U.S. Sets Preliminary Plan for Addressing Concerns over Japanese Steel Imports

Under heavy domestic pressure, the Clinton Administration last week issued a Congressionally mandated "Steel Plan" detailing its efforts to help the U.S. steel industry. The "Steel Plan" did not call for any new sanctions against steel-exporting countries, but rather provided tax relief to U.S. steel companies and indirectly called for Voluntary Export Restraints ("VERs") from Japan.

We find several aspects of the "Steel Plan" to be of interest. First, it primarily targets Japan as the key culprit in the influx of steel imports into the United States. Specifically, the plan's key feature -- its indirect request for VERs -- was only made vis-à-vis Japan. No similar demands were made against Russia, South Korea or Brazil. We believe that the U.S. focus on Japan is likely a result of general U.S. displeasure with Japan's trade policy, including Japan's recent action with regard to tariffs on rice imports.

Second, aside from the demand for VERs from Japan, the other features of the plan are generally considered to be weak. However, the Clinton Administration under this plan has left itself significant room to maneuver and pursue stronger remedies if the current level of steel imports continues or rises. In particular, the monthly monitoring provisions for steel imports -- again, solely focused on Japan -- will provide the Administration a benchmark from which it can initiate more aggressive trade remedies such as a government initiated dumping action or action under Section 201.

On a related note, U.S. officials continue to express their opposition to the GOJ's announced tariff on rice imports. U.S. officials are investigating the possibility of bringing a complaint before the WTO on this matter. WTO rules provide that a party has 90 days from the announcement of a tariff during which it can file a complaint. The United States will confer with Japan on this issue within this period before pursuing a complaint.