Russian steelmakers, wanting to avoid punitive tariffs that would effectively block them from the U.S. market, have agreed to cut steel exports to the United States by nearly 70 percent, the Commerce Department said yesterday.
Russia, Japan and Brazil had been accused of "dumping" hot-rolled steel in the United States at below-market prices.
On Feb. 12 the Commerce Department announced preliminary punitive duties ranging from 57 percent to 80 percent on Brazilian steel and 25 percent to 68 percent on Japanese steel, which could drive those countries' steel products from the market.
The tentative deal with Russia that was announced yesterday "should provide immediate relief from the surge in Russian steel imports in 1998," Commerce Secretary William Daley said at a Washington news conference.
"We are not trying to bring them to their knees. We are trying to bring them back to a rational policy."
Steel production accounts for about 7 percent of Russia's deeply troubled economy.
Big U.S. steelmakers, spearheaded by Bethlehem Steel Corp., have waged an energetic campaign against the cheap imports, which they say are costing the domestic industry profits and jobs.
Yesterday, Curtis H. "Hank" Barnette, Bethlehem's chief executive officer, criticized Washington's agreement with Russia. Describing as "unfortunate" the U.S. government's willingness to cut deals with countries that violate U.S. trade laws, Barnette said that "the rights of the domestic companies and workers are being taken away from us. That's fundamentally wrong."
Russia faced preliminary import duties ranging from 71 percent to 218 percent.
Under the agreement announced yesterday, imports of Russian hot-rolled steel would be banned for six months and then would be limited to 344,000 metric tons for all this year -- roughly 90 percent less than 1998's level.
The deal also holds all Russian steel exports to the United States -- including galvanized, wire-rod and cold-rolled steel -- at 1997's level.
If Russia had been hit with the duties, its imports "would go to zero, that's the bottom line," said analyst Waldo Best, who follows the steel industry for Morgan Stanley Dean Witter & Co. in New York City.
In the case of Brazil and Japan, the government will not collect the duties until a final ruling in about four months.
In the interim, the targeted Japanese and Brazilian companies have to post a bond with the U.S. Customs Service of about 2 percent of their obligations.
U.S. steelmakers have also filed a dumping case with the Commerce Department and the International Trade Commission alleging that a number of countries are dumping specialty plate steel in the U.S. market.
Foreign steelmakers, fearing a punitive backlash, started reducing their shipments to the U.S. market late last year.
Because of the reduction in imports and increasing demand from carmakers and builders, U.S. steelmakers including Bethlehem and LTV Corp. have announced price increases for flat-rolled steel of 5 percent to 8 percent, or $20 or $30 a ton, for second-quarter shipments.
Insiders noted that those are published prices and do not reflect whether the price increases "stick" -- that is, whether the companies are forced to offer discounts to sell their steel.
Bloomberg News contributed to this article.
Pub Date: 2/23/99