INDUSTRY Steel capacity deal is elusive

The negotiators are still trying to deal with the issue of 'dumping.'
By JIM SWENSEN
STATES NEWS SERVICE
WASHINGTON -- International negotiators have been meeting for months to find a way to attack the worldwide over-capacity of steel that American steelmakers have blamed for their economic depression.
But they still have a long way to go.
That was the message at a Capitol Hill session Tuesday, where a top official from the international trade agency that has been conducting the meetings told lawmakers that any agreement on global steel capacity could be years away.
"Our work is aimed at reducing the causes for trade frictions," Herwig Schlogl, deputy secretary-general of the Organization for Economic Cooperation and Development, told members of the Congressional Steel Caucus.
International group
Based in Paris, the OECD is an international group of nations that meet to discuss trade, political and social concerns. If its members agree to enshrine agreements reached at OECD discussions into treaties, they can carry the force of law.
At a 90-minute session attended by House members from steel-producing states, Schlogl said that his organization was doing all it could to discourage nations that produce steel from providing subsidies to their domestic industries.
American steelmakers say that they cannot compete with imported steel that is sold in the United States at prices below what it costs the foreign company to make, a practice called "dumping."
Many bankruptcies
Since a financial crisis in Asia led steel makers in that part of the world to begin selling their inexpensive imports in the United States in 1998, 34 U.S. steel companies have filed for bankruptcy protection and thousands of steelworker jobs have been lost.
Among the casualties of the steel industry's crisis have been steel industry stalwarts such as the former LTV Corp., Bethlehem Steel Corp. and National Steel Corp.
Schlogl said the intensive discussions his organization had been holding over the past two months among representatives from steel-producing nations were aimed at eliminating government subsidies that allow foreign steelmakers to sell their product at a loss while remaining in business.
He said government subsidies should be allowed to fund only the costs of environmental cleanups, steel-plant closures and the retiree health care and pension expenses.
Schlogl also proposed giving poor, less-developed nations permission to subsidize their steel industries until they can reach the same standards as those in the United States and Europe.
Must include China
Any agreement that comes out of the international discussions must include China, said Rep. Phil English, R-Pa., who is the caucus' chairman. The world's most populous nation is a developing industrial superpower that has the heft to change the worldwide market for steel.
"Any agreement on steel subsidies without the full participation of China, one of the heaviest over-producers and subsidizers, is a deal breaker," English said in a statement.