Order Code RL31792
Report for Congress
Received through the CRS Web
Steel: Legislative and
Oversight Issues
Updated April 2, 2003
Stephen Cooney
Industry Analyst
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

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Steel: Legislative and Oversight Issues
Summary
The U.S. steel industry has faced increasing difficulties since the late 1990s.
More than 30 U.S. steel producers have gone into bankruptcy and many workers have
lost their jobs. Many retirees have lost company-funded health care benefits, while
their pensions are being taken over by the federally chartered Pension Benefit
Guaranty Corporation. The condition of the industry is discussed in detail in CRS
Report RL31748, The American Steel Industry: A Changing Profile.
U.S. policymakers responded with a variety of measures. The House of
Representatives in 1999 approved a bill that would have required the President to roll
back imports. The Clinton Administration reacted with expedited enforcement of
U.S. antidumping and countervailing duty (AD/CVD) laws, as well as Section 201
import safeguard measures on wire rod and line pipe products, which expired as of
March 1, 2003. The 106th Congress approved and President Clinton signed a law to
establish a steel loan guarantee program (P.L. 106-51), and to distribute to petitioners
duties collected from AD/CVD cases, (known as the Byrd Amendment to the
Agriculture appropriations bill, P.L. 106-387). These measures did not prevent a new
downturn in the domestic steel industry. Moreover, the World Trade Organization
(WTO) has found that the Byrd Amendment violates its rules. The Bush
Administration in its FY2004 budget request proposed elimination of both programs,
but both continue to operate. On March 26, 2003, the Emergency Steel Loan Board
approved a $250 million loan guarantee for Wheeling-Pittsburgh Steel Corporation.
In the 107th Congress, a broader version of the 1999 import quota bill was
reintroduced and gained a majority of the House as co-sponsors. Pressed to act by
Members of Congress, steel companies and labor representatives, President Bush in
June 2001 requested the U.S. International Trade Commission (ITC) to undertake a
new Section 201 trade investigation on the steel industry and on March 5, 2002,
imposed three-year safeguard tariffs with top rates of 30%. Also, a provision in the
2002 Trade Act approved by Congress and the President (P.L. 107-210) assists
retirees not eligible for Medicare, who have lost their health care benefits because of
corporate bankruptcies.
Some Members of Congress, economists and representatives of steel consuming
industries believe that the steel safeguard tariffs are having a negative impact on the
competitiveness of a broader range of U.S. businesses. H.Con.Res. 23 and
S.Con.Res. 27 call on the ITC to consider the impact of the Section 201 safeguards
on steel consuming industries. House Ways and Means Committee Chairman
William Thomas on March 18, 2003, requested that the ITC conduct an investigation
on the impact of the safeguard measures on consuming industries, under Section 332
of the trade law (19 USC 1332). Meanwhile, U.S. trading partners are challenging
the safeguard tariffs and other U.S. steel policy measures under WTO rules (see CRS
Report RL31474, Steel and the WTO).
This report examines recent legislative measures addressing aspects of problems
in the steel industry and issues that may arise in the 108th Congress. The report will
be updated as events warrant.

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Contents
Congressional Response to Section 201 Steel Safeguard Tariffs . . . . . . . . . . . . . 1
Congressional Role in Section 201 Process . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ITC Reports on Safeguards under Sections 204 and 332 . . . . . . . . . . . . . . . . 4
Other Legislative Measures Affecting the Steel Industry . . . . . . . . . . . . . . . . . . . 8
Antidumping and Countervailing Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Clinton Administration Section 201 Case on Steel . . . . . . . . . . . . . . . . . . . 11
China Safeguards: The Steel Wire Hanger Case . . . . . . . . . . . . . . . . . . . . . 12
The Byrd Amendment (Continued Dumping and Subsidy Offset Act) . . . . 13
The Emergency Steel Loan Guarantee Act of 1999 . . . . . . . . . . . . . . . . . . . 16
Export-Import Bank Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
National Security and Defense Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Steel Industry Report on National Defense and Economic Security . . 21
The Section 232 Investigation on National Security . . . . . . . . . . . . . . 21
Steel Issues in Defense Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Industry and Legacy Cost Relief Legislation . . . . . . . . . . . . . . . . . . . . . . . . 23
The Steel Revitalization Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
The Rockefeller Legacy Cost Bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
House Steel Legacy Cost Relief Bills . . . . . . . . . . . . . . . . . . . . . . . . . 26
The Outlook for Legislation on Steel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
For Additional Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

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Steel: Legislative and Oversight Issues
Congressional Response to Section 201 Steel
Safeguard Tariffs
The U.S. steel industry has been in serious difficulties since the late 1990s (the
causes and impact of these problems are explored in CRS Report RL31748, The
American Steel Industry: A Changing Profile). In recent years, Congress has actively
considered and acted on measures designed to assist the industry. The industry’s
economic situation and future, however, remain generally uncertain.
Members of Congress, as well as industry and union representatives, urged
President George W. Bush to protect the steel industry with safeguard measures
under Section 201 of the Trade Act of 1974. The two major types of domestic raw
steel producers – “integrated” steel mills, which start by making steel from iron ore,
and “minimills,” which generally make a narrower range of products by remelting
steel scrap – both broadly supported safeguard actions under Section 201. As
detailed in CRS Report RL31748, the integrated mills and the minimills both believe
that steel prices have been kept too low and that their ability to invest and modernize
has been impaired by a high rate of imports, which has resulted from global
overcapacity. But on other issues, particularly with respect to assistance to the
industry in paying for pension and health care commitments, the minimills and the
integrated mills have quite different perspectives on resolving industry problems.
After the President decided to launch a Section 201 trade case, Congress
essentially gave President Bush the lead in addressing steel industry trade issues.
President Bush’s Section 201 trade action, announced on March 5, 2002, has kept
this initiative in his hands. But Congress has remained active in considering
additional measures, particularly related to the issue of legacy costs, the pension and
health care benefits paid by steel companies.
Congressional Role in Section 201 Process
Sections 201-204 of the Trade Act of 1974, commonly referred to as “Section
201,” permit the President to grant temporary relief, usually “safeguard” tariffs or
quotas, to domestic industries that are found to be seriously injured by an increase in
imports of articles like or directly competitive with products produced by those
industries. Representatives of affected industries may petition the U.S. International
Trade Commission (ITC) for assistance, and the Commission is required to
investigate whether the increase in imports is causing or is likely to cause serious
injury to the industry involved. Investigations may also be initiated by resolution of
the House Ways and Means Committee or the Senate Finance Committee, or may be
requested by the President or the U.S. Trade Representative (USTR). After the

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investigation, the ITC then determines whether action is warranted and, if so,
recommends to the President various forms of import relief.1
Congress has played an active role before, during and after the Section 201
process by which steel safeguard tariffs were established. On June 5, 2001,
responding to many requests from Congress, union representatives and steel
companies, President George W. Bush announced that his Administration would call
upon the ITC to begin an investigation on steel under Section 201 of U.S. trade law.
The President also announced that he would seek multilateral negotiations with U.S.
trading partners on fundamental issues of overcapacity and subsidies.2
Senator Jay Rockefeller separately pursued a Senate Finance Committee
resolution that would independently call for an ITC investigation, in addition to the
presidential action. Sen. Rockefeller had considered including upstream inputs in a
different, committee-sponsored request to the ITC, but the final committee resolution
endorsed the Administration action and product list, as well as the effort to seek a
multilateral agreement. Accordingly, the ITC consolidated the Section 201 case
requests from the Administration and Senate Finance.3
The ITC held an extensive series of hearings on the issue of injury to the steel
industry from imports, which began on September 17, 2001. The ITC staff had
grouped the tariff headings forwarded by the USTR into 33 product categories, under
four broad groupings. For each category, the ITC had to determine whether imports
for the period 1996-2001 constituted a “substantial cause of injury or threat of injury”
to domestic producers (i.e., were “important and not less than any other cause”).4
Members of Congress may participate in ITC hearings, and many did so. The
first witness at the first hearing, testifying in support of relief, was Senator Robert
Byrd of West Virginia. He was followed through the course of the hearings by 40
other elected leaders, including members of both parties, both Houses of Congress,
and several Governors, who testified in support of relief. In the subsequent ITC
hearings on suggested remedies, this perspective was balanced somewhat, as Senator
Chuck Hagel of Nebraska and Representative Jim Kolbe of Arizona provided
testimony, not against relief, but to remind the ITC of U.S. interests in maintaining
adherence to World Trade Organization (WTO) rules and the interests of U.S.
consumers. Similarly, Representatives John Isakson and Nathan Deal of Georgia
expressed concern about a constituent, an automotive parts manufacturer, whose
business could be adversely affected, they said, by an effective cut-off of steel
1 For details, see CRS Report RL31396, Section 201 of the Trade Act of 1974: Summary of
Provisions and History of Investigations by George Mangan.
2 President George W. Bush. Statement by the President Regarding a Multilateral Initiative
on Steel. (June 5, 2001), [http://www.whitehousereleases/2001/0605-4.html].
3 American Metal Market (AMM), July 18 and 31, 2001. The Finance Committee resolution
was forwarded by letter to the chairman of the ITC on July 26, 2001. USITC. “Revised
Announcement on Consolidation of Senate Finance Committee Request with USTR Request
of June 22, 2001, for a Section 201 Investigation on Steel,” August 16, 2001.
4 Quoted phrases from 19 USC Section 2252 (b)(1)(B).

