Global Fastener News

1983 FIN – Reagan Administration Studies Renewing Fastener Trade Sanctions

June 08
00:00 2010


March 16, 1983 FIN – The Reagan Administration’s Commerce Department found that imported fasteners are not threatening to impair the domestic industry’s requirements in case of a national emergency and consequently no sanctions need to be placed on imported fasteners.

The results of the investigation did not come as too much of a surprise to the industry, but that does not mean the decision by Secretary of Commerce Malcolm Baldrige is going to be calmly accepted.

Industrial Fasteners Institute managing director Richard Belford told FIN the Commerce Department has “established a precedent in this case involving fasteners which embraces the Asiatic countries into our mobilization base in the U.S. and this is a devastating thing.”
“While we’re shattered because of the casual way they wrote the fastener industry off, if you sit back and think about it, just as a citizen of the country and know that your government now has, by executive fiat, an openly admitted dependency on foreign supply, it has to be repugnant.”
“We’ve been educated that we are a very self sufficient country as relates to our own defense needs and here’s Reagan standing up and saying, ‘I’m going to make our country the strongest in the world. We’re going to retain this supremacy and I’m going to do this, and this …'”
“And at the same time Reagan is saying, ‘Oh, by the way, we’re now dependent on foreign supply for fasteners today and tomorrow’,” Belford projected Reagan’s words. “‘It’s going to be all our electronics and the day after it’s going to be a whole flock of other metal working components’.”

Belford told FIN domestic manufacturers are not going to be “quiet about it. This is one of those things which you just do not accept lying down.”
“Obviously we’ll get no consideration from the Administration’s agencies. As far as they’re concerned the decision has been made and the decision stands.”
Belford is hoping Congress will be “appalled” at the decision by the Reagan Administration that tough questions will be asked at Congressional hearings. “And if those questions are asked, they are not going to be easy for the Administration’s spokesman to answer.”

“As you read the report you see that Commerce took a wartime scenario and determined that there was sufficient capacity to meet any of our needs,” Belford noted. “The scenario that the Department of Commerce elected to match against the industry’s capacity was one that has been identified as being a very low probability scenario given a very low percentage chance of ever actually happening.”
“The basic criterion of that scenario is that during the first year of mobilization there would be zero shipping losses in the Pacific Ocean and once war actually got under way there would be a very minimal loss of shipping in the Pacific.”
“They assume that all these countries will all remain pro-U.S.A. and there’s no reason to suspect there would be a disruption of supply to us,” Belford pointed out.
“I think that anyone that thinks about it, has to question that kind of logic,” Belford suggested.
Statistics in the report demonstrate a “very brutal shortfall between the industry’s current capacity and what they project the needs would be in an national emergency.”

Belford responded to a FIN question on using the “Buy American” regulations to defend domestic manufacturers by saying that the IFI’s understanding is “the law now permits any of the federal agencies to establish procurement on a Buy American basis. This is within their own executive authority to do. And certainly a number of agencies encourage it right now.”

“The one thing though that has never clearly been clarified – and needs to be clarified – is when you say, ‘Buy American,’ does it mean buy American-produced products or buy from an American citizen?” Belford asked. “And if you can buy it from an American citizen and be in compliance with the act you’re back to square one – where we are now.” ©1983/2010 Fastener Industry News

By Dick Callahan
FIN Editor/Publisher
March 2, 1983 FIN – It looks like the domestic fastener industry won’t be getting help from the government in its latest efforts to stem the growth of imports.

The secretary of Commerce’s report to the president in the matter of the Investigation of the Effect of Imported Articles (bolts, nuts, and large screws of iron or steel) on the National Security, pursuant to Section 232 of the Trade Expansion Act of 1962, reportedly recommends that President Reagan not renew any trade sanctions on imports.

In our last issue of FIN (February 1, 1983, page 7), we explained that the investigation, initiated by the department of Defense, was made to determine whether imports of fasteners subject to this investigation are being brought in to this country in such quantities or under such circumstances as to threaten national security. The investigation does not concern itself with the economic welfare of a company or an industry, except as the welfare may affect the national security.

The president received the report from the Commerce Secretary on February 12, 1983, and no details of that report have yet been made public (and maybe never will).
The president can either accept Commerce’s recommendations or ignore them in determining whether trade sanctions should be imposed. This determination will be reported back to the Commerce Department and the first glimpse you’ll get of it will probably be when it’s published in the Federal Register. There’s no fixed time frame, to our knowledge, within which the president must act.

Though the Commerce Department’s recommendations have not been made public, there already have been leaks to government and industry sources indicating that the domestic industry has come up losers.
One press account of what Commerce Secretary Malcolm Baldrige is supposed to have advised the president was carried in the February 21, 1983, issue of American Metal Market. According to AMM, Baldrige concluded that the general economic slump is responsible for much of the fastener industry’s decline and that most of our foreign sources are politically reliable and could make up any shortfall that occurred in both military and civilian markets in the event of an emergency.
The report also is supposed to have informed the president that while imports accounted for more than 53% of all United States industrial fastener consumption by weight by mid-82, imports are responsible for only half of the 23% in declining employment in the fastener industry over the past three years.
Additionally, the report asserts that in the event of a mobilization, domestic capacity could be increased about one third in the first year and at least that much during the next two years with the purchase of automated production equipment from machine tool builders in the U.S. and friendly foreign countries.
The experiences in World War II, the Korean War and the Vietnam War were cited as the basis of this belief.

