tured 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 action.

Mr. Chairman, 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 workers?

I firmly believe that we need legislative action. There are several major areas that can be effectively addressed by legislation if we act quickly.

SECTION 201

We need to start by strengthening our ability to deal with import surges. By bringing U.S. standards in line with the WTO "Safeguards Agreement," we can make laws which have been on our books for years, such as Section 201 of the Trade Act, more effective and easier to use. U.S. standards for proving injury are currently more strict than required by the World Trade Organization. With these changes, the industry or the Administration will be able to challenge unfair trading activities by foreign competitors in a more timely fashion.

IMPORT MONITORING

Secondly, we need to establish a strong tracking system to monitor imports. Many of our trading partners already have systems for this purpose in place. I suggest a steel import notification and monitoring system, which is modeled on similar systems currently in use by our largest trading partners, Canada and Mexico, that 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 market.

ANTI-DUMPING

We should consider strengthening our anti-dumping and countervailing duty (AD/ CVD) laws. We can bring the injury thresholds in line with international standards to allow workers and companies adequate remedies when it is proven that our trading partners are trading unfairly. One aspect of the AD/CVD laws that can be improved is the consideration of currency devaluations. Currency devaluations can have the effect of "robbing" the value of sanctions imposed and allow dumpers to avoid the penalties they should legally face.

VOLUNTARY RESTRAINT AGREEMENTS (VRAS)

Given the current situation, I believe that the United States needs to put pressure on our trading partners to curb their exports into our market. Negotiated Voluntary Restraint Agreements (VRAs) are one possible method the administration can use to accomplish this result.

We need to be careful, however, that we do not end up rewarding destructive and illegal actions by our trading partners. For an example of how this might happen, think of a horse thief who sneaks into a barn which has 10 horses in it. I am concerned that in some instances, VRAS are being used to limit the theft to just 3 horses once he is caught in the act of stealing.

It is critical to allow the anti-dumping suits which have been filed in accordance with our trade laws to run their course and come to fruition. Only then can we expose illegal dumpers to the full weight of the law. The concept of a level playing field and our "rules-based trading system" depends on this. VRAS should be used as an additional tool which can supplement the remedies allowed for under our antidumping laws, NOT as an alternative that weakens anti-dumping sanctions.

RUSSIAN AGREEMENT

In this light, the recently announced agreement with Russia gives reason for concern. In addition to short-circuiting the legal process of proving dumping and imposing sanctions against violators of the trade laws, the agreement would cede a large part of our market to one of the most inefficient steel producers in the world.

H.R. 412 AS THE BASIS

To those of you who have been following the introduction of steel related legislation in this Congress, you will probably recognize the first two points of my suggested legislative action as the components of a bill introduced by my colleague, Rep. Ralph Regula, who has most ably led this fight as Chairman of the Congressional Steel Caucus. I believe that his bill, H.R. 412 should be the basis for legislation that should be considered by the House of Representatives. The strengthening of our ability to enforce our trade laws and effectively monitor our imports is critical to ensuring that this crisis does not worsen and that a similar future crisis can be forestalled.

Rep. Regula's bill would make it easier for the President to impose duties, impose 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 can hardly be colored as sending any sort of protectionist signal(s) to our trading partners.

To this base legislation we should seriously consider adding several other ele

ments:

H.R. 506

I am a cosponsor of H.R. 506, introduced by Congressman Peter Visclosky and cosponsored by over 170 members of the House. Language similar to Rep. Visclosky's bill reducing the burden of imports into our market to pre-crisis levels will help to limit the damage done to communities, workers, and firms in the U.S. steel industry in the short term.

CARTELS

Additionally, we should look for ways we can limit the effect that foreign cartels of steel producers have on our ability to export U.S. made steel products. It is apparent that cartel activity in foreign countries is not only creating an unlevel playing field for our producers but may in fact be leading to increasing instances of dumping into the U.S. market.

TAA

Finally, I think that it is important that the certification requirements for steel industry workers applying for benefits under the Trade Adjustment Assistance program be relaxed to parallel the requirements for the NAFTA transitional adjustment assistance program. This small change would be a big help in allowing workers whose jobs were disrupted by surges in imports to obtain benefits under this valuable program.

CLOSING

Anytime an American loses their job it is a tragedy. But in the steel valleys and mills across our country this tragedy has been replayed thousands of times over in just the past few months. The Administration has been unwilling to act. No wonder our communities and districts are looking to Congress to take the strong action necessary to stop this tragedy and prevent the theft of our jobs by illegal imports.

