Global economic crisis leads nations to 'dump' steel

By CHERYL FRANKENFIELD
Collegian Staff Writer

Domestic steel companies are facing increased competition from foreign producers, but some help might exist for them in the future.

Last week a group of federal lawmakers initiated H.R. 506, a bill helping to slow steel imports from foreign companies. The bill, also known as the Stop Illegal Steel Trade Act, aims to ensure the volume of future U.S. steel imports does not exceed past volumes of imports.

According to USA Today, foreign countries are dumping steel into the U.S. market at lower-than-usual prices and have caused domestic steel producers to suffer.

Dumping occurs when a company sells its product below production costs, said Eric Bond, professor of economics.

American steel companies are not able to compete when foreign companies sell steel below market price, said Paul Clark, associate professor of labor studies and industrial relations.

"(Dumping) is a real threat to the companies," Clark said.

Steel imports generally have been increasing since 1997, according to USA Today. During the first 11 months of last year, the U.S. received 6.3 million tons of steel from Japan, an increase of 167 percent from 1997.

However, steel imports from Japan dropped in December.

"Japan's 47 percent drop in steel exports still doesn't bring it to the . . . (levels) before the foreign steel dumping crisis began," said U.S. Rep. Frank Mascara, D-Pa., a co-sponsor of the bill.

In addition to the bill, other solutions exist to help domestic steel producers. One solution would be to impose tariffs on foreign products, Bond said.

But many economists don't like this solution, he said, because tariffs undermine free trade and might damage the economy.

According to a Jan. 7 press release from U.S. Sen. Rick Santorum, R-Pa., the U.S. steel crisis is a result of the significant depreciation of Asian currencies, overabundance of steel in the Asian and Russian markets, protectionist trade practices in those countries and unfair trade practices.

Imported products are good for consumers and bad for domestic producers, Bond said.

"There are clear winners and losers."

• Steel prices slide