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Friday, June 07, 2002

By Len Boselovic, Post-Gazette Staff Writer

Fearing the White House's commitment to beleaguered U.S. steelmakers may be flagging, industry leaders urged President Bush yesterday not to weaken import restrictions he imposed March 5.

They're concerned the administration will give in to pressure from major trading partners and exclude an even wider range of products from the sanctions.

"Steel communities have not seen any recovery to date, so we are very puzzled at the notion that the U.S. government would begin to ... let people get off the hook," said William Klinefelter, legislative director for the United Steelworkers union. "It would be the worst kind of folly at this point [for them] to reverse themselves."

Bush placed three-year tariffs on a wide range of steel products after a crush of cheap imports sent prices to 20-year lows and pushed LTV Steel, Bethlehem Steel and other producers into bankruptcy. The tariffs will add as much as 30 percent to the price of imports covered during the first year, declining thereafter. However, imports from Canada and Mexico, 99 developing countries and other countries were excluded.

Foreign producers also are seeking hundreds of other exemptions for other products. Some speculate so many products and countries will end up being excluded that the tariffs won't provide much relief.

"It [could be] basically a Swiss cheese barrier," said Midwest Research steel analyst Chris Olin.

The White House will decide on many of those requests by July 3, but industry officials said there was no deadline for ruling on hundreds of other requests made after the tariffs were announced. That worries Terrence Straub, U.S. Steel's vice president for government affairs.

"The process seems a little open- ended," he said.

The European Union and Japan are threatening to retaliate, either by seeking compensation or placing their own curbs on U.S. exports. Some are asking the World Trade Organization to declare the tariffs illegal. This week, the EU delayed a decision on what it would do for three months, giving the Bush administration more time to win over those countries or accommodate some of their concerns.

While Klinefelter said he didn't have a reason not to trust Bush, he would like to see more of a public commitment from the White House not to back down.

"One would expect the administration -- Cabinet-level people -- would be out there defending the administration's position," the USW officials said.

Prices for some steel products, notably sheet, have strengthened since Bush ordered the tariffs. However, industry officials say even the prices that have gone up the most are still well below where they were when the import crisis began in mid-1998. They also said rising demand and the closing of bankrupt U.S. mills, which has cut capacity, has had more of an effect on pricing than the tariffs.

Whatever's causing some prices to rise, the trend is making the U.S. market attractive even for those countries and producers covered by the tariffs.

Charles Bradford, an independent industry analyst, said U.S. prices for hot-rolled steel, a basic sheet product, have gone up so much that foreign producers can pay the tariff and still make money on imports. That's why he's expecting imports to spike late in the third quarter or sometime in the fourth.