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In August of 1998 the Russian economy collapsed, rousing grave concern
around the world about future of a relatively new Russia. Many economists
worried that the crash of the Russian economy was another sign that the
world economy was collapsing like a house of cards. The effects of
the Asian crisis did play a role in Russia’s economic meltdown, but
the fundamental reasons for the collapse were completely internal.
Two key elements of Russia’s economy have hit the steel industry especially
hard: low domestic demand due to lack of entreprenureship within
Russia and low technological development due to poor governmental reform
policies. The lack of entreprenureship stems from the pre Soviet
idea that merchants and manufacturers are “crooks” and “ne’er-do-wells”
(Goldman, 10). One Russian offered the following anecdote as a comparison
between the American and Russian economic mindset. "When a genie
offered an American a wish, the American asked for 'a laptop computer,
a VCR, and a handgun.' Given a similar offer, the Russian replied,
'My neighbor has a goat. Kill my neighbor's goat.'” (Goldman, 10)
In Russian society, where material gain is looked upon with spite, domestic industries that would require steel have not yet appeared. Without a national, capitalistic mindset Russian industries had to turn to foreign markets in order to compensate for the lack of domestic demand. Reaching out to foreign markets in itself is not bad, but with the economy barely running Russian steel firms were unable to attract the necessary investment required to increase efficiency and become competitive in the global market. Furthermore, poor governmental policies during the market transition turned state monopolies into private monopolies (Goldman, 10). The oligarchs who owned Russian steel had no need to improve efficiency because they already controlled a small domestic market even though they were extremely inefficient.
Russian Steel Starts to Seep
U.S. steel companies began filing complaints with the International Trade Association as early as 1996. On Dec. 3 of 1996, the Department of Commerce initiated an antidumping investigation under section 732 of the Tariff Act of 1930 on cut to length carbon plate steel and in June of 1997 made a preliminary determination that Russia was selling cut to length steel at less than fair value. In order to circumvent harsh trade restrictions, the Department of Commerce and the Ministry of Foreign Economic Relations and Trade of the Russian Federation (MINFER) negotiated a voluntary trade reduction deal that was signed on Oct. 24, 1997. After the signing, the situation only worsened.
The Surge
We are now beginning to get a clearer picture of just how much Russian
steel entered the American market in 1998. On March 23, 1999 United
States Trade Representative Charlene Barshefsky reported that “in the April
through November period, imports ran some 50 percent over historic levels
across the industry, and at much higher levels in several key product sectors”
("Update on Trade Related…”). This surge in steel imports continued
into the fourth quarter as well. Based on a compilation of
U.S. Department of Commerce data, the American Iron and Steel Institute
(AISI) reported that Russia exported 162% more steel to the United States
in the fourth quarter of 1998 than fourth quarter levels in 1997 (“1998
Steel Imports…”).
This sudden surge in steel imports caused grave concern throughout
the industry and the U.S. steel industry began filing complaints with the
Department of Commerce (DOC) accusing Russia of unfair trade practices.
On November 23 of 1998 the DOC issued a preliminary ruling of critical
circumstances for hot rolled sheet imports from Japan and Russia (“White
House..."). The DOC had found grounds for trade measures and the
United States congress began taking action for legislative measures.
A number of bills were sent through Congress in 1998 addressing the issue of steel imports. H. Con. Res. 350 and S. Con Res. 121 were introduced in Oct. and Sept. respectively. Similar in content, these two bills contained four main provisions calling on the president to:
1) pursue enhanced enforcement of U.S. trade laws with respect to the increase in steel imports to the United States using all remedies available under U.S. laws including imposition of offsetting duties, quantitative restrictions, and other appropriate remedial measuresH. Con. Res. 350 containing these provisions was defeated 153-249 on October 12, but on Oct. 14, Rep. Traficant introduced similar but stronger legislation under H. Res. 598 that ended up passing the House by the considerable margin of 345-44. The fist clause was substituted with a very strict dictum stating that the President must “impose a one year ban on all steel products from any country not abiding by the international trade agreements with respect to imports of all steel products into the United States” (H. Res. 598). Rep. Aderholt reasoned that this stricter legislation was necessary because the existing U.S. trade laws are inadequate. Rep. Aderholt expressed the popular opinion in Congress and throughout the steel industry that existing antidumping countervailing duty laws “take time, and if successful, often provide relief too late to forestall serious injury from occurring” (Archer, CR H10965). Proponents of this stricter legislation felt stronger trade measures are necessary to protect domestic industries.
