By ALISON MITCHELL

WASHINGTON -- The House voted decisively on Wednesday to limit steel imports, ignoring opposition from the Republican leadership and a White House warning that the measure would violate world trade agreements.

The 289-to-141 vote -- one short of the two-thirds margin needed to override a Presidential veto -- displayed the division in the Democratic Party over Clinton's free trade policies as well as the appeal of protectionism to Republicans from Rust Belt states. All but 13 House Democrats deserted the Administration. And 91 Republicans, a surprisingly large number, broke from their party's traditional free-trade position.

The bill, the first major trade measure of this session of Congress, directs the United States to limit steel imports from other nations to their average monthly volume for the three-year period ending in July 1997. It would be up to the Administration to decide whether to use quotas, tariffs or voluntary agreements to achieve such a reduction, which could approach 30 percent.

The day's debate and offstage lobbying showed the strange coalitions that have developed over trade policy as well as the growth in protectionist sentiment. When a measure to give the President broad power to negotiate trade deals -- the so-called fast-track authority -- was defeated last year, 71 Republicans voted against it. Today, 20 more Republicans took a stand against unfettered free trade.

With world demand hurt by the Asian financial crisis, foreign steelmakers have sold their products at low prices. The American industry has seen a drop in business while imports rose 33 percent in 1998 before starting to subside in December.

Last month, the Clinton Administration said it would impose tariffs to punish Japan and Brazil for dumping steel in this country at prices below cost and negotiated an agreement with Russia to limit imports.

The stricter limits passed by the House Wednesday are unlikely to become law. The bill's fate in the Senate is uncertain, and a Presidential veto is considered likely. In a letter to House members, the White House chief of staff, John Podesta, acknowledged the steel industry crisis but warned that the measure "constitutes a violation of our international obligations" under the World Trade Organization and "is not in our nation's economic interest." He said Clinton's senior advisers would recommend that he veto the bill.

This vote, though, showed how difficult it will be in this Congress to pass the long-sought measure to give the President the power to negotiate trade agreements and submit them to Congress for a vote without potentially crippling amendments.

Representative J. Dennis Hastert of Illinois, the House Speaker, also opposed the bill as a violation of free trade. But its supporters had enough backing probably to be able to force a vote, and Hastert let the measure come to the floor. His spokesman, John P. Feehery, said that some Republicans "were pushing very strongly for a debate, and we also wanted to avoid the other parliamentary shenanigans."

The Ways and Means Committee, which strongly favors free trade, reported the bill to the full House with the recommendation that it be defeated.

Pat Buchanan, the G.O.P. Presidential aspirant who has challenged the party's establishment, wrote to House Republicans on Tuesday urging them to support the bill to "regain the loyalty of working Americans."

And Representative Richard A. Gephardt of Missouri, the Democratic minority leader, spoke out in favor of the bill, giving a hint of the debate that might have been if he had chosen to challenge Vice President Al Gore for next year's Democratic Presidential nomination.

Unions are also working hard for the bill, and the United Steelworkers had several hundred rank-and-file members on hand for the final push. In the last few months, steelworkers have written to Congress and held rallies around the country. Industry and union representatives have complained to the Clinton Administration about the dumping of foreign steel.

"An economic collapse has swept the globe," Gephardt said, "first striking Asia, but now impacting Latin America and other developing countries as well."

During the debate over special aid from the International Monetary Fund to stabilize these economies, he continued: "I warned that import surges would result from the Asian economic crisis and that a plan needed to be in place to combat unfair imports. Unfortunately, no such plan was forthcoming."

Gephardt said 10,000 steel jobs had been lost to imports, adding that the United States "should not be forced to unilaterally take in a massive global import surge."

Several senior Republicans argued against the bill, which was sponsored by Representative Peter J. Visclosky, Democrat of Indiana. They contended that the American economy was thriving because of the new markets provided by international trade. They also said the limits proposed could hurt other United States manufacturers by raising steel prices and cutting off the supply of specialized steel products that were only available through imports.

Representative Bill Archer, Republican of Texas, the chairman of the Ways and Means Committee, said that the President and his advisers had studied the steel situation and chose not to set quotas.

