The floor price mechanism received severe critcism as it was felt that floor prices for different categories of steel were far higher than what the industry deserved and that it would also place a section of the industry at a significant disadvantage.

However, the imposition of floor prices, essentially to prevent large-scale dumping, has been a failure, as customs department figures show that imports of sheets, coils, and plates have doubled over the last four months. Steel companies say that these imports of seconds anddefectives have been facilitated by certain loopholes in the floor price mechanism itself that traders have promptly taken advantage of.

The irony is that floor prices were announced after the commerce ministry supposedly studied in detail representations from the domestic steel companies for over a year-and-a-half. The import figures since December 1998 come at a time when the commerce ministry, in response to the sharp criticism, is considering lowering the floor prices.

As the whole purpose of imposition of floor prices now appears to have been defeated, it leaves to question whether the extent of `protection' extended was adequate. One has to remember that steel companies need to sell their products either in the domestic market or in the export market to repay loans to the financial institutions and the tag of being a "potentially sick" sector can be taken off it.

In this context, some of the actions taken by the US government -- the proponents of free trade on the issue of dumping of steel inrecent months, and in the past -- can act as an eye-opener for its Indian counterpart.

From 1978 to 1982, the US used the trigger price mechanism (TPM) to protect its steel industry from dumped imports. Under the mechanism, the US government attempted to deter the sale of imported steel at less than the cost of production without provoking a trade war with either Europe or Japan. Under the TPM, the US used the production cost of Japanese companies, as it was the lowest-cost producer, as the benchmark for all steel imports. Hence, the price of imports of any country less than Japan's production cost almost certainly involved dumping.

Each distinct steel product group had its own trigger price, calculated using data supplied by Japanese mills. The US government had calculated the trigger prices on a cost, insurance and freight (CIF) basis, and adjusted them quarterly to reflect changing costs and currency fluctuations.

Since November 1997, the US authorities have assigned high dumping margins ranging from81 to 238 per cent on steel imports from Ukraine, Kazakhstan, and Russia. Since the three countries had been accorded non-market economy status by the US, all data and information considered while assigning the high duties were arbitrarily based on what was filed by the petitioners -- the US steel companies.

More recently, the US government has decided to address the issue of steel dumping through two bills that have been introduced in the House of Representatives and the Senate. Additionally, the US President has laid out a comprehensive plan in the Congress on how the US should respond to this issue.

In January, the US government introduced a bill in the House of Representatives which seeks "to provide for the assessment of additional anti-dumping duties prior to the effective date of an anti-dumping order issued under the Tariff Act of 1930, with respect to steel products".

Another bill, the Stop Illegal Steel Trade Act, was introduced in the Senate. It says that the President shall take necessarysteps by imposing quotas, tariff surcharges, negotiated enforceable voluntary export restraint agreements, or some other measure to ensure that the volume of steel products imported into the US does not exceed the average volume that was imported monthly during the 36-month period preceding July 1997.

The US President's agenda includes: