End users don't likeU.S.-Russia steel pact
By Staff -- Purchasing, 4/8/1999
Metalworking companies that rely on Russian-made steel, a labor union that blames imports for widespread layoffs, a Russian exporter, and domestic steel mills all have told the Clinton Administration they don't like import limits negotiated by the two countries.Russia has agreed to roll back to 1996 levels its hot-rolled steel sheet shipments to the U.S. in order to short-circuit punitive anti-dumping tariffs of up to 218% above the cost of Russian sheet sold here in 1998. The agreement with Commerce sets an annual quota for Russian hot-rolled steel at 750,000 metric tons/year, about 78% below 1998 import levels.
In light of a dramatic 1998 surge in Russian hot-rolled steel imports to the U.S., the agreement imposes a six-month moratorium on imports of hot-rolled steel products from Russia. The suspension agreement also sets a minimum price range of $255-$280 per tonne. Atop that, there will be varying import limits on 16 other types of steel back to 1997 levels. The agreement is needed, says Assistant Secretary for Import Administration Robert LaRussa, because Russia is both one of the world's largest steel exporters and one of the countries suffering drastic hardships as a result of the global financial crisis.
Domestic steel firms are unhappy with the allowable tonnage because imports of Russian hot-rolled have increased 700% from 508,000 tonnes in 1995 to 3,468,000 tonnes in 1998. As a result of the moratorium, Commerce says Russian hot-rolled steel exports to the U.S. will be less than 345,000 tonnes in 1999, about 90% less than in 1998. Attorney Alan Wolff of Bethlehem Steel Co. says the larger steel companies oppose the deal in its entirety. "Russian steel cannot be sold fairly in the U.S. market," he contends. From the point of view of large domestic steel makers, he says, every import level in the agreement is too high.
Andrew Dillon, president of DSC Ltd. of Trenton, Mich., has asked Commerce's International Trade Administration to make an exception for the slab steel on which his business depends. He says DSC buys from Russia because it's difficult to get a reliable source of U.S.-produced slab steel. Integrated mills use all they produce and other manufacturers buy as much as mini-mills are able to turn out. "No steel mill wants to sell slabs because it's the low link on the food chain," he says. "There is no domestic supply of slabs and our business depends on this." Dillon's company is in process of bringing modern facilities on line, but if the Russian agreement is finalized, "we will not be able to open our mill."
JSC Severstal, the largest Russian steel producer, intends to ask Russia's trade officials to negotiate modifications to the deal, described by its representative, Peter O. Suchman, as vague and "totally unbalanced."
Not surprisingly, Carl Frankel of the United Steelworkers of America pans the Clinton Administration's entire approach to recent surges in low-priced steel arriving on U.S. docks. "The union cannot support the proposed agreement unless it is part of a global solution," he says. He complains that when one nation's steel imports are cut back, some other country steps up its imports, forcing new trade cases that take some 13 months to resolve.
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