US steelmakers seek action to slash Japanese imports
Charging that it is being victimized by unfair competition, the American steel industry is asking the government to slash Japanese steel mill exports to the United States and to impose a stiff surcharge on Japanese steel products.
The American Iron and Steel Institute and eight individual companies say they will file an unfair trade complaint today (Dec. 16) under Section 301 of the Trade Act of 1974. The complaint will allege that a series of agreements between Japan and the European Coal and Steel Community limits the exports of Japanese steel to Europe and results in Japanese steel being diverted to the US market.
According to David Roderick, chairman of the United States Steel Corporation, quantitative and price restraints in a 1978 agreement between the European Community and Japan ''are an integral part of a broader market-sharing scheme,'' in which each party is given geographic spheres of influence in which it sets prices. This violates Japanese treaty obligations with the US, the industry claims.
To offset the alleged damage to US producers from that arrangement, the steel industry seeks a one-third, or 1.75 million-metric-ton, reduction in Japanese steel mill imports over each of the next four years. Japanese steel imports over the past five years have ranged from 6 to 6.5 million tons annually.
Mr. Roderick also claims that the ''dominant position'' of the Japanese industry is being ''artificially maintained through an undervalued yen, in violation of the GATT (General Agreeement on Tarrifs and Trade) Treaty.'' To offset that advantage, the industry seeks imposition of a 25 percent import levy on Japanese mill products. These include rails, bars, rods, strips, sheets, and tubing.
Japanese steelmakers admit they have an agreement with the Europeans setting limits on export prices and quantities. ''But the allegation that there is a diversion (of product) to the US [as a result] is ridiculous,'' according to a spokesman for the Japan Iron and Steel Exporters Association. He adds that he has ''no knowledge of any agreement on market sharing.''
The official of the Japanese trade association notes that the US industry filed a similar suit in 1976 ''and the US government made a decision that there were no grounds for such an allegation.''
To win the relief it now seeks, the industry must convince the US trade representative of the merits of its case. The trade representative in turn makes a recommendation to the President of what action, if any, should be taken.
The Japanese industry spokesman also denied claims that the Japanese government was artifically undervaluing the yen to help the steel industry. ''There was a public hearing on Capitol Hill a couple of weeks ago where American government people testified that there was no artificial operation to weaken the yen.''
Still, the steelmakers involved in the suit - Armco Inc., Bethlehem Steel, Cyclops Corporation, Inland Steel, Jones & Laughlin Steel, National Steel, Republic Steel, and United States Steel - see unfair trade practices as a major cause of the industry's considerable woes.
According to the American Iron and Steel Institute, unemployment among industry workers approaches 50 percent. Imports have grabbed 22.3 percent of the market. And US companies are operating at 30 percent of cacl11
pacity, the lowest level since the depression of the 1930s.
Since steelmaking is a highly capital-intensive operation, it is difficult to be profitable at low rates of utilization. For example, in the third quarter of 1982, US Steel, the industry volume leader, lost $82.4 million.
With sales weak and idle capacity rampant, prices have weakened. US Steel this week announced it would cut the price of tubular steel, used in oil drilling, by about 20 percent. Analysts see the move as a bid to match Japanese prices on the products.
The US industry's effort to curb Japanese exports is just part of its import-fighting battle. Earlier the steelmakers had brought action against members of the European Common Market, charging unfair trade practices. An agreement was reached in October under which the 10 Common Market members will reduce their steel shipments to the US by about 1 million tons from their 1981 exports of 6.5 million tons. That 1981 level of exports gave them about 6.3 percent of the US market. Under the three-year quota arrangement they will be limited to a bit over 5 percent of the US market.
In return for agreeing to the quota system, eight major US steelmakers dropped charges of unfair trade practices they had brought against the Europeans. If an accommodation had not been reached, the US government was ready to impose duties on steel imports to offset production subsidies the European steelmakers receive from their governments.