Following is the text of the White House Q and A:

QUESTIONS AND ANSWERS ON THE PRESIDENT'S ANNOUNCEMENT TO PROVIDE SECTION 201 RELIEF FOR AMERICA'S STEEL INDUSTRY

Q: Why did the President decide to provide Section 201 relief for the U.S. steel industry?

The President decided to request the initiation of a Section 201 investigation last year as one part of a comprehensive steel initiative. In October 2001, the U.S. International Trade Commission (ITC) determined that steel imports have been a substantial cause of serious injury, or threat thereof, to the U.S. steel industry. The President decided to provide Section 201 relief in order to address this injury to the domestic industry and to give the industry breathing room to adjust and undertake the changes needed to compete more effectively with imports.

Q: What is the President's goal in providing Section 201 relief for the U.S. steel industry?

Consistent with the Section 201 safeguard provision, the President's goal is to provide the U.S. steel industry temporary relief that allows the industry to adjust to import competition. It is now up to the U.S. industry to take advantage of this interim relief to make the difficult adjustments needed.

Q: How is the President's decision to provide relief under Section 201 consistent with his support of free trade?

Free trade is a cornerstone of the President's agenda to help generate jobs for American workers, open markets to American products and services, and spur economic growth. An integral part of that free trade agenda is the President's commitment to enforcing U.S. trade laws. Consistent with that commitment, last June the President launched a three-part initiative to restore market forces to world steel trade. This initiative included asking the International Trade Commission to launch a Section 201 investigation of injury to the U.S. steel industry. The temporary safeguard measures imposed today are in response to the ITC's finding that increased imports were a substantial cause of serious injury to the domestic industry. These safeguard measures are explicitly permitted by the rules of the World Trade Organization, which recognizes that sudden and large increases in imports can overwhelm even the most competitive of industries.

However, the support of free trade also requires making sure that U.S. companies and workers do not compete against unfair imports that are caused by other countries' market distorting practices. As a result, the President is also committed to vigorously enforcing our unfair trade laws, such as Section 201, as appropriate.

Q: What did the President consider in making his decision to enact the relief?

The President considered a wide range of information, including information from the ITC, other agencies, domestic steel producers, domestic steel consumers, ports, workers, foreign steel producers, and foreign governments. The information and views of all of these parties and from all of these sources, as well as others, were taken into consideration when the President evaluated the various factors that the statute requires him to take into account.

Q: What will be the impact of the Section 201 relief on U.S. steel consumers?

The Administration has fashioned the relief to exclude certain steel products for which no relief is necessary at this time. The level of relief provided for each product was also limited to the level needed to provide relief for the domestic industry. The Administration has also worked with U.S. steel consumers and producers on excluding foreign steel products from the Section 201 relief that are not available in the U.S. market from domestic producers.

Q: What will be the impact of the Section 201 relief on foreign steel producers and importers?

The Administration has crafted the temporary safeguard to be consistent with WTO [World Trade Organization] rules and our obligations under our free trade agreements. Relief is concentrated in the products that have caused greatest injury to the domestic industry and has been set at the level that will facilitate adjustment.

Q: Exactly what relief did the President decide to provide to the U.S. steel industry?

The President decided to impose temporary safeguards ranging from an 8 percent tariff to 30 percent tariffs on certain steel products. As required by WTO rules, these tariffs decline over the period of the relief. The relief also includes a tariff rate quota (TRQ) on imports of semifinished steel products known as slabs. Under this TRQ, 5.4 million short tons of semifinished slabs will be allowed to enter duty free. The out of quota tariff will be 30 percent.

Q: When does the relief go into effect?

The relief will go into effect March 20, 2002.

Q: Why did the President decide to institute a TRQ for slab imports?

A majority of Commissioners at the U.S. International Trade Commission (ITC) recommended a tariff-rate quota (TRQ) on slab imports. A TRQ only allows only a certain amount of slabs to be imported duty free each year under a tight cap. Imports above that cap are subject to the tariff. This relief was instituted for slab imports due to the important role that slab imports play for certain U.S. steel producers. A TRQ balances the needs of such producers for imported slabs with the needs of other steel producers to avoid a surge in slab imports.

Q: The ITC recommended a quota of 7 million tons for slab; why did you set the quota at 5.4 million tons for slab?

The ITC's quota recommendation was roughly equivalent to 2000 slab import levels. Our quota is based on the ITC recommendation, except that we have excluded Mexican slab imports pursuant to our NAFTA obligations.

Q: Why were different tariff rates instituted for the other steel products?

In all cases the relief was chosen to address the injury and to facilitate adjustment by the domestic industry without placing an undue burden on U.S. steel consumers or the country as a whole. The tariff rates announced by the President are in most cases similar to or higher than the tariff rates recommended by a majority of Commissioners at the ITC.

Q: Why was no relief provided for imports of tool steel and stainless flanges and fittings, while relief was provided for stainless wire and tin mill products?

