REPORT SUBMITTED TO THE UNITED STATES CONGRESS

PURSUANT TO SECTION 203(B)(1) OF THE TRADE ACT OF 1974, AS AMENDED

INTRODUCTION

Free trade is a cornerstone of President George W. Bush’s agenda to 

help generate jobs for American workers, open markets to American

products and services, and spur economic growth. While free trade is 

an engine of economic growth, sometimes changes in global economic

conditions and large increases in imports can have dramatic

consequences on industries, and this has been the case with America’s 

steel industry. 

Foreign steel producers, often nurtured by government subsidies that 

have allowed them to build huge amounts of excess capacity, have

flooded the U.S. market with imports. The Asian financial crisis

further compounded distortions in global steel markets and

precipitated a massive surge of imports. This combination of factors 

seriously affected U.S. steel producers, workers and communities.

Since 1998, firms accounting for thirty percent of U.S. steel-making 

capacity have filed for bankruptcy. Domestic steel prices in the last 

quarter of 2001 were at their lowest levels in 20 years, and a number 

of integrated and mini-mill producers posted significant

fourth-quarter financial losses last year.

World Trade Organization (WTO) rules recognize that sudden and large 

increases of imports can overwhelm even the most competitive domestic 

industries, and that countries may need to take temporary actions to 

provide relief. Last June President Bush asked the International

Trade Commission (ITC) to investigate the effects of imports on

America’s steel industry and its workers. The ITC found that imports 

were a substantial cause of serious injury to the U.S. steel industry. 

PRESIDENTIAL ACTION

President Bush has decided to impose temporary safeguard measures on 

key steel products to provide appropriate relief to those parts of the 

U.S. steel industry that have been most damaged by import surges. 

This relief is being provided in response to the injury findings of 

the ITC and is consistent with the President’s free trade agenda and 

his commitment to enforcing U.S. trade laws to help maintain the

competitiveness of the U.S. economy.
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America’s steel industry has long been a key component of the U.S.

economy, and the relief that the President is announcing today will 

give the U.S. steel industry the breathing space it needs to

restructure and adjust. The President has taken care to craft this 

relief to minimize the impact on steel consumers.

These types of temporary safeguard measures are expressly allowed by 

WTO rules -- in fact, international trade rules have provided such

relief for more than 50 years. Many of our major trading partners --

including the European Union, Japan, Korea, Brazil, and India -- have 

imposed safeguard measures covering a wide range of products. 

This relief does not end the Section 201 process. The President will 

impose an import licensing system to allow the U.S. government to

obtain more timely information about changes in steel trade trends for 

products covered by this action. The President will monitor the

extent to which other nations are eliminating global excess steel

capacity. The President will also monitor economic conditions and the 

state of the U.S. steel industry to ensure that the industry is taking 

steps to restructure and increase its competitiveness. The President 

retains the right to modify or terminate the safeguard measures as

appropriate. 

The relief is intended to last for three years. Consistent with

America’s free trade obligations and WTO rules, the Administration is 

excluding our free trade agreement partners. In addition, consistent 

with WTO rules, we are excluding developing countries that ship

relatively small quantities of imports.

This relief represents just the latest in a series of actions

President Bush has taken to help the U.S. steel industry in its

efforts to meet the challenges of the global marketplace. Last June 

the President announced a comprehensive, three-pronged plan to reduce 

global excess steel-making capacity; to eliminate subsidies and market 

distorting practices globally; and to request the initiation of a

Section 201 investigation.

RELIEF COMPONENTS

Products

Consistent with U.S. international trade obligations, the

Administration is announcing temporary safeguard measures on key steel 

products. As required by U.S. law and international trade rules, the 

level of relief is reduced periodically throughout the duration of the 

measure:
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• Flat Products: A tariff of 30% will be imposed on imports of plate, 

hot-rolled sheet, cold-rolled sheet, and coated sheet. This remedy 

provides substantial relief for the sector of the industry that has 

been hardest hit by imports and which is the anchor for many

struggling U.S. companies. This tariff is higher than the 20%

tariff recommended by the plurality of ITC commissioners. The

higher tariff enhances the ability of U.S. producers to adjust to 

import competition without placing an undue burden on U.S. steel

consumers or on the country as a whole. 

