Congressman Philip M. Crane (R-IL), Chairman, Subcommittee on Trade of the Committee on Ways and Means, today announced that the Subcommittee will hold a hearing on steel trade issues. The hearing will take place on Thursday, February 25, 1999, in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 1:00 p.m.

Oral testimony at this hearing will be from both invited and public witnesses. Invited witnesses will include United States Trade Representative Charlene Barshefsky and Secretary of Commerce William Daley. Also, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee or for inclusion in the printed record of the hearing.

BACKGROUND:

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 near record levels, and steel demand in the United States during 1998 was the strongest in history.

Preliminary U.S. Department of Commerce figures for December 1998 indicate a decrease of 1.1 million metric tons in steel imports entering the United States. The November-to-December change in steel imports, based on metric tonnage, reflects decreases primarily in hot-rolled sheets, plates in coil, and blooms, billets and slabs. The source of the decrease is primarily Russia, Japan, and Korea.

In response to the increase in steel imports, segments of the U.S. industry have sought relief under U.S. trade laws. Most recently, U.S. steel producers and workers filed antidumping petitions at the Commerce Department on September 30, 1998, 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 affirmative injury determination on these petitions on November 13, 1998. On November 23, 1998, the Commerce Department 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.

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. The determination with respect to Russia is expected shortly. Commerce final determinations are due April 28, unless extended, and the ITC final determinations are due June 2, unless extended.

On December 30, 1998, another segment of the U.S. steel industry filed a petition for relief with the ITC under section 201 of the Trade Act of 1974 on imports of steel wire rod, alleging that imports of the product are a cause of substantial injury to the U.S. industry. An injury determination on that petition is due mid-May.

In the 106th Congress, four pieces of legislation have been introduced in the House of Representatives in response to the increase in U.S. steel imports. On January 19, 1999, Congressman Aderholt introduced H.R. 327, a bill to provide for the assessment of antidumping duties on entries of steel products made prior to the effective date of any antidumping order issued in the current investigation. On the same day, Congressman Regula introduced H.R. 412, the "Trade Fairness Act of 1999," to amend the injury test for a safeguard action by eliminating the requirement that imports be a "substantial" cause of injury to U.S. industry in order for the ITC to recommend industry relief to the President. In addition, H.R. 412 would establish a steel import permit and monitoring program to permit the U.S. Government to receive and analyze import data in a more timely manner by requiring the use of a permit to import steel into the United States.

On February 2, 1999, Congressman Traficant introduced H.R. 502, the "Fair Steel Trade Act," to impose a three-month ban on imports of steel and steel products from Japan, Russia, South Korea, and Brazil. Also on February 2, Congressman Visclosky introduced H.R. 506, a bill to require the President to take steps, by imposing quotas, tariff surcharges, negotiated enforceable voluntary export restraint agreements, or other methods, to ensure that the volume of steel products imported into the United States during any month 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. H.R. 327, H.R. 412, H.R. 502, and H.R. 506 were all referred to the Committee on Ways and Means.

On January 7, 1999, the Administration issued its own plan to address the steel crisis.

In announcing the hearing, Chairman Crane stated: "There is no question that the U.S. steel industry is facing competition from foreign producers that has intensified since the onset of the global financial crisis. I believe that the United States should strongly enforce its existing trade laws, which are designed to deal with such competition. I look forward to this opportunity to examine the impact of the increase in steel imports on the U.S. industry and the U.S. economy, as well as the legislation that has been introduced to address the rise in steel imports. I intend to examine whether proposed legislation is consistent with our WTO obligations and whether it runs the risk of sending messages to our trading partners that erecting trade barriers is an appropriate response in these circumstances. Finally, I am concerned about U.S. downstream users of steel, who are dependent on competitively priced inputs to maintain their own competitive stance in the global market."

FOCUS OF THE HEARING:

Witnesses should address the impact of the increase in steel imports on U.S. steel producers and workers and on the U.S. economy, as well as the legislation addressing this issue which has been introduced in the 106th Congress. In addition, testimony presented should address the effectiveness of U.S. trade remedy laws and the effect on downstream steel users in the United States to restricting access to foreign produced steel. Finally, witnesses should address ways to seek greater foreign consumption of excess steel and the possibility of retaliation against U.S. exports in response to action that would restrict the access of foreign steel to the U.S. market.

