Dumping Dispute

The dirtiest word in the world's coldly competitive steel business is "dumping"-the calculated practice of selling for less abroad than at home. While raising their own domestic prices last week, U.S. steelmakers grumbled bitterly that cut-price European and Japanese competitors are dumping steel on the U.S. market. In a thumb-in-the-eye brawl that is becoming global, the Europeans also accuse the Japanese of dumping steel in the Common Market. The Europeans have quietly made a cartel-like agreement to set prices of exports and carve up world markets--but so have the Japanese. Last week West Germany's Die Welt reported that the Common Marketeers and the Japanese, united at least in anger at U.S. antidumping charges, may yet combine into one great steel cartel to battle the U.S.

Ready Admission. By underselling U.S. steelmakers by as much as 30%, the Japanese increased exports to the U.S. from 615,000 tons in 1961 to 1,160,000 tons last year. The Europeans have met the Japanese export prices, shipped 2,450,000 tons to the U.S. in 1962. This threat has not only upset U.S. steelmakers but also brought the U.S. Government into the argument. Acting under a 42-year-old U.S. anti-dumping law, the Treasury Department last month ruled that Belgium, Germany and Luxembourg had been dumping wire rods in the U.S., turned the case over to the Tariff Com mission for a final ruling next month. Because the Tariff Commission can boost duties retroactively, many American importers have slashed their buying just to be on the safe side. One result: imports of some German steel products are running 75% below normal rates.

The Japanese steelmen are also being investigated by the U.S. Government, but have not yet been ruled upon; meanwhile, they are stepping up their exports to both the U.S. and Europe. They have impressed Washington with their arguments that steel exports are profitable to them even at cut prices because payment is quicker, warehousing cheaper and loan interest rates easier than on domestic sales. Like the Japanese, the Europeans admit that they have been selling below list price in the U.S., but claim that they have also been discounting from their list prices at home in the face of soft markets and stiffening competition. While U.S. steelmen are raising prices, the Common Market in the past month has cut export prices for some beams, rods and rolled steel by $1 to $2 a ton.

Threats of Reprisal. Unlike U.S. steelmen, who bank their furnaces when demand drops but keep prices fairly steady, the Europeans prefer to slash prices and keep production high to avoid politically unpopular layoffs and the expensive overhead of idle plants. In addition, Belgium and Luxembourg, argue that they must export at almost any price to get foreign exchange to finance their heavy imports. The angry Common Marketeers contend that the U.S.'s anti-dumping law is outmoded in that it restricts free trade, but they have little hope that the U.S. Government will do anything to encourage further competition for the U.S. steel industry. Now they are threatening reprisals similar to the retaliatory tariffs they slapped on U.S. plastics and paints after Washington raised duties on Belgian carpets and glass last year. The dumping battle is just beginning.

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