We have not seen the Commerce report (or any of the leaked executive summaries of that report) but through the Freedom of Information Act we were able to look at most of the briefs submitted to the Department of Commerce by proponents and opponents of import restrictions.
Based on examination of these briefs it’s our guess that some of the following points (in addition to those mentioned above) made by the pro-importer groups have been responsible for the commerce Department decision to recommend that the president should not impose import sanctions.

1 – While imported standard fasteners have taken over a large portion of the domestic market, the fasteners used in military equipment, especially military aircraft, missiles and space vehicles, are mostly specials. And as of now, specials only account for a very small percentage (probably below 5%) of imported fasteners.

2 – While the fastener industry is now operating at low levels, in the case of an emergency, unused capacity could quickly be brought into play and this, together with a shift from production of civilian type fasteners to military types, could take up any shortfalls in output that occurred.

3 – Even is the country attempted to attain a position of self sufficiency in fastener requirements there would remain the problem of obtaining sufficient wire rod as the raw material for those fasteners demands for this product would far exceed the domestic supply (even if the steel mills were not the subject of an initial enemy attack which they probably would be). Both imported wire rod and imported fasteners, as a consequence, would be needed to supply the military.

4 – The imposition of import restriction as the result of the Section 232 Investigation would create a precedent inducing other industries to demand protection in the name of national security, seriously affecting the entire framework of U.S. trade agreements.

5 – The surge in imported standard fastener over recent years has actually enhanced the domestic industry’s ability to meet national emergency requirements by forcing domestic manufacturers to increase the percentage of special fasteners (those used primarily by the military) which they produce, compared with standards (which could readily be obtained from both Mexico and Canada if necessary).

6 – There is no shortage of machinery that would be needed to turn out either special or standard fasteners, or of workers to run these machines. And if necessary a pool of 5,000 workers could be trained in advance to supplement the approximately 14,000 workers involved in producing the fasteners covered by the Section 232 investigation.

7 – Any import sanction imposed would have an inflationary effect on the economy.

We don’t agree with all these arguments (and think that some of them are dead wrong) but we feel that they could have had something to do with Commerce’s decision to recommend what it did.

If the president goes along with Commerce’s recommendations, it will be the latest in a series of adverse decisions that the industry has suffered in trying to do something about imports.

Since 1975, fasteners have been the subject of four separate investigations under the escape clause provision of the countervailing duty law and one other investigation under Section 232 of the Trade Expansion Act of 1962.
While the industry came out on the short end of most of these investigations, in 1978 President Carter reluctantly proclaimed increased duties on imports of bolts, nuts and large screws for a three-year period (instead of five years recommended by the International Trade Commission).
This import relief was scheduled to expire on January 5, 1982, unless extended by the president.
On November 9, 1981. the ITC determined that import relief would not have an adverse economic effect on the domestic industry. President Reagan accepted the Commission’s recommendations and the import relief that the industry had enjoyed for three years was terminated as scheduled on January 5, 1982. ©1983/2010 Fastener Industry News.

Scroll down for an industry editor’s 1983 letter to President Reagan

1983 FIN ?Akstens to Reagan: Who Will Look Out for the Defense of Our Country?

1983 FIN – Editor’s Note: In connection with the above item, we noted with some bemusement the recent effort by the editor of Fastener Technology magazine to inform the president about the danger of this country’s national security if something isn’t done about the deterioration of the country’s fastener making capacity stemming from the high level of imports. We reproduce in full the letter to the president as it appears on the front cover of the magazine’s February issue.

Dear President Reagan:
On February 11, 1983, Malcolm Baldrige, Secretary of Commerce, will send a report to your office regarding the capacity of American producers of nuts, bolts and large screws to fulfill the basic needs of the United States in time of national emergency. This study was requested by Secretary of Defense Caspar Weinberger because he and others responsible for the nation’s security are deeply concerned.

I have no way of knowing what that report may contain, but if I had been asked to send you a report, it would have included these basis facts: 1) Nuts, bolts and large screws are used in every building, bridge, machine, factory, automobile, tank, plane, missile, computer, and every other essential civilian and military item. 2) Imports now supply over 50 percent by pounds of the total fastener market. In pieces-eight out of every ten nuts and six out of every ten bolts consumed in the U.S. are supplied from offshore sources, and import growth continues to accelerate. 3) US fastener producers will not survive unless you intervene now to stop the collapse of the critical industry. 4) The destructive forces at work must be stopped now and a program to rebuild domestic fastener capacity must be activated to the required level.

If the highest officials in the United States turn their backs on this problem, who will look out for the defense of our country as the bolt, nut and large screw industry dies?…Who, Mr. President?
Frank W. Akstens
Editor, Fastener Technology
©1983/2010 Fastener Industry News

Callahan Response to Akstens
FIN editor Dick Callahan noted that Fastener Technology was Canadian owned and that the magazine features prominent ads from Belgium, Switzerland, England and Taiwan and for Italian and Japanese made equipment.
“It appears to us that at least half of the ad revenue for that issue of Fastener Technology is derived from overseas suppliers of fasteners and fastener equipment,” Callahan pointed out.
Callahan also noted that Fastener Technology is selling booth space and is the sponsoring publication for an International Fastener Exposition, which is organized by Mack-Brooks Exhibitions Ltd. of England. Most of the exhibitors are from overseas.
©1983/2010 Fastener Industry News

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