BY BRIAN WILLIAMS
WASHINGTON, D.C. - The growing crisis of overproduction in
the steel industry worldwide is exacerbating trade conflicts
and threatens to break out into a full-scale trade war among
Washington, Tokyo, and Brussels. In the United States, the
steel bosses, with full support of the United Steelworkers of
America (USWA) officialdom, have been conducting a
reactionary protectionist campaign under the theme of "Stand
up for Steel. Stand up for America." The steel bosses are
calling for stiff sanctions to be imposed particularly
against Japanese imports. They demagogically proclaim that
this will "save American steel jobs." Among the strongest
proponents of this effort is ultrarightist columnist Patrick
Buchanan.
In September, Bethlehem Steel, USX, and 10 other steel companies and the USWA filed trade cases demanding that import duties be imposed on steel coming into the United States from Japan, Brazil, and Russia. In October, a nonbinding resolution calling for a one-year ban on steel imports passed the House with 340 votes. "All the blood is gone from our industry," proclaimed USWA president George Becker, who has been leading the charge against steel imports. "We can't bleed anymore. We don't have enough steelworker jobs to give away to keep the economies of Japan, Russia, and Brazil going."
Under the guise of fighting imports, U.S. steel bosses in the 1980s proceeded to eliminate 300,000 jobs. As the current campaign gets under way, some 10,000 steelworkers have already been laid off, and twice that number affected by short work weeks and other work slowdowns. According to a report by the International Labor Organization, 51 percent of steel jobs in the United States were eliminated between 1975 and 1995, while production fell by only 10 percent. In Japan, 48 percent of steel jobs were cut with only a 1 percent production loss. In early January, U.S. president William Clinton announced a $300 million tax break for steel companies. He also threatened to impose stiff duties on steel imported from Japan if shipments to the United States don't rapidly fall to 1997 levels. "It is no secret that trade tensions between the United States and Japan are increasing quite dramatically," stated U.S. trade representative Charlene Barshefsky. "Steel is perhaps the most visible element of that." The Japanese government, in response, announced plans to challenge the 1916 U.S. anti-dumping law before a World Trade Organization panel. European producers also blasted the tax break as an illegal subsidy. The drive toward protectionist measures has been spurred by the collapse of economies in many Asian countries producing a sharp decline in demand for steel in much of the region that was formerly one of the world's biggest importers of steel products.
While Washington may be leading the way, a number of other countries have also adopted or threatened trade sanctions against steel imports. In June, Taiwan's rulers slapped anti- import duties against steel beams imported from Japan and products from Poland, Russia, India, and south Korea. In November, the government of India placed duties on products coming from Russia, Kazakhstan, and Ukraine. Chilean and Brazilian officials are considering similar measures.
Eurofer, the European steel producers' association, has filed charges against the "dumping" of hot rolled coils by Bulgaria, India, South Africa, Taiwan, and Yugoslavia. Eurofer is planning further complaints against heavy plate and wire rod imports coming from China, India, and Turkey. Authorities in the United Kingdom are demanding that tariffs be imposed on these products to "protect British jobs." According to Eurofer documents, for the first time in its history the European Union became a net importer of steel in the first half of 1998.
Overcapacity and deflationary spiral
These stepped-up conflicts over imports are rooted in the
worldwide "overcapacity" of steel production - that is the
production of more steel than can be sold profitably -under
deflationary conditions, which has led to the plummeting of
prices of raw materials and commodities. This is compounded
by the collapse of the currencies and economies in Southeast
Asia.
World steel production in November plunged 9.3 percent, one of the biggest drops on record. According to the London- based Iron and Steel Statistics Bureau, excess capacity in steel new equals more than a quarter of world production - at least 250 million tons - and it continues to rise. While steel bosses rail against imports, steel production is actually on the decline. Japanese steel output is now at its lowest level in 27 years. Last year Japanese companies cut their production by 12 percent. Plants in Europe anticipate producing about 7 percent less in 1999. Operating rates at U.S. mills in November and December dropped to 72 percent of capacity, compared with 96 percent at the start of the year. But these reductions don't come anywhere near reversing the huge global overcapacity in steel. The economic crisis in Asia has also led to a dramatic drop in steel exports by the European Union and the United States. In the first five months of 1998, total steel exports by European producers to Asia were down by more than 50 percent.
According to the Organization for Economic Cooperation and Development (OECD), Washington's exports to China, Taiwan, Japan, and Korea fell 80 percent last year, and are expected to fall further this year. As opportunities to export steel to Asia declines, these shipments are instead being diverted to Europe and the United States. While Washington is targeting Japan for possible trade sanctions for the time being, further conflicts with producers in Europe loom as well. A January 11 article in the London Financial Times states, "Europe, where steelmaking remains organised on a largely national basis, may have to swallow more substantial cuts in capacity if a trade war is to be avoided."
Brian Williams is a member of United Steelworkers of America Local 2609 in Sparrows Point, Maryland.