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Bush order on steel dumping may hit India

Aziz Haniffa
India Abroad Correspondent in Washington

India, which has been accused by the US of dumping steel and threatening the survival of the ailing American steel industry, could be in the firing line of a directive issued by President George W Bush.

Bush, following the US steel industry's plea for government relief, on Tuesday ordered the US International Trade Commission to conduct a thorough investigation into the steel industry under section 201 of the 1974 Trade Law to determine whether 'unfair trade practices' are the reason for the plight of troubled American steel-makers.

Such a finding could lead to trade sanctions against India or any steel exporter to the US and under the law, the President would be empowered to restrict imports that the ITC determines are a threat to the domestic industry.

India, along with the European Union and a slew of other nations, could be hit hard if the ITC conclude that the US steel-makers' complaint is correct.

The ITC could restrict steel imports from India and other steel exporters by a variety of means, including applying punitive tariffs.

The ITC would have to determine whether remedial measures are necessary within 120 days.

If its probe discovers unfair trade practices, like massive government subsidies being provided to the steel exporters in countries such as India, the agency would have to recommend remedies within 60 days.

The President would then act on the ITC's findings.

Already steel exporters in India and a host of other countries are under punitive tariffs for certain categories of steel imports. The order issued by Bush, however, would cover all steel categories.

The steel industry and the labour union leaders had lobbied with the Congress and the US administration to use the section 201 provision, warning that failure to do so could result in the replication of the 1998 steel crisis in the US where several steel mills had to close down with thousands of workers were laid off.

Bush, while announcing his decision to direct the ITC for a 'full investigation', said: "This initiative will be designed to restore market forces to world steel markets and eliminate the practices that harm our steel industry and its workers."

He charged that "the US steel industry has been affected by a 50-year-old legacy of foreign government intervention in the market and direct financial support of their steel industries.

"The result has been significant excess capacity, inefficient production and a glut of steel in world markets."

As a first step, Bush said that he would direct the US Trade Representative and the Secretaries of Commerce and Treasury "to initiate negotiations with our trading partners seeking the near-term elimination of inefficient excess capacity in the steel industry worldwide".

Second, he said, he would also direct them "to initiate negotiations on the rules that will govern steel trade in the future and eliminate the underlying market-distorting subsidies that led to the current conditions in the first place".

Meanwhile, he said his directive to the USTR to investigate the "injury to the US industry" by the ITC under section 201 was fully consistent with The US's WTO obligations.

US lawmakers from steel-producing states hailed Bush's action and said it would provide much needed relief to the battered US steel industry.

Senator Robert Byrd, West Virginia Democrat, said: "The American steel industry has been decimated by wave after wave of illegal below-cost foreign imports. If we do not act, if we do not take advantage of every law on our books to fight illegal trade, our domestic steel industry will disappear."

He said the Bush's decision was "long overdue, but very welcome".

Senator Jay Rockefeller, also a West Virginia Democrat, echoed Byrd's sentiments and predicted: "This action by the White House is going to send a strong message around the world that we will no longer tolerate illegal dumping of steel that has crippled our domestic steel industry and threatened our national and economic security".

He warned that "unless there is immediate, comprehensive relief covering all steel products, tens of thousands of jobs will be lost."

But lobbies for steel importing industries warned that protectionism that the administration was providing would result in the prices of cars, housing, heavy machinery and a variety of other products, going up.

Janet Kopenhaver, head of the Consuming Industries Trade Action Coalition, said: "The Bush administration's decision to initiate a section 201 investigation appears to ignore the interests of a huge number of companies, workers, and consumers who will face the consequences of import restraints."

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