"International Steel Producers and Consumers Must be Heard in Washington"

December 4, 2001

Vice-President of The PBN Company consulting firm and Senior Advisor to the President of the American Institute for International Steel (AIIS), Paul Nathanson, told Commersant journalist Nikolay Ivanov that Russian metallurgists have far more levers of influence available to them than they use.

Q.: What is your opinion of actions taken by the Russian authorities and the metallurgical lobbyists soliciting the right to trade at foreign markets without any restrictions?

A.: I can speak only about their activity on the U.S. market. In late February or early March of next year, President Bush is going to announce his decision on the question of protecting American steel producers from "dumped" steel imports. The best option for importers would be for the government to suggest a re-training program for American steel industry employees. The worst scenario is that a 40-50% duty on imported metal products, including those imported from Russia, would be introduced.

On the whole, Russia is taking the right steps in the face of this threat. It has applied to the U.S. Department of Commerce for recognition as a market economy. If the application is approved, the production costs of Russian metals, when calculated in the course of a dumping investigation, will no longer be based on third world indexes, which are usually lower. As a result, it would be significantly more difficult to prove the fact of dumping.

Q.: What could be done to ensure a positive decision on this application?

A.: Russian metal producing companies, as well as most foreign firms, are presently involved only in legal proceedings, that is, they send their trade lawyers to court hearings on dumping cases. It is not enough. After all, the decision about additional limitations on steel imports will be made not by lawyers but by politicians, whom it is also necessary to influence, as the Japanese and Latin American steel producers do.

Q.: But it is generally assumed that the U.S. steel producers lobby is very strong and that there's no sense in getting into a legal battle with it.

A.:That's not quite true. You are right, the U.S. metallurgical industry has been lobbying Washington politicians for import protection for 30 years and has spent large sums on PR activity in the mass media, and so forth. However, President Bush and some officials in his Administration-for example, U.S. Trade Representative Robert Zoellick- are advocates of free trade and are sympathetic to arguments against introducing further import restrictions on steel. For precisely this reason, Russian metal producers should take a more active part in the political debate in Washington. It is a legitimate and effective measure.

Even private individuals may engage in lobbying activity, so long as they are registered with the U.S. Department of Justice. There are stringent laws and rules that regulate lobbying in the U.S. It is important to note that lobbyists are prohibited by law from paying money to government officials or legislators in exchange for support.

A.: What does the lobbying profession actually do?

Q.: Lobbyists develop contacts with all interested parties, including representatives of the Presidential Administration, influential newspaper editors and columnists. As for Russian steel companies, they need to make frequent contact with their consumers in the U.S.-with the construction industry, the automotive industry and others.

Q.: Could you give illustrative examples of situations in which lobbying helped foreign states to settle their trade problems in the U.S.?

A.: Two years ago, after Chinese companies turned to a number of American lobbying companies, China was granted "most-favored nation" status by the U.S. Congress. NAFTA-the North American Free Trade Agreement signed by the U.S., Canada and Mexico-is another good example. Mexican and Canadian companies lobbied strongly for NAFTA. It was opposed by many U.S. labor organizations and some American companies. However, the business community succeeded in convincing the U.S. Congress to approve this agreement. In both cases, probably the most decisive factor was the fact that foreign companies had succeeded in finding a common language with the consumers of their products in the U.S.