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Public Papers - 1989

Statement on the Steel Trade Liberalization Program


Today I am establishing a Steel Trade Liberalization Program that will extend for 2/2\ years the voluntary restraint arrangements (VRA's) that limit steel imports into the United States. I am taking this step to permit the negotiation of an international consensus to remove unfair trade practices and to provide more time for the industry to adjust and modernize. This Steel Trade Liberalization Program is designed to restore free-market forces to, and end government interference in, global trade in steel. I am directing U.S. Trade Representative Carla A. Hills to oversee implementation of the program.

Ambassador Hills will negotiate a 2/2\-year transitional extension of the restraints that currently limit steel imports from VRA countries to 18.4 percent of the U.S. market. The extension will cover all major product categories. During this transition to an open market, the ceiling on imports from VRA countries will be increased at an annual rate of 1 percentage point. To support our efforts to achieve an international consensus, this increase will be allocated to countries that undertake and abide by disciplines to address trade-distorting practices.

I am also directing Ambassador Hills to seek to negotiate, through the Uruguay round of multilateral trade negotiations and complementary bilateral agreements, an international consensus to provide effective disciplines over government aid and intervention in the steel sector and to lower barriers to global trade in steel. The international consensus will contain three elements: strong disciplines over trade-distorting government subsidies, lowering of trade barriers so as to ensure market access, and enforcement measures to deal with violations of consensus obligations.

In extending the VRA's for a transitional period, I am mindful of the need to improve the availability of steel in the United States and to promote price competition. Accordingly, to ensure that adequate supplies of competitively priced steel are available on a timely basis, the Department of Commerce will expedite and streamline the existing short-supply mechanism.

Since 1984 the U.S. steel industry has made considerable progress toward improving its competitiveness and modernizing its production facilities. It has reduced capacity, cut costs, and modernized its equipment and technology. I urge the industry to continue its modernization and worker retraining programs, and will support legislation to that effect. The U.S. International Trade Commission will be asked to monitor and report regularly on developments in the carbon and specialty steel industries, including investment, wages, and executive compensation.

Consistent with this administration's commitment to free and open trade, the voluntary restraint arrangements will end on March 31, 1992. Thereafter, U.S. steel producers, like other American industries, will continue to rely on domestic trade laws as an ultimate assurance against the effects of foreign unfair trade practices. The Department of Commerce will continue rigorously to enforce the laws against injurious dumping and subsidization.

For decades, governments have supported their steel producers through subsidies and import restrictions. Steel trade and the international trading system as a whole have suffered. This self-defeating rivalry must end. I urge our trading partners to work with us to restore free and fair trade to world markets.

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