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CRS-3
imports. In view of the September 11 terrorist attacks on New York and Washington,
DC, many governmental representatives frequently included in their remarks
references to the importance of a domestic steel industry to U.S. national security.
The ITC announced on December 7, 2001, its findings that 16 of the 33 product
groups under investigation had suffered or were threatened by substantial injury from
imports during the period of investigation. Injured domestic producers, the ITC
found, included makers of products in all four categories covered by the presidential
request: carbon and alloy steel flat, long and tubular products, and stainless steel
products. Subsequently, the ITC made a series of recommendations to the President
for remedial actions. These recommendations were not unanimous. Two
commissioners recommended four-year tariffs as high as 40% for most products
(measured by volume of imports), three commissioners recommended tariffs no
higher than half that level, and one commissioner generally preferred quotas instead
of tariffs.5
On March 5, 2002, the White House announced the President’s decision on
trade remedy measures under the Section 201 process. The President adopted
safeguard tariffs of 30% in the first year for high-volume flat and long products, and
semi-finished slabs, with a quota for slab imports with no remedy tariffs (a tariff-rate
quota). Lower levels of relief were provided for some long products, notably
concrete reinforcement bars, and tubular and stainless products. No remedy relief
was provided for two product categories included in the ITC injury findings. Relief
was for three years, not four, possibly to minimize compensation claims under WTO
rules, and, as required by U.S. law, the safeguard tariffs are successively lower in the
second and third years.
Canada and Mexico, the North American Free Trade Area partners of the United
States, are major steel exporters to the United States, but were exempted from all
remedy measures. So were the other U.S. free-trade area partners (namely Israel and
Jordan, which are not major producers). Imports from most developing countries
were also exempted. The Administration also excluded some steel products from the
safeguard tariffs on grounds that they are not available from U.S. producers, and
announced that it would undertake a process to review additional possible exclusions.
Ultimately, the Administration granted more than 700 requests for exclusion of
specific imports from the remedy measures. It may add to the list of exclusions in
March in each year after subsequent annual reviews.6 The first annual review,
completed in March 2003, added 295 specific products to the exclusion list.7
Members of Congress have been actively involved in expressing their views to the
5 The recommendations of the commissioners are summarized in USITC Publication 3479.
Steel: Investigation No. TA-201-73 (Dec. 2002), Vol. I: Determinations and Views of the
Commissioners, pp. 2-8.
6 President of the United States. Message to Congress (House Doc. 107-185), March 6,
2002.
7 Dept. of Commerce/Office of the USTR. Fact Sheet: Exclusion of Products from
Safeguard on Steel Products and Automatic Adjustment of the Remedy, March 21, 2003. A
summary descriptive list of exclusions, with quotas, was released with these two documents;
the full version is included in 68 Federal Register 15494-544 (March 31, 2003).

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Commerce Department and to the USTR regarding the exclusion of products from
steel safeguard remedies.
The Section 201 statute provides that if the President takes no action or action
different from the ITC recommendation, the ITC’s recommendations may still go into
effect instead of presidential action, if Congress enacts a joint resolution of
disapproval of the President’s decision within 90 days of notification of that
decision.8 Representative William Jefferson, emphasizing the potential damage of
the steel safeguard tariffs and falling imports to the Port of New Orleans in his
district, introduced a resolution under Section 201 to overturn the President’s policy.
Rep. Jefferson noted that the ITC position, from his point of view, was hardly ideal,
since he preferred no remedy tariffs and the ITC tariff levels (as recommended by
three members, and therefore the formal position) were as high as 20%. But this was
still less than the tariffs imposed by the President.9 The resolution was referred to the
House Ways and Means Committee, where it was reported unfavorably on April 24,
2002, and tabled on the House floor on May 8, 2002.10
ITC Reports on Safeguards under Sections 204 and 332
Complaints from U.S. businesses about high steel prices and short supplies
began rolling in as the Section 201 tariffs went into effect and steel prices rose in the
first half of 2002. Representative Donald Manzullo, Chairman of the Small Business
Committee, convened a series of hearings beginning in July 2002, which heard
witnesses complain that in the Section 201 tariff decision the steel industry had been
favored at the expense of steel users, that steel prices had risen even higher than the
nominal tariff increases, and that the supply of steel in sufficient quantity and quality
had become unreliable. Many of the companies were manufacturers who supply the
Big Three car manufacturers. They stressed that given the present supply-chain cost
squeeze, the auto makers could well move more sourcing offshore.11 At a Small
Business Committee hearing on September 25, 2002, Under Secretary of Commerce
for International Trade Grant D. Aldonas refused to consider any early termination
of the Section 201 tariffs outside the statutory review process, though he stated that
8 CRS Trade Briefing Book , Section 201 of the Trade Act of 1974, by Jeanne J. Grimmett
[http://www.congress.gov/brbk/html/ebtra68.html].
9 BNA. Daily Executive Report (DER), “Rep. Jefferson Announces Challenge to Bush
Decision to Impose Tariffs on Steel,” March 8, 2002.
10 DER, “House Crushes Move to Overturn Controversial Safeguard Steel Tariffs” (May 9,
2002).
11 U.S. House of Representatives. Committee on Small Business. The Unintended
Consequences of Increased Steel Tariffs on American Manufacturers (Hearing, July 23,
2002) and Lost Jobs, More Imports; Unintended Consequences of Higher Steel Tariffs (Part
II) (Hearing, Sept. 25, 2002). See also the reports in AMM, Jul. 24 and 29, 2002, which
particularly note Rep. Manzullo’s plan to request that the Attorney General investigate
“collusion” in pricing among U.S. steel producers in the wake of recent price increases. The
issue of effects of the safeguard tariffs on steel consuming industries is discussed in detail
in CRS Report RL31748, pp. 26-31.

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the exclusion list could be modified, if steel suppliers were shown to have used false
or fraudulent information in successfully objecting to product exclusions.12
Reflecting the concerns of steel users, Representative Joe Knollenberg and six
co-sponsors introduced a resolution in October 2002 that urged the President to
request the ITC to conduct an early review of the safeguard measures and to include
consideration of the impact on consuming industries (the ITC is required by law to
review the Section 201 tariffs eighteen months after their initiation, in this case by
September 2003).13 The resolution was referred to the Ways and Means Committee,
where no action was taken before the 107th Congress adjourned.
On January 29, 2003, Rep. Knollenberg introduced a different version of this
measure as H.Con.Res. 23. The request for an early review of the steel safeguard
tariffs by the ITC was dropped, but the measure urges that the President request the
ITC, “in addition to monitoring and reporting on the items enumerated in Section 204
of the Trade Act of 1974 ... also to monitor and report on the impact of the temporary
safeguards on domestic steel consuming industries.” By April 2003, H.Con.Res. 23
had 73 co-sponsors. In introducing the measure Rep. Knollenberg explained that,
“The ITC is required to review the effects of the steel tariffs imposed in March 2002
by September 2003, but is under no obligation to consider the effects of the tariffs on
steel consumers ... What good will the tariffs have achieved if there are no customers
left to buy steel from U.S. companies?”14 On March 20, 2003, Senator Christopher
Bond introduced a companion measure, S.Con.Res. 27, which has gained seven co-
sponsors by the end of the month.
Rep. Knollenberg’s point was based on the fact that the statutory text of the
safeguard provisions (in Section 204 of the Trade Act of 1974) make reference only
to the effects on the injured domestic industries, with respect to the monitoring and
reporting requirements on the ITC. That body is charged with monitoring
“developments with respect to the [subject] domestic industry, including the progress
and specific efforts made by workers and firms in the domestic industry to make a
positive adjustment to import competition.” The ITC must hold a hearing, prepare
a mid-point report on the effects of the safeguard measures and, if requested by the
President, “advise the President of its judgment as to the probable economic effect
on the industry concerned of any reduction, modification or termination” of the
safeguard action.15 (Italics added.)
The ITC announced its procedures for the Section 204 investigation on March
10, 2003. It set the following dates for public hearings, as required in the statute:
12 House Small Business Committee, Part 2 (Sept. 25, 2002), pp. 5-11. DER, “Commerce
Official Rebuffs Call to End Steel Tariffs; Leverage Cited,” (September 26, 2002).
13 Detroit Free Press, Oct. 1 and 10, 2002; AMM, Oct. 10, 2002. Technically, a “midterm
review” is necessary only when remedy measures apply for longer than three years; 19 USC
§2254(2). President Bush actually proclaimed the steel safeguard remedy measures for a
period of three years and one day.
14 Rep. Joe Knollenberg. Press release, January 29, 2003.
15 19 USC §2254(a).

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! July 10, 2003: Stainless steel products;
! July 15, 2003: Carbon and alloy flat products;
! July 17, 2003: Carbon and alloy long products;
! July 22, 2003: Carbon and alloy tubular products.
Parties intending to participate in the investigation had to apply by March 31,
2003, with deadline for requests to participate in the public hearing set for June 20,
2003.16 The ITC advises that “parties” refers generally to petitioners and respondents
during the Section 201 injury and remedy hearings of 2001.
In deciding whether to take action to “reduce, modify or terminate” safeguard
measures after receiving the ITC report, the President, as explained in the 1988
legislative history of amendments to this section of the law, may base his decision
either on:
! “changed circumstances that warrant such reduction, modification
or termination; or”
! “a majority of representatives of the domestic industry request such
reduction, modification or termination the basis that the domestic
industry has made a positive adjustment to import competition.”
The statute provides that a “changed circumstances” determination may be made
on the basis that either: (i) “the domestic industry has not made adequate efforts to
make a positive adjustment to import competition, or – (ii) “the effectiveness of the
action taken ... has been impaired by changed economic circumstances.”17 The
legislative history further elaborates that changed economic circumstances may
include developments “such as substantial shifts in currency exchange rates or
attempts to circumvent the action taken.”18 In making a determination on these bases,
the President is required to take into account the ITC report and must also seek the
advice of the Secretary of Commerce and the Secretary of Labor. The steel industry
opposed Rep. Knollenberg’s view of the price impact of the safeguards, and believes
that the emphasis on the interests of the consumer in H.Con.Res. 23 and similar
measures is misplaced.19
In March 2003 the House Ways and Means Committee took two steps
responsive to industry concerns on the impact of the steel safeguards. On March 18,
2003, the Chairman of the committee, Representative William Thomas, requested
that the ITC, under the authority of its general investigative powers (Section 332(g)
of the Trade Act of 1930), prepare a separate report on “the current competitive
16 USITC. Steel: Monitoring Developments in the Domestic Industry (Investigation no. TA-
204-9), March 10, 2003. See also AMM, March 13, 2003.
17 19 USC 2254(b)(1)(A).
18 100th Cong., 2nd Sess. H.Rept. 100-576. Omnibus Trade and Competitiveness Act of 1988:
Conference Report to Accompany H.R. 3 (April 20, 1988), p. 688.
19 See quote from Dan DiMicco, Chairman of the American Iron and Steel Institute (AISI)
and CEO of Nucor in AISI. Steel Works News Digest, Feb. 4, 2003.