• Tin Mill Products: A tariff of 30% will be imposed on imports of tin 

mill products. The ITC commissioners were evenly divided as to

whether imports were a substantial cause of serious injury to the 

domestic industry. As permitted by the statute, the President has 

decided to treat the commissioners’ findings as an affirmative

determination, and has therefore decided that relief is appropriate. 

A tariff of 30% is appropriate for the same reasons that such a

tariff is appropriate for other flat products.

• Hot-Rolled Bar and Cold-Finished Bar: A tariff of 30% will be

imposed on imports of hot-rolled bar and cold-finished bar. This 

tariff is higher than the 20% tariff recommended by the plurality of 

ITC commissioners. The higher tariff enhances the ability of U.S. 

producers to adjust to import competition without placing an undue 

burden on U.S. steel consumers or on the country as a whole. 

• Rebar: A tariff of 15% will be imposed on imports of rebar. This 

tariff is higher than the 10% tariff recommended by the plurality of 

ITC commissioners. The higher tariff enhances the ability of U.S. 

producers to adjust to import competition without placing an undue 

burden on U.S. steel consumers or on the country as a whole.

• Certain Tubular Products: A tariff of 15% will be imposed on

imports of certain welded tubular products. This tariff will

provide a higher level of relief than the tariff-rate quota

recommended by a majority of ITC commissioners. 

• Carbon and Alloy Fittings and Flanges: A tariff of 13% will be

imposed on imports of carbon and alloy fittings and flanges. This 

tariff is equal to the tariff recommended by the plurality of ITC 

commissioners. This tariff is sufficient to facilitate industry

restructuring without unduly burdening U.S. steel consumers or the 

country as a whole.

• Stainless Steel Bar: A tariff of 15% will be imposed on imports of 

stainless steel bar. This tariff is equal to the tariff recommended 
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by the plurality of ITC commissioners. This tariff is sufficient to 

facilitate industry restructuring without unduly burdening U.S.

steel consumers or the country as a whole.

• Stainless Steel Rod: A tariff of 15% will be imposed on imports of 

stainless steel rod. This tariff is lower than the tariff

recommended by the three commissioner plurality. Given the

conditions prevailing in the domestic stainless steel market, this 

tariff is sufficient to facilitate industry restructuring without

unduly burdening U.S. steel consumers or the country as a whole.

• Stainless Steel Wire: A tariff of 8% will be imposed on imports of 

stainless steel wire. The commissioners were evenly divided as to 

whether imports were a substantial cause of serious injury to the 

domestic industry. As permitted by the statute, the President has 

decided to treat the commissioners’ findings as an affirmative

determination, and has therefore decided that relief is appropriate. 

This tariff is sufficient to facilitate industry restructuring

without unduly burdening U.S. steel consumers or the country as a 

whole.

• Slab: Imports of slab will be subject to a tariff rate quota (TRQ). 

The in-quota volume will be set at 5.4 million short tons. The

out-of-quota tariff will be 30%. A majority of ITC commissioners 

recommended a tariff-rate quota on slab, with an in-quota volume

roughly equivalent to imports in 2000 and an out-of-quota tariff of 

20%. Slab is an input for a key segment of the domestic industry. 

Given market circumstances, including the level of current demand, 

the TRQ announced today is sufficient to ensure continued access to

slab without undermining the relief applied to other flat products. 

Other Provisions

FTA partners. For those products where the ITC recommended the

inclusion of a NAFTA partner, or reached a tie decision on whether

NAFTA imports should be excluded, the Administration asked for

supplemental information on whether imports from countries besides

Canada and Mexico were by themselves a substantial cause of serious 

injury to the domestic industry or threat thereof. The ITC found in 

each case that they were. Based on these findings and the specific 

factors enumerated in the statute, and consistent with the obligations 

of the United States under its free trade agreements and the WTO, the 

President has determined that our FTA partners should be excluded from 

the relief on all products. 
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Imports from developing countries. Consistent with WTO rules, the

Administration will exclude from the relief imports from developing

countries that exported only small amounts of steel to the United

States and that are WTO members. 

Import licensing and surge protection. The President will impose an

import licensing system to allow the U.S. government to obtain more 

timely information about changes in steel trade trends for products

covered by the relief. The President will closely monitor imports to 

ensure that the purpose of the 201 remedy is not undermined, and

retains the discretion to impose safeguard measures on products from 

excluded countries should imports of such products surge during the

duration of the relief. This system will also help guard against

transshipment.

