Foreign Relations of the United States, 1977–1980, Volume III, Foreign Economic Policy

79. Memorandum From the Under Secretary of the Treasury for Monetary Affairs (Solomon) to President Carter¹

Washington, December 1, 1977

SUBJECT

• Summary of Steel Task Force Report

The steel task force report consists of three major sections:²

—an introduction which provides a background on those problems of the steel industry which are addressed by the report;

—an outline of the general objectives which guided the task force in developing the program; and

—a five-part program which is responsive to problems in those areas where government policies impact upon the industry.

The program proposals are grouped into major areas of: (1) relief from unfair trade practices; (2) modernization of plant; (3) rationalizing environmental practices and policies; (4) community and labor assistance programs; and (5) other general measures.

1. Relief from Unfair Trade Practices

A “trigger-price” antidumping procedure³ is proposed to deal with complaints of steel imports at prices below home market prices or costs of production that injure the U.S. industry.

The trigger-price is to be established for each class of steel mill product based on production costs of the world’s most efficient producer (currently Japan).

—The use of trigger price to initiate proceedings will accelerate the identification and prevention of dumping.

—The system is consistent with U.S. law and the GATT.

—It will not deny to any affected person rights to initiate or contest proceedings on findings under the Antidumping Act.

2. Modernization of Plant

—The general tax measures of the Administration’s tax reform proposal will emphasize⁴ incentives for modernization.

—IRS will be asked to investigate the appropriateness of shortening useful lives of capital goods for tax depreciation from 18 to 15 years.

—Additional funds will be made available for loan guarantees for modernization under existing programs.

3. Rationalizing Environmental Policies and Practices

—A review of EPA regulatory procedures will be undertaken to reduce rigidities⁵ and inconsistencies.

—The access of the industry to EPA for discussions with respect to specific policies will be expanded.

—There will be a reexamination of other policies (e.g. offset policies⁶—the transfer of air pollution credits from one facility to another).

4. Community and Labor Assistance

—The loan guarantee programs for modernization under section (2) will be geared to plants located in areas of high unemployment.

—Existing EDA funds will be made available to combat unemployment in severely impacted steel communities.

—A task force will be established to examine alternative uses for closed steel plants.

—Consideration will be given to economically viable proposals for community and/or worker takeover of previously closed plants.

5. Other General Measures

—Requests for business reviews of joint ventures for research and development and mergers will be expedited by Justice.

—A government review of Federal funding of industry research and development will examine the merits of greater assistance to the steel industry—particularly in regard to energy and the environment.

—A task force will examine regulatory and other factors which lead to high transportation costs for industries processing bulk materials.

—A tripartite committee of business, labor, and government will be established to continue a dialogue on issues of common concern.

These measures will provide a basis for the industry through its own efforts, and the cooperation of labor, to regain a strong competitive position in the domestic economy.

1. Source: Carter Library, Staff Office Files, Domestic Policy Staff, Eizenstat Files, Box 284, Steel/Chrome (CF, O/A 24) (2). No classification marking. A stamped notation reads: “The President has seen,” and at the top of the page, Carter wrote: “a) We should state that pollution standards will not be lowered, b) Tax measures will be ‘considered’ to encourage modernization.”
2. The task force was chaired by Solomon; see Document 63. Attached but not printed is the undated “Report to the President—A Comprehensive Program for the Steel Industry.” A notation on the report’s cover page reads: “The President has seen.” Carter initialed the cover page and wrote: “To: Stu & Tony—This is ok. See comments on Stu’s memo. a) Too many ‘task forces’ and committees—consolidate if possible. b) Reread this for typos & some confusing language.” The memorandum from Eizenstat to which Carter refers is printed as Document 80.
3. Under the trigger price anti-dumping procedure, also known as the trigger price mechanism (TPM), the Department of the Treasury would launch an anti-dumping investigation when the price of certain steel imports fell below a pre-determined level (the so-called “trigger price”).
4. Carter underlined the word “emphasize” and wrote “?” in the adjacent margin.
5. Carter underlined the words “reduce rigidities” and wrote “?” in the adjacent margin.
6. Carter underlined the words “offset policies” and wrote “?” in the adjacent margin.