"The President's logic is clear," Archer said. "If the U.S. were to set up trade barriers now in our fragile world economy, we could have a much bigger problem on our hands that would affect thousands more American jobs and threaten our economy. In addition, we would set a terrible example for countries in real economic trouble -- countries whose leaders are under tremendous pressure to retaliate against American-made products."

But Rust Belt Republicans as well as Democrats took the side of the steelworkers and the industry. "We're going to stand up for Main Street today, not Wall Street," said Representative Bob Ney of Ohio. "That's why this bill is here. We're here because thousands of steelworkers and citizens would not let this issue go, would not let this issue die."

The limits in the House bill would reduce steel imports by 12 million tons a year from 1998 levels, while still allowing about 29 million tons of steel into the country. At the height of the import surge in 1998, 41 million tons of steel was being imported annually.

The Administration argued that the bill violated United States obligations to the World Trade Organization because it would impose a global limit on imports, instead of using existing tools such as tariffs to fight an illegal dumping of imports.

But confronted with the vote, Charlene Barshefsky, the United States trade representative, said, "While we oppose this legislation, we are going to work with the Congress to address this issue."

The Administration hopes eventually this session to muster support for an alternate approach to the steel crisis and to support a bill sponsored by Representative Sander M. Levin, Democrat of Michigan, and Representative Amo Houghton, Republican of New York. Their measure would change the trade law to make it easier and quicker for the Administration to take action in cases of import surges.

By ANICK JESDANUN

WASHINGTON (March 17, 1999 4:51 p.m. EST http://www.nandotimes.com) - The House approved legislation setting limits on steel imports Wednesday as supporters criticized the Clinton administration's trade policies and its commitment to U.S. steelworkers.

The bill passed 289-141 over the objections of GOP leaders and President Clinton, who has threatened a veto. It won considerable support from Republicans with large steel constituencies but faces an uncertain future in the Senate.

Nevertheless, Wednesday's vote showed lawmakers' desire for tougher action to help an industry struggling against low-priced imports from Japan, Russia and other countries.

Rep. Dennis Kucinich, D-Ohio, said the administration could have avoided the bill by taking stronger steps to curb shipments of foreign steel.

He noted the administration has taken on the European Union over rules the Clinton administration contends favor bananas from the Caribbean and Africa at the expense of Latin American bananas marketed by U.S. companies. The United States has threatened punitive tariffs on millions of dollars worth of European imports.

"Bananas did not build America," Kucinich said. "Steel did. ... The administration cares more about bananas than about steel. Such a trade policy is, in a word, bananas."

Imports reached record highs last year as the Asian economic crisis reduced demand for steel abroad and forced foreign producers to turn to the United States to unload their goods. The domestic industry contends the import surge has resulted in thousands of U.S. layoffs and three company bankruptcies.

President Clinton has faced difficult choices about how exactly to respond to the import surge. While labor is an important Democratic constituency, the administration fears that trade restrictions would encourage other countries to close off their markets to U.S. exports and could stall the economic recovery of those countries.

The steel bill would establish quotas that would essentially reduce shipments of foreign steel by 25 percent. Imports are already heading down, but the industry fears the turnaround is only temporary.

Top Republicans, who agreed to consider the bill only after a threat of procedural disruptions by its supporters, urged the measure's defeat, calling it a violation of international trade agreements and bad economic policy.

"The fact is, 40 times more American workers are employed in the U.S. industries that use steel than in industries that actually make steel," said Rep. David Dreier, R-Calif. "When we use protectionism to protect one industry, 40 times the workers are injured."

Critics also say the quotas could hurt some manufacturers by cutting off the supply of specialized products available only through imports.

The U.S. industry recently won preliminary rulings on its complaints that Japan, Russia and Brazil illegally dumped hot-rolled carbon steel in the U.S. market at prices dramatically below production costs. Japan and Brazil face steel tariffs, although Russia has agreed to reduce its imports to avoid tariffs.

