Trade Cases

Trade Attorney Questions Likeliness of a Section 201 Investigation

Written by John Packard

Recently, US Steel CEO Mario Longhi was quoted as saying that a Section 201 investigation may be needed to save the domestic steel industry.

We want our readers to learn more about what a Section 201 means so we enlisted the help of trade attorney Lewis Leibowitz who was actively involved in the last Section 201 filing back in 2001. This is what Lewis reported to Steel Market Update this afternoon:

You asked about the steel Safeguard action in 2001.  That was self-initiated by the President in mid-2001 and resulted in a finding of “serious injury” by the International Trade Commission and a presidential Proclamation in March 2002.  

There were some valuable lessons learned from that action that makes it unlikely to be repeated.

First, the steel tariffs resulted in many more job losses in steel-using industries than any jobs saved (essentially none were created) in steel production.  A study in 2003 concluded that more jobs were lost in the first year of steel tariffs (2002-03) than existed in the steel industry.  So there is no free lunch.

Second, major steel exporting countries brought the US to the WTO immediately after relief was granted.  The WTO found that on two major legal grounds (no finding of “unforeseen circumstances” leading to the injury and inadequate evidence that increased imports directly caused the injury).  The US Safeguards statute, which was enacted in 1975, long before the Uruguay Round agreements were finalized, does not provide for such findings.  For a new case to be brought, the statute would need to be amended.  This has not taken place—nor has there been a serious effort to do so.

Third, the politics in 2002-03 were quite different from the current situation.  Steel workers were given relief in the hope that they would give credit to the Bush Administration for helping the industry adjust to new conditions of competition. But in 2003, the USW endorsed Dick Gephardt for President and said that any of the 8 candidates running for President on the Democratic side would be better than the Republican currently occupying the White House. See the Wall Street Journal editorial from August 2003 (“Steel Thyself, Karl Rove”).

The steel industry can always file a Section 201 petition.  But that seems unlikely while the AD/CVD investigations are pending.  A petition would be less well-received than a self-initiated petition.  But the President would alienate Europe, Japan, Canada, Mexico and other TPP partners just when the agreement is coming up for approval in 12 parliaments (including our own).

The issue of free trade, the existing antidumping and countervailing duties trade cases, critical circumstances and now Section 201 suggestions as the next step for the steel industry – these subjects are critically important to manufacturing, distribution, trading companies as well as the domestic steel mills themselves who initiate these cases. Trade attorney Lewis Leibowitz will be holding court at our first Leadership Summit Conference in Palm Beach Gardens, Florida on March 7-9, 2016. We are limiting the number of attendees to less than 100 for this conference. Registration is open and available on our website or through our office: 800-432-3475.

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