Global Steel Trade; Structural Problems and Future Solutions

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• Reinvigorate the international steel policy agenda. - Make the Organization for Economic Cooperation and Development (OECD) Steel Committee a viable forum for real progress. - Restrict government and multilateral development bank lending to expand steel capacity. • Promote more market-oriented financial systems, including in major steel-producing countries, through complementary measures. Maintain Strong, WTO-Consistent U.S. Trade Laws Recognizing the need to maintain effective trade remedies, the Administration firmly opposed all efforts to reopen the Antidumping Agreement during the WTO Ministerial in Seattle. The United States tabled a proposal to strengthen implementation efforts by the existing WTO Antidumping and Subsidies and Countervailing Measures Committees and to discuss certain implementation issues raised by developing countries regarding the existing agreements. Maintaining strong U.S. trade laws continues to be one of our highest priorities for a new round of negotiations. The Administration also negotiated strong terms on antidumping and subsidies in the agreement regarding China’s accession to the WTO. Under the terms of the U.S.-China bilateral agreement signed in November 1999, China has committed to important disciplines on subsidies and agreed to guarantee our right to continue using our current antidumping methodology (treating China as a nonmarket economy in antidumping cases for fifteen years after China’s accession to the WTO). Challenges to U.S. trade laws in WTO dispute settlement proceedings have been increasing. Japan has recently formed a special task force within its Ministry of International Trade and Industry to bring WTO challenges against trade remedy rulings made against Japan by the United States. In response, the Administration is strengthening its resources to forcefully defend U.S. trade laws in WTO dispute settlement litigation. The Commerce Department has increased personnel dedicated to WTO litigation support in the Department’s Import Administration and Office of the Chief Counsel. Funding is also being sought in the Administration’s budget request for FY 2001 to increase WTO litigation resources within the Office of the U.S. Trade Representative (USTR) and the Commerce Department. Provide Early Warning of Import Surges and Industry Conditions Early Release of Steel Trade Statistics The Commerce Department’s Bureau of the Census will issue steel import statistics on an expedited schedule (approximately one month early) at least through January 2002. The Bureau of the Census will also expand the list of products for the early release of statistics to include certain steel inputs and certain additional steel products. These actions are an extension of the commitment made in the President’s Steel Action Program to continue the early release of steel import statistics through December 2000. Domestic steel producers, steel workers, trading companies, and steel service center operators have indicated that the early release of steel statistics by the Census Bureau significantly enhanced market stability by allowing market participants to better assess market conditions. The early release of trade statistics also allows more rapid responses by government policymakers. Monitor Industry Trends Our experience in responding to the steel crisis and our consultations with steel industry representatives have highlighted the need for an early warning system for any potential future crisis. Accordingly, we 174 Global Steel Trade: Structural Problems and Future Solutions
propose to monitor additional data on the steel industry, steel consuming sectors, and steel demand each month to more quickly detect trends in the steel industry. No economic forecasting will be conducted; the focus will be to collect existing data to provide the greatest early warning for possible future steel industry downturns. The types of data that the Department of Commerce will monitor include the following: • Shipments of total basic steel mill products and shipments by steel sector. • Raw steel production and raw steel capacity utilization. • Apparent consumption (shipments minus exports plus imports) of major steel product groups. • Industry productivity. • Import penetration (imports as a percent of apparent consumption) by product group. • Average weekly steel industry overtime hours and other U.S. Bureau of Labor Statistics steel industry employment data. We will make this information available to the public on a comprehensive page within the Commerce Department Web site (http://www.ita.doc.gov) and circulate summary reports each month to key government agencies. During the crisis, domestic steel producers, the United Steelworkers, and several members of Congress expressed concern that, after trade remedy investigations were begun on certain products, the industry and workers were still being economically injured by unfairly traded imports of related products and products from other countries. The Commerce Department believes that during times of extraordinary import surges such as occurred in the steel sector in 1998, intensive product-specific monitoring, including under Section 732 of the Tariff Act of 1930, can be an effective tool to monitor surges of potentially unfairly traded goods from other supplier countries. Such intensive monitoring would include monitoring of import volumes and prices. Provide Timely Information to Domestic Steel Firms and Their Workers on Changing Market Conditions Our discussions with smaller domestic steel producers and local unions have shown that sometimes they are not aware of changing market conditions until they begin losing orders and reducing the number of hours worked at their mills. Each month, the Commerce Department will provide the early warning information it obtains to domestic steel producers and their workers through an e-mail broadcast and make the data publicly available through the Internet. Monitoring Global Steel Production and Consumption The collapse of foreign steel consumption after the global financial crisis was a critical event in the 1998 steel crisis. To better assess upcoming market conditions, the Commerce Department will also monitor foreign indicators of steel production and consumption. In addition, the Administration’s FY 2001 budget request would support Commerce Department personnel in key posts abroad who could monitor foreign market trends such as production and home market consumption of specific products. Steel Report Update The Department of Commerce will continue to monitor foreign market-distorting practices in the steel industry and will issue an update to this report in 2001. This update will address trade trends and monitor movements toward open markets. Chapter 7: Avoiding Future Crises 175
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Preface This report is the product
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Contents Preface ..................