2) pursue with all methods at the President’s disposal to achieve a more equitable sharing of the burden of accepting imports of finished steel products from Asia and the Independent States of the Soviet Union
3) establish a task force within the executive branch that has the responsibility for closely monitoring imports of steel into the United States
4) report to congress not later than Jan. 5, 1999 with a comprehensive plan for responding to the increase in steel imports, including ways of limiting the deleterious effects on employment, prices, and investment in the United States steel industry (S.Con. Res. 121)
Similar legislation failed to pass through the Senate and as a compromise the previously defeated form of the bill, H. Con. Res. 350, appeared in Section 111 of the Omnibus Consolidated and Emergency Supplemental Appropriations Act. 1999. The President’s report to Congress with a comprehensive plan for responding to the import surge, as provided in the fourth clause of Section 111, was delivered as required by Jan. 5, 1999.
The President envisioned an action plan that would both protect the U.S. steel industry from the current onslaught of imports and also certain steps that the United States must take to insure that this type of surge would never happen again. The President stated that the “Administration is committed to strong enforcement of our trade laws and Commerce will work closely with the U.S. industry, unions and Congress throughout this process ("White House...")The President also stated that "in addition to actions being taken by the Department of Commerce pursuant to its
antidumping
investigation of hot rolled steel from Russia, the Administration is working
with Russia and the IMF to stabilize the Russian economy, promote market
based reforms, and help Russia move toward economic growth" ("White House...").
In the report the President indicated that Russia’s accession to the WTO
“will encourage the kind of competition needed to help Russia restructure
its economy, encourage a shift to service sectors, facilitate labor mobility
and reduce Russia’s dependence on industries such as steel” ("White House…").
The OECD estimated that domestic consumption of Russian steel “declined
to 26% of 1992 levels, and that Russia exported 51% of its steel production
in 1998, compared to 12% in 1992” ("White House…). The OECD recommended
technical assistance for Russia “aimed at the promotion of restructuring
and environmental clean-up of the steel sector, the development of additional
Russian domestic demand for steel, and the promotion of sound business
and marketing practices”("White House..."). These internal market
development concerns were taken into consideration in the controversial
voluntary trade reduction (VTR) treaty on Feb. 22.
By the time Commerce Secretary William Daley announced the initialing
of the VTR agreement between Russia and the
United
States, Russian steel imports had been declining. Russian steel imports
started declining when the DOC announced its preliminary finding of critical
circumstances on Nov. 23. This announcement warned the Russian government
that the United States had found evidence of unfair trade practices and
that if Russian steel continued to be dumped into the U.S. market, strong
trade measures would result. In February the DOC announced that hot
rolled imports, the main culprit for the surge, “fell from over 600,000
metric tons in November 1998 to less than 11,000 tons in January 1999”
("Steel Import…"). In fact, imports from Russia, Brazil and Japan
combined fell by 96% from the record levels in November ("Steel Import…").
Despite these promising numbers, AISI president and CEO Andrew G. Sharkey
III remained concerned. He stated:
In 1998, the U.S. had a steel crisis caused by unprecedented levels of unfairly traded and injurious steel imports. The factors that caused this crisis remain. The December level itself is too high to avoid sustained injury to U.S. steel companies, employees and communities. Any December decline can be directly tied to the pending trade litigation on a single product category; hot rolled carbon steel, from three countries—Japan, Russia, and Brazil. America’s current steel import problem is global. The U.S. steel import crisis continues (“1998 Steel Import…")Sharkey called for more inclusive trade action covering a broader range of steel products. The fact is that hot rolled carbon steel imports declined because they were the main focus of the DOC investigation and steel industry complaints. The DOC’s investigation revealed that “imports of Russian hot rolled have increased 700% from 508,000 metric tons in 1995 to 3,468,000 metric tons in 1998,” and have been “sold at dumped prices substantially below the cost to produce them” (“We Need…”) Sharkey’s concerns are valid, though, the roots of the crisis are much deeper than hot rolled steel.
