US steel ruling condemned

US ruling condemned at home and abroad

A US trade panel has cleared the way for President George W Bush to impose import restrictions on steel products, after finding that some foreign steel products harmed the domestic industry.

We see this as a potential dire threat to the competitiveness of the US manufacturing sector

David Phelps
AIIS

The ruling by the International Trade Commission (ITC) has been condemned by South Korea, which has called for joint action with Japan and the European Union.

US steel importers warned the ruling risked triggering a trade war.

The top steel exporters to the US include the EU, Canada, South Korea, Japan, Mexico, Turkey, Brazil, China, Russia, Taiwan, South Africa, Argentina and Ukraine.

Last week, Bethlehem Steel became the 25th US steel company to file for bankruptcy since the Asian financial crisis in 1998, which triggered a flood of cheap steel imports to the US.

South Korean concerns

South Korea's Ministry of Commerce, Industry and Energy warned the ITC rulings would seriously affect steel exports and called for joint efforts with Japan and the EU to discuss counter-measures.

"Aside from bilateral negotiations with the US government, we will strengthen cooperation with major steel makers such as the EU and Japan," the ministry said.

The ministry said the US rulings may affect 60% of South Korean steel exports, which have been led by Pohang Iron and Steel Company (Posco), the world's largest steel company.

Posco has enjoyed record revenues in the past three years but sales fell this year due to competition and dwindling demand.

US condemnation

US steel importers said the ruling would do nothing to solve problems facing the domestic steel industry.

"We see this as a potential dire threat to the competitiveness of the US manufacturing sector," American Institute for International Steel president David Phelps said in a statement.

"The ITC ruling doesn't change the fact that the US domestic steel industry must make fundamental changes, including closing non-economic capacity," said Mr Phelps.

They also warned import restrictions could severely damage the already fragile global economy by triggering a new round of protectionism around the world.

US ruling

A total 12 steel products - such as hot-rolled, cold-rolled and slab steel - hurt US industry, 17 had no effect, while the panel was undecided over another three.

The ITC is due to deliver its recommendations on "Section 201" import relief to President Bush by 19 December.

Under the Section 201 trade law, President Bush could impose quotas or tariffs or both to protect the US steel market.

The ITC investigation was launched in June, after an intensive lobbying campaign by the steelworkers union after thousands of job losses.

"It is very good news..the steel industry in the United States has been badly battered in the last four years," Leo Gerard, president of the United Steelworkers of America told the BBC's World Business Report.

Thomas Usher, chairman of USX Corporation the nation's top integrated steel company, also hailed the decision and called on Bush to fashion a "strong remedy" to help the ailing steel industry get back on its feet.