I want to be clear. The choice we face today is not between free markets on the one hand and protectionist barriers on the other. The choice today is whether we have the will to take appropriate action, such as I have outlined here, to prevent the victimization of our economy by predatory exporters determined to pursue a mercantilistic economic policy at the expense of our workers. Unfortunately, nations sometimes try to take unfair advantage of their trading partners. Companies may attempt to benefit-at the expense of their legitimate competitors-from unfair and often disguised subsidies. When that happens it is the job of government to step in and ensure a level playing field where competition—which benefits us all—can survive. Now is such a time for government action. I hope this committee will answer our call and restore fairness for American steel producers. Thank you.

Chairman CRANE. Thank you, Mr. English, and now, Mr. Cardin. STATEMENT OF HON. BENJAMIN L. CARDIN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MARYLAND

Mr. CARDIN. Thank you, Chairman Crane and Mr. Levin and the other Members of the Subcommittee. I appreciate this opportunity of testifying before this Subcommittee.

I would ask that my full statement be made part of the record. Chairman CRANE. Without objection, so ordered.

Mr. CARDIN. I have the honor of representing the 3d Congressional District of Maryland. I represent many of the steelworkers who work at Bethlehem Steel at Sparrow's Point. They are amply represented by their locals-2610, 4727, and 9084-and many of them have been to visit with you. You know firsthand their problems.

Let me underscore what has happened. Now, I understand the last month or two might have shown some improvements on steel imports. But what we saw between 1997 and 1998, for example, was an increase of 162 percent-going from 7.4 percent of the U.S. market to 15.8 percent of the U.S. market in 1 year. That occurred because of illegal dumping of steel. There is no question about that. Now, Mr. Chairman, I have been in government long enough to remember the problems of U.S. steel production. We were not competitive internationally during the seventies and the eighties and the steelworkers and the steel companies made the adjustments necessary to become competitive. At Sparrow's Point, we can compete on a level playingfield with any steel producer in any country in the world. We couldn't do that in the seventies, but we can do it today if we have a fair playingfield.

What's happening right now is not fair. The steelworkers are losing their jobs and we are losing our capacity in this country to produce steel. That is not right. It is time for action. There are those who say: Well, just wait and let the normal trade process work. If we do that, we are going to lose steel production in the United States unfairly. It is time for us to move legislation now. I support the Visclosky bill, H.R. 506, as a way to move this issue forward. It is time for us to help the distressed steelworkers in this country. It is time for us to help the steel companies in this country maintain their production. When they are competitive and on a level playingfield, they will be able to do that.

So, I urge the Subcommittee to act soon. Let us bring a bill to the floor and let us move legislation. Thank you, Mr. Chairman. [The prepared statement follows:]

Statement of Hon. Benjamin L. Cardin, a Representative in Congress from the State of Maryland

Mr. Chairman and distinguished members of the Ways and Means Subcommittee on Trade: I applaud your efforts here today on steel dumping and look forward to an open debate on this troubling issue.

I represent many of the 4,600 men and women who work at Bethlehem Steel's Sparrows Point Division in Baltimore. They are very ably represented by locals 2610, 4727, and 9084. I say that because I, like many of you, have had the chance

to meet with many of these workers and their union leaders in the last six months— in my office and around the district. They have painted a compelling and disturbing picture of the state of the industry in the wake of these unfair dumping practices. Mr Chairman, these people are frightened and frustrated. Although no jobs have been lost yet at Sparrows Point, there has been a slowdown at the plant and the fourth quarter financial report from the company was especially bleak. Bethlehem Steel, as my friend Hank Barnette will attest, is clearly hurting.

And, to be blunt, the workers who have taken time to visit my office are furious. They are furious at the inaction of their government in the face of a foreign invasion. They are furious that 10,000 fellow steelworkers are already out of work. They are furious because they realize they're next. They are furious but they won't go quietly. And I think the House Steel Caucus has made it clear that Congress won't sit quietly either.

It is hard to argue with this fury when you consider the numbers and the facts. U.S. imports of steel from Japan jumped nearly 162-percent from 1997 to 1998. In 1998, Japan exported to the US a staggering 385-percent more steel mill products than it did in 1997, according to new statistics from the Commerce Department. It is no surprise that Japan's share of the US market for imported steel also jumped dramatically-from 7.4 percent to 15.8 percent.

At Sparrows Point in Baltimore, they experienced a 20-percent drop in hot-and cold-rolled steel from June 1997 to November 1998. During that same time, the plant weathered a 25-percent decrease in realized prices. Although they have avoided layoffs, plant officials say they can't operate at these levels for too long without

them.