The Feb. 22 Secretary Daley announced the initialing of two steel agreements with Russia: “a suspension agreement on the carbon flat rolled dumping case, and a broader agreement under the market disruption article of the 1992 U.S. bilateral trade agreement with Russia” (“Update on Trade Related…”). The suspension agreement placed a 6 month moratorium on hot rolled steel, and thereafter set an annual quota at 1996 levels with a minimum price between $255 and $280 per metric ton (Blustein). The 16 other steel products included in the suspension agreement include certain cold rolled carbon steel products, semifinished steel products, galvanized products, other metallic coated flat rolled products, certain tin mill products, electrical sheet products, heavy structural shapes, rails, hot rolled bars, cold finished bars, pipe and wire tube products, wire rod products, tool steel, drawn wire products, hot rolled stainless and alloy sheets and pig iron (64 FR 9892). The inclusion of these products is important because the DOC had not yet gone through all the procedures necessary to limit the import of these products under normal trade law. Also, the European Union already had similar import restraints which, as USTR Charlene Barshefsky cited, “may have caused diversion of Russian steel to the U.S. market” (“Update on Trade Related…”). Perhaps the most important part of the agreement was the “Memorandum of Understanding.” This section allows for “opportunities for regular dialogue between U.S. and Russian government and steel industry representatives which can be used to provide technical assistance in the transformation of the Russian steel sector to market based principles” (“Update on Trade Related…”). This assistance, as outlined by the President’s Steel Report, will help Russia develop its domestic steel market and help take the weight off the United States.
The U.S. steel producers were not pleased with the agreement and threatened that “if the Administration proceeds with this agreement, [they] will take appropriate legal action”(“Russian Agreements…). In a response read in Congress, the U.S. steel industry stated: “We have consistently requested the Administration to permit our laws to be enforced as Congress intended, but by entering this Agreement our rights have been taken away from us” ( “Russian Agreements…”). The industry was glad that something had been done, but the agreement saved Russia from the provisional duties of 25-80% suggested by the DOC (Blustein). As the steel industry cried, the House responded and in March of 1999 began debating stricter legislation.
The U.S. steel industry is obviously having hard times, but weather or not strict legislation such as HR 975 is truly necessary has not yet been resolved. Independent steel analyst Charles Bradford stated that “some of the companies clearly are in desperate shape, but the question is, what are the world market prices and currency values? And an even more important question is, are U.S. companies just trying to raise their prices in a weakening world environment?”(“Materials...”,10). An even broader question is “Who will benefit from stricter legislation?” The U.S. steel producing sector will obviously gain, but what about U.S. industries that use steel products? In fact, the Steel Service Center Institute (CCSI) applauded the President’s measures. The president of CCSI called the U.S.-Russia agreement “a bold step toward restoring order in the American steel market which should help lead to a more reasonable balance of supply and demand."(SSCI Applauds…). In the steel service sector, the biggest complaint about the agreement was that it put import restrictions on too many products. Speaking before the U.S. Department of Commerce, the president of Lapham-Hickey Steel Corp. stated:
We question the quota levels that this agreement would establish for semi-finished steel products and pig iron. Imports of these products expand the supply of domestically produced products and increase the value-added in the United States. Without these imports, we would have less domestic supply of the products we sell and our customers need. This would serve only to increase the imports of finished steel and, worse yet, steel containing products (“On Behalf…”)By raising higher trade barriers against foreign steel, U.S. steel producers would be protected, but the larger industries that
use steel would be hurt. Caterpillar, for instance, submitted a letter
to Congress begging them not to pass HR 975. The letter stated that
the legislation “not only would hurt our competitiveness in overseas markets,
but would lead to direct retaliation against Cat exports” (Barton, H1358).
Another letter, submitted by Don Brown of Tru-Die Inc., stated that “the
protectionist pressures currently being exerted by the ‘Stand Up for Steel’
coalition give us great concern because they are aimed at restricting our
ability to get the best steel for a competitive price”(Brown, H1358).
These two cases highlight the broader concerns of stricter steel trade
bills. USTR Charlene Barshefsky also opposes such legislation. On
March 23, 1999 Barshefsky reported to the Senate Committee on Finance:
Our action plan and our trade laws are in place, and beginning to provide the relief needed and deserved by U.S. steel producers and workers. Proposed legislation such as H.R. 975, which would attempt to resolve these issues through legislated imposition of import quotas or similar import restrictions, would be neither in our national interest, nor that of our steel industry (“Update on Trade Related…”)In fact, industries dependent on consuming steel employ 40 times as many workers as the steel producing sector (Crane, H1352). By increasing the price of steel through such legislation, these workers jobs may be at risk. The net gains and losses of such trade measures must be taken into account and in the end the U.S. steel producing industry may have to take some strong blows for the greater good of the economy.
