[The prepared statement follows:] Statement of Robert W. Cardy, Vice Chairman, Specialty Steel Industry of North America; and Chairman, President, and Chief Executive Officer, Carpenter Technology Corp., Reading, Pennsylvania Good afternoon. My name is Bob Cardy, Chairman, CEO and President of Carpenter Technology Corporation. I am appearing before you today in my capacity as the Vice Chairman of the Specialty Steel Industry of North America. SSINA is a Washington, D.C.-based trade association representing 15 companies which employ over 25,000 workers. Specialty steels are high technology, high-value stainless and other special alloy products sold by the pound rather than the ton. While shipments of specialty steel account for only about 2 percent of all steel produced in North America, annual revenues of approximately $8 billion account for about 14 percent of the total value of all steel shipped. Our industry has long been recognized as extremely modern and efficient and second to none in the world. We have a strong history of continuous investment in plant and equipment. We are a world-competitive industry facing an import problem based solely on unfair trade. We cannot afford to, in essence, continue to subsidize our customers who are benefitting from predatory import pricing. Our basic responsibility to our shareholders and employees requires that we file dumping and countervailing duty suits to seek restoration of fair pricing in the U.S. marketplace. We greatly appreciate the opportunity to talk about our situation today. Three years ago, SSINA did a study in which we examined anticipated growth in worldwide stainless capacity. At that time, we projected that by mid-1998, new capacity would come on stream around the world at twice the size of the U.S. stainless market. At the same time we sought a Multilateral Specialty Steel Agreement (MSSA) to reduce subsidies and encourage fair trading, but our efforts were rebuffed by foreign interests. To no one's surprise, with no MSSA in place much of the new capacity that came on line was built with foreign government subsidies. Even though market demand for stainless steel has been and remains strong, we knew that there was simply no way that world markets could ever absorb the new capacity-and prices were going to be depressed. While we knew that global capacity was increasing dramatically, we could not predict the second contributing factor to the current crisis disastrous economic developments in Asia which began in mid-1997. You know the story: the currencies of the Asian "tigers" were severely weakened, their consumers panicked and refused to buy, and their steel mills, desperate for hard currency, began the sale of the decade-with no thought of profitability or even costs of production. As a result of excess capacity funded by government subsidies and the unpredicted effect of the Asian crisis, the price crunch was much more severe than we anticipated. Prices today are off about 30 to 40 percent compared to just three years ago. To counter the surge of unfairly traded specialty steels entering the country, we knew it would be necessary to begin the long, arduous and expensive task of filing antidumping and countervailing duty trade cases. Over the last 35 years, SSINĂ has all too regularly found it necessary to challenge the unfair international trading practices of our trading partners around the world. In the past 18 months, stainless steel producers have filed 34 trade cases against more than 45 producers in 14 countries on four different product lines. A summary is attached to my statement. It has been a difficult process. But, we are finally beginning to see some improvement in some stainless prices as a result of our trade cases. Bear in mind that it takes about a year and a half from the decision to launch cases to final decisions by the Department of Commerce and the ITC. So where do we go from here? The evidence is clear-foreign manufacturers are willing to do anything and sell at any price to make a sale. Modern and efficient industries like ours must aggressively attack these unfair trade practices in order to preserve our markets. We will continue to closely monitor imports. We will continue to actively pursue the trade cases already filed to their successful conclusion. We will fight to preserve existing cases as the "sunset" review process moves through the Commerce Department and the International Trade Commission. And, we are actively considering additional cases on specialty steel products and producThe Administration is beginning to recognize the severity of the steel import situation, as highlighted when the Secretary of Commerce personally announced the antidumping margins in the stainless steel wire rod cases last summer. The mes ers. sage Secretary Daley delivered was directed squarely at foreign producers of all products dumping cannot be the answer to the economic crisis in Asia or elsewhere. Our companies and employees should not be the scapegoats for other nations' economic mismanagement. The Commerce Department should recognize the devastating effect of the Asian financial crisis on the U.S. marketplace. In the past year, we have seen imports of certain stainless steel products from Korea surge over 50 percent. At the same time, the Korean won lost more than 60 percent of its value. Yet, for reasons that puzzle me, the Commerce Department has refused to take this dramatic currency devaluation into account when making its preliminary dumping determinations against Korea. In fact, Korean stainless steel producers have continued dumping their products into the U.S. market with impunity. Both Secretary Daley and Undersecretary Aaron have stated numerous times that they will enforce U.S. trade laws to the fullest extent, yet if foreign exporters are allowed to take advantage of a weak currency to dump product into the United States, they will be beyond the reach of our dumping law clearly not what Congress intended. The