DETAILS FOR SUBMISSIONS OF REQUESTS TO BE HEARD:

Requests to be heard at the hearing must be made by telephone to Traci Altman or Pete Davila at (202) 225-1721 no later than the close of business, Friday, February 19, 1999. The telephone request should be followed by a formal written request to A.L. Singleton, Chief of Staff, Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House Office Building, Washington, D.C. 20515. The staff of the Subcommittee on Trade will notify by telephone those scheduled to appear as soon as possible after the filing deadline. Any questions concerning a scheduled appearance should be directed to the Subcommittee on Trade staff at (202) 225-6649.

In view of the limited time available to hear witnesses, the Subcommittee may not be able to accommodate all requests to be heard. Those persons and organizations not scheduled for an oral appearance are encouraged to submit written statements for the record of the hearing. All persons requesting to be heard, whether they are scheduled for oral testimony or not, will be notified as soon as possible after the filing deadline.

Witnesses scheduled to present oral testimony are required to summarize briefly their written statements in no more than five minutes. THE FIVE-MINUTE RULE WILL BE STRICTLY ENFORCED. The full written statement of each witness will be included in the printed record, in accordance with House Rules.

In order to assure the most productive use of the limited amount of time available to question witnesses, all witnesses scheduled to appear before the Subcommittee are required to submit 200 copies, along with an IBM compatible 3.5-inch diskette in WordPerfect 5.1 format, of their prepared statement for review by Members prior to the hearing. Testimony should arrive at the Subcommittee on Trade office, room 1104 Longworth House Office Building, no later than Tuesday, February 23, 1999. Failure to do so may result in the witness being denied the opportunity to testify in person.

WRITTEN STATEMENTS IN LIEU OF PERSONAL APPEARANCE:

Any person or organization wishing to submit a written statement for the printed record of the hearing should submit six (6) single-spaced copies of their statement, along with an IBM compatible 3.5-inch diskette in WordPerfect 5.1 format, with their name, address, and hearing date noted on a label, by the close of business, Monday, March 8, 1999, to A.L. Singleton, Chief of Staff, Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House Office Building, Washington, D.C. 20515. If those filing written statements wish to have their statements distributed to the press and interested public at the hearing, they may deliver 200 additional copies for this purpose to the Subcommittee on Trade office, room 1104 Longworth House Office Building, by close of business the day before the hearing.

FORMATTING REQUIREMENTS:

Each statement presented for printing to the Committee by a witness, any written statement or exhibit submitted for the printed record or any written comments in response to a request for written comments must conform to the guidelines listed below. Any statement or exhibit not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.

1. All statements and any accompanying exhibits for printing must be submitted on an IBM compatible 3.5-inch diskette in WordPerfect 5.1 format, typed in single space and may not exceed a total of 10 pages including attachments. Witnesses are advised that the Committee will rely on electronic submissions for printing the official hearing record.

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.

3. A witness appearing at a public hearing, or submitting a statement for the record of a public hearing, or submitting written comments in response to a published request for comments by the Committee, must include on his statement or submission a list of all clients, persons, or organizations on whose behalf the witness appears.

4. A supplemental sheet must accompany each statement listing the name, company, address, telephone and fax numbers where the witness or the designated representative may be reached. This supplemental sheet will not be included in the printed record.

The above restrictions and limitations apply only to material being submitted for printing. Statements and exhibits or supplementary material submitted solely for distribution to the Members, the press, and the public during the course of a public hearing may be submitted in other forms.

Note: All Committee advisories and news releases are available on the World Wide Web at 'HTTP://WWW.HOUSE.GOV/WAYS__MEANS/.

Chairman CRANE. Will everyone please take their seats?

Good afternoon and welcome to this hearing on the topic of steel trade issues. This hearing provides us with an opportunity to examine the underlying causes of the state of the steel industry today and the role of imports.