Another issue raised by opponents of HR 975 is whether or not these trade laws are WTO consistent. Russia may not be a member of the WTO, but many U.S. steel suppliers are members and all countries will be effected by measures such as HR 975. The President chose not to take trade action in the form of unilateral quotas for steel products because they are in violation of WTO rules ( Archer,H1350). The United States did set restrictions on Russian hot rolled steel and 16 other steel products, but these were negotiated in the form of voluntary trade reductions with considerable evidence of dumping.
Proponent of the HR 975 claim that it is in full compliance with WTO measures because the steel industry composes a vital aspect of national security. Rep. Jackson Lee outlined the United State's dependence on steel for security before the Congress on March 17, 1999.
During the war in the Persian Gulf, we deployed 95,000 tons of American steel in the form of battleships, aircraft carriers, tanks, aircraft, and artillery. We could not have been as successful as we were without the benefit of a robust steel industry here in the United States. We could not apply further pressure against Iraq, without the constant and ready supply of steel here in the United States. If we are to lose more mills, we run the risk of losing our ability to replenish our military resources, and therefore, diminish our level of national security (Jackson Lee, H1354)The U.S. military may be dependent on steel to build its war machines, but the current steel crisis is not going to shut down all of the United State’s steel making capacity. If fact, by setting quotas and increasing tariffs, the United States may in the long run just need to increase its defense budget. Also, if the Defense Department chooses to purchase steel only from U.S. manufacturers, there will always be a demand for U.S. steel. It may be in our security interests to have a steel industry, but it is not in our interests to set up laws prohibiting the entrance of foreign steel.
The decline of Russian steel imports shows that the steel crisis is
subsiding. Actions already taken by the DOC and the President are
the cause of the declension and further legislation would only hurt the
economy as a whole. The steel production industry must endure the
fallout of the Asian crisis, but in the meantime industries that use steel
must take advantage of the low steel prices. Richard Aldrich of Lehman
Brothers may be correct in assessing the situation as “people scoring political
points by voting for a bill they didn’t expect to become law”(Schwartz,
E-6). The President must reject legislation such as HR 975 and continue
to approach the steel crisis in a more logical and positive manner.
producers
make this case unfinished business. If the industry does indeed take
judicial action against the treaty, the court may decide to annul the treaty.
In this case, the findings of the DOC would determine if stronger trade
barriers are indeed necessary. But to the President’s defense, in
Section 111 of the Omnibus Consolidated and Emergency
Supplemental
Appropriations Act, 1999 as enacted gave the President the power to “pursue
enhanced enforcement of U.S. trade laws with respect to the surge of steel
imports into the United States.” By negotiating the moratorium on
Russian hot rolled steel, the President merely fulfilled his obligation.
In a strongly phrased letter to Congress, the major steel producers in the United States expressed their dissatisfaction with the agreement. They maintained that:
The tons of unfairly traded steel that the Administration is going to allow Russia, at 750,000 metric tons per year, will still allow Russia to be the largest single supplier to the U.S. market. The pricing level given to the Russians of $255 per metric ton will both allow continued dumping and allow inefficient Russian producers to undercut and damage efficient U.S. producers (“Russian Agreements…”,H988)The steel industry announced that the President’s agreement is “contrary to applicable laws and is inconsistent with the Administration's own recent critical circumstances findings” (“Russian Agreements…”,H987). The debate over the legality and worth of the Feb. 22 agreement will continue to be debates and the findings may be instrumental in deciding whether legislation such as HR 975 is necessary.
The Feb. 22 VTR agreement
with the Russian Federation was a bilateral action. Article XI of
the 1992 agreement between the United States and the Russian Federation
provides that “the Parties will consult with a view toward finding means
of remedying or preventing actual or threatened market disruption” as well
as authorizing “the Parties to take action, including the imposition of
import restrictions, to achieve this goal” (64 FR 9892). It was under
this treaty power that Secretary Daley negotiated the Feb. 22 agreement.
