Administration plans import curbs, other aid
Under a relentless assault from cut-rate foreign competitors, the nation's steel industry has suffered through a nightmarish year. Steel imports have increased about 50% just since 1975 and in some months this year have captured 20% of the U.S. market. Combined with lackluster domestic demand, that foreign invasion has caused shutdowns of old mills, forcing more than 60,000 workers out of jobs in the past year. Steel executives, union men and a new caucus of Congressmen from steel-producing areas have brought heavy pressure on the Carter Administration to do something. The President's first response was to invite steelmen to file complaints against the "dumping" of foreign metal—that is, selling it below cost. The trouble is that though dumping violates both U.S. law and international trade rules, it is difficult to prove.
Last week the Administration seemed ready to try a new tack and push for a six-point program of aid to the domestic industry. Treasury Under Secretary Anthony Solomon briefed industry executives and members of the congressional steel caucus on the plan that he will present to the President this week, and the main outlines—though not all the details —promptly leaked.
The centerpiece of the program is a proposal to establish so-called reference prices—in effect, minimum permitted prices—on 40 to 60 main categories of imported steel. Any metal entering the U.S. at quotes below the reference prices would be subjected to heavy antidumping tariffs. Most likely, the prices would be pegged to Japanese steel-production costs —and so the reference-price system might permit some continued dumping by European mills, whose costs are higher than those of the Japanese makers. Solomon pledged to have the reference prices set by year's end and to begin enforcement by Feb. 1.
The program's other components:
> Low-cost Government loans to domestic mills to enable them to improve plants and buy efficient new equipment. That would be similar to the help that governments in Europe and Japan extend to their steel industries.
> Faster tax write-offs for aging equipment that would increase the industry's cash flow and provide more capital for modernization. If approved by Congress, the measure would benefit all industries. At present, steel assets generally can be depreciated over 14½years; Solomon would cut that period to twelve years.
> So-far unspecified tax breaks for mills investing in antipollution equipment. This proposal would be included in the tax plan that Carter will send to Congress next year and would apply to all heavy industry. But the stiff cost of installing air-and water-purifying equipment required by the Government has been a particular sore point to steelmen.
> A rejiggering of freight rates by the Interstate Commerce Commission to lower the cost of shipping steel by railroad. The aim is to enable steel produced in the Midwest to compete more efficiently with foreign steel, much of which is sold in coastal areas close to ports of entry.
> An easing of antitrust regulations that would permit small-and medium-size steel companies to form joint ventures to develop advanced technology—for example, designing new rolling mills or coke ovens.