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June 21, 1999

H.R. 975 - Steel Imports
(Visclosky (D) Indiana)

The Administration strongly opposes H.R. 975 because it is not in the Nation's economic interest and would violate U.S. international obligations under the World Trade Organization (WTO). If H.R. 975 were presented to the President in its current form, his senior advisors would recommend that it be vetoed.

H.R. 975 would require the President to impose rigid quotas on steel imports. Quotas are not needed to address last year's steel import surge. The Administration has succeeded in reducing overall steel imports to traditional, pre-crisis levels through an aggressive strategy of strong, effective, and expeditious enforcement of U.S. trade laws, coupled with bilateral contacts at the highest levels. The level of overall steel imports for the first four months of 1999 is 5% and more than 3% below the level for the same period in 1998 and in 1997 respectively. April 1999 imports of all steel products were 22% below the April 1998 level and 6% below the April 1997 level and more than 42% below the historic high of last August. Overall steel imports in April from Japan and Russia, which accounted for well over half of the surge, were down 74% and 97% respectively since November. This strategy will remain in place. The Administration is determined to keep a strong U.S. manufacturing base and the good jobs it provides, and to ensure our trading partners play by international trade rules.

Enactment of steel quotas could have serious economic consequences for American workers, farmers, and companies. The United States is the world's largest importer and exporter, and our economic strength is tied to strong, open global markets. This quota bill could spark a global round of destructive protectionism that would threaten our strong economy as well as endanger the global economic recovery. In addition, since many U.S. industries depend on steel imports to stay competitive, the arbitrary and inflexible nature of the quotas would drive up costs and result in shortages for these U.S. companies, thereby making it more difficult for them to compete at home and abroad. H.R. 975 would backfire on U.S. exporting industries (including those that use steel) and will not ensure long-term job security for American steelworkers.

H.R. 975 would violate our WTO obligations; consequently, it would give steel exporting countries the right to retaliate against U.S. agricultural, services, technology, and industrial exports, including exports that use American steel (e.g, heavy industry, autos). In addition, the Administration will commence later this year a new round of global trade negotiations to open markets for U.S. exports. It will be difficult to persuade other countries to further open their markets, if we are imposing new import quotas.

The Administration has taken forceful action to address the surge of steel imports, and will continue vigorous enforcement of U.S. trade laws, close monitoring of imports, early release of trade data, and firm engagement with our trading partners to abide by international trade rules and eliminate steel subsidies. Congress should not place at risk our steel industry's recovery, or the continued growth of the U.S. economy, by passing H.R. 975. The Administration is prepared to work with Congress on legislation that the President can sign.

Pay-As-You-Go Scoring

H.R. 975 would affect receipts; therefore, it is subject to the pay-as-you-go requirement of the Omnibus Budget Reconciliation Act of 1990. OMB has not yet developed pay-as-you-go estimates for this bill.

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