News From Congresswoman
Nydia M. Velázquez
Representing New York's 12th Congressional District - Brooklyn, Manhattan, Queens
Ranking Democratic Member, House Small Business Committee

For Immediate Release
March 10, 2004

CONTACT: Wendy Belzer, Kate Davis, (202) 225-2361

Velazquez: Steel Issue Has No Easy Fix
Steel prices have skyrocketed, impact on small businesses is not cut-and-dry

WASHINGTON - Congresswoman Nydia M. Velázquez (D-N.Y.), Ranking Member of the House Small Business Committee, today spoke on the recent rise in steel prices and its effect on the industry and consumers, which are mainly America's small manufacturers.

"The price of steel has skyrocketed by over 60 percent in the last five months," Congresswoman Velazquez said. "This incredible surge has been the result of several factors. They include the increased internal demand for steel - which has outstripped supply - and foreign trade policies that have limited access to many international steel markets."

The issues surrounding the cost of steel and its impact on the small business sector has been an ongoing issue. When the House Small Business Committee first examined it two years ago, an influx of cheap foreign steel was creating substantial hardship for domestic steel producers. In response to this, the Bush administration implemented tariffs to protect the domestic steel industry, which were supposed to last three years, but they were lifted after just 21 months due to "changed economic circumstances."

As the tariffs were lifted, many expected to see prices fall, but the exact opposite occurred as steel prices rapidly increased. Like the situation two years ago, today's issue results from the convergence of many factors, such as growing demand, increased supplier costs, limited international suppliers, and rising energy costs.

"Recently, the idea of implementing export controls on scrap steel was suggested as a way to soften the domestic supply shortage," Congresswoman Velázquez said. "This seems surprising considering the Bush administration tried to restrict what was coming into our country with tariffs, and now wants to restrict what is being exported in the same way. This sends very mixed messages about our trade policies."

Congresswoman Velázquez called for finding a fix that "reduces costs to steel consumers and protects producers." But she also highlighted the importance of finding solutions to other pressing small business problems such as access to health care, capital and escalating energy costs - all of which are pulling resources away from our most important economic driver."

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