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Steel Producers and Manufacturers React to President Bush's Steel Program

Opinions Diverge on 201 Tariff Remedy

New York, Jul 31, 2002

Tariffs on imported steel imposed in March by the Bush Administration have created a dichotomy of opinion between national associations representing both the producers and users of the material. Yesterday, the American Iron and Steel Institute (AISI) issued a press release stating that the President's "remedy" should be maintained while four groups representing steel-consuming industries have urged Bush to "reconsider" the tariffs.

In a joint letter to President Bush, four ANSI membership organizations--the Air-Conditioning and Refrigeration Institute (ARI), the Association of Home Appliance Manufacturers (AHAM), the Gas Appliance Manufacturers Association (GAMA) and the National Electrical Manufacturers Association (NEMA)-cited "the negative impact on domestic steel-consuming industries" as the reason for the Administration to reconsider the tariffs. In addition, the groups have "expressed concern for the 750,000 manufacturing employees represented by their membership."

The joint letter clearly states the rationale for the group's position. "U.S. appliance and electrical manufacturers consume more than two million tons of steel annually," "the majority" of which "is purchased from domestic steel companies." Since the tariffs were imposed, however, manufacturers have experienced significant cost increases, in some cases almost double the normal price, as well as supply constraints in a number of product and component categories. Although manufacturers have remained competitive, thus far, despite these factors, AHAM's president, Joseph M. McGuire, fears that in the long term, increased pressure on domestic jobs will "hasten the trend towards offshore manufacturing."

Although preliminary U.S. Census Bureau data indicates that steel imports have risen 37 percent from last May, AISI president and CEO, Andrew G. Sharkey, III, believes that the "President's Steel Program is in the national interest" and, if maintained, will eventually work to the advantage of the American steel industry. AISI members account for more than two-thirds of the raw steel produced in the United States, Canada and Mexico. Many of these companies have experienced hard times over the past five years; during 1998 through 2001, over 30 steel firms filed Chapter 11 and a total of 50,000 steel workers lost their jobs. Viewed as a solution to this crisis, the organization strongly supports the President's program and believes that it will give the industry a chance to resolve structural issues and restore some of the lost jobs.

The President unveiled his Steel Program in June 2001 to address what many have termed a "national steel emergency." The 201 Tariff Remedy is one component of the plan that calls for the application of tariffs, some as high as 30 percent, on various imported steel products. AHAM members expressed their opposition to tariffs on stainless and flat rolled steel in late December, citing an eventual increase in both domestic and imported steel costs in these categories.

Producers, on the other hand, contend that the gravity of the steel crisis demands comprehensive measures at the international level aimed at reducing excess and inefficient global steel capacity as well as eliminating subsidies and other market-distorting practices. They hope that the provisions of the President's Plan for multilateral negotiations with other member governments of the Organization for Economic Cooperation and Development (OECD) will help to revive the U.S. steel industry.

Although their opinions diverge on the necessary course of action, both the manufacturers and users of steel firmly believe that they have the best interests of the industry in mind. ANSI will continue to monitor this very important issue, in the hopes that a resolution will be met that is amenable to both sectors of the industry.

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