Commerce Department should recognize the effect of drastic exchange rate changes in administering the dumping law. We simply will not allow our efficient, technologically-superior U.S. specialty steel industry and the valued jobs of our dedicated workforce to be destroyed by illegal foreign trade practices. I urge you to join us in protecting the sanctity of our trade laws and to oppose at every opportunity any attempt to weaken them. SSINA joins with other steel trade associations in urging the Congress to work with us and the Administration to develop a comprehensive policy to address these issues. We urge that the following steps be taken: • Administration pressure on foreign governments to discourage unfair trade practices such as dumping and subsidization; • Expeditious handling of trade cases on specialty steel products; Ways and Means Committee support for H.R. 412, the "Trade Fairness Act of 1999," and legislation to pay the dumping duties over to injured U.S. industries; and Legislation to improve the trade laws to provide more effective relief to injured industries. We are working with our colleagues in the steel industry and other industries to develop specific legislative proposals. These will be provided to you shortly. The specialty steel industry is on full alert in monitoring specialty steel imports and reported foreign efforts to circumvent U.S. trade laws. We appreciate your help in assuring that competitive, efficient industries such as ours are given the opportunity to compete in a marketplace free of cutthroat practices which violate both U.S. laws and the international rules of the WTO. Thank you, Mr. Chairman, for holding this timely hearing. ATTACHMENT Stainless Steel Producers and Unions-Status of Unfair Trade Cases by Major Product Line Filed in 1997 and 1998 Product Date Filed Named Countries Next Step Product Named Countries Stainless Steel Rod July 30, 1997 Italy, Germany, Japan, Korea, Spain, Sweden, Taiwan The case concluded with the issuance of final antidumping and countervailing duty (CVD) orders by the Commerce Department on 9/15/ 98. The duties range up to 34%, with penalties extending back to 3/ 5/98. The International Trade Commission (ITC) voted on final injury determination on 9/1/98. Excluding Germany, ITC concluded that imports from six of the seven named countries caused injury to producers. On 10/15/98, appeals were filed with Court of International Trade. Successful appeals would result in a significant increase in the antidumping duties levied on imports from Korea and the assessment of antidumping duties on imports from Germany. The industry will vigorously pursue the appeals process with the hope of a decision by year-end 1999. Stainless Steel Round Wire March 27, 1998 Canada, India, Japan, Korea, Spain, Taiwan Stainless Steel Producers and Unions-Status of Unfair Trade Cases by Major Product Line Filed in 1997 Status Case Concludes Product Named Countries Case Concludes Product Status Case Concludes and 1998 Continued On 6/4/98, ITC preliminarily determined that imports from the named countries are injuring the domestic industry. In 11/13/98, Commerce set preliminary antidumping duties ranging up to 36% on imports from the subject countries. The ITC and Commerce will conclude their investigations and final antidumping duty orders will be announced in early April 1999. Stainless Steel Plate In Coils March 31, 1998 Belgium, Canada, Italy, South Korea, South Africa, Taiwan June 10, 1998 France, Germany, Italy, Japan, Mexico, South Korea, Taiwan, United On 7/24/98, the ITC voted preliminarily that imports from the named Chairman CRANE. Thank you. Mr. Becker. STATEMENT OF GEORGE BECKER, INTERNATIONAL Mr. BECKER. Thank you, Mr. Chairman. Without a clear linkage to the global solution to the crisis of American steel, the Steelworkers Union cannot support the recently concluded agreements with Russia. The Steelworkers would be prepared to support a suspension agreement and comprehensive steel agreement, provided they were part of a global solution. In the absence of such a linkage, there is no justification for entering into a suspension agreement with Russia, particularly in light of the Commerce Department's finding that Russia engaged in an egregious level of dumping of hot-rolled steel. The crisis facing the American steel industry cannot be dealt with on a country-by-country or product-by-product basis. It took over 15 months of suffering before the flow of one steel product from three countries was restricted. It is also far too easy for the dumped steel to be moved from one country to another, and from one type of product to another. For example, a year ago there was a suspension agreement with Russia, the Ukraine, China, and South Africa to cut the link on carbon steel plate. These countries virtually dropped out of the market. Just last week, however, the Steelworkers and the industry had to file trade cases against eight new countries that have now moved into the market and dumped, and subsidized steel plate. There is also no protection against the foreign producers such as those in South America from purchasing Russian semifinished steel products and finishing them, and then dumping the finished products into our market. These agreements with Russia must either be linked to an administration-initiated and supported 201 action on all steel products, which would result in global, quantitative restraints, minimum prices, and adequate enforcement mechanism and a moratorium on further shipments until the inventory of dumped steel has been cleared. Or two, become part of H.R. 506, this is the Visclosky quota bill, and Senate bill 395, which is Senator Rockefeller's bill, which would roll back all steel imports to the precrisis levels. The comprehensive steel agreement, while flawed as described above, does have the virtue of clearly demonstrating that the administration can if it wishes use its authority to limit the flood of foreign steel into this