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conditions facing the steel consuming industries in the United States, with respect to
the tariffs imposed by the President on March 5, 2002.” Chairman Thomas
specifically requested that this report be completed no later than the Section 204 mid-
point report (September 2003) and be issued with it as a single document.20
A few days later, on March 26, 2003, the Trade Subcommittee of Ways and
Means, chaired by Representative Philip Crane, held a hearing on the impact of the
Section 201 steel safeguard measures. The hearing listened to testimony of more
than two dozen witnesses, including House Members, representatives of the steel
industry and its major union, numerous manufacturers who detailed how their
business had been hurt since the Section 201 tariffs entered into force, and similar
comments from representatives from Houston and the port of New Orleans.21
Speaking at the hearing, Rep. Knollenberg stated that all he was seeking in his
resolution was “balance” in ITC reporting on the effects of the safeguard tariffs.
With Chairman Thomas’ request to the ITC, he continued, “I am happy to say the
request in my resolution has been fulfilled.”22
In his opening statement at the hearing, Trade Subcommittee Ranking Member
Sander Levin was more concerned that the Thomas request “indicated a clear
predisposition against the safeguard relief.”23 The Ranking Members of the Senate
Finance and House Ways and Means Committees, Senator Max Baucus and
Representative Charles Rangel, expressed their “serious concern” about Rep.
Thomas’ request in a joint letter to the Chairman of the ITC. While in their letter
they did “not mean to suggest that the [ITC] should not conduct the 332 investigation
requested,” they further noted that “as a legal matter, a request by one congressional
committee cannot amend a statute ...” In their analysis:
The statute on its face neither provides for nor contemplates an
examination of the kind called for by the 332 request letter, a conclusion
that is only reinforced by a review of the legislative history. Indeed, under
Section 204(b), it is not clear how any such information could, consistent
with law, be considered by the President in his decision whether to reduce,
modify or terminate relief. Therefore, it is not possible as a legal matter
for theCommission to comply with the request in the 332 letter to combine
the 332 report and the 204 midterm review.”24
20 Letter from Rep. William Thomas to USITC Chair Deanna Tanner Okun, Mar. 18, 2003.
21 See committee website, [http://waysandmeans.house.gov/hearings], for a complete list of
witnesses. Most of the prepared testimony was reported online by Inside US Trade on March
26, 2003.
22 Rep. Joe Knollenberg. “Testimony Before House Ways and Means Subcommittee on
Trade, March 26, 2003,” released by his office.
23 DER, “Crane calls for Constructive Dialogue on Tariffs Between Steel Producers, Users”
(Mar. 27, 2003).
24 Letter from Sen. Max Baucus and Rep. Charles Rangel to Chairman Deanna Tanner Okun,
USITC, March 25, 2003.

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Other Legislative Measures Affecting the Steel
Industry
Presidential action under Section 201 has been far from the only action taken
or proposed under U.S. law in defense of the interests of the domestic steel industry.
This section of the report reviews:
! Actions undertaken by or for the domestic steel industry under U.S.
trade remedy laws beyond the Bush Administration safeguard
measures;
! The application and impact of other measures passed in recent years
to assist the steel industry;
! Other issues, particularly legacy cost relief, which have been
proposed and considered for legislative action.
Antidumping and Countervailing Duties
The U.S. steel industry has filed numerous petitions under existing U.S.
antidumping and countervailing duty (AD/CVD) trade law. In a report written in
2002, Edward Gresser of the Progressive Policy Institute calculated, based on
Commerce Department data, that, “...About 130 of the nearly 260 antidumping orders
now in force, affecting 32 different countries, are on steel products; likewise, 30 out
of the 50 countervailing duty orders in force affect steel.”25
AD/CVD cases are still being filed while the Section 201 safeguard tariffs are
in place. For example, furnace coke producers, whose product was not covered in
the Bush Administration 201 case, instead filed an antidumping case against products
from Japan and China. In this case the ITC in early August 2001 voted 3-2 against
an injury determination.26 On September 28, 2001, four major U.S. integrated steel
producers (Bethlehem, U.S. Steel, LTV, and National Steel), who supply the majority
of domestically produced cold-rolled steel, filed an antidumping case against cold-
rolled imports from 20 countries. According to a Bethlehem Steel statement,
“Imports from these countries now represent over 80% of all imports of cold-rolled
steel products.” The petitioners also filed a subsidy case against four of the countries
(Argentina, Brazil, France and Korea).27 Meanwhile, the Department of Commerce
found that nine countries are dumping hot-rolled steel in the United States and that
producers in four countries are receiving countervailable subsidies. The ITC has
subsequently found material injury in these cases, thereby allowing final AD/CVD
25 Edward Gresser, Kind to Be Cruel (Progressive Policy Institute report, April 2002), p. 3.
26 AMM, August 13 and September 25, 2001.
27 DER, “U.S. Producers File Trade Case Against Cold-Rolled Steel Exporters,” October 1,
2001; AMM, October 2, 2001.

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duties to be imposed.28 On April 3, 2002, the Commerce Department announced
preliminary antidumping duties of as much as 370% on wire rod imports from seven
countries. The ITC on October 2, 2002, voted in favor of a positive finding of injury
from imports in this case, despite the continued existence of Section 201 remedy
relief dating from 2000.29
Other countries have criticized U.S. AD/CVD laws, and have alleged that the
application and administration of the laws may infringe U.S. WTO obligations. The
United States has recently lost two WTO cases related to steel that were critical of
U.S. AD/CVD laws, including the seldom-used 1916 Antidumping Act authorizing
a private right of action and criminal penalties for dumping (Section 801 of the
Revenue Act of 1916, 15 USC 72). The outcome of these cases may require the
United States to amend its laws or provide compensation to the complaining parties.30
Legislation to repeal the 1916 Antidumping Act was introduced in the House in
2002, but never reached the House floor. On March 4, 2003, Representative James
Sensenbrenner, Chairman of the Judiciary Committee, and Representative Thomas,
Chairman of the Ways and Means Committee, introduced H.R. 1073 to accomplish
the same purpose.31 WTO dispute settlement panels have also ruled against the way
U.S. law was applied in two countervailing duty cases involving EU member
countries and in an AD/CVD case involving cut-to-length steel plate from India.32
The ITC’s denial of injury claims in three consecutive steel antidumping cases
in May-June 2002 led some observers to conclude that “the ‘door is closed’ to further
trade relief in the wake of the Section 201 import tariffs.”33 This impression was
fortified on August 27, 2002, by a negative ITC determination regarding material
injury on the first five of the 20 countries charged in the big cold-rolled AD/CVD
case. This decision was followed by a negative finding of injury on imports from
the remaining 15 countries, as well as with respect to injury from subsidies alleged
in some cases.34 In a joint press release with U.S. Steel, Bethlehem Steel CEO
28 DER, “Commerce Finds Nine Countries Are Dumping Hot-Rolled Steel,” September 26,
2001; U.S. International Trade Commission. Press release 01-129 (November 2, 2001);
AMM, November 5, 2001.
29 U.S. International Trade Commission. “Carbon and Certain Alloy Steel Wire Rod from
Brazil [et al.], But Not Germany, Injures U.S. Industry, Says ITC,” press release 02-090.
AMM, Apr. 3, Oct. 3 and 4, 2002; DER, “ITC Ruling paves Way for AD/CVD Duties on
Wire Rod” (October 3, 2002).
30 DER, “EU Wants to ‘Mirror’ Illegal U.S. 1916 Act, with Japan Will Make Unique WTO
Request” (Jan. 9, 2002); “U.S., Japan Agree on Arbitration to Implement Hot-Rolled Steel
Deadline” (Nov. 27, 2001); and, “WTO Sets Compliance Deadline for U.S. to Meet Hot-
Rolled Steel Order” (Feb. 20, 2002).
31 See the official U.S. notice to the WTO on the introduction of this bill (WTO ref.
WT/DS136/14/Add.13 – WT/DS162/17/Add.13, doc. Ref. No. 03-1203, March 7, 2003).
32 WTO cases DS212-213 and DS206, respectively. See CRS Report RL31474 for details.
33 AMM, June 25, 2002.
34 USITC. Certain Cold-Rolled Steel Products from Australia, India, [et al.] (Investigations
Nos. 731-TA-965, 971-2, 979 and 981), Determinations and Views of the Commission (Publ.
(continued...)

