238. Editorial Note

In a March 21, 1980, letter to Roy Jenkins, President of the Commission of the European Communities (EC), President Jimmy Carter noted that his “domestic advisers are strongly and unanimously of the view that if U.S. Steel files its suits, our government must suspend the Trigger Price Mechanism (TPM) or face grave inflationary consequences.” Carter told Jenkins that “in authorizing the Commerce Department to publish the second quarter Trigger Price Mechanism at an unchanged level, I have decided that we will suspend that mechanism immediately if any major anti-dumping suits are filed.” Noting that he had not foreclosed the possibility of reinstating the trigger price mechanism, Carter expressed his “hope that this meets some of Commissioner Davignon’s concerns and that in the meantime you will be able to discourage any European over-reaction, as I have sought to resist [Page 691]protectionist pressures in the United States. Any such reaction might set off a chain process that could endanger the MTN results of which we are both so rightly proud.” (Carter Library, Plains File, President’s Personal Foreign Affairs File, Box 1, European Communities, Commission of the, 7/78–3/80)

On March 21, the U.S. Steel Corporation filed anti-dumping complaints against steel producers in Belgium, France, Italy, Luxembourg, the Netherlands, the United Kingdom, and West Germany. In response, the Department of Commerce suspended the trigger price mechanism, while suggesting that it could be reinstated “in the event that the petitions are withdrawn or otherwise satisfactorily resolved.” (Clyde H. Farnsworth, “Protective Pricing in Steel Suspended,” The New York Times, March 22, 1980, page 1) In Brussels, Davignon conveyed to the U.S. Mission to the EC, the EC “Commission’s disappointment and bitterness over the recent turn of events on the steel issue,” asserting “that the filing by [U.S.] Steel and the suspension of the trigger price created a completely new situation which the EC would have to assess carefully before developing a new policy. Davignon was especially critical of what he regarded as a cop-out by the administration which would effectively leave the US industry to regulate the market.” (Telegram 5178 from USEC Brussels, March 21; Carter Library, National Security Affairs, Staff Material, International Economics, Subject File, Box 6, Steel: 2–3/80) On March 27, the EC Commission released a statement expressing disappointment in the suspension of the trigger price mechanism, asserting that “a means of fighting protectionist tendencies in the U.S. has, for the time being, disappeared.” While disavowing “rumors concerning possible retaliatory measures” and the possibility of a trade war, the EC also denied “that it might propose a modus vivendi such as ‘orderly marketing arrangements’ or self restraint on steel exports.” (Telegram 5527 from USEC Brussels, March 27; National Archives, RG 59, Central Foreign Policy File, D800155–0663)

Over the next several months, as the investigation into the anti-dumping complaints progressed, U.S. officials engaged in informal talks with representatives of U.S. Steel in an effort to resolve the issue. In July, Davignon traveled to Washington to discuss the situation with U.S. officials, “urging that the Government and the steel companies find some way of settling the cases—presumably in a way that does not hurt the European steel producers too much.” Davignon cautioned that there was a “growing possibility of a ‘Trade War’” and expressed concern “that ‘we will let the situation get out of our control.’” (Memorandum from Council of Economic Advisers member George Eads to Schultze, August 5; Carter Library, Staff Office Files, Council of Economic Advisers, Charles L. Schultze Subject Files, Box 80, Steel [3])

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In September, the Tripartite Advisory Committee, established in December 1977 pursuant to the report of the Steel Task Force (see Document 79), submitted its recommendations on the U.S. steel industry. On September 28, the President’s Assistant for Domestic Affairs and Policy, Stuart Eizenstat, and Domestic Policy Staff member Joshua Gotbaum sent Carter a draft response to the committee’s recommendations for his comments. Carter wrote on the draft response: “Basically ok—proceed—check any changes with me.” At the bottom of the first page of the response, he added: “Emphasize need to control inflation.” (Carter Library, Staff Office Files, Domestic Policy Staff, Eizenstat Files, Box 283, Steel (CF, O/A 731) (3))

On September 30, Carter announced a revitalization program for the U.S. steel industry that reflected the recommendations of the Tripartite Advisory Committee. The program included provisions encouraging investment in industrial modernization, technological research and development, and compliance with environmental regulations, as well as assistance for dislocated workers and communities and the continuation of the Tripartite Advisory Committee. It also established a revised trigger price mechanism that would bring about the “expeditious investigation of unfair trade practices.” In his statement, Carter also announced that U.S. Steel would drop its anti-dumping suits. For the text of Carter’s statement on the steel revitalization program, as well as his remarks announcing the program, see Public Papers of the Presidents of the United States: Jimmy Carter, 1980–81, Book III, pages 1959–1969.