Today, Richard A. Robinson, president of Norfolk Iron and Metal and Chairman of the Metals Service Center Institute (MSCI) which represents both steel mills and service centers, told the Office of the US Trade Representative (USTR) that global steel oversupply is fueled by intentional actions by foreign governments and that, to address the issue, the US government must directly engage with US trading partners through negotiation. Robinson said USTR should make it a stated principle objective to target countries that use market distorting policies to inflate supply and should increase efforts to address currency manipulation.
“The disjunction between capacity and demand has been fueled in large part by intentional actions of foreign governments,” Robinson said. “In particular, China has, through various anti- competitive mechanisms such as massive state-sponsored subsidies, substantially increased its domestic steel industry in the last several years, including during a time of stagnant—and negative—growth in its own steel consumption.”
Robinson testified on behalf of MSCI at USTR hearing in Washington, D.C., arguing US government policy must ensure a healthy source of supply and a healthy customer base. Robinson noted MSCI member services centers supply the steel requirements of more than 300,000 downstream manufacturers and fabricators and that, collectively, service centers are the largest domestic customers of US mills, purchasing more than 30 percent of all carbon and more than 50 percent of all specialty steels produced and distributed in the United States.
“There is no question that the US steel industry has suffered from these developments, as measured by demand for carbon steel, which is reflected in service center shipments,” argued Robinson. “Today, MSCI member company shipments are only 65 percent of peak shipments just prior to the 2008 recession.”
In comments submitted to USTR in late March, MSCI argued US policymakers must “consider the impact of US trade policy on downstream US markets and US manufacturers, as well as domestic steel producers.” MSCI recommended the US government:
1) Engage with US trading partners directly to reduce global excess capacity through negotiation and make it a stated principle objective of US trade policy to target excess capacity in countries that increase capacity through market distorting policies;
2) Increase efforts to address currency manipulation; and
3) If the US government imposes additional tariffs on imported steel, avoid unintended damage to the US manufacturers that utilize steel by imposing a corresponding and offsetting tariff on steel-containing products identified by USTR in consultation with domestic steel consuming companies.
2) Increase efforts to address currency manipulation; and
3) If the US government imposes additional tariffs on imported steel, avoid unintended damage to the US manufacturers that utilize steel by imposing a corresponding and offsetting tariff on steel-containing products identified by USTR in consultation with domestic steel consuming companies.
“MSCI is a strong proponent of free and fair trade,” Robinson said in his testimony. “However, the effectiveness of trade agreements in promoting free and fair trade depends on vigorous monitoring of each party’s compliance and prompt and vigorous enforcement against violators.”