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Steel industry criticized
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November 29, 1999: 11:54 a.m. ET
Importers charge that government subsidies mar protectionist claims
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NEW YORK (CNNfn) - Steel importers charged Monday that the U.S. steel industry’s claim that it should be protected from the unfair practices of importers is marred by the fact that the U.S. industry has received billions in government subsidies over the past 20 years.
However, the U.S. steel industry’s trade groups say that the importer’s report is biased and that the help it received is insignificant and completely legal under trade laws.
The American Institute for International Steel (AIIS), which represents the importers, issued a report Monday, on the eve of the World Trade Organization ministerial meeting in Seattle.
The report is an attack on the Clinton administration’s "Steel Action Plan” announced in August, which calls for: an analysis of other nations’ steel subsidies; an international conference on unfair practices which support economically unjustified capacity; and bilateral discussions with key steel exporters to eliminate what the administration said are market-distorting subsidies.
But the AIIS said that the administration should be looking at the domestic subsidies as part of its efforts.
"Over the past two decades, U.S. federal, state and local governments have provided billions of dollars in direct grants, loan guarantees, protectionist
‘Buy American’ restrictions and other programs to provide a competitive edge to inefficient U.S. steel makers and maintain or expand capacity or product lines where there is already uneconomic capacity,” said Horst Buelte, president of the AIIS.
Buelte said the most recent example of these subsidies is the 1999 Emergency Steel and Oil and Gas Guaranteed Loan Program Act, which makes a total of $1 billion in loan guarantees available to U.S. steel makers who cannot obtain credit for continued operations and reinvestment in facilities.
"The companies who will qualify for this loan program uncompetitive, high-cost produces in need of significant investments in modernization, including environmental,” said the AIIS report. "They have been unable to sustain profits even in the best market conditions.”
The American Iron and Steel Institute (AISI) and the Steel Manufacturers Association released a joint statement attacking the AIIS report, saying it was a calculated effort to weaken legitimate U.S. anti-dumping and countervailing duty laws at the WTO meeting.
"In a world where foreign steel subsidies, closed markets, dumping and cartel practices continue to distort steel markets and trade, this strategy to weaken trade laws will not succeed,” said the statement from Andrew Sharkey, president and chief executive of AISI. 
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