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106th Congress Report
1st Session HOUSE OF REPRESENTATIVES 106-52
MEASURES RELATING TO STEEL IMPORTS
March 15, 1999.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
Mr. Archer, from the Committee on Ways and Means, submitted the
ADDITIONAL AND DISSENTING VIEWS
[To accompany H.R. 975]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 975) to provide for a reduction in the volume of
steel imports, and to establish a steel import notification and
monitoring program, having considered the same, report
unfavorably thereon without amendment and recommend that the
bill do not pass.
I. Introduction................................................ 2
A. Purpose and Summary................................. 2
B. Background.......................................... 2
C. Legislative History................................. 4
II. Explanation of the Bill..................................... 4
A. Section 1: Reduction in Volume of Steel Imports..... 4
B. Section 2: Steel Import Notification and Monitoring
III. Voice of the Committee...................................... 8
IV. Budget Effects of the Bill.................................. 8
A. Committee Estimate of Budgetary Effects............. 8
B. Statement Regarding New Budget Authority and Tax
C. Cost Estimate Prepared by the Congressional Budget
V. Other Matters Required to be Discussed Under the Rules of the
A. Committee Oversight Findings and Recommendations.... 12
B. Summary of Findings and Recommendations of the
Government Reform and Oversight Committee.......... 12
C. Constitutional Authority Statement.................. 12
D. Information Relating to Unfunded Mandates........... 12
VI. Correspondence.............................................. 13
A. Correspondence from the Speaker of the House and the
Majority Leader.................................... 13
B. Correspondence from Chief of Staff of the President
of the United States............................... 13
VII. Additional Views............................................ 15
VIII.Dissenting Views............................................ 16
A. PURPOSE AND SUMMARY
Within 60 days of enactment, H.R. 975 would impose quotas
for a three year period on U.S. imports of steel, based on
tonnage, equal to the monthly average of such imports during
the 36 months prior to July 1997. In addition, H.R. 975 would
require the Secretary of Commerce to establish a steel import
notification and monitoring program, within 30 days of
enactment, which includes a requirement that any person
importing steel into the United States first obtain an import
notification certificate and that data collected from the
certificate applications be made publicly available.
During the first 10 months of 1998, U.S. steel imports grew
at record levels, rising 30 percent over the same period in
1997. Increases were particularly high in key products such as
hot-rolled sheets and coils, where imports rose 66.3 percent in
the first 10 months of 1998 versus the same period in 1997.
Overall, import penetration grew from 24.2 percent in the first
10 months of 1997 to 29.5 percent during the same period of
1998. Steel imports from Japan, Russia, and Korea together
accounted for 78 percent of the increase. At the same time,
U.S. steel production for 1998 was at a near record level of
102 million metric tons (down slightly from the record of 105
million set in 1997), and steel demand in the United States
during 1998 was the strongest in history, at over 141 million
In response to the increase in steel imports, segments of
the U.S. industry have sought relief under U.S. trade laws. On
September 30, 1998, U.S. steel producers and workers filed
antidumping petitions at the Commerce Department on U.S.
imports of hot-rolled steel from Japan, Russia, and Brazil, and
a countervailing duty petition on imports from Brazil. The U.S.
International Trade Commission (ITC) issued a preliminary
injury determination on these petitions on November 13, 1998,
finding that imports from all three countries threatened the
domestic industry with injury but did not cause present injury.
On November 23, 1998, Commerce issued a preliminary ruling of
critical circumstances with respect to hot-rolled steel imports
from Japan and Russia. Based on this finding, importers may be
retroactively assessed dumping duties reaching back 90 days
before the preliminary determination to November 14, 1998, if
an antidumping order is issued. As a result of the critical
circumstances finding, importers have been put on notice of
potential antidumping duty assessments.
Preliminary steel import statistics from the Commerce
Department for January 1999 indicate a decrease of 1.2 million
metric tons in monthly steel imports entering the United States
from levels reached prior to the critical circumstances finding
in the antidumping cases against Russia and Japan. The result
of the critical circumstances finding, which put importers on
notice of potential antidumping duty liability, was to
virtually stop imports of hot-rolled steel from countries
involved in pending investigations and to reduce by 70 percent
the level of all hot-rolled imports entering the United States.
Overall, imports of all steel mill products from all sources
declined by 34 percent from their November levels, according to
preliminary January 1999 statistics.
On February 12, 1999, the Commerce Department issued a
preliminary affirmative determination of dumping with respect
to Japan (margins ranging from 25.14 to 67.59 percent) and
Brazil (margins of 50.66 to 71.02 percent). In addition,
Commerce made an affirmative preliminary subsidy determination
with respect to Brazil, with margins ranging from 6.62 to 9.45
percent. Commerce's final determinations with respect to Japan
and Brazil are due April 28, unless extended, and the ITC's
final determinations are due June 2, unless extended.
On February 22, 1999, Commerce announced a preliminary
affirmative determination of dumping with respect to Russia
(margins ranging from 71 to 218 percent). On the same day,
Commerce reached tentative agreements with Russia to (1)
suspend the antidumping investigation of Russian hot-rolled
steel products and roll back those imports to 1996 levels; and
(2) set imports of Russian steel at 1997 levels on a
comprehensive list of other steel products. A Memorandum of
Understanding was also initialed committing Commerce and the
Russian Ministry of Trade to work together to assist the
Russian government and business communities to eliminate unfair
trade practices. Because the agreement on hot-rolled steel
involves the suspension of the current antidumping
investigation with respect to Russia, the views of the
petitioners in the case must be considered before the agreement
On December 30, 1998, another segment of the U.S. steel
industry filed a petition for relief with the ITC. This
petition, filed under section 201 of the Trade Act of 1974 on
imports of steel wire rod, alleged that imports of the product
are a substantial cause of serious injury to the U.S. industry.
An injury determination on that petition is due mid-May.
On February 16, 1999, the U.S. steel industry and workers
filed additional antidumping and countervailing duty petitions
at the Commerce Department on imports of carbon steel plate
imports from France, India, Indonesia, Italy, Korea, and
Macedonia. Antidumping petitions only were also filed against
the Czech Republic and Japan on carbon steel plate. Commerce
initiated these investigations on March 8, 1999. Preliminary
injury determinations by the ITC are due April 12, 1999.
Preliminary countervailing duty determinations are due by May
12, 1999 unless extended, and preliminary antidumping
determinations are due by July 26, 1999 unless extended.
c. legislative history
H.R. 975 was introduced on March 4, 1999 by Representative
Visclosky et alia and was referred to the Committee on Ways and
Means. On March 5, 1999, Chairman Archer received a letter from
the Speaker of the House and the Majority Leader requesting
that the Committee consider and report unfavorably H.R. 975,
despite their ``share[d] . . . misgivings'' about the policy,
in order to ensure that the House will consider this measure
under orderly legislative procedures (see attached letter). On
March 10, 1999, the Committee ordered H.R. 975 reported
adversely without amendment to the House by a voice vote with a
quorum present. The Administration stated its opposition to the
legislation at the Committee meeting (see attached letter).
The Subcommittee on Trade held a hearing on February 25,
1999, on steel trade issues. At the hearing, Members of
Congress, as well as representatives of the steel industry and
steel workers expressed concern about the current state of the
U.S. steel industry. The Secretary of Commerce, William Daley,
and the U.S. Trade Representative, Charlene Barshefsky,
testified as to the Administration's actions in response to the
increase in steel imports and the status of the ongoing
antidumping and countervailing duty investigations into hot-
rolled steel. Representatives of U.S. steel users testified as
to the impact of restricting access to steel imports on other
sectors of the U.S. economy.
