Economy
SMA Seeks Strong Infrastructure Plan, Trade Enforcement from Biden
Written by Tim Triplett
November 19, 2020
In an interview with Steel Market Update on Thursday, Philip Bell, president of the Steel Manufacturers Association in Washington, shared his thoughts on what the change of presidential administration means for the steel industry and SMA. Following is an edited transcript:
SMU: Will the change in administration next year change SMA’s mission?
Bell: As a nonpartisan organization, SMA was prepared for any outcome. We want to work with folks who want to promote the interests of domestic steelmakers. So, we are looking froward to working with President-elect Biden and his administration. We are also keeping a close eye on the Senate races in Georgia. That will play a large part in determining how much of his agenda the Biden administration can pursue.
As far as what SMA is working on, it doesn’t really change much. We are still here representing our members and supporting safe, sustainable steelmaking and a strong infrastructure program. We hope the Biden administration continues the current administration’s practice of strong trade law enforcement and keeping Section 232 in place.
SMU: Every new president says he will invest in infrastructure and create jobs, but it doesn’t seem to happen. Assuming the Republicans retain control of the Senate, I wonder if President Biden stands any better chance of getting funding for his plan?
Bell: There have been lots of big proclamations from both sides. We need infrastructure to not only repair bridges and roads and build hospitals and schools, but also to create jobs. For the economy to recover from COVID-19, I think a well-funded, long-term infrastructure package should be a centerpiece. It does have bipartisan support, and if we muster the political will to do this, we will be in good shape.
SMU: The steel industry has had President Trump’s ear with advisors like Dan DiMicco (former Nucor CEO) and Commerce Secretary Wilbur Ross (former head of the International Steel Group). Will your access to the White House suffer in the changeover?
Bell: I don’t think so. We will have a president who really understands the importance of domestic steel. Various elements of his “Build Back Better” plan incorporate products made by Americans for Americans, and that includes steel that is melted and poured here.
Looking at trade, I doubt there will be a significant change, at least not right away, for a couple of reasons. One, there needs to be a focus on COVID-19. Second, the infrastructure package will be a high priority. No one benefits by putting up roadblocks to infrastructure investment. Both sides of Congress need to seize the opportunity to show voters they can come together and compromise on a very important issue. Keep in mind that while the USW endorsed Biden, they are also among the strongest supporters of Section 232. I don’t think Section 232 can just go away with the stroke of a pen, which would disrupt markets and create surges in imports.
SMU: Certainly, President Biden will get pressure from steel consumers who argue that Section 232 raised their prices and ultimately the cost to consumers. With all the AD/CVD duties already in place, one could make a case that unfair imports from China can be controlled without Section 232. Don’t you think the debate will continue?
Bell: The debate will continue, but there are a couple points to note. We are not only concerned about China. Global overcapacity, dumping, countervailing duties, circumvention and evasion are occurring around the world. We see issues arising in Southeast Asia, subsidies in the EU and capacity expansion in places like India, as well.
What goes underreported is that if you actually look at the steel that’s subject to the Section 232 tariffs, it’s not that much. Brazil, Argentina and South Korea are subject to a quota. Mexico and Canada, our two largest trading partners, are not subject to the tariffs because of the USMCA passage. D.C.-based trade associations and law firms estimate that only about 20 percent of imported steel products are subject to the tariffs in the first place. If you add on top of that all the exclusions and exemptions that have been granted by the government, which represents millions of tons, you see that steel is readily available at market-based prices here in the U.S.
SMU: The Trump administration negotiated the USMCA, but the Biden administration will now have to implement it. Will Biden’s approach to relations with Mexico and Canada ease the process?
Bell: First, let me applaud President Trump for passage of the USMCA. It represents a needed modernization of NAFTA and it should serve as a template for other foreign trade agreements. I would assume Biden has good relationships with the governments in Canada and Mexico.
SMA just concluded a meeting with the North American Steel Trade Committee (NASTC). Industry representatives and government representatives from the three countries get together twice a year to discuss trilateral trade enforcement and ways to increase steel production and demand in the region. So, there is some structure in place that already shows the cooperation between the three countries. Almost 90 percent of our domestic steel exports go to Canada and Mexico. There is a lot of cross-border ownership. So, the cooperation is there. T
What I am proudest of is our low carbon footprint. We have the lowest CO2 emissions of any developed steel economy in the world. We need to make sure that our governments understand that, and we need to take steps to level the playing field and make sure all the steel consumed in this region meets the same environmental standards and low CO2 emissions that we have been accomplishing for decades.
SMU: Certainly, the approach to climate change is a big difference between the administrations. Biden’s infrastructure proposal includes more funding for green initiatives, such as wind and solar energy. We know that EAF steelmaking is environmentally friendly, but most people don’t. Will the new administration’s focus on the environment bring new scrutiny to the steel industry?
Bell: We are ready to respond because we have a tremendous story to tell. EPA data shows the U.S. EAF industry’s emissions are up to 75 percent lower than traditional steelmaking. EAF steelmaking is the cleanest and greenest in the world, and it is taking place right here in America. It is my hope that when the Biden administration rejoins the Paris Climate Accord, they will use our participation and influence to encourage countries like China and India to meet their professed carbon reduction targets. China and India are major contributors of global excess steel capacity, and the major contributors of CO2 emissions, and neither is participating in the Global Forum on Steel Excess Capacity to try to deal with the issue. Pressure needs to stay on them.
SMU: Does SMA support the carbon trading and carbon tax schemes gaining traction in other parts of the world?
Bell: Right now, with the pandemic, our economy is too fragile to be implementing carbon taxes. We need to be in stimulus mode, not taxation mode. This is why control of the Senate is so important. A Republican-controlled Senate will create a check and balance on just how far the Biden administration can go with some of the more progressive elements of the platform for the Green New Deal, such as carbon taxes and burdensome and unnecessary regulations. Let’s stay focused in infrastructure and stimulus right now. If you want to do a carbon tax, do it at the border so that it can level the playing field for steel that is often unfairly traded and finds its way to our shores, yet is made under some of the worst environmental standards in the world.
SMU: Do you view this change of administration as an opportunity to reset and start over?
Bell: Make no mistake, the Trump administration’s policies resulted in a net positive for domestic steel producers. Every change brings an opportunity to re-educate and reinforce. With a new administration, it is a golden opportunity for EAF steelmakers to show that they are a force for good in the world through lower CO2 emissions and the $10 billion they are investing to upgrade mills and invest in renewable energy. We are looking forward to it.
Tim Triplett
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