I believe that we must strongly enforce U.S. trade remedy statutes and it appears that the administration is doing so with preliminary antidumping and countervailing duty margins announced by the Commerce Department in the past few days.

At the same time, I believe that we must make sure that any actions taken against steel imports in our market do not violate our obligations in the World Trade Organization or send the wrong signals to countries recovering from the global financing crises about the steps they should take in their own economies. We must also be concerned about the impact of any changes to the law on U.S. industrial users and their employees, as well as U.S. consumers. [The opening statement follows:]

Opening Statement of Hon. Philip M. Crane, a Representative in Congress from the State of Illinois

Good afternoon. Welcome to this hearing of the Subcommittee on Trade on the topic of steel trade issues. This hearing provides us with an opportunity to examine the underlying causes of the state of the steel industry today and the role of imports.

I believe that we must strongly enforce U.S. trade remedy statutes and it appears that the Administration is doing so with the preliminary antidumping and countervailing duty determinations and margins announced by the Commerce Department in the past few days. At the same time, I believe that we must make sure that any actions taken against steel imports in our market do not violate our obligations in the World Trade Organization or send the wrong signals to countries recovering from the global financial crisis about the steps they should take in their own economies. We must also be concerned about the impact of any changes to the law on U.S. industrial users and their employees, as well as U.S. consumers.

I would now like to yield to Mr. Houghton, who serves as Chairman of the Ways and Means Oversight Subcommittee, to make a brief opening statement.

I would now like to recognize Mr. Levin, the Ranking Member of the Trade Subcommittee, for an opening statement.

We have a very full witness list today and I would like to inform all of our witnesses that we will be strictly enforcing the five minute rule. Longer written statements will be made a part of the hearing printed record of the hearing.

Because of the length of the hearing, and the number of Members interested in testifying, we are using special procedures. We will ask the first Member panel to testify and then retire to the witness chairs located directly behind the witness table. After the second Member panel has finished, there will be a question and answer period for both panels. Should you be called upon to answer questions, please move to the chair located to the left of the panel table. Please identify yourself for the hearing record before responding. The remaining panels will proceed as usual.

With that, I would like turn to our first panel of witnesses and ask that our Colleagues testify in the order printed on the witness list. We will begin with Senator Specter.

Chairman CRANE. And, I now would like to yield to Mr. Levin, who is the Ranking Member of the Trade Subcommittee, for an opening statement.

Mr. LEVIN. Thank you, Mr. Chairman. I am glad we decided last month that it would be useful to hold this hearing. Since then, the steel issue has become even more important.

As we are all aware, over the last year low-priced imports of steel have flooded the U.S. market. Although our 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 steelworkers have lost their livelihood as companies have reduced their work force, 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. Most recently, the Department of Commerce preliminarily decided that Japanese, Brazilian, and Russian producers were dumping hot-rolled steel into the United States. The Department also announced this week that it has reached two agreements with Russia to curb steel imports.

One immediate step we can take to address further the current crises is to ensure that the U.S. Government has adequate resources. To that end, I am proposing today that Congress make supplemental appropriations to the Department of Commerce as soon as possible to ensure that it has adequate resources to address this problem.

Last week, 14 additional petitions were filed to address imports of dumped and subsidized steel plate products. This supplemental appropriation would ensure that the Department of Commerce has the resources it needs to process these cases swiftly.

While this step and the Russian agreements and the antidumping determinations against Japanese and Brazilian steel will provide some relief to the U.S. industry, the vital question remainsand we will address it today-whether they will be enough to resolve the problem. As I see it, there are three reasons why they are not.

First, for workers, relief is too little, too late. In important respects, U.S. law is unable to provide U.S. producers with expeditious relief. To make an effective case under the antidumping laws, U.S. producers must wait until the damage is imminent or has already been done. Once a case is filed, it takes a significant amount of time for relief to be provided, even with such steps as the critical circumstances finding which was invoked by the administration. Further, section 201 has not been used effectively for rapid response to import surges, even where anticipated.

Second, the response largely has been ad hoc. We now have provisional measures in place against three countries covering one group of products, except for the broader agreement with Russia. While these measures appear to have at least temporarily stemmed