Steel Industry, Workers Urge Commerce Department to Stop Dumping of Foreign Steel
American steel producers and the United Steelworkers (USW) are working together to stop foreign “dumping” of seamless tubes, or oil country tubular goods (OCTG), which are used in the gas and oil industry. Dumping is the practice of exporting products at a subsidized below-market price, in many cases as much as 30 percent below. This practice has been perpetuated by countries including India, the Philippines, Saudi Arabia, South Korea, Taiwan, Thailand, Turkey, Ukraine, and Vietnam. International trade law is not being properly enforced and it is American manufacturers that will pay the price for the federal government’s inaction. The steel industry is correct to be concerned; 10,000 American steelmaking jobs were lost in 2008 because of a similar practice by China.
It is the responsibility of the United States Department of Commerce to enforce trade agreements by imposing antidumping duties and countervailing duties when its government subsidizes a foreign competitor’s production.
“We actually won that fight (with China), but by the time it was over we already lost the jobs at home,” said Chris Masciantonio, General Manager for Government Affairs at US Steel and co-chair of the PA Steel Alliance. “If we lose this one, it could become the model for cheating in the future.”
On the surface, the explosion in global steel capacity over the past ten years would indicate the world’s economy is growing at a staggering rate. China alone has the capacity today to produce one billion tons of steel a year. Ten years ago, it could produce a tenth of that. But it’s more than a supply and demand policy driving the growth; it’s what trade experts call a beggar-thy-neighbor policy. One country attempts to remedy its economic problems by worsening the economies of other countries. In short, some countries dump their products overseas by selling below production costs or below market prices in their home countries.
“A lot of nationally driven businesses rely on this practice of unloading product overseas so they don’t undermine stability at home,” said Terence P. Stewart, a trade lawyer with the Washington D.C. firm of Stewart and Stewart. “You keep people working and strengthen internal and national security. The duties aim to bring the goods back to a fair market value.
In July of 2013, US Steel and other American steel producers petitioned the Department of Commerce to investigate dumping by nine countries; they won only a minimal victory. In February, the department imposed high duties on India, and small levies on other nations who are mostly smaller producers. The biggest offender, South Korea, skirted any penalties with the department, saying that it lacked the evidence to take action. The investigation continues and a decision is expected in early July.*
The Alliance for American Manufacturing says that overall imports from the nine countries in question more than doubled from 850,000 tons in 2010 to 1.8 million in 2012, a 113 percent increase, with South Korea accounting for half that amount. In that time period, domestic industry operating margins have dropped from 13.6% to 9.8% with foreign imports often sold at hundreds of dollars per ton less than domestic OCTG products.
A spokesman for the United Steelworkers said that one positive to take from the latest trade fight is that it has put the workers and management on common ground. “Dumping weakens our position in contract negotiations because it weakens the industry,” said USW spokesman Tony Montana. “We are fully behind management on this.”
The market for OCTG has expanded rapidly with the onset of drilling in the Marcellus Shale and other newly accessible gas and oil plays. This makes business leaders doubly concerned that the OCTG dumping is undermining America’s long sought after and now attainable goal of energy independence.
“We’re simply exchanging one form of dependence for another if foreign energy is replaced by a domestic energy infrastructure built with products from other parts of the world,” said David N. Taylor, Executive Director of the Pennsylvania Manufacturers’ Association.
America is losing jobs today, and needs to pursue global cheaters with a determination spirited by former President Ronald Reagan, who said: “We will vigorously pursue our policy of promoting free and open markets in this country and around the world. We will insist that all nations face up to their responsibilities of preserving and enhancing free trade everywhere. But let no one mistake our resolve to oppose any and all unfair trading practices.”
In anticipation of the July decision, the Alliance, the producers, and the USW are holding a series of rallies around the country. The first was held in Lorain, Ohio on Monday, May 5, where US Steel has an oil country tubing plant. Other planned rallies include Granite City, Illinois on May 16, and June 16 in Fairfield, Alabama. Dates will be announced for upcoming rallies in McKeesport, PA and Longview, Texas.
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*Separately, the department did maintain anti-dumping duties on oil and natural gas pipe products from China. The action was first imposed in 2009, but it was reviewed again because of loopholes used to ship pipe to the United States by third-party countries. About 2 million tons of the Chinese pipe, worth about $2.7 billion, were sold in the United States in 2008.