June 22,1999

Roth Urges Vote Against Steel Quota Bill

WASHINGTON -- Senate Finance Committee Chairman William V. Roth, Jr. (R-DE) today urged his Senate colleagues to vote against the steel quota bill, H.R. 975, which was brought up for a procedural vote Tuesday on the Senate floor. Roth's statement on the Senate floor follows:

"Mr. President, I rise today to express my opposition to H.R. 975, and to urge my colleagues in the strongest terms possible to vote no on cloture. Let me explain my position.

"Our steel industry faces a serious challenge as a result of foreign competition. That challenge stems from the persistent overcapacity in the global steel industry that is the legacy of decades of foreign government intervention. The quota bill, however, does nothing to eliminate this overcapacity.

"What the quota bill does do is simply lock in a certain share of our market -- the quota amount -- for foreign imports at a vastly inflated price. According to a study by the Institute for International Economics, this bill would raise steel import prices by about $29 a ton. This represents a windfall of $800 million to the lucky foreign producers who get their goods into the United States under the quota, with the price tag being paid by the American people.

"While the bill does enrich certain foreign producers, it also poses a grave threat to our economy. For every one job in the steel industry, there are forty jobs in the steel-using industries. These forty workers manufacture autos, industrial machinery, kitchen appliances, and other products. All these jobs will be at risk as a result of the quota bill, because this legislation sets arbitrary limits on the amount of steel coming into our country. And the quotas apply, regardless of domestic demand and regardless of whether the type of steel is even produced in the United States.

"To make matters worse, this measure would actually help foreign companies that compete against American steel-using industries both in the United States and abroad. For instance, U.S. auto makers would be forced to pay higher prices for steel than their foreign competitors. This will disadvantage American companies in our market and in the foreign markets in which they compete. The impact of this on jobs and on the economy will be severe.

"This bill would also put us at risk of retaliation by our trading partners. Our farmers are well aware of this risk. That is why 21 leading agricultural groups have signed a letter last week stating their strong opposition to this legislation. These include the American Farm Bureau Federation, the National Council of Farmer Cooperatives, the National Association of Wheat Growers, the National Cattlemen's Beef Association, and others. As these groups understand all too well, passage of this legislation will threaten our access to foreign markets at a time when these markets are most needed for our businesses and our farmers.

"If we decide to go down the path of quotas, we must also keep in mind that the price will ultimately be paid by the American consumer. By raising the average price of products made with steel, the quota constitutes an artificial tax on ordinary Americans, regardless of wealth or income. Keep in mind that the tax will not be insignificant. According to the Institute of International Economics Study, the bill will, at most, save 1,700 jobs in the steel industry, but will do so at a cost to the economy of about $800,000 a job. For us to put such a burden on the American families is simply unconscionable.

"With that said, let us not forget that the import surge that the quotas are designed to address appears to be over. In fact, imports of all steel products for the first four months of this year were below the imports for the same period in 1997, well before the surge began.

"Let me address one last point. For some of my colleages, this may be seen as a free vote. I, like many of you, hope that the President will have the courage to veto this legislation if it does pass. But we have to remember that the American people send us to Congress to further the national interests. Let's not disappoint them.

"I urge my colleagues to vote against cloture."