02-977. Report on the Effect of Imports of Iron Ore and Semi-Finished Steel on the National Security

AGENCY:

Bureau of Export Administration, Department of Commerce.

ACTION:

Publication of Executive Summary of Report from the Secretary of Commerce to the President on the Effect of Imports of Iron Ore and Semi-Finished Steel on the National Security/Notice of availability of full report.

SUMMARY:

On October 29, 2001, the Secretary of Commerce (“Secretary”) submitted a report to the President summarizing the findings of an investigation conducted by the Department pursuant to Section 232 of the Trade Expansion Act of 1962, into the effect of imports of iron ore and semi-finished steel on the national security of the United States. Based on the evidence gathered in that investigation, the Secretary was unable to conclude that imports of iron ore and semi-finished steel threaten to impair the national security of the United States, or to recommend to the President that he take action under Section 232 to adjust the level of imports of these items. Included herein is the Executive Summary of the Secretary's report to the President.

ADDRESSES:

Copies of the Secretary's report and certain records related to this investigation (with any business confidential information redacted) are accessible in accordance with the regulations published in part 4 of title 15 of the Code of Federal Regulations (15 CFR 4.1 et seq.). Specifically, the above documents are maintained on the Bureau of Export Administration's Web page, which can be found at http://www.bxa.doc.gov (see Freedom of Information Act (“FOIA”) heading). Alternatively, any person may request that a copy of the Secretary's report be sent to him by calling [phone].

FOR FURTHER INFORMATION CONTACT:

Daniel O. Hill, Director, Office of Strategic Industries and Economic Security, Bureau of Export Administration, U.S. Department of Commerce, [phone].

SUPPLEMENTARY INFORMATION:

On February 1, 2001, the Secretary initiated an investigation under Section 232 to determine the effects on the national security of imports of iron ore and semi-finished steel. This investigation was conducted at the request of Representative James Oberstar of Minnesota and Representative Bart Stupak of Michigan. For further details on this investigation, see the Federal Register notices of February 6, 2001 (66 FR 9067), April 18, 2001 (66 FR 19917), June 14, 2001 (66 FR 32315), and July 10, 2001 (66 FR 35927).

On October 29, 2001, the Secretary concluded his investigation and submitted a report to the President. Based on the evidence gathered in that investigation, the Secretary was unable to conclude that imports of iron ore and semi-finished steel threaten to impair the national security of the United States, or to recommend to the President that he take action under Section 232 to adjust the level of imports of these items. The Executive Summary of the Secretary's October 2001 report to the President, titled “The Effect of Imports of Iron Ore and Semi-Finished Steel on the National Security,” is reproduced below in accordance with 15 CFR 705.10.

Dated: January 10, 2002.

James J. Jochum,

Assistant Secretary for Export Administration.

I. Executive Summary

This report summarizes the findings of an investigation conducted by the Secretary of Commerce (“Secretary”) pursuant to Section 232 of the Trade Expansion Act of 1962, as amended, 19 U.S.C. 1862 (“Section 232”), into the effects of imports of iron ore and semi-finished steel on the national security of the United States. The conclusions of this report are as follows:

(1) Iron ore and semi-finished steel are important to U.S. national security. Specifically, iron ore and semi-finished steel— as raw and semi-finished materials consumed by certain segments of the steel industry in the production of finished steel products—are needed to satisfy the requirements for finished steel products of (i) the U.S. Department of Defense (“DoD”), and (ii) certain industries that are critical to the minimum operations of the U.S. economy and government.

(2) Imports of iron ore and semi-finished steel could threaten to impair U.S. national security in either of two ways: (i) through excessive domestic dependency on unreliable foreign suppliers, or (ii) if such imports fundamentally threaten to impair the capability of the U.S. iron ore and semi-finished steel industries to satisfy national security requirements.

(3) In fact, however, there is no probative evidence that imports of iron ore or semi-finished steel threaten to impair U.S. national security. There is neither evidence showing that the United States is dependent on imports of iron ore or semi-finished steel, nor evidence showing that such imports fundamentally threaten the ability of domestic producers to satisfy national security requirements. Specific findings supporting this conclusion include the following:

• National defense requirements, as communicated to the Department of Commerce (“Department”) by DoD, for finished steel—and thus for iron ore and semi-finished steel as inputs—are very low and likely to remain flat over the next five years. DoD's current and projected demand for iron ore and steel can be readily satisfied by domestic production. Moreover, DoD already has established domestic preferences that apply to essentially all of the steel used in weapons systems; accordingly, no weapons system is dependent upon foreign steel. DoD has concluded that “imports of iron ore and semi-finished steel do not currently affect the national security when assessed in terms of the ability to meet defense demands.”
• The demand of critical industries for iron ore and semi-finished steel can be readily satisfied by domestic production, even assuming that all such demand were necessary to preserve the national security (which is not the case).
• Consideration of other relevant factors, as dictated by Section 232, does not demonstrate that imports of iron ore or semi-finished steel threaten to impair U.S. national security. U.S. industry currently has, and anticipates continuing to have in the future, sufficient human resources, products, raw materials, and other supplies and services needed for the production of iron ore and semi-finished steel.
• Imports of iron ore and semi-finished steel are from diverse and “safe” foreign suppliers, with the largest suppliers of these products being U.S. allies in the Western Hemisphere (Canada, Mexico, and Brazil).
• Although domestic manufacturers of iron ore and semi-finished steel clearly are enduring substantial economic hardship, there is no evidence that imports of these items (which account for approximately 20 and 7 percent of U.S. iron ore and semi-finished steel consumption, respectively) fundamentally threaten to impair the capability of U.S. industry to produce the quantities of iron ore and semi-finished steel needed to satisfy national security requirements, a modest proportion of total U.S. consumption.
• These conclusions take into account the campaign against terrorism resulting from the events of September 11, 2001, and the requirements of related military operations.

Accordingly, the Department is unable to conclude that imports of iron ore and semi-finished steel threaten to impair the national security of the United States, or to recommend to the President that he take action under Section 232 to adjust the level of imports.