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Robert S. Miller reflected the opinion of much of the domestic steel industry when
he said, “This determination is flatly at odds with President Bush’s steel program and
the law...[it] moves the nation backwards, not forwards to a free trading future.”35
But on behalf of steel users, CITAC’s Jon Jensen said, “Most cold-rolled steel is
already covered by the Section 201 tariffs of up to 30%. As a result, U.S. cold-rolled
steel prices have increased 70 to 75% and steel consumers face serious and
continuing supply shortages and delays.”36 Earlier in August, U.S. domestic
petitioners received another setback from the trade adjudication process when a judge
of the Court of International Trade vacated an ITC decision that had established
antidumping duties of more than 100% against tinplate imports from Japan.37
More fundamentally, Members of Congress are concerned that the U.S. Trade
Representative, in reaching agreement with WTO partners to begin a new trade
negotiation, has accepted that antidumping rules will in some measure be opened for
discussion in that negotiation.38 In response, the Senate adopted an amendment, co-
sponsored by Senators Craig and Dayton, to its version of the 2002 Trade Act. The
amendment would have required a separate vote on any changes to U.S. trade remedy
laws negotiated at the WTO. An effort to table this amendment was defeated 61-38,
despite reported veto threats by the Administration. More than 100 House
Democrats, including some active on steel issues, wrote Speaker Dennis Hastert to
urge inclusion of the provision in the final bill, but the measure was effectively
dropped in the House-Senate conference on the legislation.39 The amendment was
replaced in the final bill by the establishment as a “principal negotiating objective,”
34 (...continued)
No. 3536, Sept. 2001); and, Certain Cold-Rolled Steel Products from Argentina, Belgium,
[ et al.] (Investigations Nos. 701-TA-423-5 and 731-TA-964, 966-70, 973-8, 980, and 982-
3), Determinations and Views of the Commission (Publ. No. 3551, Nov. 2002).
35 U.S. Steel/Bethlehem Steel press release, “Steel Industry Condemns Unjust ITC Ruling;
Decision Ignores Facts and Law,” Aug. 27, 2002.
36 Quoted in Washington Post, August 28, 2002. See also, DER, “ITC Nixes Duties for Five
Countries in Ruling on Cold-Rolled Steel Charges” (Aug. 28, 2002); Inside US Trade, “ITC
Rejects Cold-Rolled Dumping Case Against Five Countries in Final Injury Vote” (Aug. 27,
2002); Forbes.com “Steel Panel: No Harm, No Foul” (Aug. 28, 2002); Bloomberg News,
“U.S. Says Cold-Rolled Imports Don’t Hurt Steelmakers” (Aug. 27, 2002); Financial Times,
August 27, 2002; AMM, August 28, 2002.
37 AMM, August 13, 2002.
38 See, for example, statement of Sen. Robert Byrd, Congressional Record (Nov. 16, 2001),
pp. S11985-6. However, a House resolution initially intended to instruct USTR not to
renegotiate U.S. AD/CVD laws was subsequently replaced by a more flexible version. See
Inside U.S. Trade analysis, “House Effort Could Enable U.S. to Put Trade Laws on Table
at WTO,” (Nov. 9, 2001). Contrarily, an analysis by an expert on the WTO, R.K. Morris,
who attended the WTO meeting, emphasizes that the ministerial declaration allows only a
narrow scope for renegotiating AD/CVD rules, “An NGO Looks Back: Lessons from the
WTO’s Ministerial Meeting in Doha, Qatar,” Global Positions, III:1 (Jan. 7, 2002), pp. 4-5.
39 Congressional Record (May 14, 2002), pp. S4299-4326; DER, “House Democrats Push
to Include Dayton-Craig in Trade Conference Bill” (May 24, 2002) and “TAA Deal,
Dumping of Dayton-Craig Clause Crucial to Agreement on Omnibus Trade Bill” (July 29,
2002).

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preservation of “the ability of the United States to enforce rigorously its trade laws,
including the antidumping, countervailing duty, and safeguard laws, and avoid
agreements that lessen the effectiveness of domestic and international disciplines on
unfair trade, especially dumping and subsidies, or that lessen the effectiveness of
domestic and international safeguard provisions ...”40
Clinton Administration Section 201 Case on Steel
The steel industry also gained limited import relief under Section 201 safeguard
actions undertaken by the Clinton Administration in 1999-2000 regarding steel wire
rod and line pipe products. The remedies were questioned under WTO procedures
by Korea and the EU. The initial WTO dispute settlement panel on October 29,
2001, found that the Korean claims were partly valid, but rejected other elements of
the Korean case.41 When the case was brought before the Appellate Body of the
WTO, its ruling in February 2002 substantially upheld much of the Korean case. It
found, in particular, that the U.S. government mishandled the exemption of NAFTA
partners from the line pipe remedy tariffs and, very significantly for upcoming WTO
cases on the Bush 201 remedies, had not adequately linked remedies to the actual
levels of injury caused by imports as opposed to other causes. The line pipe issue
was resolved with Korea on July 29, 2002, when USTR agreed that Korean exporters
could have a tariff-free quota of up to 17,500 tons per quarter from September 1,
2002 (the safeguard remedy expired on March 1, 2003).42
U.S. wire rod producers were disappointed that the remedies they received did
not apply to NAFTA competitors, and gained a subsequent ruling from the ITC that
imports from these sources are indeed a substantial cause of injury to the industry.43
President Bush responded by adjusting the tariff rate quota (TRQ) to allow shares
according to historical sources of imports, instead of allowing all imports to fill the
TRQ on a first-come, first-served basis. The change satisfied the EU, which dropped
its WTO case. The President also considered bringing NAFTA imports under quota
restrictions, but decided not to do so.44 The U.S. wire rod industry has always
considered the Section 201 remedy insufficient and, as noted in the previous section,
successfully brought an antidumping case against imports. Both Mexican and
40 P.L. 107-210, §2101(b)(14)(a).
41 DER, “South Korea Welcomes WTO Ruling on Steel Pipe, Says Implications Wide”
(October 30, 2001).
42 Ibid., “WTO Appellate Body Upholds Ruling Against U.S. Safeguard on Line Pipe
Imports,” February 19, 2002; Office of the U.S. Trade Representative. Press release 02-78,
“United States and Korea Resolve WTO Dispute on Line Pipe” (July 29, 2002). The U.S.
Permanent Mission to the WTO formally notified that body of the termination of these
safeguards in documents G/SG/N/10/USA/4/Suppl.2 and G/SG/N/10/USA/5/Rev.1/Suppl.2,
released as WTO documents 03-1683 and 03-1684 (March 24, 2003).
43 AMM, August 23, 2001; DER, “ITC Says Import Surge of Wire Rod from Canada, Mexico
Is Undermining Relief,” August 24, 2001.
44 Inside U.S. Trade, “U.S. Carves EU Share in Wire Rod Quota, as EU Agrees to Drop
Case,” November 30, 2001; DER, “Canada’s Pettigrew Likes Decision by United States on
Wire Rod Imports,” December 4, 2001.

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Canadian companies are challenging the ITC determination on injury under NAFTA
dispute settlement resolution rules.45
China Safeguards: The Steel Wire Hanger Case
When Congress established permanent normal trade relations with China in
2000, it also approved a special safeguard provision for U.S. domestic industries,
which corresponded to product-specific safeguard provisions accepted by China as
part of its WTO accession package. This China safeguard relief provision, added as
Section 421 of the Trade Act of 1974, operates similarly to a Section 201 safeguard
case. The big difference is that U.S. producers need prove only “material injury” or
threat of such injury resulting from increases in imports from China – not the greater
“substantial injury” standard required under Section 201. After a positive injury
determination from the ITC, the USTR is authorized to negotiate agreements with
China to prevent or remedy the market disruption caused by increased Chinese
exports to the U.S. market, prior to a presidential determination on the application
of safeguard remedies. Also, the President must apply a cost-benefit test on the
national economic impact of safeguard relief as part of his decision.46
Two cases were brought under Section 421 in 2002. The first involved pedestal
actuators, an electromechanical device used to adjust seats in electrically motorized
carts (known as “electrical scooters”), chiefly used by disabled persons. While the
ITC found injury to the only U.S. pedestal actuator producer in a 3-2 vote, a maker
of the scooters and organizations representing disabled persons opposed safeguard
relief. The President decided against relief, saying “I find that import relief would
have an adverse impact on the U.S. economy clearly greater than the benefits of such
action.”47
The second case, on which a presidential determination is pending, involves
steel wire garment hangers. The case was brought by three producers, though other
leading producers testified against injury. The ITC found unanimously in favor of
a ruling of material injury. But in the relief recommendations, all the commissioners
rejected a tariff of 1.8¢ per hanger requested by the petitioners, in favor of an ad
valorem tariff, with three commissioners settling on a rate of 25%.48 The Office of
45 DER, “Canadian Firm Seeks NAFTA Panel on U.S. ITC’s Steel Wire Rod Ruling” (Dec.
17, 2002), and “Mexico Steelmaker Seeks NAFTA Panel on U.S. Wire Rod Antidumping
Decision” (Jan. 9, 2003).
46 19 USC §2451.
47 DER, “Bush Denies Import Curbs in First Case Applying China-Specific Trade
Safeguard” (Jan. 21, 2003); AMM, January 23, 2003.
48 DER, “ITC Investigates Wire Hangers from China under Anti-Surge Provision” (Dec. 5,
2002); and, “ITC Makes Affirmative Ruling in Wire Hanger Safeguard Case” (Jan. 28,
2003); AMM, Jan. 21, 2003; USITC. Publ. 3575. Certain Steel Wire Garment Hangers from
China (Invest. TA-421-2.1), Determination and Views of the Commission (Feb. 2003).

