Trade panel wants tariffs, quotas to penalize steel imports

Associated Press WriterWASHINGTON (AP) -- A federal trade panel recommended a range of tariffs and quotas on steel imports, but their proposals fell short of what the beleaguered U.S. industry wanted.

Each of the six members of the International Trade Commission made recommendations on how the U.S. government could offset steel imports that the panel earlier ruled were unfairly subsidized by foreign governments.

The quotas suggested for 16 steel product lines ranged from 5 percent to 40 percent, with most in the range of 8 percent to 20 percent. Two commissioners also recommended quotas.

The U.S. steel industry, which has seen 26 companies file for bankruptcy since 1998, had sought tariffs ranging from 30 percent to 50 percent.

Foreign steel producers and companies that use foreign-made steel say tariffs will raise prices on consumer products ranging from cars to appliances and could ignite a trade war that would make it harder to sell American steel products abroad. They also say U.S. companies have outdated facilities that make steel production more expensive.

"The split (among commissioners) shows how difficult it was to find a remedy that will help the American steel industry," said Richard Cunningham, who represents several foreign steel companies. "This will force the president to find other ways to help American companies, such as helping with health care costs and to encourage consolidation of the industry."

The tariffs recommended by the commissioners would be in place for four years, though they would decline each year. The idea is to give U.S. steel producers time to fix their problems so they can better compete in the world market.

The commissioners will formally present their recommendations to President Bush on Dec. 19. He must decide by mid-February whether to accept, alter or reject the remedies.

U.S. Trade Representative Robert Zoellick has said the administration would impose remedies only if the steel industry consolidates some of its operations. This week, two of the largest domestic steel producers, USX and bankrupt Bethlehem Steel Corp., announced they and three other companies are discussing the possibility of merging.

The Bush administration already is negotiating with other countries to reduce steel production worldwide. Global steel production increased 7 percent last year to a record 747 million tons.

The U.S. steel industry has been in decline for years. Only about 210,000 people are employed in the industry now, down from 600,000 in 1980.

U.S. companies say their problems are caused by the flow of subsidized, or "dumped," products from abroad. The trade commission agreed in October, citing 16 product lines representing about 80 percent of imported steel, that have been hurt seriously by imports. Most steel imports come from Brazil, China, Russia and Japan.

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ITC: http://www.usitc.gov