02-5712. Action Under Section 203 of the Trade Act of 1974 Concerning Certain Steel Products

Memorandum of March 5, 2002

Action Under Section 203 of the Trade Act of 1974

Concerning Certain Steel Products

Memorandum for the Secretary of the Treasury[,] the Secretary of Commerce[, and the] United States Trade Representative

On December 19, 2001, the United States International Trade Commission (ITC) submitted a report to me that contained determinations pursuant to section 202 of the Trade Act of 1974, as amended (the “Trade Act”), that (a) certain carbon flat rolled steel, including carbon and alloy steel slabs, plate (including cut-to-length plate and clad plate), hot-rolled steel (including plate in coils), cold-rolled steel (other than grain-oriented electrical steel), and corrosion-resistant and other coated steel (collectively, “certain flat steel”); (b) carbon and alloy hot-rolled bar and light shapes (“hot-rolled bar”); (c) carbon and alloy cold-finished bar (“cold-finished bar”); (d) carbon and alloy rebar (“rebar”); (e) carbon and alloy welded tubular products (other than oil country tubular goods) (“certain tubular products”); (f) carbon and alloy flanges, fittings, and tool joints (“carbon and alloy fittings”); (g) stainless steel bar and light shapes (“stainless steel bar”); and (h) stainless steel rod are being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or the threat thereof, to the domestic industries producing like or directly competitive articles. The ITC commissioners were equally divided with respect to the determination required under section 202(b) regarding whether (i) carbon and alloy tin mill products (“tin mill products”); (j) stainless steel wire; (k) tool steel, all forms; and (l) stainless steel flanges and fittings (“stainless steel fittings”) are being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or threat of serious injury, to the domestic industries producing like or directly competitive articles. The ITC provided detailed definitions of the products included in categories (a) through (l) and their corresponding subheadings under the Harmonized Tariff Schedule of the United States (HTS) in Appendix A to its determination, set out at 66 Fed. Reg. 67304, 67308-67311 (December 28, 2001).

The report of the ITC also contained findings pursuant to section 311(a) of the North American Free Trade Agreement Implementation Act (the “NAFTA Implementation Act”) as to whether imports from Canada and Mexico, considered individually, account for a substantial share of total imports and contribute importantly to the serious injury, or threat thereof, caused by imports. The ITC made negative findings with respect to imports from Canada of certain flat steel, tin mill products, rebar, stainless steel rod, and stainless steel wire; and also made negative findings with respect to imports from Mexico of tin mill products, hot-rolled bar, cold-finished bar, rebar, certain tubular products, stainless steel bar, stainless steel rod, and stainless steel wire. The ITC made affirmative findings with respect to imports from Canada of hot-rolled bar, cold-finished bar, carbon and alloy fittings, and stainless steel bar; and also made affirmative findings with respect to imports from Mexico of certain flat steel, and carbon and alloy steel fittings. The ITC commissioners were equally divided with respect to imports from Canada of certain tubular products. By February 4, 2002, the ITC provided additional information in response to a request under section 203(a)(5) of the Trade Act (“supplemental report”) made by the United States Trade Representative (the “USTR”) on January 3, 2002.

Having considered the determinations of both groups of commissioners with regard to tin mill products, tool steel, stainless steel wire, and stainless steel fittings, I have determined, pursuant to section 330(d)(1) of the Tariff Act of 1930, as amended, to consider the determinations of the groups of commissioners voting in the affirmative with regard to tin mill products and stainless steel wire to be the determination of the ITC, and the determinations of the groups of commissioners voting in the negative with regard to tool steel and stainless steel fittings to be the determination of the ITC.

By Proclamation signed today (the “Proclamation”) and after considering all relevant aspects of the investigation, including the factors set forth in section 203(a)(2) of the Trade Act and the supplemental report, I have implemented actions of a type described in section 203(a)(3). I have determined that the most appropriate actions are safeguard measures in the form of an increase in duties on imports of certain flat steel, other than slabs (including plate, hot-rolled steel, cold-rolled steel, and coated steel), hot-rolled bar, cold-finished bar, rebar, certain welded tubular products, carbon and alloy fittings, stainless steel bar, stainless steel rod, tin mill products, and stainless steel wire, as defined in paragraph 7 of the Proclamation, and in the form of a tariff rate quota (TRQ) on imports of slabs, with an increase in currently scheduled rates of duties for imports over the TRQ limits. I have implemented these safeguard measures for a period of 3 years plus 1 day.