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the USTR has requested public comments on the ITC recommendation and other
possible relief measures.49
The Byrd Amendment (Continued Dumping and Subsidy
Offset Act)
Relating in part to the ongoing financial difficulties of parts of the U.S. steel
industry, the Continued Dumping and Subsidy Offset Act (CDSOA), was signed into
law in October, 2000. The CDSOA is known as the “Byrd Amendment,” because the
West Virginia Senator added it to the FY2001 Agriculture appropriations bill (P.L.
106-387).50 It requires antidumping and countervailing duties to be deposited in a
special account, from which the domestic industry petitioners who meet eligibility
criteria may draw funds to offset expenses incurred as a result of the dumped or
subsidized imports.
On June 26, 2001, the Customs Service proposed rules to implement the Byrd
Amendment. A preliminary list of eligible “affected domestic producers” was
identified by the ITC, based on petitioners in 400 active dumping cases. This list of
2,000 potentially eligible producers was posted on the Customs website.51 To be
eligible for a distribution, producers must still be in operation and making the
product for which a dumping or subsidy injury was found. Funds may be used by
claimants for a wide range of purposes, including training, employee health care and
pension benefits, as well as improvement of manufacturing technology and
equipment, and R&D expenditures.52 A total of $207 million was distributed in
December, 2001, to 130 U.S. companies – about half of them steel mills and iron
foundries. But individual totals in most cases were relatively small: the largest
reported payouts to steel companies were about $4 million each to Bethlehem Steel
and AK Steel. The largest single payouts under the program were for $63 million to
Torrington Co. and $31 million to Timken Co., two ball bearing manufacturers.53
For FY 2002, the Customs Service distributed $329 million in AD/CVD duties
to qualifying petitioners. During 2002, Timken acquired the Torrington ball bearing
division from its parent company, Ingersoll-Rand. The two companies, which are in
the process of merging, are together by far the largest recipient of FY 2002 Byrd
Amendment disbursements, at nearly $127 million.54 Another group of big winners
is a small group of U.S. candle manufacturers, which could share up to $65 million
in collected duties owing to a successful antidumping case against Chinese imports,
49 68 Federal Register 10765-67 (March 6, 2003).
50 Included as Title X; codified at 19 USC §1671a.
51 See [http://www.customs.gov/news/fed-reg/notices/dumping.pdf].
52 66 Federal Register, pp. 33920-26 (June 26, 2001); pp. 40782-40800 (Aug. 3, 2001); pp.
48546-55 (Sept. 21, 2001); and, p. 49451 (Sept. 27, 2001).
53 U.S. Customs Service. “U.S. Customs Publishes List of First Disbursements under the
Continued Dumping and Subsidy Offset Act of 2000,” press release (Jan. 30, 2002), and list,
“CDSOA FY2001 Disbursements by Claimant;” AMM, April 8, 2002.
54 Waterbury Republican-American, December 31, 2002.

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pending the outcome of a lawsuit in the case.55 By contrast, the many steel company
claimants shared about 20% of the disbursements, according to an American Metal
Market calculation; the top recipient among them was U.S. Steel at $5.9 million.56
U.S. trading partners believe that diversion of antidumping and countervailing
duties from importers to a competing domestic industry, as under the Byrd
Amendment, contravenes WTO rules. The European Union, Japan, Canada, and
eight other U.S. trading partners initiated a WTO dispute settlement proceeding. On
July 17, 2002, the interim report of the WTO dispute settlement panel found against
the United States and concluded that the only conceivable and effective remedy
would be to repeal the law altogether, a conclusion confirmed in the final report of
September 16. Senator Byrd issued a statement that he found the WTO ruling
“appalling” and immediately requested that USTR Zoellick file an appeal, which the
Bush Administration subsequently did.57
The substance of the initial decision was reaffirmed by the WTO Appellate
Body on January 16, 2003. It found that the CDSOA is a “specific action” against
dumping, which is prohibited under WTO rules, though it reversed the panel’s ruling
that the existence of the disbursement mechanism encourages companies to file
AD/CVD petitions in a manner that undermines the industry support requirements
in WTO agreements. In confirming the earlier ruling, however, the Appellate Body
did not call for outright repeal as the only solution to the problem of the Byrd
Amendment being out of compliance with WTO rules. In responding to the
Appellate Body decision and to its confirmation by the WTO Dispute Settlement
Body, U.S. Ambassador to the WTO Linnet Deily refrained from commenting on
repeal of the law, but did say that the United States would “implement [the ruling]
in a manner that respects U.S. WTO obligations.” Meanwhile, the Office of the
USTR quickly noted that the outcome of the case did not adversely affect U.S. ability
to enforce its AD/CVD laws.58
55 Cincinnati Post, January 3, 2003.
56 AMM, “Steelmakers Snack on a Smaller Slice of ‘Byrd Money’ Pie” (Jan. 20, 2003 print
ed.). For the official list, see U.S. Customs Service. CDSO FY2002 Disbursements by
Claimant/State (Jan. 30, 2003).
57 Inside U.S. Trade, “Nine U.S. Trading Partners File WTO Request on Byrd Law,” July
13, 2001; DER, “WTO Members Outline Case Against Byrd Amendment; First Hearing Set
for February” (Dec. 10, 2001); “WTO Panel Shoots Down Byrd Amendment in Preliminary
Ruling, Urges Straight Repeal” (July 18, 2002); “WTO Issues Final Ruling Condemning
Byrd Amendment” (Sept. 4, 2002); and, “U.S. Must Repeal Byrd Amendment, WTO
Concludes in Its Official Report” (Sept. 17, 2002); Inside US Trade, “WTO Interim Panel
Rules Against Byrd Law Distributing Duties to Private Parties,” July 17, 2002; Sen. Robert
C. Byrd, “Byrd Blasts WTO Ruling as Undermining Congressional Authority,” (press
release) July 17, 2002;
58 Inside US Trade, “WTO Appellate Body Condemns Byrd Law as U.S. Considers Repeal”
(Jan. 17, 2003); AMM, Jan. 17, 2003; DER, “Appellate Panel Upholds WTO Decision
Against Byrd Amendment; EU Seeks Repeal” (Jan. 17, 2003); and, “WTO Adopts Byrd
Amendment Ruling; U.S. Urged to Repeal Dumping Fees Law”(Jan. 28, 2003) . For a good
summary analysis of the Appellate Body decision, see Eliza Patterson, “World Trade
(continued...)

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Members of Congress quickly reacted to the Appellate Body decision. Seventy
Senators signed on to a letter that asserted, “... The WTO has acted beyond the scope
of its mandate by finding violations where none exists and where no obligations were
negotiated.” The Senators urged that the Bush Administration respond with three
specific actions:
! “To seek express recognition of the existing right of WTO Members
to distribute monies collected from AD/CV duties.”
! “To promptly integrate the Administration’s response to this WTO
decision into the strategy announced in the administration’s recent
[December 2002] Report to Congress on the WTO Dispute
Settlement Process.”
! “To consult closely with Congress on the particulars of any approach
taken in negotiations on this issue.”59
But the 2004 budget proposed by President Bush proposed repeal of the Byrd
Amendment. The President’s FY 2004 budget message did not directly reference the
WTO decision, but argued that the Byrd Amendment disbursements were:
... Corporate subsidies [that] effectively provide a significant “double-dip”
benefit to industries that already gain protection from the increased import
prices provided by countervailing tariffs. While the Administration does
not believe that these payments are inconsistent with U.S. treaty
obligations, repeal of the provision would allow the funds to be directed
to higher priority uses.60
In reports on the meeting of the WTO Dispute Settlement Body on February 26,
2003, regarding the Appellate Body decision and its implementation, the U.S.
representative reiterated that the United States would implement the decision, though
it requested a “reasonable period” to comply with the ruling. Some trading partners
reportedly emphasized in reply the conclusion of the initial panel report that the only
satisfactory means of compliance is repeal of the statute. Parties should reach a
mutual agreement on the compliance deadline within 45 days of the adoption by the
58 (...continued)
Organization Ruling on US Continued Dumping and Offset Act of 2000 (CDSOA),” ASIL
Insights (American Society of International Law), February 2003.
59 Letter of Feb. 4, 2003, to President George W. Bush, signed by 70 U.S. Senators. For
additional reaction, see AMM, “Steel Backers Circle Wagons after WTO Shoots Down
Byrd” (Jan. 20, 2003 print ed.); DER, “Senate Staffers See No Chance of Repeal of Byrd
Law Following WTO Condemnation” (Feb. 14, 2003).
60 Office of Management and Budget. Budget of the United States Government. Fiscal Year
2004, p. 240. See also, Inside US Trade, “Presidential Budget Proposes Repeal of Byrd Law
Reimbursing Petitioners” (Feb. 3, 2003); and, AMM, “Bush Budget Plucks Byrd Tariff
Payouts” (Feb. 10, 2003 print ed.).

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WTO of the ruling, or the Director-General of the WTO may be called in to set the
date if the parties cannot agree.61
The Emergency Steel Loan Guarantee Act of 1999
This law (P.L. 106-51) established a program to guarantee loans for
restructuring and modernizing steel companies that were financially distressed
following the 1997-98 import surge and industry financial crisis. The program
guarantees steel industry loans by private-sector financial institutions up to a total of
$1 billion (maximum of $250 million per company). The program is operated
independently under the auspices of the Commerce Department; its three-member
board, which must approve all applications for guarantees, consists of representatives
of the Secretary of Commerce, the Chairman of the Federal Reserve Board of
Governors, and the Chairman of the Securities and Exchange Commission.
In the original version of the program, the guaranteed loans could carry a
maturity date no later than the end of 2005. The 107th Congress approved in October
2001 an amendment in the FY 2002 Interior appropriations law (P.L. 107-63, Section
336) to extend and modify the Steel Loan Guarantee Program. It prolonged by 10
years, to the end of 2015, the deadline by when loans guaranteed under the program
must be repaid. The amendment also provided that the portion of a loan covered by
a guarantee may be increased from the present level of 85% to 90% or 95%, provided
that no more than $100 million in total loans may be outstanding at any one time
under program guarantees at each of the higher guarantee rates, nor may any single
loan at each higher rate be greater than $50 million. The amendment extended the
authority for loan guarantees to be issued through 2003.62
In practice, the loan guarantee program has not played a major role in alleviating
industry problems. It has issued only two loan guarantees that companies have
subsequently been able to take up. Moreover, Geneva Steel, which received the
larger loan of $110 million, has defaulted and is in liquidation.63
The changes adopted in October 2001 did not enable LTV, the third-largest
integrated steelmaker, to gain a loan under the program and avoid the Chapter 7
liquidation process in 2002. The steelmaker was in the process of negotiating a $250
million loan with its bankers and the Steel Loan Board, when the prospects of the
industry suddenly worsened after the September 11, 2001 terrorist attacks and the
61 DER, “U.S. Wants ‘Reasonable Period’ to Comply with Byrd Amendment Ruling” (Feb.
27, 2003).
62 Congressional Record, July 12, 2001, pp. S7559-60, S7566; see also Congress Daily PM,
“Senate GOP Refusing to Agree to Approps Time Limits,” July 17, 2001; and, Inside U.S.
Trade, “Senate Approves Steel Program with Better Loan Terms for Companies” (July 20,
2001); AMM, October 12, 2001. Because of requirements to perform due diligence on
applications, the Steel Loan Board has announced that all applications must be filed by June
30, 2003; AMM, March 12, 2003. On problems previously identified with the program, see
General Accounting Office report, Financial Management: Emergency Steel Loan
Guarantee Program (GAO-01-714R).
63 OMB. FY 2004 Budget., p. 69.

