The Trade Promotion Authority bill S.995, or “fast track bill” as it being called, passed the Senate Finance Committee last week by a vote of 20-6. The fast track portion gives the President the authority and guidelines to negotiate trade deals in exchange for a vote by Congress passing resulting trade agreements without amendment. The bill has been introduced to the Senate floor for further consideration and vote.
Critics of fast track say it will push Congress to agree to trade deals without due consideration, a concern for Democrats who worry that agreements may harm domestic jobs and the environment. A House Ways and Means committee voted 25-13 in favor similar legislation with only two democrats voting in favor.
Level the Playing Field
Sen. Sherrod Brown (D-OH) was among those voting against the package despite success in getting his bill, Leveling the Playing Field, included in the Senate Finance trade package.
“We shouldn’t give fast track authority if we can’t guarantee a level playing field for American workers and manufacturers, or if we can’t prevent China from joining the pact at a later date,” said Brown. We must prevent more NAFTA-style deals from giving corporations handouts while workers get sold out.”
Level the Playing Field is of particular interest to those in the steel industry. The following explanation of the provision was provided by Sen. Brown’s office.
“This portion of the bill would help the steel industry by strengthening antidumping and countervailing duty laws – which help the steel industry and other American businesses petition the Commerce Department and the International Trade Commission when foreign producers sell goods below market price or receive illegal subsidies. It ensures that the test for injury is not too high. By increasing the number of factors and length of time that the ITC can use to evaluate injury or threat of injury to U.S. producers, the bill provides for more comprehensive assessments prior to the ITC making a determination. It also makes several clarifications that Commerce has the authority to determine who the respondents are in an investigation and what data they use in an investigation, authorities that foreign respondents have attempted to undermine.”
The Steel Manufacturing Association (SMA) expressed its support of the act in a letter to Sen. Brown on April 1 from SMA President Philip Bell:
“Current steel market conditions underscore the vital importance of proper trade law enforcement. Despite slowly improving domestic demand and a number of recent trade case victories, U.S. markets continue to be flooded with offshore imports from a range of nations and in virtually every product category, thereby preventing domestic companies from realizing the benefits of our nation’s economic recovery. The impact has been widespread. Our nation’s laws must remain effective in addressing unfair trade practices. The provisions in this legislation would provide common sense revisions to antidumping and countervailing laws, as well as overall improvements to the trade case process.”
The Senate Finance Committee adopted the ENFORCE act as part of the trade legislation package which AISI says is “critical to ensuring transparent and fair enforcement of U.S. trade remedy laws by creating a new process for industry to petition for action to address fraud and evasion of trade remedy orders.”
Senate Bill S.995
Senate bill S.995, Bipartisan Congressional Trade Priorities and Accountability Act of 2015, sponsored by Sen. Orin Hatch (R-UT) highlights the need to addresses state-owned and state-controlled enterprises and provide trade remedy laws:
“The principal negotiating objective of the United States regarding competition by state-owned and state-controlled enterprises is to seek commitments that (A) eliminate or prevent trade distortions and unfair competition favoring state-owned and state-controlled enterprises to the extent of their engagement in commercial activity, and (B) ensure that such engagement is based solely on commercial considerations, in particular through disciplines that eliminate or prevent discrimination and market-distorting subsidies and that promote transparency.”
“The principal negotiating objectives of the United States with respect to trade remedy laws are (A) to preserve the ability of the United States to enforce rigorously its trade laws, including the antidumping, countervailing duty, and safeguard laws, and avoid agreements that lessen the effectiveness of domestic and international disciplines on unfair trade, especially dumping and subsidies, or that lessen the effectiveness of domestic and international safeguard provisions, in order to ensure that United States workers, agricultural producers, and firms can compete fully on fair terms and enjoy the benefits of reciprocal trade concessions; and (B) to address and remedy market distortions that lead to dumping and subsidization, including overcapacity, cartelization, and market access barriers.