It also should be noted that Russia approached the United States for the
negotiation of this treaty. Washington Post writer Paul Blustein
reported that “the Russian agreement stemmed from a request by Moscow to
escape the worst consequences of a dumping complaint brought by several
U.S. steel firms and the steelworkers union”(Blustein,E-2). The agreement
was the fruit of mutual cooperation between the two countries.
Even though Russia is not a member of the WTO, the United States has taken steps compliant with WTO standards. The WTO allows a county to impose import restrictions if there is proof of dumping. The DOC initiated procedures to determine whether Russian steel was being sold below the cost of production in the United States. Also, by negotiating a VTR with Russia, the United States avoided imposing unilateral quotas or tariffs that may have been in violation of WTO standards.
Current legislation such as HR 975 may not comply with the WTO.
This is very important because Russia would not be the only country effected
by such legislation. Proponents of the legislation hold that The
United States has the right to impose quotas and tariffs under HR 975 because
a strong U.S. steel industry is vital to national security. If this
is the case, under GATT Article XXI.
The Feb. 22 agreement was only signed by the United States of America
and the Russian Federation. The Russian steel sector will be limited
in the amount of steel they can export to the United States. U.S.
steel producers will then be able to compete. For the time being,
these two countries shall be the only two countries to feel the affects
of this treaty, but over
time
this agreement has the potential to affect steel consuming countries around
the world. Since Russian steel imports to the United States will
be reduced bu up to 70%, Russian steel producers will try to find other
outlets for its exports. This may result in the dumping of steel
in another section of the world. The EU also may be confronted.
Russian steel products were diverted from the EU because of preexisting
trade measures. The Russian Federation may decide to negotiate agreements
that would allow them easier access to a broader range of markets.
Secretary Daley negotiated a VTR treaty with Russia and initialed it
on Feb. 22, 1999. This is the current state of the trade
action
against Russia, but the status may change through an act of Congress
such as HR 975.
Even though the Feb. 22 agreement came about through anti-dumping investigation,
the actual agreement is better labeled as an import ban. The agreement
placed a 6 month complete ban on Russian hot rolled steel in order to allow
the previously dumped steel to clear the market. After this 6 month
ban, hot rolled steel imports will be reduced to the 1996 level of 750,000
metric tons. The agreement also includes import limits on 16 other
Russian steel products. These provisions are set to last 5 years
(Blustein,E-2).
b. Indirectly Related to Product: No
c. Not Related to Product: No
d. Related to Process: Yes (air and water pollution)
Over the last few years, the United States steel industry has undergone extensive restructuring to meet stiffer environmental regulations and also to become more competitive. The U.S. Bureau of Labor and Statistics prepared this chart of the steel industry's productivity index (output per hour).
Image from: http://www.steel.org
| 1998 | Dec. 1998 | Nov. 1998 | Dec. 1997 | 12/98 vs.12/97 %change | 12 Months |
| European Union | 540 | 656 | 481 | 12 | 7214 |
| Japan | 436 | 828 | 199 | 119 | 6728 |
| Canada | 341 | 381 | 380 | -10 | 4914 |
| Brazil2729 | 252 | 297 | 185 | 36 | 2729 |
| Mexico | 250 | 207 | 133 | 88 | 3167 |
| Korea | 239 | 327 | 136 | 76 | 3430 |
| Russia | 167 | 738 | 133 | 26 | 5274 |
| China | 66 | 61 | 41 | 61 | 632 |
| Australia | 54 | 58 | 80 | -33 | 951 |
| South Africa | 43 | 54 | 19 | 126 | 649 |
| Indonesia | 42 | 37 | 19 | 121 | 542 |
| Turkey | 40 | 53 | 57 | -30 | 527 |
| India | 31 | 2 | 3 | 933 | 377 |
| Ukraine | 24 | 68 | 70 | -66 | 882 |
| Others | 336 | 264 | 174 | 93 | 3504 |
Pollution from the the steel industry is widespread due to the various processes associated with steel making. The EPA has labeled the various pollutants "Toxic release Imissions" or simply TRI. This includes the various chemicals and elements released through process residues, oven gas and sludge ("EPA...") The EPA closely monitors these emissions by the steel industry, but the Russians have yet to adopt a comprehensive system. With Russia's economy in decline, it is not likely that Russia will make moves to improve its environmental protection any time soon.