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further downturn in the economic situation. Negotiations ensued between the
company, its creditors, the United Steelworkers union (USWA), the Steel Loan
Board and other interested parties, particularly the City of Cleveland. But they
ultimately failed to create a package that lenders and the Steel Loan Board believed
that the company was likely to repay. In late November, 2001, LTV’s management
asked the bankruptcy court for permission to liquidate. LTV was able to agree to
leave its blast furnaces on “hot idle” status, making them less expensive to restart,
but retirees and employees lost their health care and other benefits, except for what
is covered by the Pension Benefit Guarantee Corporation. Ultimately the
steelmaking assets were acquired out of liquidation at the end of February 2002 and
restarted as the International Steel Group.64
LTV’s closure in late 2001 stimulated a number of legislative initiatives to ease
further the conditions for Steel Loan Program guarantees. A petition was filed in the
House to discharge from committee the sweeping Steel Revitalization Act (discussed
further below), which contained a provision to expand the Steel Loan Guarantee
Program dramatically. The petition did not gain sufficient signatories to force floor
consideration. On November 28, 2001, Representative Peter Visclosky attempted to
add an amendment to the FY 2002 Defense appropriations bill that would have
established a three-year, $2.4 billion government entitlement program for steel
companies seeking to cover retiree health care obligations. He was supported on the
floor by a number of other Members, but his amendment was ruled out of order and
he withdrew it.65 On December 6, 2001, Representative Steven LaTourette and three
co-sponsors introduced a bill that would allow the Steel Loan Guarantee Board to
waive the requirement that a borrowing company must have good prospects for
paying back guaranteed loans, provided that a number of other conditions were met.
On December 20, 2001, Senator Paul Wellstone with six co-sponsors, and Rep.
Visclosky in the House, introduced companion versions of a different steel loan
guarantee reform measure. It would have required a “fair likelihood” that prospective
industry borrowers repay loans, but would mitigate the requirement by allowing
forecasts to “assume vigorous and timely enforcement of our trade laws and general
prosperity in the economy ...” The bill also would have raised the limit on a loan to
any one company to $350 million and increased the maximum share of a loan that
can be guaranteed to 95%. None of these bills was acted on at either the committee
level or the floor of either body.66
The Bush Administration essentially considers the program a failure. It has
proposed rescinding the remaining federal outlays required to back up any future
steel loan guarantees in both the FY 2003 and FY 2004 federal budgets. “Despite the
difficult market conditions [for the steel industry], there has been little demand for
the program,” the FY 2004 budget proposal noted, and the Geneva Steel default left
“taxpayers to pick up the loss.” The Administration had recommended rescinding
64 See Cooney, CRS Report RL31748, p. 12.
65 Congressional Record (Nov. 28, 2001), pp. H8519-23; AMM, November 30, 2001
66 For a discussion of bills in the 107th Congress to amend the Emergency Steel Loan
Guarantee program, see Stephen Cooney, CRS Report RL31107 Steel Industry and Trade
Issues (last updated Oct. 10, 2002), pp. 58-60.

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$96 million in outlays for Steel Loan Guarantee program loan guarantees, and
proposed rescission of the remaining $26 million in “no-year” outlays in the FY 2004
budget.67 Such measures would in effect terminate the program, even with most
outstanding loan guarantee authority still unused, because no funds would be
available to back up a loan default, as occurred in the Geneva Steel case. However,
the FY 2003 Consolidated Appropriations Resolution (H.J.Res. 2) approved by
Congress in February 2003 and signed into law by President Bush did not include the
requested $96 million rescission for the Steel Loan Guarantee program.
As the Steel Loan Guarantee program continues in operation, Representative
Bart Stupak on February 5, 2003 introduced H.R. 629, which would seek to prevent
loans guaranteed by the program from benefitting foreign iron ore and steel
production. The bill provides that no proceeds from a loan guaranteed under the
program may be invested in a foreign iron or steel production facility. It would also
not allow such proceeds to be used to pay for imports of iron ore or semi-finished
steel from any country subject to U.S. trade remedies related to iron and steel.
In a closely watched decision, the Steel Loan Board on February 28, 2003,
initially rejected the application of Wheeling-Pittsburgh Steel for a loan guarantee.
The company has been in bankruptcy for two years, and had hoped to use the federal
loan guarantee to help modernize its steelmaking operations by the installation of an
electric arc furnace. The company in its annual financial statement had said that its
restructuring under Chapter 11 was “contingent on the approval of a $250 million
loan guarantee” from the Board. But the Steel Loan Board reportedly “was
unconvinced the company had the earning potential to pay the loan.”68
The company re-applied almost immediately with an amended loan guarantee
request. Reportedly, the states of Ohio and West Virginia, which are financing $27
million of the total loan package, agreed to ease their repayment terms, and the
company’s suppliers also agreed to finance $8 million of the non-guaranteed portion
of the loan. These improved terms apparently led the Board to reverse its decision
and approve the guarantee, though the funds will not be released until the company
has emerged from Chapter 11 bankruptcy protection.69
Export-Import Bank Loans
Members of the 107th Congress became seriously concerned over the possibly
negative impact on U.S. steel producers of loans made or guaranteed by the U.S.
Export-Import Bank (Exim) for transactions benefitting foreign competitors. This
concern led to modification of Exim economic impact review procedures, after a
67 OMB. FY 2004 Budget Proposal, p. 69. See also Inside US Trade, “Bush Budget
Proposal Seeks Elimination of Funding for Steel Loan Program” (Feb. 4, 2003); AMM,
“Default Prods Call to Nix Steel Loan Funds” (Feb. 10, 2003).
68 Wheeling-Pittsburgh Steel Corp. “Wheeling-Pittsburgh Steel Announces Results for
2002,” press release, Feb. 24, 2003; Herald-Star (Steubenville, OH), March 2-3, 2003; Wall
Street Journal, March 3, 2003.
69 Association of Iron & Steel Engineers. Steel News, “Wheeling-Pitt’s Loan Guarantee Is
Approved” (March 27, 2003); AMM, March 28, 2003.

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December 2000 loan guarantee of $18 million, over the reported objections of the
Clinton Administration, to upgrade the Benxi, China steel mill, which the Commerce
Department subsequently found to be dumping in the U.S. market.
The Senate Banking Committee on July 18, 2001, considered an amendment to
the Exim reauthorization bill to prevent it from lending to any project associated with
a foreign company accused of dumping, although the amendment was withdrawn.
Meanwhile, Exim itself on July 16, 2001, had announced proposed modifications to
its procedures for consideration of potentially adverse U.S. domestic economic
impact of proposed Exim loans and guarantees. On the House side, Representatives
Peter Visclosky and Alan Mollohan co-sponsored an amendment to the FY 2002
Foreign Operations appropriations bill to reduce Exim support, which passed by a
vote of 258-162. The amendment transferred $18 million from Exim to the child
health and survival programs in Title II of the same bill.70
On September 20, 2001, Exim announced the changes to its revised procedures.
It decided not to prohibit outright financing for a company subject to a preliminary
AD or CVD investigation, but that such an investigation is a “potential indicator” of
commodity oversupply. It would serve as a “yellow flashing light,” though not a
“stop sign,” for a proposed transaction. The next day Representative Patrick Toomey
offered an amendment in a Financial Services subcommittee markup of the Exim
reauthorization bill, to ban financing for “any entity” subject to AD/CVD and Section
201 investigations. This amendment was criticized by supporters of Exim and U.S.
business interests and lost by a single vote (11-10).71 He then reintroduced a
modified version of his amendment at the full committee level on October 31, 2001,
and this version was approved by voice vote.72
Final action on Exim reauthorization was not agreed until late May 2002. It was
approved by the House on June 5, 2002, on a vote of 344-78, and by the Senate on
a voice vote the next day. The bill reauthorizing Exim through FY2006 was signed
into law by President Bush as P.L. 107-189.73 Exim is now prohibited by statute
from providing a loan or guarantee “for the resulting production of substantially the
same product that is the subject of”either a preliminary AD/CVD order or a Section
201 injury determination. Exim was also required to establish procedures to insure
that any loans to such entities do not result in increased imports of “substantially the
same products” as are under investigation.74
70 Congressional Record, July 24, 2001, pp. H-4437-47.
71 DER, “House Panel Narrowly Defeats Amendment Restricting Exim Funding,” September
24, 2001.
72 DER, “Exim Bank Reauthorization Bill Clears House Panel with New Restrictions on
Loans,” November 1, 2001.
73 AMM, May 24, 2002; DER, “Short-Term Exim Extension Expected, as Lawmakers
Complete Conference Bill” (May 23, 2002) and “Exim Bank Conference Report Cleared for
President’s Signature” (June 11, 2002).
74 P.L. 107-189 §18.

