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TESTIMONY OF
Lewis Leibowitz, Representative
Consuming Industries Trade Action Coalition Steel Task Force (CITAC
STF)
Hearing Concerning Investigation 332-452,
"Steel-Consuming Industries: Competitive Conditions with Respect
to Steel Safeguard Measures"
Before the
United States International Trade Commission
June 19, 2003
Good morning. I am Lewis Leibowitz, a partner in the law firm of
Hogan & Hartson LLP in Washington, D.C. I represent the Consuming
Industries Trade Action Coalition Steel Task Force (CITAC STF).
CITAC STF has worked long and hard to secure an official ITC investigation
into the effects of the steel safeguard measures on American consuming
industries. We are grateful to the Commission for undertaking this
study, and of course to the Committee on Ways and Means for requesting
it.
This study is an essential part of the question whether the steel
safeguard measures should be modified or terminated at the mid-point
of the scheduled relief this coming September. The Section 332 request
specifically calls for the Commission to include its analysis in
this proceeding in the same document with the analysis under Section
204 of the Trade Act (19 U.S.C. § 2254) and to transmit both
reports to the President simultaneously in the same document. CITAC
STF supports this approach because the President should have the
benefit of all relevant information in making his determination
of what to do in the future.
This proceeding has generated a great deal of interest, so much
so that a second day of hearings proved warranted (even two days
may be insufficient to accommodate all the witnesses who desired
to be heard). CITAC STF commends the Commission for its decision
to extend the hearing through two days of testimony. Steel consumers
are determined and eager to get their stories before the Commission
and the Staff and to respond to questions about the impact of these
measures on their businesses.
It is important to delineate clearly what this investigation should
and should not do. First, we do not wish to reargue the wisdom or
propriety of the safeguards decision of the President in March 2002.
The Commission's tasks are to determine the impact of the measures
on steel consuming industries, and to predict, through modeling,
the economic impacts of continuing or terminating the safeguard
measures. Our organization has secured a study that deals with these
questions, and the results will be presented during the course of
this proceeding.
The impact of the steel safeguards remedy on downstream consumers
has been significantly greater than was predicted during the initial
round of hearings on this 201 proceeding. All the impacts must be
fully appreciated.
Second, we wish to state unequivocally that downstream impacts
on the economy, such as the effects this study will measure, are
legally and logically relevant to the Commission's mid-point review
of the steel safeguard measures. Based on the data for apparent
consumption of steel products, domestic consumers represent well
over 90 percent of the steel shipped by domestic steel producers.
Their economic welfare or decline is clearly a relevant part of
the health and future of the U.S. steel production industry and
therefore is a "development with respect to" the steel
industry. In addition, the President is authorized to determine
whether the "effectiveness" of the measures has been "impaired"
by "changed economic circumstances." This 332 study will
certainly bear on the changed circumstances caused by the steel
safeguard measures and therefore will help the President make an
informed decision concerning the termination, modification or continuation
of the tariffs.
Third, the safeguard measures are WTO-inconsistent. While the WTO
decision has not yet been publicly announced, there is little doubt
that it will be adverse to the United States on all products covered
by the steel safeguard measures. The WTO decision could lead to
retaliation by trading partners under their rights to "rebalance"
trade concessions. This retaliation will not await a 15-month implementation
period, but will happen immediately. CITAC STF supports the full
and prompt implementation of the decision to conform the practices
of the U.S. to the requirements of our international obligations.
This is not only the right thing to do legally, but the right thing
to do for the entire U.S. economy.
Fourth, I want to put the issue of exclusions in perspective. Although
some consumers have benefited from exclusions, exclusions have not
eliminated the negative effects of the safeguard measures on steel
consumers. There have been several types and rounds of exclusions
in this case. Indeed, some 1,200 specific products have been excluded
from the case. The process of exclusions during the relief is a
positive development to be sure; CITAC played a leading role in
securing this process and we are gratified that so many U.S. consuming
industries have received exclusions. The sheer number of exclusions
requested, and the much smaller but still substantial number granted,
indicates the degree of dislocation in the U.S. economy caused by
the steel safeguard measures.
This Section 332 proceeding is properly viewed as a part of the
process of providing the President with the information he needs
to make an informed policy decision regarding the steel safeguards.
But, it is only a part. Another part, the Section 204 Mid-Point
Review proceeding will also develop relevant information, including
information on the steel industry's attempts at adjustment and the
impacts on steel industry suppliers. For this reason, it is curious
that so many steel producers and their suppliers have requested
to testify in the 332 hearing.
The Commission has a big job simply to address the questions in
the House Ways & Means Committee request. We hope and trust
that the Commission will not be distracted from this important task
by tangential testimony.
During the hearing to come, the Commission will hear from a broad
variety of companies that consume steel in manufacturing. These
companies, and thousands more, have been hurt by the steel tariffs
because they affect their access to steel that is competitively
priced, of the highest quality, that is there when they need it
and that runs efficiently on their equipment. Manufacturing in this
country is at a crossroads. There are significant negative pressures
on U.S. manufacturers and there is not much good news. Clearly,
international protection that assists one percent of U.S. manufacturing
workers by hurting 59 times as many workers is a piece of bad news
we can do without.
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