BUSH appeals for trade help for steel industry

<br>WASHINGTON (AP) _ President Bush, pledging to help beleaguered American steelmakers, asked for a trade investigation Tuesday that could lead to stiff import barriers on foreign steel. <br><br>While

Tuesday, June 5th 2001, 12:00 am

By: News On 6

WASHINGTON (AP) _ President Bush, pledging to help beleaguered American steelmakers, asked for a trade investigation Tuesday that could lead to stiff import barriers on foreign steel.

While steel users complained that the action would drive up prices on everything from automobiles to refrigerators, U.S. steelmakers and lawmakers from steel-producing states hailed Bush's decision, saying government help was urgently needed.

Since a surge of foreign imports began in 1998 as a result of the Asian currency crisis, 18 U.S. steel companies have filed for bankruptcy protection and 20,000 jobs have been cut, according to industry figures.

In making his announcement, Bush said at the White House, ``It's in our nation's interest to make sure that if there are unfair trade practices in the steel industry, we address them in a very aggressive way.''

The administration asked the U.S. International Trade Commission, an independent government agency, to begin a four-month investigation to determine if domestic producers are being seriously harmed, using a provision of U.S. trade law known as Section 201, which allows for protections against import surges.

If the ITC finds serious injury, it would make recommendations to Bush on what types of punitive tariffs or quotas should be imposed to restrict imports.

The administration would have the freedom to accept the recommendations or come up with its own set of trade barriers, which it could put into place for three years.

During that time, the U.S. industry would be required to come up with plans to become more competitive.

In addition to possible trade barriers, Bush said he was directing Commerce Secretary Donald Evans and Treasury Secretary Paul O'Neill to begin negotiations with U.S. trading partners to find ways to eliminate global overproduction in the steel industry and to develop new trade rules to make sure the current glut of steel does not occur again.

Administration officials rejected suggestions that Bush, who championed free trade during the campaign, was seeking to establish some type of global steel cartel, rivaling OPEC's oil pricing power.

Overcapacity problems have existed for a half century, and the administration wants to keep those problems from recurring, one official said.

Republicans and Democrats in Congress from steel states said the administration had taken a good first step but cautioned that the real test would be in making sure the final trade protections covered the full range of steel products.

Sen. George Voinovich, R-Ohio, said, ``Steel is in the worst shape that I have seen in my memory.'' He said the crisis was more severe than during the 1980s, when the Reagan administration negotiated ``voluntary restraint agreements'' with foreign producers to give the U.S. industry time to go through a painful restructuring.

While the administration said it had no estimate of what the impact on steel prices would be from higher import barriers, Gary Hufbauer, a trade expert at the Institute for International Economics, said restrictive tariffs could add $100 to the price of a new car, about half the impact the Reagan steel protection efforts had in the 1980s.

Duane R. Dunham, president of Bethlehem Steel Corp., said that Bush's decision ``is welcome news to an industry beleaguered by the unfair and illegal flood of steel imports over the last several years.''

Shares of U.S. steel companies surged on the news. USX Corp.'s U.S. Steel Group, the nation's largest steelmaker, was up $1.70, or 8 percent, to $21.74. Bethlehem Steel Corp. rose $1.16, or 39 percent, to $4.15, and Nucor Corp. rose $4.16, or 8 percent, to $56.

The administration decision is certain to worsen trade tensions with Europe, where the president will travel next week for his first big meeting with leaders of the 15-nation European Union.

``This is bad news,'' said Pascal Lamy, the EU's top trade negotiator, of the Bush announcement. ``The 201 route is not the way to go. The cost of restructuring in the U.S. steel sector should not be shifted onto the rest of the world.''

The Clinton administration had refused the steel industry's request to launch a 201 case, fearing it could trigger retaliation from trading partners and could be challenged before the World Trade Organization.

The WTO recently ruled against the Clinton administration's use of Section 201 to impose higher tariffs on lamb imports from New Zealand and Australia.