Memorandum From the President on the Domestic High Carbon Ferrochromium Industry

Memorandum for the Special Representative for Trade Negotiations

Subject: Determination Under Section 202(a) of the Trade Act; High Carbon Ferrochromium

Pursuant to Section 202(b) (1) of the Trade Act of 1974 (P.L. 93-618, 88 Stat. 1978), I have determined the action I will take with respect to the report of the United States International Trade Commission (USITC) dated September 6, 1978, concerning the results of its investigation, as requested by the House Ways and Means Committee, of the domestic industry producing ferrochromium, containing over 3% by weight of carbon, provided for in Item 607.31 of the Tariff Schedules of the United States.

After considering all relevant aspects of the case, including those set forth in Section 202(c) of the Trade Act of 1974, I have determined to provide import relief for the domestic industry. Relief should be granted in the form of an increased tariff of 4¢ on any high carbon ferrochromium entering the United States at less than a value of 38¢ per pound for the following reasons:

1. The domestic industry is currently operating at unprofitable levels. Even the most competitive domestic firm (which supplies over half of all domestic production) is operating with substantial losses due to the price and volume of import competition this year.

2. Other importing countries have protected their producers. The European Community has established minimum prices for high carbon ferrochromium imports. The Japanese market does not appear to be fully open. The U.S. industry thus bears virtually all of the burden of adjustment during the current period of world overcapacity (the U.S., Japan, and EC constitute 90 percent of the free world high carbon ferrochrome market.

3. The additional duty on HCF would raise sufficiently the U.S. import price, minimizing the likelihood that the EC minimum import price and Japan's duty paid import price would divert HCF exports to the United States. This would provide the principal domestic producer with the opportunity to operate at a reasonable rate of return.

4. The recommended relief would not be inflationary. Market prices would be restored to levels assuring a fair return after imports have unduly depressed prices.

This determination is to be published in the FEDERAL REGISTER.

JIMMY CARTER

[Filed with the Office of the Federal Register, 11:51 a.m., November 3, 1978]