U.S. steelmen reject pact with E.E.C.

Press, 9 August 1982, Page 7

U.S. steelmen reject pact with E.E.C.

NZPA-Reuter Brussels The European Commission responded sharply at the week-end to American steel firms' rejection of a pact limiting European steel sales in the United States, and said it remained valid unless withdrawn by the United States Government.

In a coldly worded statement the E.E.C.'s chief negotiator, Viscount Etienne Davignon. of Belgium, said that he considered the agreement still stood.

"The U.S. authorities have not informed the European Commission of any change in their position,” he said. President Ronald Reagan has pronounced the accord equitable to both sides, and his Administration undertook to recommend acceptance of it to the American steel industry. The agreement was rejected earlier at the weekend by the U.S. Steel Corporation. one of the biggest American firms, and by an. association representing specialty steelmakers. Their condemnation appeared to torpedo months

of diplomatic efforts to avoid a threatened trade war between the United States and the European Economic Community. Viscount Davignon. who is Vice-President of the European Commission, learnt of the American steel industry's reply on his return to Brus-

sels from Washington. Viscount Davignon said that the Commission considered that the agreement was valid as long as there had been no announcement by

the American authorities of any change in their attitude. The agreement set an ultimate deadline for the withdrawal of all complaints filed by the American steel industry against European steel exporters by September 15. Viscount Davignon said that Community officials would make the necessary technical and legal preparations for fulfilling its side of . the bargain for that date. A first step would be to meet representatives of Community governments and steelmakers next week, officials said.

Viscount Davignon had no intention of returning to Washington to reopen negotiations, they said. The agreement reached after weeks of bargaining limited European exports of nine types of carbon steel and two of specialty or stainless steel to a fixed share of the American market. In exchange the American steel industry was to agree to withdraw its allegations against European makers of unfair trading practices involving these products. But the chairman of U.S. Steel (Mr David Roderick) rejected the agreement as "neither fair not equitable.” “To accept it would condone a continuation of massive subsidies by European governments," he said. European officials said that the disagreement would force the Reagan Administration to demonstrate w r ho was stronger — it or the nation’s steel industry. “If President Reagan says the accord is equitable, w’hat do you expect us to do now — go back and renegotiate

an agreement which is inequitable?" one European official said angrily. The apparent breakdown of the settlement means that the United States Commerce Department will have to go ahead with its investigation of unfair trade suits filed by American industry. In a preliminary ruling on June 11, the department said that carbon steel produced in Belgium, Britain, France. Italy. ' Luxemburg. the Netherlands, and West Germany had been illegally subsidised.

A final ruling on those cases is due this week. If the

initial finding is upheld and a separate inquiry finds that the subsidies have damaged American industry, permanent penalty duties will be levied against the subsidised products. The department is also set to rule this week on separate allegations that Community nations are guilty of dumping steel on the American market. Dumping occurs when products are sold at a price below the cost of production.