January, 2001: The Yankee Trader

By Greg Rushford

Published in the Rushford Report

Be careful what you wish for — for you may get it.

That cliché is one that some big-time users of U.S. antidumping laws like Bethlehem Steel and USS may have occasion to reflect upon. The two steelmakers are accused in an official study of dumping dioxins into the atmosphere. According to the study, the dioxins drift all the way to the Canadian Arctic, where they end up in the food chain of innocent Inuit Indians. And although it was not specifically mentioned in the study, another U.S. firm with a controversial environmental record — Utah’s Magnesium Corporation of America — could be vulnerable to the same charges. The Inuits seem to be looking for some hungry American tort lawyers.

If so, don’t expect lawyers for accused polluters to roll over; experience warns against drawing immediate hard-and-fast conclusions to complex questions of science and possible legal responsibility. Bethlehem spokeswoman Bette Kovach says that she first learned that her company had been publicly accused of dumping dioxins when she was called by a reporter from Gary, Indiana asking for comment. When she checked to see what was going on, Kovach says, Bethlehem officials informed her that the data cited in the study conflicts with actual emission testing of Bethlehem stacks by the Environmental Protection Agency. “Although dioxins are created in the sintering process in steel plants, the levels of dioxin generated by steel plants are not contributing to alleged health and environmental issues in northern Canada,” Kovach insists.

Tom Ferrall, a USS spokesman, says that his company’s own tests show “absolutely minimal emissions, barely above the level of being detectable.” The spokesman adds, “Our findings have been verified by separate tests by the EPA.”
Regardless what happens in the legal arena, for international-trade practitioners and students, this is a story that is rich in irony. The U.S. steel lobby regularly expresses outrage at the audacity of foreigners who engage in so-called “illegal dumping” of steel in our domestic markets. Now, fairly or unfairly, some of these same Americans are being portrayed as the real dumpers — who export toxic wastes, not merely low-priced steel.

The story further illustrates some of the economic contradictions that are inherent in these U.S. trade laws. It began with the political push to sell the North American Free Trade Agreement seven years ago.

When the United States, Canada and Mexico struck Nafta in 1993, the U.S. labor and environmental lobbies (including the United Steelworkers of America) got their wish to make Nafta the first “green trade treaty.” A side agreement was signed that created the North American Commission for Environmental Cooperation, which is known by its acronym, CEC. The fledgling tri-national institution described itself as more than “simply an advisory body supplemental to Nafta.” The CEC promised that it would be “the institutional structure which will set the ground rules and guidelines for the environmental dimensions of Nafta.” One of its great strengths, CEC officials said, would be in issuing fact-finding environmental reports, colorfully expressed as “intrusive sunshine.”
In 1993, the common wisdom scoffed at that boast. But this October, the CEC released a study that now has some of America’s biggest polluters blinking in the light.

The study “for the first time links dioxin pollution in Canada’s Arctic to specific sources in the U.S., Canada and Mexico,” the CEC claims. The study was conducted by a research team headed by Barry Commoner at Queens College’s Center for the Biology of Natural Systems. Now 83, Commoner is one of the original founders of the U.S. green lobby. He was the Citizen’s Party presidential candidate in the 1980 U.S. presidential elections, winning some 200,000 votes.
Commoner’s 85-page CEC study — Long-range Air Transport of Dioxin from North American Sources to Ecologically Vulnerable Receptors in Nunavut, Arctic Canada — finds that “dioxin concentrations in Inuit mothers’ milk are twice the levels observed in southern Quebec.” The study said that Inuit mothers get the dioxins by eating caribou, seals, and fish that have eaten lichen, mosses, etc. that have in turn gotten dioxins through airborne pollution — much of it from the United States.

The report did not directly address the issue of whether the exposure rates threatened the Inuits’ health. “It is worth noting, however, that the body burden of dioxin in the general populations of the United States and Canada reflects an average level of exposure associated with a lifetime cancer risk several hundred times greater than the generally ‘acceptable’ one-in-a-million level generally adopted by the U.S. EPA,” the study said in a footnote.

Mainly, the report identifies the specific sources of the airborne pollution in generalized terms — like municipal waste incinerators in places like Utah; cement plants in Minnesota, Indiana, Michigan, and the like. But Bethlehem Steel and USS were identified by name, without further elaboration, in a table attached to the study.

The report concluded that since the Inuits could not control the airborne pollutants that were showing up in their food chain, “it is apparent that remedial action must be directed toward emissions at the source.”
Sheila Watt-Cloutier, the Canadian president of the Inuit Circumpolar Conference — who appeared with Commoner at the press conference when the report was released in October — told Reuters reporter Ed Stoddard on December 5 that her group was considering seeking compensation from industries responsible for the release of dioxins into the atmosphere.

The study said that there were 44,091 sources that put dioxins into the atmosphere in North America, asserting that the Canadian Arctic is even touched by copper smelters and cement kilns that burn hazardous waste as far away as Mexico and Texas. The study said that some 62 percent of North America’s dioxin emissions came from the United States; Mexico accounts for a 30 percent share, and Canada has 8 percent.

The Magnesium Corporation of America — which produces magnesium metal and alloys — wasn’t one of the sites that was sampled in the study. But a nearby Utah municipal waste incinerator was linked in the study to dioxins that ended up in the Inuit food chain. This would seem to make the Salt Lake city-based Magcorp a logical suspect. The Environmental Protection Agency has cited Magcorp as “the number one emitter of chlorine” on its toxic release inventory. In October, Magcorp entered into a consent order with the EPA, under which the company is to evaluate health risks associated with dioxins that have been found near its facility in Rowley, Utah.

Sharon Kercher, an EPA spokeswoman in Denver, says that while it is “an interesting theory” on possible Magcorp emissions winding up in the Canadian Arctic, “we don’t have definitive data” as to how far away the company’s dioxins reach. Magcorp officials declined to comment.
For those who appreciate irony, Magcorp’s exploitation of U.S. antidumping laws offers a full dose.

I reported in August how Magcorp has successfully used the U.S. countervailing-duty and antidumping laws to penalize Canadian magnesium producers. The offending Canadian subsidy was — incredibly — a 1988 grant from the Quebec government to help Norsk Hydro Canada, Inc. install pollution control equipment for its smelter.

One wonders what Inuit mothers would think of this.

A larger irony is that from an economic standpoint it makes no sense for North American countries to use antidumping laws against each other. A company like Magcorp in Utah, or Bethlehem Steel in Pennsylvania, is perfectly free to engage in ruthless price discrimination to lure customers in, say, North Carolina. Within U.S. borders, such price discrimination — including sales below cost, as long as there is no predatory intent — is routinely praised as healthy competition helps the free-market economy function properly. But Canadian steelmakers and magnesium producers just across the border cannot compete for business in U.S. markets using the same practices. This is because while domestic price discrimination is considered praiseworthy, nationalistic antidumping laws slap tariffs on international price discrimination. Meanwhile, the CEC study raises the possibility that companies like Bethlehem, USS, and Magcorp are the real dumpers, spewing toxic wastes into the atmosphere that end up being dumped on the Canadian Arctic.

Footnote: The Quebec government has asked Ottawa to call for a dispute-resolution panel to challenge Magcorp’s victory under Chapter 19 of Nafta. Canada could also challenge the U.S. action in the World Trade Organization.
Stay tuned.

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