Last week Sen. Rob Portman (R-Ohio) co-sponsored an amendment addressing currency manipulation by holding countries accountable to International Monetary Fund Standards. The amendment would add to TPA explicit and enforceable currency language necessary to prevent foreign competitors from using exchange rates to subsidize their exports.
“We need a balanced approach on trade – fighting for good jobs through more exports and fighting against unfair trade practices,” said Portman. “Unfortunately, some of our competitors tilt the playing-field by manipulating their currencies, so that our American-made exports are more expensive, while our competitors’ exports into our country are cheaper.”
The amendment was strongly supported by the major U.S. steel manufacturers who issued statements in support of the Portman-Stabenow amendment.
“Unfair trade practices, including currency manipulation, have contributed to overcapacity in the global steel industry and record-setting import levels. These market challenges have weakened domestic steel prices to unsustainable levels, placing our industry at serious risk,” said Andy Harshaw, chief executive officer, ArcelorMittal USA flat carbon. “Congress and the Administration must ensure that an effective trade enforcement regime is in place for steel going forward. “
“Our industry is experiencing an unprecedented volume of steel imports, fueled by unfair trade practices including currency manipulation,” said John Ferriola, Chairman, President and CEO of Nucor Corporation. It is critical that any new trade agreement include effective tools to fight back against a practice that has resulted in the loss of millions of American jobs and has slowed the U.S. economic recovery.”
Despite strong support, amendments to the TPA concerning currency manipulation were shot down in both the House and Senate committees. The Obama administration feared the inclusion would derail a Trans-Pacific Partnership agreement, making trade partners hesitant to face consequences should currencies weaken and central banks intervene to promote economic growth.
The American Iron and Steel Institute expressed their disappointment that the amendment was not included in the TPA bill.
“A number of our trading partners continue to intervene directly in foreign exchange markets to make their exports more competitive and to impose new barriers to imports from the U.S. That is why it is critical for the U.S. to negotiate strong and enforceable disciplines against the trade-distorting practice of currency manipulation in all new trade agreements and to provide a remedy to currency manipulation under our existing countervailing duty law, and why we strongly supported the Portman-Stabenow amendment to strengthen the currency negotiating objective in the TPA bill and the Schumer, Brown, Stabenow, Portman, Burr amendment to create a remedy against currency manipulation under the countervailing duty law. We are pleased the Schumer amendment was adopted but disappointed the Finance Committee did not pass the Portman-Stabenow amendment.”
The number of amendments and changes that legislation goes though before becoming law is staggering. AISI commented on the difficulty in predicting an outcome for the TPA.
“There are a couple of procedural issues in play here. One is that the Senate Finance Committee considered two types of trade bills together – the TPA bill, and the Customs Authorization Bill (which is what ENFORCE was in). The House won’t likely take the same strategy, so what may come out of the House Ways and Means Committee today will be different, and then what gets to the floor will be even more different! As such, it is hypothetical to speculate about the impact of the whole TPA bill in its current form – but we are pleased with the results on enforcement, currency and strengthening of the laws and are continuing to work to retain those provisions.”
AISI issued the following statement regarding the TPA.
“The improvements to our trade laws [passed by the Senate Finance Committee] have been a long time coming, and we are grateful to the provisions’ sponsors for working with the steel industry to ensure this critical language was included in the trade bill.
“We applaud Senators Portman, Brown, Burr, Casey, Coats and Bennet for their leadership in proposing legislation to improve the administration and enforcement of the antidumping and countervailing duty laws. Our industry continues to face a flood of imports coming into this country unfairly and at record levels, with finished imports taking the highest share of the U.S. market we have ever seen. If enacted into law, these provisions will ensure that our trade laws remain an effective tool for domestic companies and workers to use to remedy the injury caused by imports benefitting from foreign trade-distorting practices.”
SMU Note: New and/or proposed regulations and other government actions which may impact the steel industry will be one of the agenda items at our 5th Steel Summit Conference in Atlanta on September 1 & 2, 2015. Mark your calendars and plan on joining SMU in Atlanta.
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