United States Steel Deeply Disappointed in Administration Decision to Remove Steel Safeguard Measures
Officials of United States Steel Corporation (NYSE: X) expressed deep disappointment in today's decision by President Bush to yield to pressure from the World Trade Organization (WTO) and various foreign governments to lift Section 201 steel safeguard tariffs more than 15 months before they were due to expire in March 2005.
"The President made the right decision last March when he put these tariffs in place," said Thomas J. Usher, chairman and CEO of U. S. Steel. "He recognized that after 50 years of foreign government subsidies and other market distortions, the domestic industry needed some breathing space from import surges. The tariffs were working as planned, and have been instrumental in bringing about the improvements in the industry that we've seen over the last two years."
"This decision will complicate the historic restructuring that is ongoing in the industry," said Mr. Usher, "and will be particularly difficult for weaker industry players."
President Bush initially implemented safeguard relief on March 6, 2002, after the non-partisan U.S. International Trade Commission (ITC) unanimously determined, based on the most exhaustive investigation of its type in history, that imports were a substantial cause of serious injury to domestic producers of flat-rolled steel. The President announced a three-year program of relief designed to help an industry that had already suffered over 30 bankruptcies and was threatened with the permanent closure of much of its capacity.
The ITC's mid-term report, issued in September, demonstrated that domestic flat-rolled producers met every requirement under the law for retention of the relief -- spending over $3 billion on consolidation and restructuring, reaching groundbreaking new agreements with United Steelworkers of America, and taking far-reaching steps to cut costs and improve productivity. The report also showed that any costs to consumers or the economy were negligible, and that in fact steel consumers performed far better, and saw fewer job losses, after the relief was put in place than before.
"This decision will only make it harder to deal with the underlying problems distorting the global steel market," Mr. Usher explained. The steel program announced by the President in connection with the initiation of the Section 201 relief also included initiatives to address global excess capacity and market-distorting practices in the steel sector. Ongoing talks at the Organization for Economic Cooperation and Development have focused on these issues, and have prompted negotiations relating to a potential new steel subsidies agreement.
"Without the discipline of these tariffs in the U.S. market, it will be much more difficult to get our trading partners to seriously address the subsidies and other unfair practices that have plagued the global industry for decades and that have led to hundreds of millions of tons of excess capacity," Mr. Usher commented.
Mr. Usher leveled his harshest criticism at the WTO, which recently issued an adverse ruling on the steel safeguard measures. "The unelected bureaucrats at the WTO are making a mockery of the global trading system. They have struck down every safeguard action they have ever reviewed, and increasingly view it as their province to rewrite laws and policies passed by the U.S. Congress. This can't help but raise serious questions about whether this institution, operating in its current form, is really in the best interest of American workers and businesses."
Notwithstanding the President's decision, Mr. Usher emphasized that U. S. Steel will continue its efforts to adjust to import competition and resist unfair trade. "We are making all the right decisions with regard to our operations, and we will carry forward with the fundamental steps we are taking to reduce costs and integrate our facilities," he said. "We are encouraged by the Administration's statements that it will forcefully and aggressively respond to unfair trade in this market. We intend to work closely with the Administration in this regard, and will be actively looking at new cases to respond to dumping and unfair foreign subsidies in the days ahead."
SOURCE: United States Steel Corporation
CONTACT: John Armstrong, +1-412-433-6792, or Mike Dixon,
Web site: http://www.ussteel.com/
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