Specifically, I have established the following safeguard measures:

(a) certain flat steel: with regard to slabs, a TRQ of 4.90 million metric tons in the first year of the measure, 5.35 million metric tons in the second year, and 5.81 million metric tons in the third year, with no increase in duties for imports below the within-quota level and an increase in duties of 30% ad valorem for imports above the within-quota level in the first year of the measure, 24% in the second year, and 18% in the third year; and with regard to certain flat steel, other than slab (including plate, hot-rolled steel, cold-rolled steel and coated steel), an increase in duties of 30% ad valorem in the first year, 24% in the second year, and 18% in the third year;

(b) hot-rolled bar: an increase in duties of 30% ad valorem in the first year of the measure, 24% in the second year, and 18% in the third year;

(c) cold-finished bar: a increase in duties of 30% ad valorem in the first year of the measure, 24% in the second year, and 18% in the third year;

(d) rebar: an increase in duties of 15% ad valorem in the first year of the measure, 12% in the second year, and 9% in the third year;

(e) certain welded tubular products: an increase in duties of 15% ad valorem in the first year of the measure, 12% in the second year, and 9% in the third year;

(f) carbon and alloy fittings: an increase in duties of 13% ad valorem in the first year of the measure, 10% in the second year, and 7% in the third year;

(g) stainless steel bar: an increase in duties of 15% ad valorem in the first year of the measure, 12% in the second year, and 9% in the third year;

(h) stainless steel rod: an increase in duties of 15% ad valorem in the first year of the measure, 12% in the second year, and 9% in the third year;

(i) tin mill products: an increase in duties of 30% ad valorem in the first year of the measure, 24% in the second year, and 18% in the third year; and

(j) stainless steel wire: an increase in duties of 8% ad valorem in the first year of the measure, 7% in the second year, and 6% in the third year.

Pursuant to section 312(a) of the NAFTA Implementation Act, after consideration of the report and supplemental reports of the ITC, I further determine that imports of certain flat steel, hot-rolled bar, cold-finished bar, rebar, certain tubular products, carbon and alloy fittings, stainless steel bar, stainless steel rod, tin mill products, and stainless steel wire that are products of Canada and Mexico either do not account for a substantial share of total imports of these products, or are not contributing importantly to serious injury or the threat of serious injury. Therefore, pursuant to section 312(b) of the NAFTA Implementation Act, the safeguard measure will not apply to imports of certain flat steel, hot-rolled bar, cold-finished bar, rebar, certain tubular products, carbon and alloy fittings, stainless steel bar, stainless steel rod, tin mill products, and stainless steel wire that are the product of Canada or Mexico. Similarly, the safeguard measures will not apply to imports of these products that are the product of Israel or Jordan.

The safeguard measures also will not apply to imports of certain flat steel, tin mill products, hot-rolled bar, cold-finished bar, rebar, certain tubular products, carbon and alloy fittings, stainless steel bar, stainless steel rod, or stainless steel wire that are the product of a developing country that is a member of the World Trade Organization (WTO), as long as that country's share of imports into the United States of the product, based on a recent representative period, does not exceed 3 percent, provided that all such developing country WTO members collectively account for not more than 9 percent of total imports of that product. For purposes of the safeguard measures established under the Proclamation, I determine that the beneficiary countries under the Generalized System of Preferences are developing countries. Subdivision (d)(i) of U.S. Note 11 to subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States (Note 11) in the Annex to the Proclamation identifies those developing countries that are WTO members, and subdivision (d)(ii) identifies the products of such countries to which the safeguard measures shall not apply.

