Raul Gutierrez, co-CEO of Monterrey, Mexico-based Deacero, wrote an editorial in the Houston Chronicle Saturday, slamming the recent rebar trade case against his company and urging the US to allow for more diplomatic solutions to trade cases with its NAFTA partner. The letter is as follows:
Earlier this year, the leaders of the United States, Mexico and Canada met to mark the 20th anniversary of the North American Free Trade Agreement and to reaffirm the importance of NAFTA in building prosperity in the three nations. Unfortunately, the promise of NAFTA is not being fulfilled. Far from it. Rather than celebrating and encouraging the free flow of commerce, two of America's most politically favored sectors - steel and sugar - have decided to file anti-dumping actions against Mexican businesses. The results could be needlessly strained relations between our two countries and harm to both our economies.
I know the steel case well because my company is a target. Our firm was started 52 years ago in Monterrey by my father. In the beginning, we had just 10 employees. Now we have 7,200, including about 700 in the United States, where we have factories in Houston and Poplar Bluff, Mo. We're proud of building a family-owned business in Mexico in the face of global competition, and, on a recent trip to the US, I was surprised and pleased that so many Hispanic-Americans are proud of our accomplishments as well.
Among other steel products, we make reinforcing bar, or "rebar," a key ingredient in construction. Some 89 percent of the rebar used in the US is manufactured in the US; imports from Mexico constitute just 4 percent.
Counting all steel products, trade statistics show that the US in 2013 ran a surplus with Mexico of about 1 million tons. Another way of saying this is that Mexicans bought $2.7 billion more US-produced steel than Americans bought Mexican-produced steel.
You would think, then, that US steel producers would be pretty happy. They've got a big surplus, and they control about nine-tenths of the rebar market. Instead, they have filed a complaint with the US International Trade Commission claiming that we are "dumping" - or selling steel at too low a price in the United States.
Forget for a second the weirdness of a complaint that something is being sold too cheaply to America's homebuilders and commercial real estate developers. (Wouldn't lower prices for materials mean that more Americans can afford new homes and thus more homes would get built and more construction workers employed?)
Forget also that the claim itself does not come close to meeting the standards for an anti-dumping case.
What is truly outrageous is the way the dumping claim violates the spirit of US-Mexican cooperation at the heart of our bipartisan free trade agreement, which was conceived in a Republican administration and enacted in a Democratic one.
My company will have to spend thousands, and probably millions, of dollars to defend itself against this specious action. In the end, many Mexicans may lose their jobs - all because some companies want more than the 89 percent market share they already have.
Perhaps these US companies should not be blamed. For them, it is only business. But for America's policy makers - and America's citizens as a whole - the relationship with Mexico, which has national security, cultural and even moral implications, should be much more.
That is why I was particularly dismayed by a letter that was sent recently to US Commerce Secretary Penny Pritzker by 31 US senators, including many who have been strong proponents of free trade, such as Republican Sens. John Cornyn of Texas and Dan Coats of Indiana, home of Purdue University, where my five brothers and I got our degrees. And I frankly could not believe my eyes when I saw Sen. Rob Portman, R-Ohio, a former US trade representative and free-market advocate, among the signers.
The letter backed the US companies, stating, "It is essential that we do everything that we can to prevent unfairly traded imports from negatively impacting good-paying American jobs, especially in these challenging times." The claim of unfairness is not only flat wrong; it is extremely short-sighted.
Steel represents 40 percent of the dumping cases before the International Trade Commission. That is, as a US Commerce Department official said last week, "too many cases." Certainly, there will be disagreements, but the way to resolve them is not through the nuclear bomb of dumping actions but rather through negotiations between friends and partners.
And steel is not alone. In late March, US sugar companies filed a petition asking for duties on Mexican sugar because they are allegedly selling their product at too low a price. No wonder, the Financial Times said the other day that the US actions "have led to a flare-up in trade tensions between the North American neighbors."
There is a simple way to douse the flames. Let's sit down and settle our differences. Let's talk first and litigate only in extreme cases. The Mexican rebar industry is willing to find common ground with US producers and the US government. This approach - which would result in what is called a "suspension agreement," or a deal satisfying both sides - is far less destructive to the US-Mexican relationship than dumping actions.