II. EXPLANATION OF THE BILL
a. section 1: reduction in volume of steel imports
No quotas exist under current U.S. law on imports of steel
Title VII of the Tariff Act of 1930, as amended, provides
for the collection of antidumping or countervailing duties only
after an administrative determination that foreign merchandise
is being sold in the U.S. market at less than fair value, or
that the imports are subsidized, and that such imports are
materially injuring, or threatening material injury, to the
Sections 201-204 of the Trade Act of 1974, commonly known
as the ``safeguard'' law, sets forth the procedures for the
President to take action, including import relief, to
facilitate efforts by a domestic industry to make a positive
adjustment to import competition. Relief is granted under
Presidential discretion only if the ITC finds that the article
is being imported in such increased quantities as to be a
substantial cause of serious injury to the industry.
Explanation of provision
H.R. 975 directs the President, within 60 days of
enactment, to take the necessary steps by imposing quotas,
tariff surcharges, negotiated enforceable voluntary export
restraint agreements, or otherwise, to ensure that the volume
of steel products imported into the United States during any
month, based on tonnage, does not exceed the average volume of
steel products that was imported monthly into the United States
during the 36-month period preceding July 1997. The quotas in
H.R. 975 apply to the following categories of steel products:
semifinished, plates, sheets and strips, wire rods, wire and
wire products, rail type products, bars structural shapes and
units, pipes and tubes, iron ore, and coke products. The quotas
expire at the end of the 3-year period beginning 60 days after
H.R. 975 directs the Secretary of the Treasury, through the
U.S. Customs Service, and the Secretary of Commerce to
implement a program for administering and enforcing the quotas
in the bill and authorizes the U.S. Customs Service to refuse
entry into the customs territory of the United States of any
steel products that exceed the allowable levels of imports of
Reasons for Committee action
The Committee sympathizes with the current situation faced
by the U.S. steel industry and its workers, and notes that the
steel industry is not alone in undergoing difficult times. The
U.S. oil and gas industry has also experienced a downturn in
the wake of low priced imports. In addition, U.S. farmers and
ranchers have gone through a difficult period as a result of
the drying up of export markets and drop in commodity prices.
The Committee on Ways and Means reports H.R. 975 adversely
primarily because it would impose a quota on steel imports
outside of U.S. trade remedy laws and U.S. obligations in the
World Trade Organization (WTO). Specifically, the quotas under
H.R. 975 would not be based on a determination of whether the
imports are causing or threatening serious injury or whether
unfair trade or subsidization is involved, as required by WTO.
In addition, the bill would apply to steel imports coming to
the United States from all countries, even fairly traded
The Committee also believes that the quotas in H.R. 975
threaten thecompetitiveness of U.S. downstream steel users who
manufacture products like defense equipment, cars, and machinery, and
who employ 40 times as many U.S. workers as the integrated steel mills.
The Committee is concerned that increased demand may create a situation
in which the domestic industry is unable to supply sufficient
quantities of particular products because of import limitations imposed
by the quotas. In addition, in some circumstances, the domestic
industry may be able to supply the product, but at aberrational prices,
resulting in a functional lack of availability.
Moreover, H.R. 975 makes U.S. exporters vulnerable to
retaliation in overseas markets. In fact, the United States,
the Committee believes, would be setting a bad example for
countries in the midst of a financial crisis, particularly
those which have resisted closing their own markets in times of
The Committee is also concerned about the impact of the
private sector mandate contained in the bill, as defined under
the Unfunded Mandates Reform Act (UMRA) of 1995 (Public Law
104-4). The Congressional Budget Office (CBO) has determined
that the direct costs to the private sector resulting from the
enactment of H.R. 975 would exceed the statutory threshold each
year that the bill is in effect. Specifically, CBO estimates
that the quotas in H.R. 975 would result in higher steel market
prices costing the private sector nearly $400 million in 2000,
$340 million in 2001, and $150 million in 2002.
Finally, the Committee believes that the actions taken by
the Administration in response to the increase in steel imports
last year are already having the intended effect of reducing
the level of U.S. steel imports. In particular, hot-rolled
steel imports from Japan, Russia, and Brazil, which are now
subject to high preliminary antidumping margins, have virtually
stopped according to preliminary January 1999 import
statistics. Hot-rolled imports from all countries, even those
not subject to investigation have dropped 70 percent since
November and imports of all steel mill products from all
sources are down 34 percent over the same time frame.
The provision is effective within 60 days of enactment.
b. section 2: steel import notification and monitoring program
The Census Bureau within the Department of Commerce
compiles and releases trade statistics under a directive from
the Office of Management and Budget (OMB) related to the
announcement of ``Leading Economic Indicators.'' Statistics are
generally released six to eight weeks after entry. In early
1999, the Secretary of Commerce received approval from OMB to
release monthly steel import statistics compiled by the Census
Bureau 20 days earlier than usual, approximately one month
Explanation of provision
H.R. 975 directs the Secretary of Commerce, in consultation
with the Secretary of the Treasury, to establish a steel import
notification and monitoring program, not later than 30 days
after enactment, which includes a requirement that any person
importing a product classified under chapter 72 or 73 of the
Harmonized Tariff Schedule (HTS) of the United States obtain an
import notification certificate before such products are
entered into the United States.
To obtain a steel import notification certificate, H.R. 975
requires an importer to submit an application to the Secretary
of Commerce containing:
(A) the importer's name and address;
(B) the name and address of the supplier of the goods
to be imported;
(C) the name and address of the producer of the goods
to be imported;
(D) the country of origin of the goods;
(E) the country from which the goods are to be
(F) the U.S. Customs port of entry where the goods
will be entered;
(G) the expected date of entry of the goods into the
(H) a description of the goods, including the
classification of such goods under the HTS;
(I) the quantity (in kilograms and net tons) of the
goods to be imported;
(J) the cost insurance freight (CIF) and free
alongside ship (FAS) values of the goods to be entered;
(K) whether the goods are being entered for
consumption or for entry into a bonded warehouse or
foreign trade zone;
(L) a certification that the information furnished in
the certificate application is correct; and
(M) any other information the Secretary of Commerce
determines to be necessary and appropriate.
In the case of merchandise classified under chapter 72 or
73 of the HTS that is initially entered into a bonded warehouse
or foreign trade zone, H.R. 975 would require a steel import
notification certificate before the merchandise is entered into
the customs territory of the United States.
H.R. 975 directs the Secretary of Commerce to issue a steel
import notificationcertificate to any person who files an
application that meets the requirements of this section. Certificates
would be valid for a period of 30 days from the date of issuance.
H.R. 975 further directs the Secretary of Commerce to
compile and publish on a weekly basis information obtained from
steel import notification certificate applications concerning
steel imports into the United States including the HTS
classification (to the tenth digit), the country of origin, the
port of entry, quantity, value of steel imported, and whether
the imports are entered for consumption or are entered into a
bonded warehouse or foreign trade zone. Such information is
also to be compiled in aggregate form and made available to the
public by the Secretary of Commerce on a weekly basis by public
posting on an Internet website. The information provided under
this section is in addition to any information otherwise
required by law.
H.R. 975 authorizes the Secretary of Commerce to prescribe
reasonable fees and charges to defray the costs of carrying out
the provisions of this section, including a fee for issuing a
certificate under this section.
