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Tax, tariffs could help steel industry |

Tax, tariffs could help steel industry

| Wednesday, October 17, 2001 12:00 a.m

WASHINGTON – A tax on steel to pay for retiree health care and tariffs on imports are among the proposals being discussed here that could help Bethlehem Steel Corp. and other troubled steel companies.

Congress is considering legislation that would impose a 1.5 percent-per-ton tax on steel to help companies pay for the medical benefits of retirees and their families.

The Bush administration could impose tariffs on imported steel if the U.S. International Trade Commission rules that imports have caused ”serious injury” to American firms.

Bethlehem Steel, which on Monday became the 26th steel company to seek Chapter 11 bankruptcy protection since 1998, cited retiree health costs and competition from imports as major causes of its problems.

The Bethlehem-based steel company is one of several older companies that negotiated large retirement packages in lieu of salary increases for employees during the 1990s. Other such companies include LTV Corp. and USX Corp.

Rep. Pete Visclosky, an Indiana Democrat, said Tuesday he would try to include the tax increase in the $100 billion economic stimulus package that the House is scheduled to consider later this week.

Sen. Jay Rockefeller of West Virginia is the Senate’s chief backer of the idea but is not sure when he will bring it up, his spokeswoman said yesterday.

Republicans, even those from steel-producing areas, have opposed the idea and the Bush administration has declined several requests from union officials to endorse it.

Rep. Phil English, who chairs the Congressional Steel Caucus, said he plans to introduce an alternative plan within the next few weeks. English, from northwest Pennsylvania, declined to reveal details of his proposal.

The United Steelworkers of America, the industry’s largest union, estimates that the overall cost of retiree health benefits is about $1 billion annually.

Bethlehem Steel, the country’s third largest steel company, said it spends $180 million-per year on health benefits for retirees and their families.

Steel companies are divided on the issue and the industry’s major lobbying group, the American Iron and Steel Institute, is not taking a position.

Newer steel companies, which have fewer retirees, oppose the tax increase.

American steel companies are awaiting next Monday’s scheduled vote by the International Trade Commission on whether subsidized imports have damaged the domestic industry

If the six-member commission finds ”serious injury” from imports, it could recommend that President Bush impose punitive tariffs or quotas to restrict imports.

The commission would have to submit any recommendations to the administration by Dec. 19.

The Bush administration requested the investigation of steel imports in June. Since then, conditions have changed.

Steel imports have gone down and efforts are under way to negotiate a worldwide reduction in steel production.

Companies that use steel to manufacture products argue that tariffs will cost jobs because foreign countries will retaliate by cutting access to their markets.

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