A federal court has ruled that the British government's investments in British Steel Corp. are subsidies and that products made and exported with those subsidies are subject to countervailing tariffs on their arrival in the United States.
Supporters praised the court's decision, saying that it gives beleaguered domestic industries a new weapon in their battle to limit foreign penetration in their home markets. Opponents said it would raise another barrier to free trade.
The ruling by Senior Judge Bernard Newman of the United States Court of International Trade in New York City upholds a 1983 finding by the International Trade Administration that BSC, in effect, held an unfair competitive advantage over its U.S. rivals because its operations were subsidized by the British government.
To compensate for that advantage, ITA ruled that exports of BSC's specialty steel products to the United States should be subjected to a 19.3 percent tariff based on the value added to those products by subsidies.
BSC went to the Court of International Trade in July 1983 to appeal the ITA's ruling.
Judge Newman late last week rejected BSC's appeal, saying in part that "by providing massive funding to help BSC eliminate obsolete facilities and unneeded labor, the British government reduced BSC's cost of producing steel and gave BSC precisely the kind of unfair competitive advantage that Congress sought to equalize through the application of countervailing duties."
But Newman said that he would hold the 19.3 percent tariff rate in abeyance until the ITA could provide more information about how it arrived at setting the penalty.
"This case is important, not only for the steel industry but also for all other industries" in the United States that have to compete with foreign companies backed by their governments, said Paul Rosenthal, a lawyer representing companies in the U.S. specialty steel business. Specialty steels include stainless steel sheet and plate, among other products.
BSC was formed in March 1967 through the combination of 14 British steel companies into a national corporation.
Forcing BSC to pay duties on investments needed to keep the company healthy will weaken its ability to remain competitive, and thereby ill-serve international free trade, BSC officials said.