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Exim quickly aroused further interest under the new rules, specifically with
reference to a proposed $19 million loan for an export of steel pickling equipment
from a Texas company, Delta Brands Inc. (DBI), to the Turkish steel company
Erdemir. Critics charged that the equipment would increase the capacity of the
Turkish mill’s production, although Turkey had been specifically granted a
developing country exemption from U.S. steel safeguard tariffs for most products.
Rep. Toomey protested the Turkish deal to Exim and the Exim board on August 15,
2002, voted not to proceed with the deal. American Iron and Steel Institute (AISI)
president Andrew Sharkey expressed approval of the outcome, but DBI’s president
emphasized in a letter to President Bush that the rejection would aid his European
competitors, while he was also losing business to them among U.S. steelmakers.75
The House Appropriations Committee in its report on approving the Foreign
Operations appropriations bill stated that it “expects the Export-Import Bank to
report back to the Committee any steel-related proposals posted on the agenda of the
Export-Import Bank’s Board.”76 On November 26, 2002, Exim announced a further
redrafting of its economic impact review procedures, pursuant to the changes in its
charter made in the reauthorization of June 2002.77 Exim has now established
“screens” to determine if proposed transactions may be associated with specific
legislative prohibitions and a potential cause of substantial injury to the U.S.
economy. If a subject capital goods export will enable a foreign buyer to establish
or expand production of an exportable good, the transaction is further analyzed under
one of the following three categories:
! Capital goods transactions relating to products not subject to final or
preliminary U.S. trade remedy actions are subject to a “detailed
economic impact analysis,” if the transaction value is more than $10
million and if the establishment or expansion of foreign production
capacity totals 1% or more of U.S. production.
! Transactions subject to “final trade measures” are subject to
automatic prohibition, without any detailed economic analysis,
unless the applicant can show that the exporter or the U.S. economy
will be “extraordinarily harmed” by denial of Exim support. Final
Board action on such a determination would require a 14-day public
notice and comment period.
! Transactions over $5 million that are subject to preliminary
AD/CVD injury determinations or over $10 million that are subject
to a Section 201 investigation initiated by the executive or legislative
branch (but not private parties) must be provided a 14-day notice and
75 AMM, July 29 and Aug. 1, 16 and 26 (print ed.), 2002; DER, “Export-Import Bank Denies
Loan Guarantee for Exports to Turkish Steel Plant” (August 16, 2002).
76 House Report 107-663, p. 6; similar language was adopted in the manager’s statement on
the FY2003 Consolidated Appropriations Resolution (H.Rept. 108-10, p. 934), signed into
law as P.L. 108-7 by President Bush on Feb. 20, 2003.
77 Export-Import Bank of the U.S. “Ex-Im Bank Revises Economic Impact Procedures,”
press release, November 26, 2002.

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comment period. If, based on comments received, the Exim staff
determines that the transaction “poses the risk of substantial injury,”
then it will not go forward until Exim has conducted a detailed
economic impact analysis.78
National Security and Defense Issues
The role of steel in U.S. national security has been raised frequently during
discussions of various steel-related issues. In particular, a number of Members of
Congress mentioned the issue during appearances before the ITC.
Steel Industry Report on National Defense and Economic Security.
On December 6, 2001, three steel industry associations, in cooperation with the
United Steelworkers (USWA), issued a special report emphasizing the critical role
of steel in U.S. national defense and economic security. The report examined the
direct and indirect uses of steel that are critical both in direct defense applications and
to “U.S. economic and infrastructure security.” The report claims that even
opponents of industry trade relief acknowledge the importance of specialty steels in
defense applications, such as the F-22 and F-18 E/F jet fighters, but that only a broad
and commercially viable domestic steel industry can remain a reliable collaborator
with the Defense Department, or in programs such as the Specialty Metals Processing
Consortium with Sandia National Laboratory. The report estimates that 5.5 million
tons of steel are directly or indirectly utilized annually in all forms of defense
applications. Beyond such direct Defense Department procurement use, the report
also stresses the role of steel in maintaining infrastructure critical for U.S. economic
security. The report argues that foreign sources cannot be relied upon with respect
to either price or timeliness, if a broad and viable domestic steel industry is not
maintained.79
The Section 232 Investigation on National Security. Under Section
232 of the Trade Expansion Act of 1962, the President may act to “adjust imports,”
if the Secretary of Commerce has found that they threaten to impair national security.
Among the criteria for determining the effect on national security are the effect on
“the economic welfare of any domestic industry essential to our national security”
and the “displacement of any domestic products causing substantial
unemployment...” Administrations have rarely taken positive action under Section
232, although in 1979 and 1982, Section 232 was used as the legal basis to ban oil
imports from Iran and Libya.80
78 Ibid. “Fact Sheet: Economic Impact Procedures” (March 2003).
79 A Strong U.S. Steel Industry: Critical to National Defense and Economic Security. Jointly
issued by AISI, Specialty Steel Industry of North America, Steel Manufacturers Association
and USWA (December, 2001).
80 U.S. Department of Commerce. Bureau of Export Administration, Office of Strategic
Industries and Economic Security. Section 232 Investigations: The Effects of Imports on the
National Security (January, 2001).

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In January 2001, Representatives James Oberstar and Bart Stupak wrote then-
Secretary of Commerce Norman Mineta to request a Section 232 investigation into
the upstream iron ore and semi-finished steel industries, which have been under
heavy pressure from import competition.81 On February 1, 2001, the Commerce
Department announced that it was initiating an investigation under this provision to
“determine the effects on the national security of imports of iron ore and semi-
finished steel.” The report was released to the public on January 9, 2002. It
concluded that while iron ore and semi-finished steel were important to U.S. national
security, “imports of these items do not threaten to impair U.S. national security.”
The report found that 20% of U.S. iron ore and 7% of semi-finished steel are
imported. Even though one major iron ore mine was in the process of closing,
sufficient other capacity exists to secure a domestic source of supply for the long
term, the report found. Moreover, the primary sources of imports were Canada,
Mexico and Brazil, all nations with which the United States has friendly relations,
and one of which is a close military ally.82
The Defense Department (DOD) participated in the Section 232 process. It
estimated that its demands for iron and steel for weapons systems are a small portion
of the domestic industries’ annual output: 325,000 tons annually, or about 0.3% of
the total. Current demand was based on earlier defense plans to be able to maintain
a “two major theater war,” but as the quadrennial defense review had moved away
from this standard, it was probable that DOD demand would be flat or lower for steel
over the next five years, according to the Commerce Department report. The final
report noted a wide variety of steel usage in other products procured by DOD, but
stated that for all of these uses, domestic production levels were easily sufficient to
meet industry needs. Furthermore, the report also noted that about half of this
general domestic supply was met by minimills, which do not use iron ore or imported
semi-finished slabs. Based on these findings, the Commerce Department
recommended no action under Section 232 of the Trade Act.83
Reps. Stupak and Oberstar criticized the Commerce Department finding, as both
noted continuing closures and pressure from imports in the iron ore and steel
industries. USWA president Leo Gerard believed the findings incompatible with
statements made by President Bush and Homeland Security Director Tom Ridge
regarding the national security importance of the steel industry.84
Steel Issues in Defense Procurement. The House passed on November
28, 2001, the FY 2002 Defense appropriations bill, which contained a provision to
require that “steel; or equipment, products or systems that are necessary to national
security or national defense and that are made of steel” use only steel that is “melted
81 Text of letter in Inside U.S. Trade (January 26, 2001).
82 U.S. Department of Commerce Bureau of Export Administration. The Effect of Imports
of Iron Ore and Semi-Finished Steel on National Security (October 2001).
83 Ibid., pp. 13-16, 37.
84 DER, “Iron Ore/Semi-Finished Steel Imports Not Seen Threatening National Security,”
Jan. 10, 2002; and “USWA Blasts Administration Ruling on Imports of Iron Ore, Semi-
Finished Steel,” Jan. 11, 2002.

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or poured in the United States...”85 This provision is much more sweeping than
existing language in the Defense acquisition regulations, based on previous
legislation. The Senate version of the bill contained a provision that was based on
the narrower existing law and regulations. It refers only to “carbon, alloy or armor
steel plate,” and requires that such products must be “melted and rolled” in the
United States (and Canada) to be eligible for procurement using DOD acquisition
funds. The Senate language was adopted and included in the final Defense
appropriations bill, which was signed into law by President Bush on January 10,
2002.86
In the Second Session of the 107th Congress, a bill was introduced similar to the
House-passed requirement of November 2001. But the FY2003 Defense
appropriations bill approved in both Houses and which President Bush signed into
law contains a provision similar to that included previously, limited to carbon steel
armor and armor plate.87 On February 5, 2003, Reps. Stupak and LaTourette
introduced H.R. 628, which once again proposed the broad prohibition on Defense
Department procurement of equipment made with foreign steel.
In the FY2003 Military Construction appropriations law, there is also a new
provision which requires that “American steel producers, fabricators and
manufacturers” must have the opportunity to compete for steel procurement in any
military construction project.88
Not directly related to defense issues, but within the House version of the Coast
Guard appropriation for FY2003, a provision established a form of preference for
U.S.-made “steel, iron and manufactured products” in projects designed to alter
bridges for navigation purposes. This provision was included in the final FY2003
consolidated appropriations law. Funding for such projects is made contingent upon
use of U.S.-produced products, “unless contrary to law or international agreement,
or unless the Commandant of the Coast Guard determines such action to be
inconsistent with the public interest or the cost unreasonable.”89
Industry and Legacy Cost Relief Legislation
The following section reviews some of the more widely discussed bills
introduced in the 107th Congress, which sought to address the threat posed by steel
company bankruptcies to employee health care and pension benefits (“legacy costs”).
The legacy cost problem, including effects on industry consolidation and the impact
on worker and retiree benefits, is discussed in detail in CRS Report RL31748. That
report describes how the Trade Adjustment Assistance Act (TAA) was expanded in
85 Section 8158, H.R. 3338.
86 P.L. 107-117 §8033 (See House Conference Report 107-350).
87 P.L. 107-248 §8030.
88 P.L. 107-249 §108.
89 Conference Report on H.J.Res. 2 (H.Rept. 108-10), Division I, Title I (p. 381, “Alteration
of Bridges”).