Duration. The safeguard measures will remain in place for three

years, rather than the four years recommended by the ITC. In light of 

the strength of the relief imposed, the President has determined that 

a remedy of three years is appropriate.

Product exclusions. The President retains the discretion to consider 

requests for product exclusions within 120 days after the date of the 

Proclamation and will consider requests for product exclusions each

year thereafter. This will help ensure that U.S. consumers have

access to needed products.

Trade remedy laws. The Administration will continue to enforce

vigorously our anti-dumping, countervailing duty and other trade

remedy laws.

THE PRESIDENT’S COMPREHENSIVE AGENDA TO HELP THE STEEL INDUSTRY

MEET THE CHALLENGES OF THE GLOBAL MARKETPLACE

Last June the President announced a comprehensive, three-pronged plan 

to:

• Reduce global excess steel-making capacity; 

• Eliminate subsidies and market-distorting practices globally; and

• Initiate an investigation by the ITC (a Section 201 investigation) 

into the injury to the domestic steel industry caused by increased 

imports.

Reducing global excess steel-making capacity. During ground-breaking 

multilateral discussions on steel in the Organisation for Economic CoOperation and Development (OECD), the United States brought together 
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the major steel-producing countries of the world for a series of highlevel meetings aimed at reducing inefficient excess capacity in the

global steel industry. The nearly 40 countries participating in this 

process -– including the European Union, Korea, Japan, China, Russia, 

Ukraine, Mexico, Brazil, and the United States -- recognized that

excess steel capacity is perhaps the central underlying problem

plaguing the global steel industry today. Most importantly, the

countries have:

• Committed to work to facilitate the market-based reduction of excess 

capacity;

• Identified 117 million tons of cuts in global excess capacity, which 

represents nearly half of the estimated excess capacity;

• Agreed to establish mechanisms for reviewing current and future

reductions; and

• Urged multilateral lending institutions to take account of the

current situation regarding excess global steel capacity when

considering any loans that might expand such capacity.

Eliminating subsidies and market-distorting practices globally. Many 

governments have long believed the development of a domestic steel

industry is the cornerstone of industrial development, and most

countries’ steel industries have benefited from direct or indirect

subsidies and other assistance. Longstanding and far-reaching 

government intervention by other nations in the steel market has

subsidized capacity expansion, and distorted competition to such an

extent that the international market no longer works as it should. 

Eliminating these foreign market-distorting practices is perhaps the

single most important step in addressing the long-term problems of

America’s steel industry. Consequently the U.S. has launched

international talks with nearly 40 major steel-producing countries

aimed at eliminating subsidies and developing greater disciplines on 

market-distorting practices in the global steel industry. Meeting

under the auspices of the OECD, countries have agreed to work toward:

• Halting further subsidies aimed at expanding steel production while 

talks proceed to establish additional disciplines;

• Developing an inventory of subsidies and other market-distorting 

practices in steel trade;

• Examining existing multilateral disciplines on subsidies and other 

market-distorting practices; and
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• Determining what additional disciplines are needed that might be the 

subject of trade negotiations in the recently launched Doha

Development Agenda in the WTO.

Initiating a Section 201 investigation. The President chose in June to 

initiate a Section 201 action to determine whether steel was being

imported into the United States in such increased quantities as to be 

a substantial cause of serious injury, or threat thereof, to the

domestic steel industry.

HELPING WORKERS & COMMUNITIES

Meeting the challenges and opportunities of the global steel

marketplace will also require adjustment and restructuring of the

American steel industry, to ensure its long-term competitiveness. 

Restructuring will impact workers and the communities in which they

live and we must help hard-working Americans adapt to changing

economic circumstances. The President has proposed a major expansion 

of the National Emergency Grants program to assist workers affected by 

restructuring with effective job training and assistance. The

President has also proposed direct assistance with health insurance

costs that will be available to workers and retirees who lose their 

employer-provided coverage. And the President supports coordinated

assistance for communities and a strengthened and expanded trade

adjustment assistance program. America’s workers are the most highly 

skilled in the world, and with effective training and adjustment

assistance we will help them find better, higher paying jobs to

support their families and boost our economy.

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