STEEL FACES UPHILL BATTLE ON IMPORTS

STEEL FACES UPHILL BATTLE ON IMPORTS

The iron and steel industry builds bridges, ships and skyscrapers that last decades, but it has trouble piecing together a trade barrier to foreign steel that can stand up in Congress.

Two trade packages now before Congress illustrate the industry's difficulty in further reducing steel imports that it believes are subsidized and often dumped below cost in the United States.The Canadian-U.S. free trade pact and the omnibus trade bill are both important to the industry. In both, U.S. steel producers face an uphill fight.

What's at stake is . . . essentially, the future, said Sheldon Wesson, a spokesman for the American Iron and Steel Institute in Washington.

Since 1980, the steel industry has lost 270,000 jobs - about 60 percent of its work force - in a struggle with foreign competition. A modest turnaround has occurred the past two years. Profits are up and employment is steady.

But the trade bills could determine whether the recovery will continue, industry spokesmen said.

Both bills are being considered in the context of America's network of steel quotas, which limits exports from Japan, South Korea, Brazil and other countries. Those quotas - the keystone of steel's recovery plan - are set to expire in September 1989, and debate has already begun over their extension.

U.S. producers grumble that some foreign steelmakers have used a variety of ruses to circumvent the import restrictions, including shipping steel and steel products through countries not limited by U.S. quotas.

Originally, the omnibus trade bill was going to take care of all that with promises to expand the definition of steel dumping and to further limit imports of steel and steel products.

But the sentiment on Capitol Hill for a hard-hitting trade package is waning, several steel lobbyists said.

The evaporation of Rep. Richard Gephardt's, R-Mo., presidential campaign, which was based on an us-against-them trade message, is one reason. Another is President Reagan's determined opposition to limiting free trade.

A group of 70 manufacturing companies also is opposing any broadening of the quotas.

The current system is unquestionably creating profits for the domestic steel industry, but it doesn't benefit the rest of the economy, Erwin L. Klein, president of the American Institute for Steel Imports, said in a speech last December.

House and Senate members working to resolve differences between their versions of the trade package have been throwing out some of the provisions that related directly to steel manufacturers.

The final version probably will expand presidential authority to respond to unfair trading practices, but will not require the United States to shut out more foreign steel, congressional staff members said.

The question is whether there are going to be quantum jumps in protection, or little ones. I would say it's going to be moderate, said Jack Sheehan, a lobbyist for the International Steelworkers Union in Washington.

Another congressional battle will come over the U.S.-Canadian free trade agreement. When the United States negotiated limits on steel imports with several nations four years ago, the Canadians were not included.

Since then, Canadian steel sales to the United States have soared by 79 percent.

U.S. Trade Representative Clayton Yeutter has assured steel state congressmen that the free-trade pact will not prevent negotiating a voluntary limit with Canada.

But several congressmen say the pact, intended to lower trade barriers, will make it harder to reach such an agreement.

Everybody here knows that the Canadians are not sure that they want to engage in voluntary restraint negotiations. This could just encourage that, said Tamara Brown, an aide to Rep. Peter Visclosky, D-Ind.

Still, the U.S.-Canadian trade pact enjoys widespread support in Congress, and most congressional observers expect it to pass this year.