The ITC Commissioners were evenly divided on the question of whether imports of tool steel, stainless flanges and fittings, stainless steel wire, and tin mill products have been a substantial cause of serious injury, or threat thereof, to the U.S. steel industry. Under U.S. law, the President has the discretion to consider such tied votes as either an affirmative or a negative determination. Based in part on the report of the ITC and views of the Commissioners, the President decided to treat the ITC tie vote regarding tool steel and stainless flanges and fittings as a negative injury determination and decided to treat the ITC tie vote regarding stainless wire and tin mill products as an affirmative injury determination.

Q: Will the exclusion of imports from free trade agreement partners and developing countries undermine the effectiveness of the relief?

These exclusions will not undermine the effectiveness of the Section 201 relief. The ITC determined that imports of steel products from countries other than our free trade agreement partners are alone a substantial cause of the domestic industry's serious injury. The excluded imports from developing countries also are relatively small -- 2 percent of U.S. steel market share.

However, in order to guard against surges of excluded imports, the Administration will review data on imports from the excluded countries on a quarterly basis. If imports of a product from an excluded country materially increase, then the Administration will evaluate whether the increase threatens to undermine the goals of the Section 201 relief. The United States will also immediately initiate consultations with the excluded country to discuss the circumstances of the import surge and whether the country plans to take action to reduce its imports to historical levels and prevent future surges. If, after consideration of the results of the consultations and other relevant factors, the Administration determines that the increased imports of the excluded country's product threatens to undermine the goals of the relief, then those imports will no longer be excluded from the relief.

Q: How will our trading partners react to this decision?

Our trading partners know that the WTO Agreement on Safeguards allows us to take action under Section 201 when surges in imports cause serious injury to domestic producers. In fact, many countries have themselves imposed safeguards on a wide range of products in the past. Our trading partners have been active throughout the Section 201 investigation process. We have had extensive discussions with government officials and representatives from foreign steel companies and have listened carefully to their recommendations and analysis. We recognize that not everyone will agree with the individual decisions that were made, but we believe that the investigation and the selected relief is in accordance with our WTO obligations.

Q: How does the President's decision to provide Section 201 relief affect the other elements of the President's steel initiative?

The President's steel initiative announced on June 5, 2001, has three elements: (1) initiate the Section 201 investigation; (2) conduct discussions with other steel producing countries to encourage the market-based reduction of excess inefficient steel-making capacity worldwide; and (3) initiate negotiations to eliminate subsidies and other government market-distorting practices in the steel sector. We are very pleased with the progress made thus far in implementing the last two objectives and plan to continue to pursue them vigorously. The long-term solution to the problems faced by the U.S. steel industry and steel industries abroad depends on the elimination of global inefficient excess capacity and market-distorting practices. We urge our steel trading partners to continue to cooperate in solving these issues.

Q: Why does the Bush Administration express concern over the steel industry when imports declined in recent months due to declining steel consumption in a cooling economy?

The ITC found that increased imports have been a substantial cause of serious injury to the U.S. steel industry. The Administration looked carefully at the evidence provided in the ITC's investigation, showing that the domestic industry is seriously injured by imports over the five-year period of the investigation. Many segments of the industry are still hurting. Over a quarter of U.S. steel producers are now in bankruptcy. Moreover, while import levels may vary, the market distortions and other underlying causes for the import surge remain. The Administration will work hard to end these distortions -- but in the meantime domestic steel safeguard measures are warranted.

Q: Isn't the U.S. steel industry one of the least efficient steel industries in the world?

The U.S. steel industry is one of the most efficient in the world in terms of productivity, measured in labor hours/ton. It is also one of the leaders in steel-making technology.

The U.S. steel industry invested more than $50 billion in steel plant modernization over the last 20 years. But the U.S. industry faces a distorted global market. Because of a number of market-distorting practices abroad, the global steel market has not responded to normal economic signals, and overcapacity has been the result.

Q: Isn't the so-called "steel crisis" just another excuse for integrated steel mills to seek import protection, when the real problem is that they can't compete with domestic mini-mills?

Every segment of the steel industry, regardless of the region, the size of the companies, or whether they use mini-mill or integrated production processes has seen its profitability suffer in recent years. Most steel companies had losses last year, and many companies -- both integrated and mini-mill producers -- are in bankruptcy. That is why integrated and mini-mill producers have both called for action to address the market distortions in the steel sector and in asking the Administration to impose Section 201 relief.

Q: Does the President plan to take any action with regard to legacy costs?

Meeting the challenges and opportunities of the global steel marketplace will also require adjustment and restructuring of the American steel industry, to ensure its long-term competitiveness.

Restructuring will impact workers in the communities in which they live and we must help hard-working Americans adapt to changing economic circumstances. The President has proposed a major expansion of the National Emergency Grants program to assist workers affected by restructuring with effective job training and assistance. The President has also proposed direct assistance with health insurance costs that will be available to workers and retirees who lose their employer-provided coverage. And the President supports coordinated assistance for communities and a strengthened and expanded trade adjustment assistance program. America's workers are the most highly skilled in the world, and with effective training and adjustment assistance we will help them find better, higher paying jobs to support their families and boost our economy.

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