The most explicit extended discussion started with Martin Forman, president of Forman Metal Co., Milwaukee. He told the Institute of Scrap Recycling Industries (ISRI) that the United States made a wrong turn in committing itself to free trade. Nonetheless, Forman said, corporate opportunists shouldn't be allowed to make this an excuse for special-interest legislation to rescue the profits of a few companies.

He said a U.S. strategy to protect semiskilled jobs was made impossible by treaty commitments of 1947 and 1992--executed with the backing of nearly all the country's political leaders.

"Did a lot of Americans get sold down the river? They did. Did the politicians sell us out for the big money one more time? Yes, they did," Forman said.

"I never would have let these American jobs be sold down the river but, as Walter Cronkite used to tell us every night, that's the way it is," Forman said.

"Free markets are not good for some of our members. Their costs prevent them from matching export-buying prices and they're very sad about that. But I'm not about to sit back and let them use our trade association to protect their bad investments at my expense."

ISRI's electronics recycling council, created last year, includes advocates of restricting or banning electronic scrap exports on environmental grounds.

Forman, whose company handles electronic scrap, criticized "protectionism masquerading as environmentalism or as nationalism. These are not technical issues or environmental issues. It's just cash. The guy who has a domestic plant wants legislation that forces my stuff to go to him or her, to offset lower costs, offshore labor and/or prison labor."

"Should ISRI members deny themselves the benefits of a free global market in order to protect a few members in this room and elsewhere who made what turned out to be a bad investment in domestic processing capability?" Forman asked. "I say no, we should not."

The two major ISRI export issues are Chinese trade abuses and export rules on electronic scrap. A July resolution by ISRI's executive board said the group is committed both to free trade and to fair trade.

"ISRI should raise documented issues of unfair or illegal trade practices with appropriate governments (and) agencies," the resolution said.

ISRI is cooperating with the National Association of Manufacturers (NAM) in a campaign to make Chinese trade abuses a U.S. government priority (AMM, Aug. 20). ISRI and NAM are both based in Washington.

In an August 2002 response to a U.S. Environmental Protection Agency initiative, the association wrote, "ISRI strongly urges the agency not to create a distinction between materials intended for domestic use vs. materials destined for export."

At last week's ISRI conference in Rosemont, Ill., scrap executive Frank Cozzi described ISRI's leadership as "in a quandary" about the export situation. "Some nonferrous members have been devastated by what they say is unfair trade practice, currency manipulation, document alteration and cheap labor. But those same conditions have created huge opportunities and markets for other ISRI members."

Cozzi is vice chairman at ISRI and is central region president for Chicago-based Metal Management Inc.

Shanghai-based journalist Adam Minter, whose family runs a Minnesota scrapyard, told the conference that a huge gap exists between China's laws and what happens on the ground. Enforcement of trade laws has become more effective in the regions around the capital, Beijing, he said. Soon, he added, the flouting of trade laws in South China also will become more difficult.

"That government needs money. They're going to crack down on smuggling and tax evasion," Minter said.

"China is always going to have cheaper labor. That's not going to change. But they're going to be concerned about their environment and they're going to be concerned about their taxes. The fun and games, in many ways, are over."

Minter noted that China outlawed imports of electronic scrap last year even though such commerce remains quite common. He said the ban eventually will divert electronic scrap to India, Vietnam and the Philippines.

"I know personally of two cases of Chinese importers who have been arrested in the last six months for importing this kind of material," Minter said. "Will (the authorities) make an example of an American who comes over there who has been exporting electronic scrap to China? Probably not. Not yet."

He said he encountered some extremely primitive scrap processing efforts in China while preparing a three-article series for ISRI's magazine.

"It's expensive to set up an electronic recycling operation. It's really cheap to employ children and to pour cyanide on a circuit board," Minter said. "You pour the cyanide and then you recover your gold and whatever else you want. It's not pretty."

The broader issue of nonelectronic scrap exports drew rueful guidance at one panel from a steel mini-mill executive, Vicki Roche.

"We all lose if the manufacturing sector dies," said Roche, raw materials director at Gerdau AmeriSteel Corp., Tampa, Fla. "When the manufacturing goes offshore, so does the scrap."

She urged scrap processors to cultivate supportive relationships with a few key domestic consumers rather than act as "opportunistic sellers."

Paul Schaffer - pschaffer@amm.com