Economy

U.S. Steelmakers: ‘We’re Not Protectionist’

August 6, 2017

In their pursuit of free and fair trade, U.S. steelmakers are often called protectionist—a label they increasingly resent.

Steel industry trade groups, including the American Iron and Steel Institute and the Steel Manufacturers Association, have urged the Trump administration to take a harder stance on steel imports. Trade action, including new tariffs or quotas under the now-delayed Section 232, are necessary to counter the unfair advantage held by foreign competitors who are subsidized by their governments, they say. Others in the supply chain contend that restricting steel imports on the grounds they pose a threat to national security is simply a ploy to give domestic steelmakers an opportunity to raise prices. Some even call the domestic steel companies hypocritical in their appeals for more free trade globally while supporting more trade restrictions at home.

In a letter to Steel Market Update, an executive from a major steel mill wrote: “Now that the dust is settling and this administration once again swung and missed (see health care, infrastructure, corporate tax reform), what hasn’t changed is the amount of unfairly traded imports that have enter the United States. Government subsidized steel and illegal circumvention are obvious and irrefutable. I am very sensitive that the steel industry gets accused of wanting protection, or basically asking for something for nothing. In [my company’s] case, that has never been the truth. All we have ever asked for is a level playing field and, for a decade in a row, we don’t have it. Here’s a few examples. The ratio of U.S. imports to exported tons for Russia is 296:1, for Turkey 189:1, for Korea 132:1. We have raw materials, we have infrastructure, we have talent, we have a mature industry. These numbers were only achieved one way and it was not free trade.”

In a July 31 commentary by Commerce Secretary Wilbur Ross, he defended the U.S. steel industry and the administration’s case for trade action, arguing that free trade must be a two-way street. Following are excerpts:

“Many governments across the globe have pursued policies that put American workers and businesses at a disadvantage. For these governments, President Trump and his administration have a clear message: It is time to rebalance your trade policies so that they are fair, free and reciprocal,” Ross wrote.

Other nations express a commitment to free markets while criticizing the U.S. for what they characterize as a protectionist stance, yet they continue to engage in unfair trading practices, Ross said, calling them “protectionists dressed in free-market clothing.”

He outlined the many quotas, tariffs and subsidies enacted by China and the EU nations that have contributed to a nearly $494 billion trade deficit. “Until we make better deals with our trading partners, we will never know precisely how much of our deficit in goods is due to such trickery,” Ross said. “Responding to such actions with trade remedies is not protectionist.”

Consistent with WTO rules, the U.S. has since Jan. 20 brought 54 trade-remedy actions—antidumping and countervailing duty investigations—compared with 40 brought during the same period last year. The U.S. currently has 403 outstanding orders against 42 countries. “Unfortunately, in its annual reports, the WTO consistently casts the increase of trade enforcement cases as evidence of protectionism by the countries lodging the complaints. Apparently, the possibility never occurs to the WTO that there are more trade cases because there are more trade abuses,” Ross wrote.

“The WTO should protect free and fair trade among nations, not attack those trade remedies necessary to ensure a level playing field. Defending U.S. workers and businesses against this onslaught should not be mislabeled as protectionism. Insisting on fair trade is the best way to ensure the long-term strength of the international trading system,” he concluded.