GOP presidential candidate Pat Buchanan circulated a letter Tuesday urging Republicans to support the bill to "regain the loyalty of working Americans." The steelworkers union dispatched about 200 rank-and-file workers Wednesday for last-minute lobbying on Capitol Hill.

By Joanne Gray, Washington

The United States is on the verge of a new wave of trade protection after the House of Representatives voted overwhelmingly in favour of a bill that would slap import quotas on foreign steel.

The White House warned that the quotas would violate international trade rules, and aides said they would recommend that President Clinton veto the bill if it passes the Senate.

The steel quota bill was backed by the United Steel Workers of America, which has run a vocal and high profile campaign against cheap imports for six months.

The union movement expects a payback from the President for its support during the impeachment scandal. But Mr Clinton's response to the bill will test his commitment to free trade as he prepares to host a fresh round of trade liberalisation talks at the end of the year.

The steel vote comes just two weeks after the US retaliated against the European Union's banana import regime by threatening 100 per cent tariffs on a $500 million of EU luxury goods.

In a show of bipartisan support the House voted 289-141 in favour of the bill, just one vote short of making it veto proof.

It reflects the growing protectionist mood in America. A survey released this week showed that 60 per cent of the American public believes tariffs are necessary to protect manufacturing jobs.

Despite successes in trade agreements early in his first term, Mr Clinton has been unable to secure authority from Congress to negotiate free trade agreements for several years - as the US trade deficit has soared, calls for new trade barriers have grown louder.

Major importers of steel such as car manufacturers and free traders said trading partners would retaliate if the bill became law.

The US steel industry recently won several anti-dumping suits with the Justice Department finding that Japan, Russia and Brazil illegally dumped hot-rolled steel at prices below the cost of production. Japan and Brazil will be hit with tariffs if their steel imports are not curbed while Russia has agreed to reduce its imports voluntarily.

The US is currently engaged in a host of trade disputes with major trading partners in the name of fair trade. Apart from the banana war, it is fighting with Canada over magazines and cultural imports, on hormone-fed beef with the European Union, and on genetically modified foods. It will decide next month whether to hit Australian and New Zealand lamb with tariffs to protect its sheep meat industry.

The White House is worried that protectionist moves would open the door for other countries to raise their import barriers, shrinking markets for US exports. The Administration expected that it would have to bear a large burden as Asian countries tried to export their way to recovery, but has attacked Japan and Europe for not expanding their economies fast enough to share recovery costs.

The steel bill would cut steel imports by 25 per cent, and the quotas would expire in 3 years. US Trade Representative Charlene Barshefsky said Mr Clinton's advisers would recommend that he veto the bill if it passes the Senate, where it will struggle to get support.

"The Administration does not support the bill that is currently pending," she said, adding that the volume of imported steel had fallen 34 per cent in the past two months.

The industry claims that the quotas are justified by the fact that three US steel producers have gone into bankruptcy and 10,000 steelworkers jobs have been lost.

"Bananas did not build America. Steel did," said Dennis Kucinich, an Ohio Democrat during the debate. "The Administration cares more about bananas than about steel." The United Steelworkers president George Becker said the campaign would shift to the Senate. "I do not expect the president to veto this," he said.

By David Folkenflik, Sun National Staff

WASHINGTON -- By a clear majority, the House passed a bill yesterday that would set strict limits on steel imports, as many lawmakers in both parties criticized the Clinton administration for having allowed cheaper foreign steel to flood the U.S. market.

The bill's fate in the Senate appears less certain, and President Clinton's senior advisers are recommending a veto. Nevertheless, its advocates proclaimed the legislation a much-needed response to efforts by foreign producers to swamp U.S. ports with under-priced steel.

"Our trading partners have shown a shocking disregard for the laws, and that has precipitated a crisis," said Rep. Alan B. Mollohan, a West Virginia Democrat. Steel workers in his district, their factories hit hard by the cheap exports, are "fed up, and they've just about lost faith in their country," Mollohan said.

The 289-141 vote revealed deep fissures within both parties over trade. All but 13 House Democrats deserted the president to support the steel quota bill. And a sizable group of Republicans -- many of them from steel-producing states -- rejected the arguments of their party's leaders, who opposed the measure on the ground that it violated the principle of free trade.