The bill clarifies that the Secretary of Commerce shall
make publicly available all information required to be released
pursuant to this Act, including information obtained regarding
imports from a foreign producer or exporter that is the only
producer or exporter of goods subject to this section from a
Finally, H.R. 975 authorizes the Secretary of Commerce to
prescribe such rules and regulations relating to the steel
import notification and monitoring program as may be necessary
to carry out the provisions of this section.
Reasons for Committee action
The Committee believes that a new steel import notification
and monitoring program is unnecessary in light of the steps
taken earlier this year by the Commerce Department to provide
steel trade information on an expedited basis. Under Commerce's
expedited program, information is made available about three
weeks after the end of the month. (normal procedures permit the
release of information six to eight weeks after entry). H.R.
975 would make information available only two weeks earlier
that Commerce's expedited program.
The Committee is also concerned that H.R. 975 would permit
the Secretary of Commerce to impose fees to cover the cost of
the steel import notification and monitoring program when the
current system, which provides for expedited release of
information already collected from importers, costs firms
nothing. CBO has estimated this added expense will cost the
private sector about $500,000 annually. This added expense, as
well as the lack of an expiration date associated with the
program, raises potential problems with respect to U.S.
obligations in the WTO.
Finally, the Committee is concerned that H.R. 975 would
make available some information which may not be currently
available to the public, potentially posing business
The provision is effective within 30 days of enactment.
III. VOTE OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the vote of the Committee in its consideration of
MOTION TO REPORT THE BILL
H.R. 975 was ordered reported adversely without amendment
by a voice vote with a quorum present.
IV. BUDGET EFFECTS OF THE BILL
A. COMMITTEE ESTIMATE OF BUDGETARY EFFECTS
In compliance with clause 3(d)(2) of rule XIII of the Rules
of the House of Representatives, the following statement is
made concerning the effects on the budget of H.R. 975, as
reported: The Committee agrees with the estimate prepared by
the Congressional Budget Office (CBO), which is included below.
B. STATEMENT REGARDING NEW BUDGET AUTHORITY AND TAX EXPENDITURES
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
provisions of H.R. 975 would decrease revenues by $43 million
between fiscal year 2000 and 2002, and would increase
discretionary spending by $2 million in 2000 and by less than
$500,000 a year thereafter.
C. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET OFFICE
In compliance of clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the Congressional Budget Office, the following
report prepared by CBO is provided.
Congressional Budget Office,
Washington, DC, March 15, 1999.
Hon. Bill Archer,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 975, a bill to
provide for a reduction in the volume of steel imports and to
establish a steel import notification and monitoring program.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Hester
Grippando (for revenues), Mark Hadley (for spending), and
Lesley Frymier (for the private sector impact).
Barry B. Anderson
(For Dan L. Crippen, Director).
H.R. 975--A bill to provide for reduction in the volume of steel
imports, and to establish a steel import notification and
Summary: H.R. 975 would temporarily set a limit on imports
of steel and steel products into the United States and would
establish a steel import notification and monitoring program.
CBO estimates that this bill would reduce governmental receipts
by $43 million between 2000 and 2002. CBO also estimates that
implementing the bill would increase discretionary spending by
$2 million in 2000 and by less than $500,000 a year thereafter,
assuming appropriation of the necessary amounts. Because
enacting H.R. 975 would affect receipts, pay-as-you-go
procedures would apply.
H.R. 975 contains no intergovernmental mandates as defined
in the Unfunded Mandates Reform Act (UMRA) and would not affect
the budgets of state, local, or tribal governments. The bill
would impose new private-sector mandates on importers of steel
products. Based on information provided by government and
industry sources, CBO estimates that the direct costs of the
new private-sector mandates would exceed the statutory
threshold established in UMRA ($100 million in 1996, adjusted
annually for inflation) in fiscal years 2000 through 2002.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 975 is shown in the following table.
The costs of this legislation fall within budget function 370
(commerce and housing credit).
By fiscal year, in millions of dollars
1999 2000 2001 2002 2003 2004
CHANGES IN REVENUES
Estimated revenues.................................. (\1\) -21 -16 -6 0 0
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated authorization level....................... 0 2 (\1\) (\1\) (\1\) (\1\)
Estimated outlays................................... 0 2 (\1\) (\1\) (\1\) (\1\)
\1\ Less than $500,000.
Basis of estimate: For the purpose of this estimate, CBO
assumes that H.R. 975 will be enacted by July 1, 1999, and
implemented on September 1, 1999.
Section 1 of H.R. 975 would charge the President to take
necessary steps to limit the volume of steel products imported
into the United States during the three-year period starting 60
days after enactment. Imports could not exceed the average
volume of steel products imported into the United States during
the 36-month period preceding July 1997. Categories of steel
products covered by H.R. 975 include semi-finished steel
plates, sheets and strips, wire rods, wire and wire products,
rail-type products, bars, structural shapes and units, pipes,
and tubes, iron ore, and coke products. This estimate assumes
that import quotas are imposed, but the projected revenue loss
would be the same if the President negotiated voluntary export
restraint agreements. CBO estimates that H.R. 975 would reduce
revenues by less than $500,000 in fiscal year 1999, and by $43
million over the 1999 through 2004 period.
CBO estimated the bill's impact on revenue based on recent
steel import forecasts in Standard and Poor's Fourth Quarter
1998 ``Steel Industry Review'' and WEFA's February 1999 ``Steel
Industry Outlook.'' Steel import projections from these
forecasts were adjusted to match the overall import projections
in CBO's January 1999 forecast. The forecast assumes that
imports will fall from the 1998 level because of lower
projected domestic demand, unusually high domestic inventories,
lower projected domestic prices, and the effect of recent trade
cases brought against U.S. importers of steel. Under current
law, CBO projects steel imports to be 32 million short tons in
2000 and 30 million short tons in 2001. CBO projected the
consumption value of steel imports using census historical data
on the consumption value of steel and Standard and Poor's
forecast of changes in steel import prices. Revenue losses were
estimated by applying a trade-weighted duty rate adjusted for
tariff reductions scheduled by the World Trade Organization
Spending Subject to Appropriation
Section 2 would require importers of steel mill products to
obtain a certificate from the Department of Commerce before
such products are shipped. The Department of Commerce would
collect trade data from steel importers and provide the data to
the public through an Internet Web site. Information from the
Department of Commerce and experience with similar programs
suggest that most of the costs would be for developing the
certificate system and Web site, with negligible amounts for
maintaining the system. Subject to appropriation of the
necessary amounts, CBO estimates that implementing section 2
would cost about $2 million in 2000 and less than $500,000 in
each subsequent year. In addition, H.R. 975 would allow the
Department of Commerce to impose fees that may offset some or
all of the costs associated with this section. The amounts
collected are not likely to be significant.
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go procedures
for legislation affecting direct spending or receipts. The net
changes in governmental receipts that are subject to pay-as-
you-go procedures are shown in the following table. For the
purposes of enforcing pay-as-you-go procedures, only the
affects in the current year, the budget year, and the
succeeding four years are counted.
By fiscal year, in millions of dollars
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Change in outlays............................................... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ......
Changes in receipts............................................. 0 -21 -16 -6 0 0 0 0 0 0 0
Estimated impact on State, local, and tribal governments:
S. 975 contains no intergovernmental mandates as defined in
UMRA and would not affect the budgets of state, local, or
Estimated impact on the private sector: H.R. 975 would
impose new private-sector mandates on importers of steel
products. Based on information provided by government and
industry sources, CBO estimates that the direct costs of the
new private-sector mandates would exceed the statutory
threshold established in UMRA ($100 million in 1996, adjusted
annually for inflation) in fiscal years 2000 through 2002.
