Thursday, November 09, 2006

Automakers: End steel tariffs

Friday, October 06, 2006
Automakers: End steel tariffs
The 1992 taxes ended the dumping of cheap, foreign steel, but prices have risen 68 percent.
David Shepardson / Detroit News Washington Bureau

WASHINGTON -- The six largest automakers joined forces Thursday to call on the U.S. International Trade Commission to end 13 years of tariffs on imported steel.

General Motors Corp., Ford Motor, Co., Toyota Motor Corp., DaimlerChrysler A.G., Honda Motor Co. and Nissan Motor Co. argue that the duties artificially increase by 30 percent the price of corrosion-resistant steel from Australia, Canada, France, Germany, Japan and Korea.

Automakers, facing steel prices that have jumped 68 percent over the past two years, are now in price negotiations with the steelmakers, who vigorously oppose ending the tariffs.

"This marks the first time that these six companies have united on a trade issue," said Mustafa Mohatarem, chief economist at GM, which buys 10 million tons of steel annually.

"Further protection for the steel industry is simply unjustified. Continuing these outdated duties hurts American manufacturing competitiveness and U.S. jobs."

The tariffs were established in 1993 to prevent foreign countries from dumping cheap steel into the U.S. market at a time when the U.S. steel industry was in turmoil. Since then, automakers say the steel industry has recovered.

The trade commission, the federal agency which regulates U.S. trade, is holding a two-day hearing beginning Oct. 17 in Washington to consider ending the tariffs, and will hear testimony from the automakers.

"American manufacturers have taken a back seat in this process for far too long. The competitiveness of our manufacturers relies on fair-priced raw materials, and it is time the ITC realizes the negative effects these tariffs have on our jobs and on our economy," said U.S. Rep. Joe Knollenberg, R-Bloomfield Township. "Steel-consuming industries employ more than 50 workers for every one worker in the steel-producing industry. The ITC must balance their decisions to reflect this reality."

Knollenberg noted that the U.S. auto and auto parts industries have lost 200,000 jobs since 1999, more than the entire U.S. steel industry employs -- about 150,000. The auto industry employs about 2.4 million people.

Thomas Danjczek, president of the Steel Manufacturers Association, blasted the automakers.

"For many years, automobile producers demanded multiyear contracts at extremely low steel prices, during periods when there was persistent and pervasive dumping of steel imports into U.S. steel markets," he said.

Danjczek said "automakers would rather have access to unfairly priced dumped and subsidized imports, no matter what the effect is on their domestic suppliers. This shortsighted approach in unfortunate and should be rejected."

"A surge of steel imports would harm the domestic steel industry without providing any real benefit to automakers. The average automobile contains about 1,000 pounds of corrosion resistant steel, valued at about $400 total," said Danjczek adding that a 5 percent price drop would cut the cost of building a car by just 1/10th of a percent.

All six automakers, who buy the overwhelming amount of the steel used in their U. S. operations from U.S. steel mills, said the tariffs should be lifted to create a more open market.

"With record profits, high prices and industry consolidation, the domestic steel industry is enjoying unprecedented prosperity that its own executives have publicly stated is sustainable for the long term," said Mark S. McConnell, a lawyer for the six auto manufacturers.

"A great deal has changed in the steel industry since the duties were put in place 13 years ago," said Jo Cooper, Toyota group vice president. "There is no longer an economic basis for keeping these duties. The steel industry benefits from unnecessary protection while the duties hurt a much wider sector of the U.S. economy."

You can reach David Shepardson at (202) 662 - 8735 or

© Copyright 2006 The Detroit News. All rights reserved.


Post a Comment

<< Home