The Commerce Department sharply revised its earlier estimates and reported yesterday that six European nations, led by Italy, are subsidizing steel products exported to the United States by as much as 26 percent.
After an investigation that occupied 70 staff members for eight months and cost an estimated $5 million, the Commerce Department found that government-owned British Steel Corp. and two major French steel makers are subsidized much less than previously estimated, but that exports of Italsider, the big Italian steel maker, are receiving a subsidy of 26.05 percent, rather than 18.3 percent.
Most of the subsidy rates were lower in the final report than in the earlier estimates last June, prompting U.S. Steel Corp. Chairman David Roderick to accuse the Commerce Department of caving in to political pressure from the Europeans. He said the findings "appear to be an effort to bail the European steel industry out of the difficulty that it created by its unfair trade practice in this country."
Commerce Secretary Malcolm Baldrige used the release of the final subsidy report to obliquely criticize the American steel firms for rejecting a proposed settlement that he negotiated with officials of the European Economic Community, or Common Market.
The settlement, under which the Europeans would have agreed to limit some exports, "would provide the U.S. industry with greater stability than would be afforded by incessant litigation," Baldrige said in a statement. "To date, several U.S. producers have indicated a preference to see the cases to conclusion. While I disagree with their assessment, it is up to the producers themselves to evaluate what method of relief from unfair trade is in their best interest."
The Commerce Department findings were sent to the U.S. International Trade Commission, which is conducting a parallel inquiry into the extent to which hard-pressed American steel makers are damaged by the subsidized foreign competition.
The ITC must rule by mid-October. If it finds that U.S. steel makers have been damaged by the subsidized imports, duties equal to the size of the subsidies will be imposed on the imported products. Meanwhile, importers of the subsidized steel must continue to post bonds guaranteeing payment of the countervailing duties, as they have been doing since June, with the amount of the bond now adjusted to reflect the new figures.
The ITC has scheduled hearings on the damage question beginning next Wednesday. The major American steel makers, who filed both the subsidy complaints and parallel complaints alleging that the foreign companies are "dumping" their steel, or selling it below market value, will present testimony about the impact on their markets, and the Europeans will present their defense.
The steel dispute has become a major irritant in U.S.-European relations, but sources in both the government and the steel industry said no settlement is in sight. Baldrige said previously that the American producers rejected the proposed settlement because it did not apply to pipe and tube products -- even though the American firms' subsidy and antidumping complaints did not cover those products.
Yesterday's report was essentially a refinement and elaboration of the preliminary assessment issued in June. The big surprise concerned West Germany, where seven of the eight manufacturers were found to be receiving negligible subsidies of less than 1 percent, and the other a subsidy of only 1.13 percent.
The preliminary report put the German subsidies as high as 8.6 percent, and the rates had been expected to go up because of a court ruling requiring the Commerce Department investigators to include the benefit to the steel makers of Germany's coal subsidy.
But Gary Horlick, deputy assistant Commerce secretary for import administration, said the coal subsidy was found to confer "no benefit" on the German steel makers, who "pay more than the world price for coal and, in fact, would prefer to buy their coal from the United States."
The subsidy rate for British Steel was reduced from an estimated 40.36 percent to 20.33 percent. British Steel has reduced its operating losses, so the amount of money the British government is pumping into it has declined, Horlick said.
Steel makers in Belgium and Luxembourg were found to be subsidized by as much as 21.8 percent. No dutiable subsidy was found on steel from the Netherlands.
The Commerce Department announced that the investigation into Brazilian imports was dropped because Brazil has decided to impose an export tax on shipments to the United States that will offset the amount of subsidy. South Africa terminated most of its subsidy programs on April 1, and no longer is subsidizing its exports to the United States by any significant amount, the report said.
The steel products covered by the subsidy investigation amount to about 3.5 million of the 104 million tons of sheet, plate, bar and structural steel consumed in the United States annually, according to Commerce Department figures.