H.R. 975 would effectively prohibit imports of certain
steel products in excess of the average volume of steel
products that was imported monthly into the United States
during the 36-month period preceding July 1997. Such a quota
would reduce the availability of imported steel and raise
prices faced by U.S. importers of steel. Just how much prices
will rise is uncertain, but based on published estimates of
demand elasticities for steel products, CBO estimates the
increased cost to importers would be nearly $400 million in
2000, $340 million in 2001, and $150 million in 2002.
H.R. 975 also would require importers of certain products
to apply for and obtain a steel import notification certificate
from the Department of Commerce. Although the Secretary of
Commerce would have the authority to charge a fee for issuing a
certificate, the Department of Commerce was unable to provide
CBO with any information on the establishment of such a fee. If
a reasonable fee were established, CBO estimates that the
direct cost to importers to obtain a certificate would be about
H.R. 975 would likely yield benefits and impose other costs
on the private sector. If domestic steel prices rise, H.R. 975
would benefit U.S. steel producers and impose costs on U.S.
consumers of steel. By increasing the gap between the domestic
and world price of steel, the bill could result in an increase
in imports of finished products from foreign countries and
place some U.S. products at a competitive disadvantage in
Estimate prepared by: Federal Revenues: Hester Grippando;
Federal Spending: Mark Hadley; Impact on the Private Sector:
Estimate approved by: Robert A. Sunshine, Deputy Assistant
Director for Budget Analysis and Tom Woodward, Assistant
Director for Tax Analysis.
V. OTHER MATTERS REQUIRED TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS
With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives (relating to oversight findings),
the Committee, based on public hearing information and
information from the Administration, believes that imposing
quotas on U.S. steel imports by enacting H.R. 975 would be
unwise and counterproductive.
B. SUMMARY OF FINDINGS AND RECOMMENDATIONS OF THE GOVERNMENT REFORM AND
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that no
oversight findings or recommendations have been submitted by
the Committee on Government Reform and Oversight with respect
to the subject matter contained in H.R. 975.
C. CONSTITUTIONAL AUTHORITY STATEMENT
With respect to clause 3(d)(1) of rule XIII of the Rules of
the House of Representatives, relating to Constitutional
Authority, the Committee states that the Committee's action in
reporting the bill is derived from Article I of the
Constitution, Section 8 (``The Congress shall have power to lay
and collect taxes, duties, imposts and excises, to pay the
debts and to provide for * * * the general Welfare of the
United States * * *'').
D. INFORMATION RELATING TO UNFUNDED MANDATES
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act (UMRA) of 1995 (Public Law
The Committee has determined that the following provisions
of H.R. 975 contain Federal mandates on the private sector: (1)
the imposition of quotas on U.S. steel imports, and (2) the
establishment of the steel import notification and monitoring
program. The direct costs to the private sector are significant
and are estimated to exceed the statutory threshold established
in UMRA ($100 million in 1996, adjusted annually for inflation)
in fiscal years 2000 through 2002. Specifically, CBO estimates
that the quotas in H.R. 975 would result in higher prices in
the steel market costing the private sector nearly $400 million
in 2000, $340 million in 2001, and $150 million in 2002. In
addition, CBO estimates that the establishment of the steel
import notification and monitoring program would cost the
private sector an additional $500,000 per year.
H.R. 975 contains no intergovernmental mandate as defined
in the UMRA and would not affect the budgets of state, local,
or tribal governments.
The Committee agrees with the analysis provided by the CBO
as to the impact on the private sector of the price increases
that would result in the steel market from the imposition of
steel quotas, as well as costs to the private sector associated
with the establishment of the steel import notification and
Congress of the United States,
Washington, DC, March 5, 1999.
Hon. Bill Archer,
Chairman, Committee on Ways and Means,
Longworth House Office Building, Washington, DC.
Dear Bill: It is our request that the Ways and Means
Committee consider and report unfavorably the Visclosky-Quinn
steel legislation (H.R. 975) next week. H.R. 975 includes the
text of H.R. 506, along with legislative language that
establishes a steel monitoring program. While we share your
misgivings about this policy, the committee's action ensures
that the House will consider this measure under orderly
Thank you for your consideration of this matter.
The White House,
Washington, March 10, 1999.
Hon. Bill Archer,
Chairman, Ways and Means Committee,
House of Representatives, Washington, DC.
Dear Chairman Archer: I want to convey to you the
Administration's opposition to H.R. 975 and, in particular, its
mandate that the President take action to roll back steel
imports to the average monthly import levels preceding the
current import surge.
The President is determined to maintain the U.S.' strong
manufacturing base and the good jobs it provides. The President
share the co-sponsors deep concern about the impact on our
steelworkers, communities and companies of the surge in steel
imports. He believes that the best way to address the current
steel crisis is by insisting that other countries play by the
international trade rules, just as the United States will
continue to abide by those rules. The President's commitment to
effective, vigorous and timely enforcement of our trade laws is
producing results. Imports of carbon hot-rolled steel have
fallen 70% between November and January. Imports of these
products also have virtually ceased from Russia and Japan (down
98% and 96% respectively) and declined 76% from Brazil. We are
committed to sustained implementation of this place and the
expeditious resolution of pending cases.
Quotas imposed outside the World Trade Organization (WTO)-
consistent processes contained in our trade laws (section 201
safeguards law or the quota suspension agreement provisions in
our antidumping and countervailing duty laws) violated our
international trade obligations. These quotas would not be
based on a determination of whether the imports are causing or
threatening serious injury, or whether unfair trade or
subsidization is involved as required by WTO. Moreover, our
current laws already provide the means for U.S. industry and
workers to request an investigation and, if a threat of injury
is demonstrated, quotas or other trade remedies can be imposed
in a WTO consistent manner. In addition, when the orderly and
thorough procedures mandated by our trade laws are followed, we
can take into account the full range of U.S. industry and
worker concerns and fashion remedies that do not result in
additional market distortion, import shortages, excessive price
hikes or retaliation that could harm U.S. export industries and
We believe that implementing H.R. 975 constitutes a
violation of our international obligations under the WTO and is
not in our nation's economic interest. Because of these
concerns, the President's senior advisors would recommend that
the President veto the bill.
Nonetheless, the steel crisis has demonstrated that there
is room for improvements to our trade laws to ensure they
deliver strong, effective relief in an expeditious manner,
while maintaining their consistency with our international WTO
obligations. We believe the legislation proposed by Congressman
Levin constitutes a constructive approach, and we stand ready
to work with him and other members of Congress to develop a
bill that we could recommend the President sign.
VII. ADDITIONAL VIEWS
We strongly oppose this legislation for two reasons and
urge its rejection by the House as a result. We recognize the
difficulty facing steel workers and companies. What we find
unacceptable is the way in which steel import restrictions
imposed by this bill would place other Americans at risk while
ignoring the plight of other working people who have seen
imports destroy their jobs in other industries.
There is no doubt that this legislation poses a risk of
retaliation against other American industries and those they
employ. The World Trade Organization agreement requires member
states to meet specific tests on causation and harm before
import restrictions may be adopted in defense of one's domestic
industries. H.R. 975 in no way meets the requirements we
accepted in trade agreements.
Failing to adhere to the rules by limiting steel imports
will entitle other nations to restrict our exports. American
jobs tied to those exports will be at risk. For export-oriented
industries such as American agriculture, the results will be
lost income and lost jobs. Acting hastily without taking
farmers's and others' concerns into account is foolish.
