5/18/2016 11:56:00 AM
NEWS BRIEFS
Metals Service Center Calls for Steel Tariffs, Continuing China’s ‘Non-Market’ Status
Report: US Steel Tariffs Rise 500% on Chinese?Exports
On May 18 the U.S. Department of Commerce ruled that imports of cold-rolled steel from China will be subject to a maximum 266% anti-dumping duty plus a 256% anti-subsidy duty, 24/7WallSt.com reports.
“The ruling is one of three expected on anti-dumping cases involving China,” according to 24/7WallSt.com.
United States Steel Corp. (NYSE: X) is also seeking a complete ban on imported steel from China “on the basis of alleged hacking attacks against U.S. Steel resulting in the theft of the company’s intellectual property.”
Steel imports from China had a total value of just $2 billion in 2015.
The Metals Service Center Institute called for additional tariffs on imported steel and imported steel containing products plus continuing China’s status as a “non-market” economy.
MSCI – a trade association with 400 members operating 2,500 locations in North America – pointed out in a statement filed with the U.S. Trade Representative an the U.S. Department of Commerce, that U.S. Steel has cut 5,000 jobs since the beginning of 2015 and lost $8 billion.
Much has changed since the 2008 recession “and not for the better,” according to the MSCI comments. While recognizing the steel industry is “cyclical” tie to economic downturns an recovery, MSCI finds “unlike past cycles, the U.S. Steel industry has not fully recovered from its air nearly a decade ago.”
Steel shipments in 2015 by MSCI member companies “were barely 65% of peak shipments before the 2008 recession.”
U.S. steel industry recovery from the 2008 recession has taken twice as long as the average recovery of previous recessions.
“The inescapable conclusion is that something more than classic, free market forces are at work in the global steel markets in ways that have harmed U.S. steel producers and manufacturers, the North American steel service center industry, and North American workers,” MSCI stated. “That something more is the continuing market distorting policies by certain foreign governments to support their state-directs steel industries through massive subsidies to both create new steel production capacity and to maintain existing inefficient capacities at a time of, at most, modest growth in demand.”
That leads to “foreign dumping and predatory pricing,” leading to “unfairly price steel and increasing bankruptcies and lay-offs for North American companies that play by the rules.”
MSCI’s statement repeated its call for U.S. trade negotiators to “both bilaterally an multilaterally – with our trading partners” to address excess capacity due to foreign governments’ “market distorting policies.” If negotiations fail to import reductions there should be countervailing tariffs and/or import licenses, the MSCI advocated.
Proposed tariffs on imports steel-containing products should correspond to any additional steel tariffs.
Such tariffs would required the U.S. government to “initiate a safeguard action under Section 201 of the Trade Act of 1974,” MSCI noted. That process of “many months may presents the quandary of too little relief, too late.” Thus MSCI recommend implementing “expeditiously and provide immediate notice to those countries engaging in unfair trade practices.”
The MSCI statement called for the U.S. to “take the long-overdue step of declaring that the Chinese government is a currency manipulator.”
Going beyond steel products, “China’s substantially undervalued currency” hurts all U.S. manufacturers. Outside experts blame currency manipulation on “the growing merchandise trade deficit with China, which last year exceeded $366 billion.”
The 2015 Trade Facilitation & Trade Enforcement Act gives the U.S. government “additional tools an enhanced authority to enforce U.S. trade laws and agreements” – including currency manipulation. The Act requires initiating bilateral negotiations.
The Department of the Treasury’s April 29, 2016, report – as required by the Act – “missed an important opportunity to dress the effects on the U.S. and global steel industry of currency manipulation by foreign governments,” according to the MSCI statement.
Treasury’s report points to two criteria of currency manipulation – a trade surplus and current account surplus – by China, but did not find a third criterion did not apply: China has not engage in “persistent one-sided intervention in the foreign exchange market” and thus Treasury would not intake an “enhanced analysis” of Chinese policies.
“MSCI believes that Treasury’s decision on the latter factor is wrong – and misses an opportunity to address the steel industry situation – because it fails to consider China’s long-term and well-known record of currency manipulation.”
MSCI sees Treasury as adopting “a narrow definition of ‘persistent one-sided intervention’ in foreign exchange markets.”
“MSCI submits that the conclusion may fit the narrow definition, but it defies common understanding which would be captured by a broader definition or by analyzing intervention practices over a longer period of time.”
Treasury “ignores China’s actions that precipitated” of sales of foreign currency. Treasury should consider China’s August 2015 to devalue its currency against the U.S. Dollar” and China’s action to devalue its own currency. MSCI believes there is “persistent one-sided intervention.”
MSCI called on the secretary of the Treasury to “initiate negotiations with China on an expedite basis to ensure that China regularly an promptly adjusts the rate of exchange.”
MSCI also called for the U.S. government to “resist efforts by the government of China to be declared a ‘market economy’ for the purposes of enforcing the anti-dumping laws of the U.S. and other countries.”
Market economy status for China peaks at the end of 2016 – which is 15 years after the World Trade Organization allow member countries to “use surrogate country prices and costs in prosecuting anti-dumping cases against Chinese products for the first 15 years after China’s accession” to WTO.
“China has claimed that at the end of this year, under the terms of its Protocol of Accession, all countries must accord China market economy status,” thus prohibiting WTO members using surrogate country costs in anti-dumping cases.
“China’s economy is, and remains, a government-dominated, non-market economy, and its steel industry continues to be state-owned, controlled and subsidized,” according to MSCI. The U.S. government must “take whatever action is necessary to ensure that China’s status as a non-market economy remains in full effect” until China can demonstrate otherwise.
The Metals Service Center Institute is an Illinois-based trade association founded in 1909 as the American Horseshoe & Heavy Hardware Association. MSCI reports 400 members operating 2,500 locations in North America. Members purchase about 75 million tons of steel, aluminum and other metals. Tel: 847 485-3000 Email: info@msci.org Web: msci.org ©2016 GlobalFastenerNews.com
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