Geneva Steel President Joseph A. Cannon says international agreements to ensure fair steel trade are not proving to be iron-clad because nations are finding creative ways to cheat.
He told the Senate steel caucus that U.S. steel industries need better protection from foreign countries that are finding ways to indirectly subsidize their steel and foreign producers who have lower costs because they do not have to comply with strict clean-air laws.Cannon also noted that temporary, voluntary steel import quotas are buying time for companies such as Geneva to find the money for needed modernization.
One of the problems, he said, is countries such as Korea artificially manipulate their currency so that it indirectly subsidizes products by making them available abroad at lower cost.
"We need to recognize currency manipulation as an export subsidy under U.S. countervailing duty law," Cannon said.
He also said some steel companies in Brazil and Mexico that are carrying huge debts have announced major expansion plans, which he warns is not possible without unfair subsidies from their governments.
Cannon also said, "Our foreign competitors spend far less on environmental controls than U.S. industry," which unfairly allows them to produce at lower cost.
He said the Journal of Commerce has also reported that some steel producers have plans to export U.S. minerals for coke processing in such countries as Brazil where pollution laws are less strict.
"A substantial amount of such coke is likely to find its way back to the United States without the benefit of pollution-free production," Cannon said.
He also noted that the Brazilian government recently intervened to keep open steel plants of two of Geneva's competitors despite violations of Brazil's pollution laws.
"It is time we recognize that cheaper foreign goods have a hidden price tag - the accelerated destruction of the world's environment," he said, urging that the United States adopt import controls or incentives to encourage other nations to adopt pollution laws similar to those in the United States.
Cannon also said that extention last year of voluntary restraint agreements to limit steel imports through 1992 has have helped give Geneva time to modernize.
"Geneva Steel's modernization effort is a good example of what can be accomplished in a short space of time, given the market stability by the VRAs," he said.
"Since shortly after the mill was acquired in August 1987, Geneva Steel has been profitable in every month of operation, has invested close to $93 million to date in capital improvements . . ., dramatically expanded its customer base and attained a strong competitive market position in the West."
He added that the company decided this year to spend another $226 million over three years to further modernize the plant.