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http://www.washingtonpost.com/wp-dyn/articles/A32756-2001Jun6.html Steel 
Lobbyists Gain the Edge
In persuading President Bush, a self-proclaimed free trader, to take steps 
this week aimed at restricting imports of steel, lobbyists for the U.S. steel 
industry used the threat that thousands of retired steelworkers in key states 
would lose their health insurance if their companies closed.

The specter of an uprising by steel retirees, who substantially outnumber 
active steelworkers, provided a potent political argument for the industry's 
case that Bush should take drastic action to protect U.S. steel companies 
from a worldwide glut even at the cost of tarnishing his free-trade image.

The argument was advanced by two top Republican lobbyists, Edward W. 
Gillespie and Vin Weber, each of whom has been receiving $45,0!
00!
a month from an industry-union coalition called Stand Up for Steel.

The coalition scored a smashing victory Tuesday, when Bush announced that his 
administration will file a case with the U.S. International Trade Commission 
seeking to win authority to set quotas on steel imports. And although many 
factors went into the White House's decision, industry sources and other 
participants pointed to the concerns raised by Gillespie and Weber as a 
classic demonstration of how a highly motivated constituency can sway an 
administration that barely won the electoral college and lost the popular 
vote.

"From a political perspective, this was not a hard case to make to a 
government as closely divided as this one is," said Weber, a former 
congressman, in an interview. Eighteen steel companies are "in one stage or 
another of bankruptcy. All those retirees are facing loss of benefits."

Only about 150,000 people now work in U.S. steel facilities, but at some of 
the biggest integrated steel!
ma!
kers -- which are in the worst trouble financially -- there are about six 
retirees for every active worker. (The total number of retirees is slightly 
more than 300,000, according to industry officials).

Adding to the political punch behind the Gillespie-Weber argument was the 
fact that many of these retirees live in Rust Belt states that were hotly 
contested in the last presidential election, including Pennsylvania, 
Illinois, Ohio and West Virginia. The most fiercely contested state of all -- 
Florida -- is among the top eight states  in number of retirees.

A lobbyist who worked against the steel industry, Lewis Leibowitz of the law 
firm Hogan & Hartson, ruefully gave credit to his opponents' political skill. 
Leibowitz represents the Consumer Industry Trade Action Coalition, which 
consists of companies that favor free trade on the grounds that import 
competition helps keep costs low.

"They did a lot, obviously," Leibowitz said, referring to Gillespie and 
Weber. "This is an!
i!
ndustry that has something like 160,000 workers, and the market [value] of 
all the companies is smaller than that of Amazon.com, and they've turned this 
town upside down. So my hat is off to them."

The administration took other considerations into account, to be sure, 
including the need to win support from steel state Democrats for 
congressional authority to negotiate new trade agreements.

Jim Dyke, a spokesman for Commerce Secretary Donald L. Evans, asserted that 
his boss was particularly moved by the pleas of union leaders who recalled 
how their companies had shed workers and restructured in the 1980s only to 
find themselves devastated anew by imports. Foreign steel shipments, which 
account for about 20 percent of the U.S. market, reached record levels after 
financial crises in Asia, Russia and Brazil in the late 1990s.

"Factories are closing, and people are losing their jobs, because there's not 
a level playing field," Dyke said, repeating the administration's argument!
t!
hat a major reason for the oversupply of steel on world markets is the 
subsidies that many foreign countries provided when they established their 
national industries. "This fits in with the president's free-trade strategy."

Capitalizing on the administration's decision, Evans joined in a news 
conference/rally yesterday with such top labor leaders as John Sweeney, 
president of the AFL-CIO, and Leo Gerard, president of the United 
Steelworkers of America, both of whom backed Democrat Al Gore in the 2000 
presidential race.

"You can trust that we will be with you every step of the way until the 
problem is fixed," Evans told the cheering crowd, which was reminded by other 
speakers that the Clinton administration had balked at filing a case like the 
one Bush intends to bring before the International Trade Commission. (The 
Clinton administration, along with a number of industry lawyers, feared 
losing the case at the time, but industry experts said another factor was the 
staunch fr!
ee!
-trade stance of the Treasury Department.)

The Bush administration itself has balked at taking action that would 
directly protect the benefits of steel retirees. The steelworkers union has 
called for the government to create a fund that would help cover these  
"legacy costs," but administration officials said their moves to block 
imports should help protect benefits by aiding the industry's revival.

The White House will now have to contend with the ire of U.S. trading 
partners, which have reacted with a mixture of indignation and restraint. 
Long Tong Yu, China's top trade official, told a news conference at a trade 
meeting in Zhouzhuang yesterday that although "China is concerned with any 
protectionist practices or measures,"  it would wait to see whether the U.S. 
action conformed with the rules of the World Trade Organization.

Akira Chihaya, president of Nippon Steel Corp. and the head of Japan's Iron 
and Steel Federation, lashed out at the United States, saying he fears!
t!
he administration's move "will encourage protectionism, which has been 
spreading globally."

But U.S. steel industry sources were crowing over the importance of a 
professed free-trade president putting his imprimatur on an ambitious 
initiative to save the industry. "He must be choking, but he wants to win 
elections," one industry official said.

<em>Correspondent Clay Chandler in Shanghai contributed to this report.</em>
richard.shapiro@enron.com