October 26, 1998

The President
The White House
Washington, D.C. 20500

Dear Mr. President:

The American steel industry has begun to suffer irreparable harm from unprecedented levels of steel imports. Immediate action is needed to counteract the unfair trade practices of Japan, South Korea, Russia, Brazil, and others, and to ensure that the U.S. will continue to have the capacity to produce steel to meet its national security needs in the future.

American steelworkers and the American steel industry can no longer wait for a correction in the Asian and Russian financial crises or for the lengthy resolution of trade remedy cases to address the damage caused by huge increases in dumped and subsidized steel imports. Despite your best efforts, there is no end in sight to the Asian and Russian financial crises, and any relief for the U.S. industry from pending trade remedy cases could be twelve months away.

The U.S. today imports more steel than at any other point in history. Steel imports are expected to reach 50 million tons this year, more than twice the level that caused the imposition of voluntary restraint agreements in the mid-1980's. Hot-rolled steel imports from Japan for this year-to-date are running 527% higher than the comparable period last year. For Russia, imports are 50% higher, and for the Ukraine imports this year-to-date are 32% higher. This is on top of already huge rises in imports for the period 1995 to 1997, when hot-rolled steel imports from Russia increased 254%, imports from Japan increased 176%, and imports from Brazil jumped 157%.

The Asian and Russian currency crises are certainly in part responsible for this flood of imports, but only in part. A recent study presented to the Brookings Institute cites the role of Japan's government-directed steel industry cartel in promoting that country's steel export surge to the U.S. Similarly, reports from Korea indicate that the Korean government has given one of that country's major steel producers, Hanbo Steel, subsidies worth $6 billion since 1993, and continues to exercise ownership control of Pohang Iron and Steel, the world's largest steel producer. This kind of activity is at odds with the commitments Korea made to the International Monetary Fund (IMF) in order to get its $60 billion financial assistance package, which is largely funded by the American taxpayer. The American taxpayer should not be forced to finance the operation of non-viable, bankrupt Korean and Russian steel industries through the IMF, especially when those firms then dump cheap imports in our market and undermine otherwise competitive products made by American workers and American firms.

The surge in steel imports has already had a devastating impact on the U.S. industry, and it will only get worse without immediate action. Last month, Acme Steel became the first of what surely will be more U.S. steel companies to declare bankruptcy, directly as a result of the surge in cheap, subsidized steel imports that are flooding the U.S. market. The damage from imports is showing up in much more personal ways as well. Industry-wide, U.S. steel companies have cut back their production of hot-rolled steel between 15% and 20%. As a result, companies have announced the layoff of thousands of American working men and women and major cutbacks in hours for remaining workers.

It is essential to stop this erosion of steel production in the United States. When the U.S. implemented the trade agreement establishing the World Trade Organization, you made it clear that American workers and American industry would never be defenseless victims of unfair trade practices. You now have the opportunity to prevent unfair government-directed and government- subsidized practices from preying on U.S. steelworkers and the U.S. steel industry.

First, you should take immediate steps to roll back steel imports for all steel products and for all countries to the levels that existed before October, 1997, prior to the import crisis.

Second, following the upcoming determination by the International Trade Commission in the anti-dumping cases that have been filed against Japan, Brazil, and Russia, and in the countervailing duty case against Brazil, the Administration should take immediate steps to determine that "critical circumstances" exist in these cases, and to set an early date for the preliminary determination of dumping and subsidy.

Third, your Administration should establish an interagency task force within the Administration which, working directly with the industry and workers, should develop and propose both a short-term and a long-term plan for dealing with the problem of unfair trade practices by foreign steel producers and for preserving domestic steel production capacity for U.S. national security and other purposes.

I look forward to working with you to ensure that American steel workers and the American steel industry no longer will be victimized by the unfair trade practices of government- directed and government-subsidized foreign steel producers.

Sincerely,

JOHN D. DINGELL
RANKING MEMBER

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