since last May 20,000 steelworkers have been laid off, according to the American Iron and Steel Institute.
While denying dumping, the EEC official said "of course" some European steelmakers "have been subsidized." He wouldn't name which countries subsidize their industries, but U.S. trade officials cite the United Kingdom, whose industry suffers massive operating losses every year; Italy, whose firms have operating profits but cannot pay their debt; France, which assumes its industry's debt, and Belgium, which provides various kinds of aid "to maintain an aged, uneconomic industry."
Both the Europeans and American trade officials, however, agree on one point: the international subsidies code doesn't define a subsidy well enough. The Europeans claim that their subsidies are for domestic purposes only although they affect the prices of their exports.
"The subsidies are not to help exports but help them get over the short-term crisis," the EEC official said. "None of them are getting export subsidies."
"Money has changed hands but it's not clear if it's a subsidy," a U.S. trade official said. If a foreign producer is found by the administration to be receiving unfair subsidies the case would probably end up in court "and the court would tell us what a subsidy is," the official said.
As for the dumping complaint, a few U.S. trade officials doubt that it would hold up, citing the strength of the dollar against most European currencies as a legitimate reason for cheap imports. "The exchange rate shift has swept away dumping" as a charge that could stick, one U.S. trade official said.
U.S. steelmakers, an American trade official said, are "still making money but they're complaining because they're not making enough money to finance modernization."
But Merrill Lynch analyst Charles Bradford blames high labor costs and low productivity, and not imports, for the U.S. industry's problems. "Labor is almost 40 percent of the cost of making steel," Bradford says. "Energy is 20 percent. That's where the industry's problem is if there is a problem.
"The industry is making a mistake by focusing so much on imports because that's telling employes and unions they're not the problem."
The business can expect to remain soft at least through the second half of next year, says Bradford, who expects more layoffs before demand picks up.