Equally disturbing to us, however, is the favoritism
embodied in this bill. H.R. 975 only recognizes the problems of
one industry. Our constituents in the oil and gas industry have
seen 30,000 jobs vanish in the last year. That loss is three
times the amount of steel jobs lost in the same period. Low oil
prices place our ability to preserve domestic, secure supplies
of crude at risk. It disturbs us that no one seems willing to
take drastic steps on behalf of our constituents. We can assure
you that our constituents who have lost their jobs in the oil
trade feel the pain of unemployment no less than the steel
workers H.R. 975 seeks to help. We see no reason to favor steel
over other working Americans in industries which are also
If the United States is going to abandon international
trade rules we fought hard for during the past half century, we
should consider the risks and equities involved. We should not
play favorites by sacrificing or ignoring the needs of other
working people and industries. H.R. 975's clear favoritism and
the immense potential for harm it poses causes us to oppose the
bill and we urge our colleagues to do the same.
VIII. DISSENTING VIEWS OF REPRESENTATIVE PHIL ENGLISH
I applaud the Committee's decision to report this bill to
the full House of Representatives. I believe that the crisis
facing the U.S. steel industry and the lack of effective
response by the Clinton/Gore Administration has forced the
Congress to take action. I very much regret that circumstances
have brought us to the point that Congressional action was
necessary. I believe, and I think that many parties agree, that
is would not be necessary for us to consider this legislation
today if the Administration had used all of the tools available
to it under current laws and consistent with all of our
I support this legislation and urge its passage by the full
House of Representatives. Section 1 of H.R. 975 will reduce the
burden of imports into our market to pre-crisis levels and will
help to limit the damage done to communities, workers, and
firms in the U.S. steel industry in the short term. Section 2
of the bill will establish an effective import monitoring
system. Many of our trading partners already have systems for
this purpose in place. The steel import notification and
monitoring system proposed, which is modeled on similar systems
currently in use by our largest trading partners, Canada and
Mexico, would allow the U.S. government to receive and analyze
critical import data in a more timely manner and allow industry
to determine more quickly whether unfair imports are disrupting
The American steel industry is facing a crisis due to an
immense surge of illegally dumped and subsidized foreign steel
imports. Since mid 1997, many foreign markets have been rocked
by economic and financial crises. One consequence of these
financial crises has been the significant drop in demand for
steel products in foreign markets. When combined with
preexisting overcapacity and subsidized foreign producers, the
drying up of foreign demand for steel has led many countries to
attempt to illegally unload their excess steel onto the U.S.
Since the 1980s the American steel industry has reinvented
itself as on of the most efficient, most competitive in the
world. Through sacrifice by the industry and its workers,
streamlining and investments, the U.S. steel industry has
nearly tripled productivity. The new U.S. steel industry can
compete against anyone in the world. The sad part of this story
is that our industry plays by the rules and has restructured
itself to be a model of economic efficiency. It is only through
illegal and unfair trading practices that foreign producers
have been able to undercut U.S. producers.
Import volumes in 1998 reached record levels, surging 33
percent over 1997. And 1997 was itself a record year for steel
imports. Imports have surged over a wide variety of product
lines. We have recently seen, in response to trade cases filed
by the industry and unions, a decline in certain products that
are subject to duties that would be imposed by the final
disposition of the cases. But steel is still flowing in massive
quantities from countries not covered and in the form of
products not listed by the cases. Also it is entirely possible
that imports have declined temporarily because we're simply out
of storage space at U.S. ports.
This crisis is precisely the reason why the Congressional
Steel Caucus, Republicans and Democrats together, have been
urging the Administration to use all of the tools at its
disposal under our trade laws to take decisive action to
address this crisis. So far, we have all been disappointed by
the Administration's general lack of concrete, effective
At the hearing on February 25, 1999, before the Ways and
Means' Subcommittee on Trade, I stated that ``the question
before us today is this: What can Congress do to stop the
current steel crisis and reduce the possibility of another
crisis that could be devastating to the industry and its
I concluded that we needed legislative action. Passage of
H.R. 975 meets the test of addressing the current crisis in the
short term and the import monitoring language would help the
U.S. steel industry and its workers discern future import
surges while there is still time to prevent unnecessary damage
to our economy. I believe that there is additional room for
legislative action to strengthen and enhance our trade laws so
that they can more effectively enforce a level playing field.
I find it interesting that, at this late date, the
Administration and its representatives are arguing that we
should consider other legislative approaches to deal with these
issues. I was the primary cosponsor of H.R. 412, the Trade
Fairness Act, which was introduced by Steel Caucus Chairman
Ralph Regula on January 19, 1999. We would have been more than
pleased to have had the Administration's support while we were
advocating this legislation and recruiting cosponsors. The
language in this bill would make laws which have been on our
books for years, such as Section 201 of the Trade Act, more
effective and easier to use. H.R. 412 would make it easier for
the President to impose duties, impost a tariff-rate quota
system, or impose quantitative restrictions under section 201
in a way that is fully consistent with our WTO obligations and
the WTO ``Safeguards Agreement.''
This approach is completely ``WTO compliant'' and could
hardly be colored as sending any sort of protectionist
signal(s) to our trading partners.
The Administration was silent on our proposal and declined
numerous opportunities to support it or work with members from
both the Republican and Democratic parties to offer
constructive criticism to strengthen and advance the
legislation. As recently as February 25, 1999, at a hearing of
the Ways and Means' Subcommittee on Trade, Ambassador
Barshefsky (USTR) and Secretary Daley (Commerce) refused to
endorse trade law changes that their departments today seem to
be open to, if not outrightly endorsing.
What has happened to cause this renewed focus by the
Administration on the steel crisis? We have put together a
bipartisan coalition of over 200 members of the House of
Representatives to cosponsor the legislation we have before us
today, which was introduced by our colleague, Rep. Peter
Visclosky. The Administration needs to be reminded that, if
they choose to ignore opportunities to find constructive
solutions to the problems facing our nation, its workers, and
communities, they may find their hand forced by Congressional
I believe that this is a proper role for Congress to play.
As the elected representatives of the people, if the Executive
Branch does not properly respond to a situation when the people
of this great nation are crying out for some action, the
Congress must move legislation to address the situation.
I therefore dissent from the negative recommendation that
the Committee today places on this report and urge the passage
of this legislation by the House of Representatives.
DISSENTING VIEWS OF REPRESENTATIVE SANDER LEVIN
The steel surge over the last year has been real and,
indeed, very harmful.
More than 10,000 hard-working steel workers have lost their
livelihood as companies have reduced their workforces, engaged
in production cuts, and in some cases, declared bankruptcy. The
U.S. steel industry, efficient as any in the world, could not
withstand the deluge of low-priced imports of steel flooding
The prime author of H.R. 975, Pete Visclosky and others,
have played a critical role in highlighting this crisis and
spotlighting the injury done to thousands of steel workers and
the steel industry from the dumping of foreign steel.
It is clear that the Government did not act soon enough. It
is also clear that even when government does act aggressively,
under present law they do not have the tools necessary to
remedy this situation.
present trade law reacts too slowly
Under present law, petitions to stop the dumping of steel
were not filed until last September. And, while the
Administration acted aggressively on these cases--including
Commerce's effective use of the critical circumstance provision
of U.S. law--existing U.S. trade remedies do not provide U.S.
producers and workers with expeditious relief, particularly in
the face of sudden, dramatic import surges.
present remedies are incomplete and can be evaded
Our present response is ad hoc in that relief under the
antidumping law only covers certain products from specific
countries, and does nothing to prevent foreign producers from
shifting to other production areas or producers from other
countries from stepping in to fill the gap.
