The Commerce Department has warned foreign steel suppliers against trying to evade U.S. quotas by shipping partially finished steel to another country for final processing before sending it to the United States.
Gilbert B. Kaplan, deputy assistant secretary of Commerce for import administration, said such practices threaten President Reagan's 14-month-old program limiting steel imports to give the domestic industry time to become internationally competitive. Kaplan said the government is prepared to file unfair-trade cases against countries that try to get around quotas to which they have agreed.
The warning came in a letter late last week to the 14 nations that have signed agreements with the Reagan administration to limit their steel sales to the United States. The letter was released yesterday by the American Iron and Steel Institute, an industry group, which said it "welcomes" the government action.
One country that signed a quota agreement with the United States, Brazil, already has gotten a Customs Service preliminary ruling that steel sheets shipped from its mills to Panama for conversion into pipes and tubes would not be counted against the Brazilian quota. Panama, which currently ships a negligible amount of steel to the United States, has no quota agreement under the president's steel program.
"The scheme, if it materializes, would have the practical effect of increasing Brazil's sheet-steel-product exports to the U.S. above the level agreed to, thereby undermining the very purpose of the U.S.-Brazil arrangement," said AISI, the domestic steel industry organization.
Thirteen other countries have asked for similar rulings from Customs, but industry representatives and steel state lawmakers have been putting pressure on the administration not to issue them.
Sen. John Heinz (R-Pa.) met with Customs Commissioner William von Raab on the issue, and Rep. John Dingell (D-Mich.) sent the commissioner letters opposing the preliminary ruling in the Brazil-Panama case. The ruling was requested on behalf of Brazilian investors who wanted that assurance before they would build the pipe mill in Panama.
In effect, major overseas steel producers are trying to use a variation of tactics developed by textile exporters such as Hong Kong, South Korea and Taiwan to avoid U.S. quotas. The steel producers, to increase the amount of steel they could sell in the United States, want to ship primary products to countries not covered by quotas for finishing.