US Presses for New Steel Quotas

BUSH administration trade negotiators are walking a steel tightrope, trying to balance the national interest with the president's campaign pledge to renew steel import quotas. The old ``voluntary restraint agreements'' expire Sunday and the president has decided to renew them for another two-and-a-half years. The negotiations are being watched carefully by trade experts, because they may have implications for the trade talks being carried out in Geneva under the General Agreement on Tariffs and Trade (GATT).

According to industry sources, as of Wednesday, the administration and the 29 steel-producing countries with which it has been negotating were still bargaining hard on some key issues.

For example, the United States would like to increase steel quotas for Mexico and Brazil, since both countries need to boost exports to provide foreign exchange to help make their debt payments. The US negotiators already have agreed to increase Polish and Hungarian steel imports by 40 percent. Both countries currently export a small amount of tonnage to the US, however.

The US would then reduce the steel imported from Japan and South Korea and possibly the European Community (EC). Japan and Korea have exported more steel to Asian markets where prices have been stronger. Neither nation filled their quotas last year.

The South Koreans have been the most difficult for the US negotiators. According to industry sources, the US is the farthest from an agreement with Korea, which maintains it is ``fair trader'' and should not lose market share.

The EC is also adamant about not losing market share. On Tuesday, Frans Andriessen, the European commissioner of external affairs, told reporters in New York, ``It is quite clear you can't expect me to go home with a result which would decrease our quotas for steel in the United States. We don't recognize that there is any necessity to do so.''

At the same time that the US is negotiating quotas, it is also trying to reach agreement to limit subsidies on imported steel.

Reaching agreement on subsidies has been even more difficult, since the steel producers must reach a ``consensus'' agreement on what subsidies are permissible. Industry sources say the US has agreed to allow some EC subsidies. EC steel companies receive some of the largest subsidies.

If there are disputes over the subsidies, many of the steel producers want to resolve the issue by arbitration. But congressional staff members and lawyers involved with trade cases are wary about this approach. ``I am afraid the whole world will gang up on US at the current GATT negotiations and force us to go to arbitration so they can avoid our trade laws,'' says one lawyer.

US negotiators are also pressing to keep the ``consensus'' system going past March 31, 1992, since it is very similar to the GATT arrangement. The US wants to make steel a part of the GATT. The US steel industry opposes this strategy.

It is unclear whether US companies will have to wait for an arbitration ruling, which has a tentative deadline of 135 days, before they can file a trade complaint. It is also not clear whether they can still file the action if the arbitration panel rules against them. ``Our worst fears are that we will sign an agreement that is not clear,'' says one lawyer.

US negotiators were not available for comment.

The negotiations are taking place during a relatively healthy period for the industry. Demand for steel products remains high, and the US industry is not able to produce enough raw steel to meet demand. Thus it is importing semi-finished steel. This year, the US will import 525,000 short tons from Brazil and 502,000 short tons from Europe.

The House Ways and Means Committee passed legislation Tuesday giving the president the authority to enforce whatever is negotiated by US Trade Representative Carla Hills. If the US cannot reach agreement with any countries, the law permits the US to arbitrarily assign a quota.