Only section 201 could provide a comprehensive response,
and the way it is presently structured to require a long period
of import surges, indeed five years of them, an industry could
be devastated before meeting present standards for relief.
present trade law fails to consider fundamental problems
Our current laws do not address the more fundamental,
systemic problems of structural overcapacity and anti-
competitive foreign practices that underlie import surges such
as the one that occurred in 1998.
These problems brought to the fore by the steel crisis
require that we reform and strengthen our trade laws. We must
provide the necessary tools to deal with this crisis and
prepare for similar situations in the future.
H.R. 975 is not the right mechanism.
First, it calls for action in a way that is contrary to the
rules of the World Trade Organization (WTO) and our obligations
thereunder. Because of this, John Podesta, the White House
Chief of Staff has recommended a veto to the President. The
reason is clear. We cannot seek to use the WTO to enforce
international rules of law regarding trade--as we currently are
in many cases--while at the same time advancing a proposal
which is clearly in violation of those rules.
I have actively participated over the years in battles to
improve our trade laws, with some success in the passage of the
'88 Act and in the maintenance under WTO of the very dumping
laws invoked in this case. I have fought to broaden the ability
in negotiating our trade agreements to include vital labor
market and environmental concerns.
In each instance it has been to strengthen the rules of
competition and trade, and to adapt them to the changing nature
of trade or to oppose them when they failed to do so. It has
been within a framework built on rules that will govern, not
ones that can be set aside as a nation sees fit.
Second, we have an instruction--unprecedented as we can
determine in this Committee's history--from the Majority
leadership that opposes the bill, to a Committee Chairman who
opposes the bill, to report that bill to the Floor. To appear
consistent with these views, they say it should be reported out
unfavorably, but from their perspective the political benefit
would seem the same--to divide House Democrats from the
Administration which will veto the bill, while at the same time
giving Republicans in marginal seats a boost by appearing to be
concerned about steel workers and the steel industry.
To further the chance that at some point in this proceeding
we will step back and seize an opportunity to pass needed
legislation that can become law and have an immediate impact on
the steel crisis and a long-term on our trade policy, I am
introducing legislation that would do the following:
Strenthen section 201 by removing the unduly high
causation standard, requiring consideration of the
impact of import surges, shortening the time period for
obtaining and expanding the availability of provisional
relief, and requiring the ITC to perform a more
comprehensive injury and threat analysis.
Create early warning import monitoring systems by
creating mechanisms for U.S. industries and workers to
request monitoring of specific products, establishing
an import monitoring center, providing for the early
release of import data when import surges are detected,
and implementing a system to allow for the accurate
tracking of products subject to antidumping/
countervailing duty orders or safeguards actions.
Reaffirm the U.S. antidumping and countervailing duty
laws by restoring the Department of Commerce's ability
to use petition information where foreign producers or
importers refuse to cooperate in an investigation, and
restoring the correct injury causation standard.
Address the systemic problems underlying import
surges by requesting the ITC to conduct a section 332
investigation on anti-competitive practices in
international steel trade, and directing the Office of
the U.S. Trade Representative to follow up on the ITC's
Promote expedient, effective enforcement of U.S.
trade laws by providing additional funding to the
Department of Commerce, the Office of the U.S. Trade
Representative, the International Trade Commission and
other agencies to administer, enforce, and defend U.S.
trade laws and actions.
Initiate a section 201 investigation on the impact of
increased steel imports on the U.S. industry.
I am providing each of you a more detailed summary. As a
result of these provisions, this bill would provide access to
comprehensive relief to the steel industry now and access to
relief against future import surges more quickly, more readily,
I have received word from the Majority that if I introduced
this bill as an amendment to H.R. 975, it would be ruled out of
order on grounds of germaneness. While it deals directly with
the steel crisis, it also applies the reforms to any and all
import surges and related crises.
Therefore, I will not offer it today. But I hope it helps
point the way toward significant remedial action that can
actually become the law of the land.
Import Surge Response Act of 1999
outline and purpose of proposal
Over the last year low-priced imports of steel have flooded
the U.S. market. Although U.S. steel companies and workers are
among the most modern, efficient, low-cost producers in the
world, they have not been able to withstand this deluge. Over
10,000 hard-working steel workers have lost their livelihood as
companies have reduced their workforces, engaged in production
cuts, and in some cases, declared bankruptcy.
Over the last few weeks, the Administration has taken some
important steps to address this problem, including aggressively
enforcing U.S. trade laws. Last month, the Department of
Commerce preliminarily determined that Japanese, Brazilian and
Russian producers were dumping hot rolled steel into the United
States. Commerce also has reached two agreements with Russia to
curb steel imports into the United States. As a result of these
steps--including Commerce's effective use of the critical
circumstances provisions of U.S. law--steel imports into the
United States have slowed substantially in key product
categories. However, in other product categories, imports
remain at historically high levels, and in some instances have
actually continued to increase.
The purpose of the Import Surge Response Act is to provide
a comprehensive, coherent and sustainable response to the
current import surge and the crisis it has created for workers
and firms in the U.S. steel industry, and to ensure that future
import surges are addressed far more quickly and effectively.
In particular, the bill, together with a proposal that the
Committee on Ways and Means request the U.S. International
Trade Commission (ITC) to initiate an investigation under
section 201, will provide a three-part strategy to address the
current crisis for workers and firms in the U.S. industry, and
to provide more effective tools for the United States to
address future crises.
First, the bill contains a complete package of amendments
to section 201 so that it provides a more effective tool to
address sudden import surges in the steel and other industries
in this crisis and in the future. Section 201 offers a
comprehensive mechanism to address the current import surge in
steel, because a section 201 investigation will be able to
cover all product categories, rather than just specific product
sectors as under the antidumping and countervailing duty laws.
In addition, under section 201 the U.S. industry can receive
various forms of relief, including tariffs and import quotas.
These amendments, with the proposal (attached) that the Ways
and Means Committee request the ITC to conduct an investigation
of the steel industry under section 201 as amended by this
bill, provide a swift, effective and pragmatic solution to the
current crisis and will enable us to address future crises more
Second, the bill would establish and codify several early
warning and anticircumvention systems. The early warning
systems will enable the United States to detect future import
surges andprevent unnecessary adverse consequences to U.S.
industry. The anticircumvention provisions will help to ensure that
relief put into place remains effective and is not undermined by
evasive actions taken by our trading partners.
Third, the bill includes provisions to address underlying
problems in world steel trade--such as cartel arrangements and
other anticompetitive practices, as well as import licensing
requirements--that tend to channel excess production capacity
in foreign industries directly into the U.S. market, while
other markets remain largely immune to the import surge. The
existence of these practices has contributed to the devastating
import surge that has occurred over the past year and has
magnified its impact on the U.S. market.
summary of proposal
Create stronger, more effective safeguard relief
Section 1 of the bill contains six key amendments to
strengthen sections 201-204 of the Trade Act of 1974. Sections
201-204 allow U.S. industries to obtain relief from imports--
including in the form of higher tariffs and import quotas--even
when unfair trade practices such as dumping are not present.
