U.S. steelmakers ask court to scrap deal with Russia

Five steel companies, including Bethlehem Steel and U.S. Steel Group, filed the suit Aug. 17 against the U.S. Commerce Department, which reached agreements in July with both countries to curb steel imports to the United States.

In 1998 U.S. steelmakers alleged Russia and Brazil were dumping hot-rolled steel, an industry staple, in the U.S. market at below-fair-market prices.

The International Trade Commission agreed and sent the case to the Commerce Department for a determination of anti-dumping duties. The department set duties of up to 184.56 percent on Russian imports. Duties were also set for Brazil.

But the duties were shelved in July when Russia and Brazil agreed to voluntarily slash steel shipments to the United States.

The five steelmakers want the New York-based court to nullify those import agreements. That move would force the Commerce Department to impose the anti-dumping duties.

"In essence, they're rewarding the countries with a specified share of our market, directly undermining U.S. trade laws," said Mike Dixon, a spokesman for U.S. Steel Group in Pittsburgh. An official with Bethlehem Steel said it could take the trade court up to a year to issue its ruling.

Under the July accord, Russia would halt shipments of hot-rolled steel to the United States this year and gradually increase them over the five-year life of the pact. It set a minimum price ranging from $255 to $280 a metric ton.

The U.S.-Brazil agreement would also limit imports of hot-rolled steel, and set a floor price of $327 a metric ton.

And on Aug. 13 the U.S. International Trade Commission ruled that American steelmakers were hurt by low-priced imports from Russia and Brazil, clearing the way for the United States to impose anti-dumping duties should the two countries fail to curb their exports.

The independent federal commission's ruling on hot-rolled steel, a basic product widely used by industry, will have no immediate impact since both countries have already reached agreements with the U.S. to permit steel exports. But if Brazil or Russia violates those agreements, the duties would kick in.

Meanwhile, brushing aside objections from European trade leaders, U.S. President Bill Clinton on Aug. 17 approved a $1.5 billion emergency loan program to aid U.S. steel, oil and gas companies hurt by cheap imports and low commodity prices.

U.S. producers welcomed the decision, but demanded that the administration do more to keep foreign shipments from being dumped on the U.S. market at below fair market prices.

Acting European Trade Commissioner Sir Leon Brittan complained that the White House was going too far, and risked a backlash from major trading partners. "It could result in a damaging escalation of subsidization," he warned.

The emergency loan program, which Clinton signed into law, will set up a $1 billion loan guarantee program for steelmakers and a $500 million loan program for oil and natural gas producers. Iron ore companies would receive up to $30 million.

The White House said the program would provide a needed cash infusion to American steel companies hit by an import surge from Russia, Brazil and other nations. At least 10 U.S. steel companies could benefit.

At the same time, Clinton has been under pressure from Europe and other trading partners, wary that U.S. actions will set off a protectionist spiral.

In a recent letter to U.S. Trade Representative Charlene Barshefsky, Brittan said the $1.5 billion emergency loan program constituted a subsidy under a World Trade Organization agreement, and sent a "highly undesirable signal to the United States' trading partners." U.S. and European trade relations are already in trouble due to disputes over agriculture issues.

Under the steel loan program, steelmakers could qualify for loans worth between $25 million and $250 million. The bill provides $140 million to cover the cost of the loan guarantees.