Included in the Feb. 22 VTR deal was a clause stating that the United
States will remain open to helping Russia improve the environmental aspect
of the steel industry. The U.S. steel industry has spent millions
of dollars in the last 10 years improving their environmental standards,
which has partially led to the higher price of U.S. steel. By helping
the Russians reform their environmental legislation, the United States
would not only be helping to improve the environment in Russia, but would
be creating a more level playing field with regards to environmental expenditures
(Ferrall,1999).
Top 10 U.S. TRI Releasing Facilities
Rank
Facility
Total TRI Releases in Pounds
1
Elkem Metals CO. - Marietta, OH
18,604,572
2
Northwestern Steel & Wire Co. - Sterling, IL
14,274,570
3
Inland Steel Co. - East Chicago, IN
10,618,719
4
Kerr-McGee Chemical Corp. Electrolytic
5,446,555
Plant - Hamilton, MS*
5
Granite City Steel - Granite City, IL
5,156,148
6
Midwest Steel Div. Midwest Steel Div. -
4,735,000
Portage, IN
7
AK Steel Corp. Middletown Works -
4,189,050
Middletown, OH
8
Bethlehem Steel Corp. Burns Harbor Div. -
3,899,470
Burns Harbor, IN
9
Wheeling-Pittsburgh Steel Corp Mingo
3,089,795
Junction Plant - Mingo Junction, OH
10
USS Gary Works - Gary, IN
2,403,348
Source: U.S. EPA Toxic Release Inventory Database, 1993
21. Name, Type, and Diversity of Species
Name: Many
Type: Many
Diversity: many
Effect: [PROD] Product Effects
The steel industry
is still favored in Russia, whereas in the United States electronic industries
have taken over. Early Soviet leaders such as Lenin and Stalin pushed
the idea of industrialization of Russia. Heavy industry
such as the steel industry was seen as the backbone of a strong nation.
In fact Joseph Stalin formed his last name from the Russian word for steel:
stal.
The idea of the strength of a nation resting in its heavy industry endures
today in both Russia and the United States. America's closeness to
steel can be witnessed in Rep. Jackson Lee's speech
before Congress with regards to the steel industry and national security.
Congressional Record 106th Congress. "1998 Steel Imports of 41.5 Million Highest Ever." 4 March 1999. H987. Read by Rep. Quinn. Available at: http://thomas.loc.gov
Congressional Record 106th Congress. "Reducing Volume of Steel Imports and Establishing Steel Import Notification and Monitoring Program." 17 March 1999. H1350-1358 by Rep. Barton, Rep. Brown, Rep. Crane and Rep. Archer. Available at: http://thomas.loc.gov
Congressional Record 106th Congress. “We need an effective, global solution to address the steel crisis.” Rep. Quin. 4 March 1999: H987. Found at http://thomas.loc.gov
Congressional Record 106th Congress. "Russian Agreements on Steel Exports to U.S." Rep. Quin. 4 March 1999: H988. Found at http://thomas.loc.gov
Department of Commerce. "Steel Import Numbers Continue to Fall, Moving in Right Direction." 25 Feb. 1999. Available at: http://ita.doc.gov
Environmental Protection Agency. EPA Sector Notebook: Iron and Steel Industry. Available at: http://www.csa.com/roulenet/epan/ironstl.html
Executive Office of the President. "White House Report to the Congress on Steel. 7 Jan. 1999. Available at: http://ustr.gov
Ferrall, Tom. Spokesman for U.S. Steel group, USX Corp. Personal Interview. 28 March 1999.
Federal Register. “Proposed Agreement Concerning Trade in Certain Steel Products.” Volume 64, Number 38. February 26, 1999: H9891-9899.
Goldman, Marshall. Challenge. Nov/Dec 1998: 9-13.
"Material's summary." Iron Age New Steel. Feb.1999: 2
Schwartz, Emily. “Steel Imports Fall for 3rd Month.” The Times. 20 March 1999: E1, E6.
"SSCI Applauds Russian Steel Agreement." 25 Feb. 1999. Available at: http://www.ssci.org/index_home.htm
United States Senate Committee on Finance. "Update on Trade-Related Elements of The President's Comprehensive Plan for Steel." Testimony of Ambassador Barshefsky, 23 March 1999.