The amendments in the bill provide a coherent package of
changes that will: remove the current, unnecessarily high
standard for demonstrating a causal link between imports and
injury to the U.S. industry; restructure section 201 standards
to ensure that import surges can be addressed more quickly and
effectively; expand the availability of early and meaningful
provisional relief; extend application of the captive
production provision of U.S. antidumping and countervailing
duty law to section 201; and improve injury analysis by adding
common sense factors to the injury analysis the ITC is required
Remove unduly high causation standard.--Under current law,
increased imports must be a ``substantial cause of serious
injury, or threat thereof'' for the ITC to make an affirmative
determination under section 201. The ``substantial cause''
standard establishes a significant and unnecessary obstacle to
obtaining relief under the statute, because it requires that
increased imports be ``not less than any other cause'' of
injury, typically the primary or leading cause of injury.
Moreover, this standard is higher than that allowed under the
WTO Agreement on Safeguards, which requires only that increased
imports ``cause serious injury, or threat thereof.''
Section 1 of the bill amends the section 201 causation
standard to comport with the causation standard established in
the WTO Safeguards Agreement. As amended, U.S. law will require
that increased imports would have to cause, or threaten to
cause serious injury for the ITC to issue an affirmative
determination. Imports will no longer have to be the leading
cause or most important cause of injury, or even more important
than any other cause, so long as imports contribute
significantly to the serious injury.
To assist the ITC in applying this causation standard, the
bill directs the ITC to focus its analysis on the rate and
amount of the increase in imports, the import share of the
domestic market, and the timing and volume of imports (see
section on import surges, below).
Address import surges more quickly and effectively.--A
substantial shortcoming in existing U.S. law is its failure to
recognize expressly that import surges occurring in a short
period of time, such as the import surge that has occurred over
the last year in steel, can cause or threaten to cause serious
injury. In particular, the ITC's practice of examining injury,
typically over a five-year period, has led to the perception
that injury must ripen or mature over a number of years in
order to meet the standards in the statute. Section 1 of the
bill corrects this problem by requiring the ITC to consider in
its causation analysis the timing and volume of imports,
specifically including whether there has been a substantial
increase in imports over a short period of time. The bill makes
a clear that an import surge is not required in order to
establish causation--in other words, that there are many
different circumstances in which the ITC may find that
causation standard is met, including circumstances that do not
involve import surges.
Provide faster provisional relief under section 201--
Section 1 of the bill shortens the time frame for provisional
relief by almost one-third, from 90 to 65 days. This change
will enable firms and workers facing critical import surges to
obtain provisional relief more quickly.
Improve effectiveness of section 201 by including common-
sense factors for injury determinations.--Section 1 of the bill
also clarifies the factors that the ITC is required to consider
in determining whether the U.S. industry is experiencing or is
threatened with serious injury. With respect to serious injury,
section 1 of the bill requires the ITC to consider, in addition
to the factors currently enumerated in the statute, the change
in the levels of sales, production, productivity, capacity
utilization, profits and losses, and employment. These indicia,
which are provided for in the WTO Agreement on Safeguards,
should assist the ITC in focusing its analysis on current
industry conditions, in addition to any historical trends in
the domestic industry that may be relevant.
Section 1 of the bill also makes the section 201 provisions
governing threat of serious injury more effective. For example,
section 1 requires the ITC to consider conditions in foreign
industries that point to the possibility of further increases
in exports to the U.S. market. These factors include foreign
production capacity, foreign inventories, the level of demand
in third country markets, and the availability foreclosure of
other export markets. These modifications will ensure that the
ITC conducts a more comprehensive threat analysis as it
requires the ITC not only to consider the state of the U.S.
industry, but also conditions in foreign industries and
The threat standard is particularly important, because it
can be used to provide relief before workers and firms suffer
full-blown injury, if the evidence indicates that such injury
is imminent. Proper and effective use of the threat standard
can save jobs and avoid injury to firms.
Expand availability of early, provisional relief.--Existing
U.S. law authorizes imposition of provisional measures after 90
days, if circumstances warrant this relief. The bill
strengthens these provisions in two ways.
First, the bill directs the ITC to consider whether there
is or has been an import surge in determining whether
provisional relief should be provided. By requiring ITC to look
at import surges, the bill makes clear that import surges can
be an important indicator that critical circumstances exist,
and that provisional relief should be provided.
Second, under current law, the ITC is allowed to make a
critical circumstances finding and recommend provisional relief
only if the investigation resulted from a petition by a
domestic industry. Current law does not allow for the
possibility of provisional relief in the case of section 201
investigations begun at the request of USTR, the Committee on
Ways and Means or the Committee on Finance, or in the case of
investigations self-initiated by the ITC.
The current steel import crisis has made clear that
expeditious provisional measures often are crucial in
preventing irreparable harm to a domestic industry adversely
affected by increased imports. As a consequence, section 1 of
the bill changes U.S. law to allow the President and respective
Committees to assert critical circumstances, and to request
provisional relief in situations where they have requested
initiation of a section 201 investigation.
Extend application of the captive production provisions of
U.S. antidumping and countervailing duty laws.--Section 1 also
would extend to section 201 the ``captive production''
provision of U.S. antidumping and countervailing duty law. This
provision, enacted as part of the Uruguay Round Agreements Act,
is intended to ensure that the ITC, in conducting an injury
analysis, does not double-count production by the domestic
industry in certain circumstances in which upstream and/or
downstream products are subject to an investigation.
Create improved early warning import monitoring systems
Amend section 332 of the Tariff Act of 1930 to allow
private parties to bequest import monitoring.--To promote early
detection of import surges and other potentially damaging trade
flows, section 2 of the bill creates a mechanism for domestic
industries to request import monitoring of particular products.
Under existing section 332 of the Tariff Act of 1930, the
President, the House Committee on Ways and Means and the Senate
Committee on Finance each may request the ITC to monitor and
investigate imports and conditions of competition between U.S.
and foreign industries, including the collection of data that
may be used in making a safeguards determination. Section 2 of
the bill amends section 332 to establish a statutory procedure
that would enable domestic industries or representatives of
domestic industries to request that the President consider
whether import monitoring is appropriate, and if so, to request
such monitoring and data collection by the ITC. Under this
provision of the bill, a request by the President to
commencemonitoring and data collection would be without prejudice to
whether an investigation under section 201 would eventually be
initiated by the ITC.
Ensure early release of import data.--Current regulations
of the Office of Management and Budget (OMB) authorize the
Census Bureau to release preliminary steel import data to the
public in extraordinary situations, prior to the release of
overall trade data. To improve monitoring and permit an earlier
response to potential imports surges, the bill expands and
codifies this practice for early release of data. Under section
3 of the bill, OMB may release preliminary trade data whenever
it detects an import surge in a product category, subject to
Congressional notification. This provision will improve the
ability of U.S. workers and firms to detect import surges more
quickly and take actions to respond to such surges effectively.
Detect and prevent circumvention I.--Establish import
monitoring center.--Section 4 of the bill authorizes funding
for the creation of a new Steel Import Monitoring and
Enforcement Support Center within the Customs Service. The
Center will be responsible for monitoring and preventing
illegal transshipment and other attempts to circumvent U.S.
antidumping, countervailing, and other trade remedy laws.
Detect and prevent circumvention II.--Monitor imports of
products subject to AD/CVD orders and safeguard actions.--The
statistical trade data currently collected by Customs and
compiled by the Census Bureau does not allow for precise
monitoring of products subject to antidumping orders,
countervailing duty orders, or safeguard actions. Collecting
relevant statistics on imports of these products will
facilitate the monitoring of product shifts and other actions
that circumvent trade remedy restrictions. Therefore, to allow
easier tracking of products covered by trade cases and to
detect shifts in imports expeditiously, section 5 of the bill
directs the ITC to establish a suffix to the Harmonized Tariff
Schedule for products subject to trade actions, that will be
used to track imports of these products.