country. We call on the administration to demonstrate the same resolve, broaden their focus, and address the problem in its entirety. We call upon this Subcommittee to move the quota bill, H.R. 506. Mr. Chairman, I would add though that the Steelworkers Union and its members are losing confidence and trust in this process. We played by the rules for 15 months while processing the trade cases. We lost over 10,000 steelworkers. Three companies have been bankrupt. Then finally winning the cases to Japan, Brazil, and Russia, only to find that the government tells Russia that they will not be held accountable for the illegal dumped steel. Today I find that the government is initiating the same kind of action with Brazil on a suspension agreement. I would question is Japan next. I think it is essential that we move to solve this problem. These countries control that the rollback in steel, the quantitative amounts of steel that showed up in January, this is controlled just like it was controlled when they dumped huge levels into the market, the huge surges. They have rolled them back. They can ship it just as easily to another country and they can increase it. They can ship product lines. We need to solve this before we virtually lose the steel industry that we know in America today. Thank you very much. [The prepared statement follows:] Statement of George Becker, International President, United Steelworkers of America I. THE STEEL CRISIS Mr. Chairman and distinguished members of the Ways and Means Subcommittee on Trade, thank you for inviting me to appear before you today to discuss what is truly a crisis in the American steel industry and for steelworkers all across the country. Today, the jobs and future of steelworkers all across America are being threatened by a flood of foreign steel, much of which has been illegally dumped into our market. Already, over 10,000 steelworkers' jobs in basic steel, iron ore mining, and coke production have been lost. Thousands more have seen their work hours and their paychecks cut as their employers have adjusted to the grim reality of empty order books and lost customers. The list of companies where steelworkers have lost their jobs or had their work hours and paychecks cut grows longer every day. Gulf States Steel in Gadsden, Alabama; Geneva Works in Provo, Utah; Bethlehem Steel's Lukens Division plants in Houston and Washington, Pennsylvania, and their Sparrow's Point plant in Baltimore, Maryland; WCI, Inc., in Warren, Ohio; USX's Fairless Works in Bucks County, Pennsylvania; North Star Steel in Texas, and LTV's Cleveland Works in Ohio. The list goes on and on. Several steel companies have already been forced into bankruptcy as a result of the current crisis, including Geneva, Laclede, and Acme. Perhaps worst of all, the crisis we are in today was both predictable and preventable. We are in a crisis today because for over a year, our policymakers ignored our warnings as foreign producers dumped millions of tons of steel into the U.S. market. When the Asian currencies collapsed in late 1997 and early 1998, we warned that if decisive action was not taken that foreign-made steel would be dumped into the American market. We warned that the International Monetary Fund's (IMF) insistence upon export-based solutions to the economic problems facing nations in Asia, eastern Europe, Latin America, and Russia would be a prescription for disaster for our own manufacturing industries. We warned that the longer action was delayed, the more damage would be done, and the more difficult this problem would be to solve. Our warnings fell on deaf ears. Unfortunately, our predictions have now been realized. 1998 was a disastrous year for the steel industry and our steelworkers. Last year, the U.S. imported a record 41 million tons of steel. That's an increase of one-third over the volume of imports the preceding_year of 1997. From July through November last year, each month's steel import figures were the highest monthly totals in history. In fact, our total volume of steel imports in 1998 was nearly half of the total volume of shipments by the entire U.S. steel industry. Almost a year ago, in March 1998, the U.S. steel industry was operating at 93 percent of capacity. Today, in February 1999, the industry is operating at only 74 percent of capacity despite a strong U.S. economy and a correspondingly strong demand for steel. This decline in domestic capacity has occurred simultaneously with the huge flood of steel imports, which has arrived on American shores since the summer of 1997. While the volume of imported steel has surged, average import values fell by almost $100 per ton last year. II. THE HUMAN IMPACT Mr. Chairman, there is a human face behind all of these cold statistics about import levels, unused capacity, and import values. Steelworkers work hard for a living. They work in some of the hottest, noisiest, and most dangerous work places anywhere and yet they take great pride in what they do. Many come from families where their fathers, grandfathers, and even great grandfathers worked in this industry. They are the people who have helped to build America. They have made the steel that has built our skyscrapers and our bridges and they are the same people who have made the steel used to defend America throughout its history. They are proud people. They have repeatedly shown their willingness to compete in the world market, but they cannot compete if the rules of international trade are not fair or if our trade laws are being violated with no sanctions. Many of us have bitter and painful memories of the last steel crisis in the late 1970s and early 1980s when over 350,000 steelworkers lost their jobs. Four hundred forty-seven (447) steel making facilities were shut down. Twenty-five steel producers went into bankruptcy. While many found other jobs, many more never worked again. The economic and social costs of that crisis were staggering. Many steelworkers lost homes, auto |