I instruct the USTR to review data on imports of products listed in paragraph 7 of the Proclamation from countries listed in subdivision (d)(i) of Note 11 on a quarterly basis. If imports of such a product from such a country increase by a material amount, I instruct the USTR to initiate consultations with the country regarding the circumstances under which the increase occurred and whether the country plans to take action to reduce imports to historical levels. If, on the basis of the information exchanged during consultations, data on imports, domestic steel demand, growth in the U.S. economy, shifts in other countries' trade patterns, and any other relevant factors, the USTR determines that the increase in imports of such product from such country undermines the effectiveness of the pertinent safeguard measure, he is authorized, upon publication of a notice of such determination in the Federal Register, to modify subdivision (d)(ii) of Note 11 in the Annex to the Proclamation to include such product from such country. I also authorize the USTR, upon publication of a notice in the Federal Register, to change the list of developing countries to which the safeguard measures do not apply.

The steel products listed in clauses (i) through (ix) of subdivision (b) of Note 11 in the Annex to the Proclamation were excluded from the determinations of the ITC described in paragraph 2 of that Proclamation, and are excluded from these safeguard measures. I have also determined to exclude from these safeguard measures the steel products listed in the subsequent clauses of subdivision (b) of Note 11 in the Annex to the Proclamation. The Trade Policy Staff Committee (TPSC) is currently evaluating requests, submitted in response to 66 Fed. Reg. 54321, 54322-54323 (October 26, 2001), that particular products be excluded from any safeguard measure with regard to certain steel products. I instruct the USTR to determine whether these particular products should be excluded and, if so, within 120 days of the date of the Proclamation, to publish in the Federal Register a notice to modify subchapter III of chapter 99 to exclude them from the safeguard measures. In making this determination, the USTR shall consider any advice rendered by the TPSC.

Similarly, I instruct the USTR, after receiving advice from the TPSC, to determine whether any particular products should be added to the list of those excluded from the safeguard measures and, if so, to publish a notice in the Federal Register in March of any year in which he receives such a recommendation to modify subchapter III of chapter 99 to exclude such particular products from the measures. I further instruct the USTR, no later than 90 days from today, to publish in the Federal Register a notice of the procedures by which interested persons may request the TPSC to recommend whether to exclude a particular product.

I also instruct the USTR, prior to the effective date of the safeguard measures established in the Proclamation, to conduct consultations under Article 12.3 of the Agreement on Safeguards with any WTO member having a substantial interest as an exporter of a product subject to such safeguard measures, provided that the WTO member requests such consultations in a timely fashion. I instruct the USTR to report to me on the results of such consultations. I instruct the Secretary of the Treasury, pursuant to section 505(a) of the Tariff Act of 1930 (19 U.S.C. 1505(a)), to prescribe by regulation a date no later than 45 days after today at which estimated duties for merchandise entered, or withdrawn from warehouse for consumption, on or after 12:01 a.m., EST, March 20, 2002, and up to the 30th day after today, shall be deposited.

I instruct the Secretary of the Treasury and the Secretary of Commerce to establish a system of import licensing to facilitate the monitoring of imports of certain steel products. Pursuant to the authority granted me by section 203(g) of the Trade Act to provide for the efficient and fair administration of all actions taken for the purpose of providing import relief under section 203, I further instruct the Secretary of Commerce, within 120 days of the effective date of the safeguard measures established by the Proclamation, to publish regulations in the Federal Register establishing such a system of import licensing.

I have determined that the safeguard measures will facilitate efforts by the domestic industries to make a positive adjustment to import competition and will provide greater economic and social benefits than costs. If I determine that further action is appropriate and feasible to facilitate efforts by the pertinent domestic industry to make a positive adjustment to import competition and to provide greater economic and social benefits than costs, or if I determine that the conditions under section 204(b)(1) of the Trade Act are met, I shall reduce, modify, or terminate the safeguard measures. In making this determination, I shall consider the pertinent factors set out in section 203(a)(2) of the Trade Act and, in particular, changes in capital and labor productivity in the domestic industries; actual and planned permanent closures of inefficient steel production facilities in the United States and in other countries; consolidation of United States steel producers; capital expenditures in the domestic industries; prices for certain steel products in the United States; and the overall effect that maintaining the measure will have on consuming industries, workers, and the United States economy as a whole.

The United States Trade Representative is authorized and directed to publish this memorandum in the Federal Register.

B THE WHITE HOUSE, Washington, March 5, 2002. Filed 3-6-02; 11:04 am]