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CHAPTER 1 Overview Introduction Ove
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steel prices and still make money (
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History of Steel Trade Friction The
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• Led by “mini-mill” companie
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New Players in the Global Steel Mar
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CHAPTER 2 The U.S. Steel Import Cri
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The Steel Workers’ Perspective on
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1997: A Cloud Behind Every Silver L
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These productivity increases and sh
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In mid-1998, financial crisis hit R
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concerns regarding purchase allocat
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percent from Korea, and 59 percent
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from Brazil, Japan, and Russia. 58
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finished steel prices is very compl
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Department of Commerce determined t
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The Role of Trading Companies Tradi
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Trading companies viewed these atyp
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Weirton, W.V.: A Community Unites i
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CHAPTER 3 Behind the Crisis Introdu
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Competition has been restrained by
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When the Asian economic crisis sapp
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The Russian steel industry has made
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steel is traded between the world
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estructuring of companies and predi
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Under the conditions of introducing
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When prices began to escalate after
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pension payments) reached almost 20
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exports extremely profitable, the b
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Trading Companies and the Marketing
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these intermediaries, one source es
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• Domestic demand for hotrolled s
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Although the production facilities
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3.2 Structural Factors and Japanese
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apparent in the marked differences
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High Domestic Prices The apparent c
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outstripped growth in domestic dema
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Noncompetitive Domestic Market and
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Professor Tilton’s price analysis
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The Product Certification System Ad
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Three factors contributed to tippin
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Collapse of Asian Export Markets At
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at a loss. The rationale for pricin
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3.3 Korea’s Steel Industry in The
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negotiations for the purchase of Ha
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almost 700 percent (Chart 3-31). By
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of 1997 and 1998, when capacity uti
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• Regulating POSCO after privatiz
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approximately 32 percent from 1997
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denominated revenue. For other mini
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Rounding Out the Big Three Usiminas
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Chapter 3: Behind the Crisis—Braz
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Import Licensing System Importers m
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they were able to cut their prices,
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CHAPTER 4 U.S. Response to the Cris
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compared to November 1998 and conti
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downstream products. The U.S. indus
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for by the WTO. The industry argues
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Effect of Excess Inventories Much o
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coke but also to the large increase
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The Role of the Chinese Coke Indust
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CHAPTER 5 Reforms and Restructuring
Page 129 and 130: The current dramatic economic and s
Page 131 and 132: While this analysis is largely corr
Page 133 and 134: these four heavyweights will be abl
Page 135 and 136: Government Initiatives to Encourage
Page 137 and 138: U.S. Firm Takes Over Hanbo Steel Pr
Page 139 and 140: ensure that the commercial banks fo
Page 141 and 142: Again, while these efforts hold pro
Page 143 and 144: Brazil-IMF Reform Program Throughou
Page 145 and 146: CHAPTER 6 New Players in the Global
Page 147 and 148: • Be subject to strong subsidy di
Page 149 and 150: Technological Backwardness. China
Page 151 and 152: 100 kg at present. Per capita consu
Page 153 and 154: Current Reform Efforts in the State
Page 155 and 156: wire rod production with an annual
Page 157 and 158: Notwithstanding the negative impact
Page 159 and 160: Media reports and interviews with v
Page 161 and 162: Baoshan is not equipped to provide
Page 163 and 164: Domestic Consumption In 1998, Ukrai
Page 165 and 166: two firms, Enakievo and Konstantino
Page 167 and 168: • Barter. Ukrainian steel compani
Page 169 and 170: Today India is the world’s tenth
Page 171 and 172: among steel-intensive sectors, such
Page 173 and 174: Banks’ Debt and Equity Exposure D
Page 175 and 176: Tariffs. High tariff rates also con
Page 177 and 178: new sales growth. 196 By 1998, even
Page 179: CHAPTER 7 Avoiding Future Crises In
Page 183 and 184: determination of dumping. In Octobe
Page 185 and 186: Engaging Korea On Hanbo In late 199
Page 187 and 188: Korea Korea’s steel industry has
Page 189 and 190: New Players: China, Ukraine, and In
Page 191 and 192: government and private sector assis
Page 193 and 194: Notes Chapter 1 1. Difference of av
Page 195 and 196: massive layoff data shows 9,550 emp
Page 197 and 198: also possess weaknesses, which the
Page 199 and 200: 64. Ibid., 145-177. 65. Id. Bethleh
Page 201 and 202: ITC considered numerous factors. On
Page 203 and 204: 104. Harry Thuedaus was recently re
Page 205 and 206: Frank Markus, Successes and Failure
Page 207 and 208: Decrepit Steel Plant in the Urals,
Page 209 and 210: 2. WTO. At the time of this report,
Page 211 and 212: Among those who have written on thi
Page 213 and 214: line pipe markets, the European and
Page 215 and 216: 97. Merrill Lynch, “Steel Industr
Page 217 and 218: chaebol to downside risk. This crea
Page 219 and 220: provided after 1991 by domestic ban
Page 221 and 222: 61. Catholic University of Korea Pr
Page 223 and 224: acquired on economically viable ter
Page 225 and 226: date of publication in printed vers
Page 227 and 228: Producers of iron ore and coke, the
Page 229 and 230: production may be shut down by the
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56. U.S. government sources. 57.
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79. World Bank-Korea, 12. 80. Seong
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24. 24. “Hard Times for China’s
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60. “PRC To Further Cut Steel Out
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132. In terms of crude steel produc
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195. The capacity of the new steel
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