Maintain steel early warning system.--Ensure continued
monitoring of steel imports.--Section 5 of the bill directs the
Commerce Department to continue its current comprehensive steel
import monitoring program.
Strengthen U.S. antidumping and countervailing duty laws
Protect commerce department ability to investigate.--Under
the antidumping provisions of U.S. law, the Department of
Commerce is authorized to use adverse inferences to determine
the dumping margin for uncooperative foreign producers or
importers: i.e., those that fail to respond to a request for
information. Department practice, consistent with U.S. WTO
obligations, had been to use information contained in the
antidumping petition, as corroborated by third-party sources,
as the basis for drawing adverse inferences. However, a recent
court decision in Borden Inc., et al v. United States bars that
practice. Section 5 of the bill amends Title VII of the Tariff
Act of 1930, torestore the ability of the Commerce Department
to use petition information as the basis for calculating dumping
margins for uncooperative parties.
Restore correct injury causation standard.--A recent
decision by the Court of Appeals for the Federal Circuit in
Gerald Metals v. United States, undermines the long-recognized
standard under U.S. antidumping and countervailing duty law
that imports need only be a contributing cause of material
injury and that the ITC shall not weigh the injury caused by
unfair imports against other factors in reaching its injury
determination. Based on the 1979 legislative language, the
court of International Trade has recognized in several
opinions, some of which have been affirmed by the CAFC, that
the Commission is permitted to reach an affirmative
determination if it finds that subject imports contribute even
minimally, or in a more than de minimis fashion, to the
material injury suffered by the domestic industry. Grupo
Industrial Camesa v. United States, 853 F. Supp. 440, 444 (Ct.
Int'l Trade 1994), aff'd 85 F. 3d 1577 (Fed. Cir. 1996); U.S.
Steel Group v. United States, 873 F. Supp. 673, 694 (Ct. Int'l
Trade 1994), aff'd, 96 F.3d 1352 (fed. Cir. 1996); British
Steel Corp. v. United States, 593 F. Supp. 959, 971 (1984).
The CAFC's decision in Gerald Metals directly contradicts
the well-established legislative intent, as well as judicial
interpretations and ITC practice following that intent.
Accordingly, section 5 of the bill clarifies this essential
injury standard expressly to reject that ruling.
Investigate causes underlying import surges
Section 7 of the bill directs the ITC to conduct an
investigation and prepare a report within one year on
anticompetitive activities in international steel trade. In
particular, section 7 of the bill directs the ITC to
investigate the extent of cartelization and other
anticompetitive practices in international steel trade pursuant
to its authority under section 332 of the Tariff Act of 1930.
This investigation will require gathering of empirical
information in other countries and from U.S. and foreign
industry sources, drawing on U.S. embassies, the Foreign
Commercial Service, local U.S. Chamber of Commerce and other
business groups, other executive branch agencies with relevant
information, and such other public and private fact-finding
resources as may be available. The ITC will be directed to use
its full authority, including under section 333, to collect and
provide as much detail as possible about the anticompetitive
practices themselves and on their trade effects, including:
foreclosure of U.S. and third country exports; dumping in the
U.S. and third markets; trade diversion into the U.S. market;
and the contribution of anticompetitive practices to the
problem of overcapacity. The provision will make clear that
this will be an empirical investigation, not a theoretical
exercise. While analysis of trade data will be necessary, the
use of economic modeling techniques is not expected to play a
role in this investigation. Section 7 further directs the ITC
to provide its report to the USTR, and the Committees on Ways
and Means and Finance, and directs USTR to include the
Commission's findings in its National Trade Estimates report
and to propose there or in a separate report to the Committees,
steps to be taken to address any anticompetitive practices in
international steel trade. In addition, the bill provides that
USTR in the National Trade Estimates report identify import
licensing systems of foreign countries in the steel sectorand
evaluate the consistency of those systems with WTO or other
international trade obligations of those countries.
Authorizations to support enhanced enforcement and monitoring
The Bill authorizes additional funding for enhanced import
monitoring and enforcement of U.S. trade laws.
Provide for import monitoring and expeditious relief.--
Section 8 of the bill provides additional funding for the
Commerce Department to implement more comprehensive import
monitoring programs and to provide for stronger, more
expeditious enforcement of the antidumping and countervailing
duty laws. The increased funding will ensure more effective
import monitoring and should shorten the time required to
conduct and complete antidumping and countervailing duty
investigations. Additional funding is also authorized for the
ITC to allow for more expeditious determinations.
Assist domestic industries and U.S. workers seeking relief
under the trade laws.--Section 8 authorizes funding for the
Economic Development Administration to create a Federal Trade
Law assistance fund. The Fund will provide grants to small and
medium size businesses, and U.S. workers, for the preparation,
filing and prosecution of trade remedy cases.
Maintain the integrity of U.S. trade remedies.--Section 8
of the bill authorizes additional funding to the Office of the
U.S. Trade Representative to hire additional staff to defend
U.S. antidumping, countervailing duty and safeguards actions,
and challenge antidumping, countervailing duty and safeguard
actions by U.S. trading partners that are inconsistent with
their WTO obligations.
Ways and Means Committee request for section 201 investigation
In addition to the measures described above, the proposal
would include a resolution by the Committee on Ways and Means
directing the ITC to commence a comprehensive section 201
investigation of the impact of increased imports on the steel
industry, applying the standards set forth in the bill.
Commencing a section 201 investigation would provide an
opportunity for the industry to obtain a comprehensive response
to the import surge that has harmed so many U.S. workers and
The proposals outlined above are designed to provide a
comprehensive response to the current import surge in the steel
sector and to create stronger, more effective tools to detect
and prevent, and, if necessary, respond more quickly and
effective to future import surges--all by taking full advantage
of, but not taking actions that are inconsistent with, the
international obligations of the United States. The purposes of
this package is to strengthen U.S. trade policy and
administrative instruments that can be used by U.S. workers and
firms. Additional proposals that improve the effectiveness of
U.S. trade laws may be considered. In addition, further
proposals to address directly the immediate needs of workers
and firms in the interval until trade remedies take effect may
also be considered.
DISSENTING VIEWS OF REPRESENTATIVE MICHAEL R. McNULTY
Mr. Chairman, I am a co-sponsor and strong supporter of
Rep. Visclosky's bill, HR 975. This Congress must send a strong
message that we will not tolerate the continued dumping of
steel--dumping that is causing tremendous harm to the industry
and forcing huge lay-offs of hard-working U.S. steel workers.
As I mentioned during the Trade Subcommittee hearing on
this issue, over 10,000 steel workers have been laid off in the
past year as a result of this flood of under-priced steel
coming into the United States.
America was built on the backs of laborers. We cannot turn
our backs on them now.
HR 975 is clear and straightforward. It would reduce steel
imports to 25% of the U.S. market. That is the level that
prevailed in July 1997--before the dumping began. The bill
authorizes the U.S. Customs Service to refuse entry to any
steel products that exceed the allowable levels. The bill also
creates a steel import notification and monitoring system. This
system would require any person importing steel products to
obtain an import notification certificate before those products
can enter the U.S.
American steel companies and organized labor have worked
very hard over the last decade to restructure and to restore
the integrity of this important industry. We cannot allow these
sacrifices to be in vain.
I urge this Committee to favorably report this bill to the
floor of the House of Representatives.
Michael R. McNulty.