In a major ruling that sharpens economic tensions between the United States and its European allies, the International Trade Commission yesterday found that imports of government-subsidized steel from six European nations have undercut domestic steel makers' ability to sell their products here.
The decision by the U.S. trade agency will lead to duties being imposed on European steel imports within weeks unless Washington and the European Economic Community (EEC) can strike a deal that satisfies the recession-battered American steel industry. U.S. steel production has plummeted to its lowest level since the Great Depression.
The ITC ruled against steel manufacturers in Belgium, France, Italy, Luxembourg, Britain and West Germany in 14 of 16 complaints brought by seven American steel companies. Subsidies on two types of West German steel did not injure U.S. producers, the ITC held.
Duties equaling the amount of the government subsidies will be imposed, and could range to as much as 26 percent of the imported steel's price.
Yesterday's ruling affects about 2.2 million tons of imported steel, involving 11 percent of all steel products imported into the United States.
Although industry sources called yesterday's ITC action a "vindication" of claims that steel imports are a large part of the problems facing American steel, ITC Commissioner Paula Stern noted that the decision will add only 2,200 jobs to the work force even if all the subsidized foreign steel is replaced by domestic products.
And Marcel Loeb of the American Institute for Imported Steel said, "This action eliminates the only competition faced by domestic steel mills . . . . American steel makers are being hurt by obsolete equipment, diminishing productivity, high wages, not imports."
The ITC decision with its accompanying threat of duties is expected to worsen trade relations between the United States and its western allies, already strained over Reagan administration attempts to stop construction of the Soviet natural gas pipeline to western Europe by imposing trade sanctions.
European steel makers, who lost $2 billion last year, ordered production cutbacks last month in the face of a continuing decline in domestic and export markets.
American steel production also is on the decline, down 38.1 percent in August from the same month last year. The nation's steel mills operated at 42.4 percent of capacity in August and an estimated 200,000 steel workers, 45 percent of the work force, are jobless.
To dramatize the plight of the industry, United Steelworkers Union President Lloyd McBride declared yesterday a national day of mourning for the jobs lost to imports and for families of laid-off workers.
Meanwhile, months-long negotiations are continuing between the U.S. Department of Commerce and the EEC to try to hammer out a new agreement limiting European steel exports that the American steel industry will support.
In August the Commerce Department and the EEC agreed to limit steel exports, but American steel makers, who, under U.S. law have the right to veto such arrangements, rejected it.
U.S. government officials refused to discuss the state of negotiations except to say they are continuing against a deadline of next Thursday, when the ITC must officially report its finding to the Commerce Department. Once that report is made it will be more difficult to withdraw the subsidy complaints against the Europeans and roll back the decision on imposing duties.
EEC officials said it is better to reach an accommodation on limiting exports of steel to the United States than to "uncork any protectionist actions" such as the countervailing duties called for by yesterday's ITC decision.
Duties will be imposed retroactive to June as soon as the ITC report is published in the Federal Register, expected around Nov. 1. The government already has collected bonds on European steel imported since June when the Commerce Department made a preliminary ruling that European steel makers are benefiting from government subsidies.
With the steel industry on both sides of the Atlantic badly hit by the world recession, the negotiators on limiting steel exports face prickly political problems as a result of pressures exerted by American and European steel makers and their workers.
On one hand, the U.S. industry's position was seen as having been strengthened by the ITC decision yesterday, making it less likely that the American companies will back down in an agreement to limit exports.
But West Germany, Europe's biggest steel producer, also was seen as unwilling to make further concessions because its steel makers receive few subsidies and because the ITC found in two cases that its exports did not injure American steel.
EEC officials said Common Market steel makers have agreed to add six alloy steel products and sheet piling to the August export-limiting agreement that was rejected by American steel.
Further talks are under way over the inclusion of pipe and tube products, widely used in the oil and chemical industries, which account for about one-third of the 6.5 million tons of European steel imported to the United States last year.