I contend that the American steel industry took the lumps it deserved in the 1970s and 80s and managed to reemerge stronger and more profitable because of it. Since 1985, there has been a $1 billion investment in the Sparrows Point facility. I began my career here in Congress just as this revitalized plant and industry returned to the fore in 1988.

But I also remember the darkness before the dawn. As Speaker of the House in the Maryland General Assembly throughout the 1980s, I remember that painful process for Beth Steel and the steel industry as a whole. Between 1977 and 1987, 45 million tons of steelmaking capacity was lost due to bankruptcies, plant closures, and partial closures. Employment dropped 57-percent from 442,000 to 188,000 jobs, and the wages and benefits of those workers who survived were substantially cut as well.

The industry had let itself lag behind other countries, failing to adopt new techniques and practices until these techniques and practices themselves were out of date. The industry needed to change and a revitalized international steel industry did just that.

But, Mr. Chairman, we can't blame the US steel industry for the problems it faces today. And one month declines in the levels of steel imports are nice; but I fear them to be the streaks of a false dawn.

I am a supporter of HR 506 and congratulate Rep. Peter Visclosky for his work on its behalf. The bill is simple because the problem is relatively simple. An avalanche of steel dumping began last summer; HR 506 would return import levels to what they were pre-July 1998. Let's all go back to the same level field we were all competing on. Let's get off this tilted track before it's too late.

I appreciate the complexity of the financial crisis in Asia which many agree prompted this glut of imports. I appreciate the work of Treasury Secretary Rubin in minimizing the effects of global economic problems on the US. I appreciate the distress of steel workers all over Asia, South America and Russia. But quite frankly I am concerned about the effects of steel dumping on our economy. A recent report from the Economic Strategy Institute makes it clear that the long term negative effects of steel dumping-lost production, investment and high wage jobs-easily outweigh the short term benefits of cheaper steel.

And I am most concerned about the distressed steelworkers at Beth Steel and all over the US. They are my primary responsibility—they are our primary responsibility—and we have to do more for them. I am equally concerned about the future capacity to produce steel in the US.

This industry has been sending us SOS signals for months. A full hearing on this bill and its consideration by the full House would help us convince them and the American public that we hear their calls.

Thank you.

STATEMENT OF HON. RALPH REGULA, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO

Mr. REGULA. Thank you, Mr. Chairman. First of all, I would like to ask unanimous consent to enter the statement of Jack Quinn in the record. He cannot be here today. So, I will submit that and also ask unanimous consent to put my statement in the record and I will summarize that statement.

I know that you have a lot of witnesses. I will try to keep my remarks very brief.

It goes without saying that there is a problem. We all agree on that. The issue is how to solve the problem. You have a number of options that will be available to you.

I have one option that I think is constructive and that is H.R. 412. We have approximately 50 sponsors for this bill. It is important in that it does not violate our international trade agreements. It is totally compatible with the WTO requirements. I think that is an important element.

Second, it would permit the establishment of something comparable to the VRAS, Voluntary Restraint Agreements, that worked so effectively in the eighties. Congressman Murtha and I were very involved in getting the VRAs put in place and, as a result of the VRAS-which this Subcommittee supported-we have allowed the steel industry in the United States to become probably the most ef ficient, the most quality-conscious, and the most productive in the world today. And, in the process, labor, management, and government worked as a team.

One result of this modernizing effort was significant downsizing. Jobs in the steel industry have gone from 440,000 to 180,000. Industry and labor have worked together on this modernizing effort. Industry invested $50 billion in new plants and equipment. So, it's not a case that the management and labor have not worked together as a team and, likewise, government was a party to the effort in establishing the VRAS.

Now we are faced with a crisis again-not because we don't have quality, not because we are not competitive, not because we don't have the most efficient steel industry, but because product is being dumped in our marketplace to get access to hard currency and to export unemployment in other countries to us. That's not fair.

In the President's report of January 7 produced as a result of a congressional request, it says "free and fair rules-based trade is essential for both global economic recovery and for U.S. prosperity." I think that establishes the benchmark that we want to achieve. What H.R. 412 does is change the standard on section 201. It eliminates the term "substantial" because if you look in the dictionary, "substantial" is very large. So, what we have proposed to do is to make the standard compatible with WTO rules. We want an effective tool for the President to deal with the current crisis that has resulted in a loss of 10,000 jobs, and 3 companies in bankruptcy.