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Area lawmakers testify to keep tariffs on Chinese steel; Nucor called a victim

By Eric Fleischauer 340-2435

Nucor Corp. and other U.S. steelmakers are the victims of China's illegal subsidization of exported steel, lawmakers testified Tuesday.

In the first day of a two-day hearing, dozens of lawmakers argued that the U.S. International Trade Commission should renew five-year punitive tariffs on hot-rolled flat carbon steel imported from China and 10 other countries. China was the main target.

Pursuant to World Trade Organization agreements, anti-dumping tariffs expire after five years unless a review by the ITC and the U.S. Department of Commerce determines that removing the tariffs would lead to continuation of dumping or subsidies, and that the conduct is hurting domestic industry.

"We must ensure that American manufacturers can compete in a domestic market that has not been skewed by unfair competition," said Sen. Jeff Sessions, R-Mobile, at Tuesday's hearing. "We should not allow our domestic producers to suffer injury because their foreign competitors will not play by the rules."

Nucor, which employs 630 in Decatur, has long been a leader in the fight to maintain the tariffs. Its arguments are particularly poignant after a 23 percent drop in second quarter earnings.

Soft demand and low-cost Chinese steel helped knock Nucor shares from their 52-week high of $69.93 as recently as June 1 to the close Tuesday at $50.20.

Among those scheduled to testify at the hearing is Joh Ferriola, Nucor executive vice president.

A study, released Monday by a trade group that includes Nucor, estimated that Chinese steelmakers have received $52 billion in subsidies. These subsidies, according to the study, include tax rebates, equity infusions, free land use and low-interest loans .

In 2006, according to the study prepared by Wiley Rein LLP law firm, China's steel capacity grew by 20 percent. Its steel exports doubled in the last year, according to the study.

"ITC's anti-dumping ... policies have ensured that steel producers in North Alabama and across the country are given an equal opportunity to compete," said U.S. Rep. Bud Cramer, D-Huntsville, in a statement after testifying at the hearing. "These tariffs allow companies such as Nucor and U.S. Steel to provide quality products and well-paying jobs in our community."

Discontinuation of the tariffs would hurt American steelworkers, testified Leo W. Gerard, president of the United Steelworkers.

"Tens of thousands of workers producing a variety of steel products are dependent on a viable hot-rolled steel industry to pay their bills, take care of their families and send their children to college," Gerard said.

Not all American businesses support continuation of the tariffs, which tend to keep domestic steel prices high.

Bill Gaskin, president of the Precision Metalformers Association, said global competition keeps steel prices down, helping manufacturers that use steel remain competitive.

"A decision to place duties on our raw materials inputs affects our ability to compete in the global market," Gaskin said. "We hope members of Congress who come here to testify today acknowledge the impact these decisions will have on domestic industrial steel consumers manufacturing in districts like theirs across the country."

The ITC decision on whether to continue the tariffs is not expected until October.

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