"Either we want protectionism or we want free markets," Majority Whip Tom DeLay told his colleagues during the debate. "Steel is no exception to that rule."

Of Maryland's eight representatives, only Constance A. Morella, a Montgomery County Republican, voted against the bill.

"She believes in free and fair trade," said Bill Miller, Morella's chief of staff. "She believes there are adequate protections for the steel industry."

Sparrows Point affected

The bill was prompted by a glut of steel from foreign producers -- notably Russia, Japan and Brazil -- that has been sold at deeply cut prices since the summer of 1997.

Officials of the Bethlehem Steel Corp., for example, have blamed the cheap imports, in part, for poor earnings in last year's final quarter, for hundreds of layoffs nationally and for a slowdown at the company's Sparrows Point plant in Baltimore.

The bill would cut foreign imports of steel to levels that were typical before the summer of 1997. At that point, foreign producers began turning to the U.S. market when the Asian economic crisis reduced demand for steel in many other countries.

Less support in Senate

Sens. Paul S. Sarbanes and Barbara A. Mikulski, both Maryland Democrats, strongly support a similar measure sponsored by Sen. John D. Rockefeller IV, a West Virginia Democrat.

Though Rockefeller's spokesman said the legislation has the support of some conservative Republican senators as well as liberal Democrats, the Senate is considered less likely to pass it.

Free-trade advocates say the legislation would drive up the cost of steel and raise the cost of consumer goods such as cars and appliances. Some argued that the bill would likely hurt, not help, the U.S. labor force.

Protectionism criticized

"The fact is, 40 times more American workers are employed in the U.S. industries that use steel than in industries that actually make steel," said Rep. David Dreier, a California Republican. "When we use protectionism to protect one industry, 40 times the workers are injured."

But labor unions representing steel workers, and most House Democrats, said foreign steel producers had violated trade regulations by "dumping" cheap steel -- that is, by selling huge amounts at low prices as a way to wrest business away from U.S. companies. Filing a complaint through the World Trade Organization would take too much time, they said.

Foreign illegalities noted

"It's the appropriate remedy for illegal actions that have taken place in other countries," Rep. Benjamin L. Cardin, a Baltimore-area Democrat, said of the bill. "We could wait, and file a case through the WTO, and seek that remedy. By that time, another 100,000 steel workers could be out of work in this country."

Imports, Clinton blamed

Mark Glyptis, president of the Independent Steelworkers Union, which represents 4,000 workers at a steel-producing plant in Weirton, W.Va., said that more than 800 of his members have been laid off in the past year. He blamed the cheap foreign exports.

"You cannot compete against the illegal steel dumping in this country," Glyptis said in an interview.

"When President Clinton was campaigning in 1992, he promised the residents of the Ohio Valley . . . that he would strictly enforce the trade laws. He has blood on his hands for the Ohio Valley," Glyptis said.

Free-trade advocates note that steel imports have already begun to drop in recent months. In February, Russian steel makers agreed to cut exports to the United States by nearly 70 percent, as part of an effort to forestall punitive tariffs.

Enforce foreign rules

In addition, administration officials say their efforts within current trade laws are starting to pay off without triggering retaliation by other countries.

In a recent letter to the chairman of the House Ways and Means Committee, John Podesta, Clinton's chief of staff, wrote that the president "believes that the best way to address the steel crisis is by insisting that other countries play by the international trade rules, just as the United States will continue to play by those rules."

The White House also argued that imposing the import quotas or tariffs mandated by the bill would violate international trade law, which calls for an appeal to the WTO first.

GOP challenge threatened

In the House, DeLay and House Majority Leader Dick Armey had sought to bottle up the legislation in the Ways and Means Committee, only to be threatened with a procedural challenge by their own party's members. In an unusual move, Speaker Dennis Hastert allowed the bill to come to the House floor despite a negative recommendation from the committee.