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the Trade Act of 2002 to provide limited relief in covering the health care costs of
retired steelworkers and others who receive pensions through the Pension Benefit
Guaranty Corporation. The USWA and many Members of Congress do not believe
that this measure adequately addresses the loss of benefits by steel workers and
retirees.
The Steel Revitalization Act. This measure was introduced in the House
by Representatives Peter Visclosky and Jack Quinn on behalf of the Congressional
Steel Caucus. It was a comprehensive measure addressing the issues that affect the
steel industry. The bill had 228 House co-sponsors by April 2002. A companion bill
was introduced in the Senate by Senator Paul Wellstone and three co-sponsors.90
The Steel Revitalization Act had four titles. Title I would have required the
President to establish import quotas on steel products for five years and was an
expanded version of a bill that passed the House in 1999. It was effectively rendered
moot by President Bush’s Section 201 trade remedies. Title II would have
established a 1.5% sales tax on U.S.-made steel products and imports to finance the
health care benefits of steelworker retirees (“legacy costs”). It would also have
established a fund for covering these costs, a federal board to administer a health care
program for steel workers, and eligibility rules for participation in these programs.
As the projected pool of eligible steel workers shrank, the special tax would have
been automatically reduced until it was phased out. This approach to the legacy cost
problem was strongly supported by the USWA, but not by steel companies or the
industry’s trade associations. The Steel Manufacturers Association (SMA), which
represents minimills as a group, actively opposed this approach. It argued that
“government assistance to troubled steel companies for continued operation or legacy
costs is unacceptable. That assistance is unfair to those steel companies who are not
troubled.”91
Title III of this legislation would have modified and extended the Emergency
Steel Loan Guarantee Act of 1999. Some parts of this measure were incorporated
into the amendments to the Steel Loan Guarantee program discussed earlier, but the
major expansion of the program with a $10 billion authorization that this bill
proposed was not included. Title IV would have created a new environmental
compliance grant program for merged steel companies worth up to $100 million per
company.
As mentioned earlier, the LTV liquidation process in late 2001 and early 2002
led to a discharge petition being filed in the House on behalf of this bill. But the
petition gained only 124 signatures; a majority of the House would have been
required to discharge the bill from committee and bring it to the floor.92
90 The House bill number was H.R. 808, and the Senate number was S. 957. Sen.
Rockefeller also introduced a bill containing only the health care and environmental titles
of this legislation as S. 910.
91 Steel Manufacturers Association. On Ending the Steel Crisis: Statement on a Program
Needed and Principles Underlying Its Implementation ( Feb. 9, 2001).
92 See House Petition 107-5.

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The Rockefeller Legacy Cost Bill. The liquidation of LTV early in 2002
terminated the health care plan that covered more than 80,000 employees, retirees
and dependents. The bankruptcy of Bethlehem Steel threatens an even larger number
of steel company health plan beneficiaries. The legacy cost impact for steel industry
retirees was highlighted at a March 2002, hearing before the Senate Health,
Education, Labor and Pensions Committee.93 On April 17, 2002, Senator Jay
Rockefeller, co-chair of the Senate Steel Caucus, introduced the Steel Industry
Consolidation and Retiree Benefits Protection Act on behalf of himself, his co-chair
(Senator Specter), the Majority Leader (Senator Daschle) and six other co-sponsors.
As indicated by Sen. Rockefeller in his statement introducing the bill, part of the
rationale was the belief that, “The American steel industry will not consolidate and
will not survive without relief from their unique burden of substantial retiree health
care costs.”94
The Rockefeller bill would have added a new title to the 1974 Trade Act to
establish a “Steel Industry Retiree Benefits Protection Program,” financed by a
number of sources:
! tariff duties collected on steel mill products;
! retiree health care trust fund assets of qualified steel companies;
! a charge of $5 per ton of steel shipped annually from the capacity of
an acquired steel company (or otherwise “qualified” company) for
10 years;
! retiree premiums;
! “appropriated funds” for shortfalls, as authorized in the bill.
The bill was intended to cover retirees from all steel companies that were
liquidated, in bankruptcy, or seeking acquisition as an alternative to bankruptcy and
liquidation. In addition to such company-specific events, once a total of 200,000
retirees and beneficiaries were participating in the federal retiree benefits program,
any other steel company could choose to transfer its retiree health care beneficiaries
to the program (a process described as a “qualified election”).
Reported estimates of total costs of the program varied from $4 billion to $12
billion. The industry was not unanimous in support of the legislation. Some large
integrated steel mill companies, notably U.S. Steel and Bethlehem Steel, as well as
the USWA, were reportedly consulted in developing the bill and indicated their
support. But the industry organizations AISI and SMA did not support the bill, and
SMA president Thomas Danjczek was reportedly critical. “Let the market work, not
the government,” he said. “I’m concerned that the essential interests of some of my
members are being sacrificed by the drive to get subsidy relief by some domestic
93 U.S. Senate HELP Committee. Hearing 107-345. The Future of American Steel: Ensuring
the Viability of the Industry and the Health Care and Retirement Security for Its Workers
(March 14, 2002).
94 Congressional Record (April 17, 2002), p. S2842; the Rockefeller bill number was S.
2189.

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producers.”95 The Rockefeller bill was referred to the Finance Committee, of which
Sen. Rockefeller is a member, but there was no further action.
Supporters of opening part of the Alaska National Wildlife Refuge (ANWR) for
oil and gas development also attempted to link to their legislation a steel legacy cost
program similar to Sen. Rockefeller’s bill. Part of the royalties from any oil and gas
production in ANWR would be hypothecated for the support of legacy cost benefits
under this proposal. Sen. Rockefeller opposed this move, and it failed on the Senate
floor.96
House Steel Legacy Cost Relief Bills. Legislation similar to the
Rockefeller bill was introduced in the House, but with some important differences.
Representative Phil English and five co-sponsors introduced the Steel Industry
Legacy Relief and Transition Act on April 24, 2002. This would have established
a Steel Industry Legacy Relief Program within the Labor Department, managed by
the Secretary of Labor. It would be partially funded by Section 201 tariff duties, any
existing health care fund assets, participants’ premiums and a $5 per ton charge on
the capacity of assets transferred to another company. Retirees would become
eligible for coverage through domestic steel company acquisitions of another
company, industry “rationalization,” or participation in any company that was
recently liquidated in order to include LTV and other retirees who had lost benefits.
However, there was no “industry-wide election” provision as in the Rockefeller bill,
and foreign-owned acquiring companies would not have been allowed to transfer
legacy cost beneficiaries into the government-supported program.97
The Steel Industry Legacy Relief Act was introduced by Representative John
Dingell and 96 co-sponsors on May 2, 2002 (the number of co-sponsors had risen to
177 by October 2002). This bill was very similar to the Rockefeller bill. The major
difference is that while the Dingell bill also established an “industry-wide” election
process for transferring all steel retiree health care responsibilities to a “Steel Legacy
Relief Trust Fund,” it would have given union representatives veto power over the
transfer process. Thus, under this legislation, a company that was not in economic
difficulties and whose retirees were therefore not eligible under the qualification
provisions for transfer to the federal plan, would not be able to divest itself of legacy
cost responsibilities unless each union representing 10% or more of its employees
agreed.98
On September 10, 2002, the Subcommittee on Commerce, Trade and Consumer
Protection of the House Energy and Commerce Committee held a hearing on the
Dingell bill. Witnesses from Bethlehem Steel and the USWA spoke in favor of the
legislation, and a former president of the Steel Manufacturers Association spoke
against it. A number of members of the Steel Caucus not on the committee attended
95 AMM, April 19 and 22, 2002; DER, “Sens. Rockefeller, Specter Introduce Bill to Finance
‘Legacy Costs’ of Steel Industry” (April 19, 2002).
96 Washington Post, April 19, 2002.
97 The bill number was H.R. 4574. For commentary, see AMM, April 26, 2002.
98 The bill number was H.R. 4646; this last provision was Section 112(d)(2)(B).

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the hearing and joined members of the committee in supporting H.R. 4646.
Conversely, a number of committee members expressed concern about the
legislation, because the legislation would aid a class of U.S. workers and retirees who
lose health care benefits, but not others.99 No further action was taken on the bill.
The Outlook for Legislation on Steel
Congress gave President Bush the lead in resolving steel trade issues, after the
President decided to launch a Section 201 trade case. President Bush’s Section 201
trade remedies, announced on March 5, 2002, essentially kept the initiative in his
hands. The measures taken by the President have engendered a strong international
reaction and are being challenged under WTO rules.100 But by taking a remedy action
that went some way to meeting industry demands under Section 201, the President
appears to have so far obviated separate actions in Congress that would have changed
current U.S. trade law or perhaps contravened U.S. international obligations.
The impact of the Section 201 safeguard tariffs on domestic industry remains
a hotly debated subject. Much of the U.S. steel industry remains financially troubled.
However, the closure of some domestic capacity because of financial distress, a
substantial rise in prices in early 2002, the Section 201 trade relief and a recent fall
in the dollar’s exchange rate against the currencies of some major competing
producers all helped provide a better year for the industry as a whole in 2002.
Conversely, some industries that use steel complain that higher domestic steel prices,
resulting at least partly from trade remedy action, have had adverse competitive
consequences in their case. This could delay or derail the consuming industries’
recovery from the recent economic recession, or even drive some of them offshore.
Thus, some companies and Members of Congress are supporting H.Con.Res. 23,
which would assure at least a review of the situation of steel consumers in the ITC
midterm report on the steel safeguard tariffs.
Since President Bush acted under Section 201, Congress has essentially
refrained from short-term industry relief measures, with the exception of limited
health care relief for retirees under the 2002 Trade Act. While a number of broader
legacy cost relief bills have been proposed, the fact is that the unions, the integrated
steel mill companies and the minimills have so far not united behind any one plan to
deal with the legacy cost issue – unlike the situation with Section 201, when all parts
of the industry requested presidential action. Nor has legislative action on legacy
cost relief been supported by the Bush Administration.
99 See DER, “Government Funding for Steel Retiree ‘Legacy Costs’ Debated by
Lawmakers” (September 11, 2002).
100 On these international challenges, see Jeanne Grimmett and Stephen Cooney, CRS
Report RL31474, Steel and the WTO: Summary and Timelines of Pending Proceedings
Involving the United States.

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For Additional Reading
CRS Report RL31748, The American Steel Industry: A Changing Profile, by Stephen
Cooney.
CRS Report RL31474, Steel and the WTO: Summary and Timelines of Pending
Proceedings Involving the United States, by Jeanne J. Grimmett and Stephen
Cooney.

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