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Steel Producers Push to Extend Import Quotas

February 09, 1989|ART PINE | Times Staff Writer

WASHINGTON — The steel industry launched a formal campaign Wednesday to persuade Congress to renew steel import quotas, which are scheduled to expire later this year, despite opposition from steel users, who contend that the restraints have worsened shortages and pushed prices up.

Amid a flurry of Capitol Hill press conferences, lawmakers from steel-producing states unveiled legislation that would extend the Bush Administration's authority to enforce the current program for another five years. The restrictions were put in place in late 1984.

The move, which has the support of President Bush, came despite protests by opponents that the domestic steel industry has rebounded and recovered its international competitiveness. Profits are high, and many mills are running nearly at capacity.

Nevertheless, most analysts agree that the quotas are almost certain to be continued. Even critics concede that the industry has become so dependent on protection that any abrupt elimination of the steel quotas might jeopardize its ability to compete worldwide.

Bush has already pledged to continue the import restrictions intact. Aides say the Administration first will try to persuade other countries to reduce the subsidies they provide their own steel industries, but few analysts expect that those efforts will succeed.

The current restrictions were imposed as part of a 1984 election year move by then-President Ronald Reagan to win votes in major steel-producing states. Washington got other steel-producing countries to limit their exports to this country--ostensibly "voluntarily"--under threat of far harsher U.S.-imposed ceilings.

During the past 4 1/2 years, the quotas have trimmed imports' share of the American steel market to 18.5%--the goal set in 1984--down from 26.4% when the program began. At the same time, the decline in the dollar's value has made American steel relatively inexpensive on world markets.

But steel-using corporations, led by Caterpillar, the huge construction equipment maker based in Peoria, Ill., have charged that the quotas have made steel products scarce at times and have sent steel prices here soaring, making their own products less competitive.

On Wednesday, executives representing 189 steel-using corporations called a press conference to charge that the quotas have helped create shortages in steel products, have spurred domestic prices and are threatening the competitiveness of other American manufacturers.

The opposition by the steel-using companies this year marks the first time in memory that steel consumers have sought to block imposition of import quotas. In 1984, the steel users remained aloof from the fray, saying they were sympathetic to the industry's plight.

However, most analysts believe that their effort may be too little--and too late--to have much impact on the current campaign. Not only has Bush already endorsed an extension of the quotas but the legislation has attracted significant support in both the House and Senate.

Companion bills that would extend the quotas are scheduled to go to the House Ways and Means Committee and Senate Finance Committee, which are expected to approve them early this year. Passage in both houses is considered virtually assured.

The two sides spent Wednesday conducting rival public relations blitzes. Early in the day, executives from major steel-producing companies endorsed the quotas before the unofficial congressional steel caucus, which is composed of lawmakers from steel-producing states. This group of about 20 states includes California, Texas, most of the so-called Rust Belt states of the upper Midwest and several others.

Minutes later, the users' coalition made public a study by Paula Stern, former chairman of the U.S. International Trade Commission, supporting their allegations, while steel state lawmakers released a report by the Congressional Research Service disputing those claims.

Bush's pledge to support continuation of the steel quotas came in a preelection letter to Sen. John Heinz (R-Pa.), leader of the Senate steel caucus. The major House legislation to renew the quotas was drafted by Rep. John P. Murtha (D-Pa.).

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