The European Community's highly publicized campaign to reduce its steel-making capacity is expected to lead to only insignificant cutbacks by 1985, according to confidential Common Market documents submitted to the U.S. International Trade Commission by U.S. Steel Corp.
D.B. King, U.S. Steel's assistant general counsel, argued at a commission investigation into European steel subsidies yesterday that the figures show the Europeans will have a continuing excess capacity and, therefore, a motive to continue expanding their exports to the United States.
U.S. Steel said it had obtained the "confidential capacity information" submitted to the Common Market last year by many of the European steel makers who are the target of the Americans' antidumping and unfair-price complaints.
The figures show that, despite the so-called Davignon plan by which the European steel makers were to improve efficiency and reduce the capacity of their underutilized plants, their "maximum possible production" in 1985 is projected to be nearly equal to -- and in some companies greater than -- what it was in 1980.
European steel makers are considered certain to dispute the figures, arguing that they are a year old and fail to reflect the reductions in manpower that they say have cut their true productive capacity. But U.S. Steel, in a legal brief filed with the ITC, said that, because of their failure to reduce capacity despite declining demand, "naturally, European exporters will be looking for other markets . . . the United States is the most likely choice in the absence of the imposition of countervailing duties."
The duties are the remedy the American steel makers are asking the ITC to impose to protect them from subsidized European imports. The commission must decide by Oct. 12 whether the imports have caused "material injury" to the U.S. steel industry. If so, countervailing duties equal to the amount of the subsidy will be imposed.
The Commerce Department found last month that steel makers in Italy, Britain, Belgium, West Germany, France and Luxembourg are subsidized by as much as 26 percent by their governments. Importers of steel from those mills already are required to post a security bond for the duties, which will be forfeited if the commission finds "material injury."
Officials of U.S. Steel and Bethlehem Steel Co. argued strongly yesterday that the ITC should impose the duties to protect the industry from what they said was relentless price-cutting by the subsidized European steel makers.
"The import situation grows worse, in a destructive, repetitive pattern," said Dale Armstrong, U.S. Steel's senior vice president, commercial. "The recent surge in imports coincided with the worst U.S. market for steel in more than 30 years. It's no secret that production of raw steel in the U.S. hit an 11-year low in June, and plant utilization hit a 40-year low, while market penetration of the imports was over 25 percent."
He and other steel executives said that, by their pricing policies, the Europeans not only seized an increasing share of the market but also forced the American producers to lower their own prices to meet the allegedly unfair competition, wiping out profits and making it impossible to invest capital in new or modernized plants.
But the Federal Trade Commission yesterday urged the International Trade Commission to proceed cautiously before imposing duties. The FTC said duties on European steel might only induce American buyers to shift to steel from Canada and Japan, and might damage companies in this country, such as steel fabricators, who use the imported steel.
It is still possible that the bitter steel trade dispute could be settled before the trade commission rules, industry sources said yesterday.