"It's a tough vote for me, because I campaign as a free trader, and I vote that way," said Rep. Robert L. Ehrlich Jr., a Baltimore County Republican whose district includes Sparrows Point and who voted for the bill. "But what the administration has done has hurt the free-traders on the Hill by doing next to nothing while working people bleed."

New Republican stance

Several House Republicans predicted that the bill signaled a new willingness among many Republican representatives to support protectionist measures, despite the free-trade tilt of the senior Republican leadership.

"This is the first bill in 20-some years that really starts to stand up for American workers," said Rep. Bob Ney, an Ohio Republican who is one of the bill's chief sponsors. "A lot of members are waking up to the fact we're being walked on."

Originally published on Mar 18 1999

By Donna Smith

WASHINGTON (Reuters) - Record trade deficits and a congressional vote to slap quotas on steel imports are raising fresh worries that U.S. protectionist pressures are building despite a robust economy and a low unemployment rate.

``I am in the camp with those who are very nervous,'' said Christopher Parlin, a Washington trade lawyer and former U.S. Trade Representative official.

``The concern is what happens when the wonderfully positive economic period ends,'' he added. ``If we've got this level of protectionism lathering now, it is very worrisome.''

The U.S. House of Representatives voted overwhelmingly last week for a bill that would curb steel imports for three years through quotas and tariffs.

The vote was a big victory for the United Steelworkers of America, which lobbied lawmakers for months. The union argued that some 10,000 jobs were lost in the U.S. steel industry last year due to imports, and it fears more losses when a union contract with a job protection clause expires in July.

The strong showing in the House -- 289-141 for the bill -- likely caused discomfort for President Clinton and Vice President Al Gore, the front-runner for the Democratic presidential nomination next year, analysts said. The bill was backed by a large number of Democrats who stood with Clinton during his impeachment trial and by a key Democratic support group.

Record trade deficits are adding to administration worries. The Commerce Department reported last week that the deficit in January rose to a record $17 billion.

The report underscored predictions that economic weakness in Asia, Latin America and Europe, and a strong U.S. economy, would result in a trade deficit this year topping last year's record $169 billion deficit.

``If the trade deficit continues to increase, it is more likely that trade issues are going to play a larger role in the political race in 2000,'' said Judith Lee, an international trade attorney with the Gibson, Dunn and Crutcher law firm.

The steel workers union has now turned its attention to the Senate where West Virginia Democratic Sen. Jay Rockefeller has introduced a similar quota bill that has attracted 14 co-sponsors.

Union President George Becker said last week he thought it would be difficult for Clinton to veto the legislation.

Many analysts say they do not expect the full Senate to go for a quota bill, but that lawmakers may alter it or opt for alternative legislation to address the steel issue in a way that does not violate World Trade Organization rules. The quota bill would violate international trade rules.

Russell Smith, an international trade attorney with Willkie Farr & Gallagher, said the campaign for congressional action launched last autumn by the steel workers and their companies has been effective.

``The campaign is having an effect in the Senate,'' he said. ''There are things that they might not have been inclined to do that they may be more inclined to do as a sop to the industry and labor in lieu of a quota bill.''

Analysts said the House vote signaled growing union muscle on the trade issue. For the past two years, union opposition to so-called fast track trade negotiation authority has kept it from passing the House of Representatives.

The bill, which would give the president authority to negotiate deals that could not be amended by Congress, is seen as having little chance of passing Congress over the opposition of labor unions until after the 2000 presidential election.

``Trade is a very real concern,'' said Thea Lee, international trade expert at the AFL-CIO, a federation of unions representing 13 million workers. ``We're in a year where the trade deficit is likely to rise significantly and there is a lot of concern about the impact of globalization on the labor market.''

Treasury Secretary Robert Rubin said Friday he was concerned about the message the congressional action would send to other countries that have resisted calls for trade barriers in the face of financial crises and economic recession.

``If we, the only major country in the world that really has a healthy economy, were to begin restricting access to our markets, it would create enormous pressure on other countries,'' Rubin told reporters. ``If that of course were to happen on a global basis, that would have enormously adverse consequences for our exports.''

Reut09:51 03-21-99
(21 Mar 1999 09:51 EST)