H.R. 5081, the Fair Trade in Steel Act of 1984

GAO discussed H.R. 5081, the Fair Trade in Steel Act of 1984, which would place a 5-year quota on imported steel, restricting imports to about 15 percent of the domestic supply of all steel mill products. In return for this protection, the steel industry is required to use the cash flow from the steel sector to reinvest and modernize. GAO noted that the intent of the legislation is to give the industry time to regain its competitiveness against foreign steel in the domestic market. GAO does not favor this legislation because it: (1) fails to address the basic problems affecting the steel industry; (2) would raise consumer prices; (3) does not require commitment on the part of investors, management, and labor; and (4) lacks built-in safeguards similar to the successful Chrysler Corporation's loan guarantee program. Furthermore, GAO noted that, under the law, sanctions would be difficult to impose against those firms which fail to comply with the reinvestment requirements. Finally, GAO suggested legislative remedies other than quotas that would aid the U.S. steel industry.