WASHINGTON -- Geneva Steel will close unless Congress acts quickly to stop massive illegal dumping of below-cost foreign steel, Geneva Chairman Joe Cannon said Tuesday.
He told the Senate Finance Committee, "Geneva (which filed for bankruptcy last month) would not be able to reorganize and continue in business if we face wave after wave of imports until the world economy improves."The U.S. steel industry says Asian and Russian economic woes have reduced demand for steel abroad, so foreign steel producers have been unloading their steel in America at below-cost prices, aided by foreign subsidies.
That is illegal under international trade law, but discovery and enforcement take time -- and meanwhile dumpers profit and domestic producers are hurt.
In response last week, the House voted 289-141 for a bill to put quotas on all steel imports. But the Clinton administration opposes that, saying it could lead to economy-ruining trade wars.
Commerce Secretary William Daley told the committee Tuesday the administration prefers to continue seeking sanctions against specific violators rather than have worldwide quotas.
But steel officials said the quota allows more foolproof action and is needed to stop foreign companies from shifting imports of final products from country to country to make an end run around other sanctions.
For example, administration officials testified that steel imports from Japan have been rolled back to pre-crisis levels because of anti-dumping sanctions sought against it.
But Cannon said Japan-based Mitsubishi International Steel may simply have shifted shipment of final products to plants in Indonesia to make up for it.
"One of our customers received an offer from Mitsubishi International Steel for plate from Malaysia at $290 a ton landed in the United States. Now this is below Geneva's costs, and I believe the costs of any manufacturer in the United States."
He said he is unsure whether the final Malaysian plate steel is made with Japanese slab or not.
"But my point is these international trading companies will never show any mercy to the U.S. market. They will bring in product from anywhere in the world where there is more supply than demand and dump it into the U.S. market at prices significantly before U.S. producers' cost," Cannon said.
He added that a glut of low-cost steel has "forced domestic prices to fall by $80 to $100 per ton in each of our major products," making it difficult for Geneva to compete despite $400 million in modernization.
Besides filing for bankruptcy protection, Cannon noted that Geneva was forced to shut down a blast furnace in September, cut 800 workers and had a $50 million loss in the fourth quarter.
Despite such tales of woe from Geneva and other plants nationally, Daley said quotas would still be "the wrong approach."
And U.S. Trade Representative Charlene Barshefsky said it could lead "to a cycle of retaliation and protectionism, which would badly damage our economy as a whole, and be especially dangerous to farmers, ranchers and manufacturing exporters . . . who are already suffering due to weaker demand for our products abroad."
Sen. Arlen Specter, R-Pa., told the committee that he and several other "rust-belt" senators are pushing hard to bring the quota bill to the Senate floor this spring -- and may have it considered in as soon as two weeks.
Cannon also said that if Geneva closes, it will not only "be bad for the people of Utah, but it will also have serious negative consequences on the hundreds of Western customers that will lose a valuable supplier."
He said the West would "lose one of its two plate producers, one of its two hot-rolled sheet producers, and one of its three line pipe producers."