April 27, 2016

Robinson: Service Centers Hurt by Unfair Trade

Unfair trade practices by foreign suppliers impact domestic service centers, as well as mills, said Richard Robinson, chairman of the Metals Service Center Institute, in recent testimony for the Office of the U.S. Trade Representative. In comments submitted to the USTR in late March, MSCI argued that U.S. policymakers must “consider the impact of U.S. trade policy on downstream U.S. markets and U.S. manufacturers, as well as domestic steel producers.”

The USTR should negotiate with these trading partners to protest their unfair trade practices and currency manipulation, said Robinson, president of Norfolk Iron and Metal, Norfolk, Neb. “The disjunction between capacity and demand has been fueled in large part by intentional actions of foreign governments,” Robinson said. “China has, through various anti-competitive mechanisms such as massive state-sponsored subsidies, substantially increased its domestic steel industry in the last several years during a time of stagnant—and negative—growth in its own steel consumption.”

Arguing that government policy must ensure a healthy source of supply and a healthy customer base, Robinson told the trade representatives that MSCI member service centers supply the steel requirements of more than 300,000 downstream manufacturers and fabricators. Service centers are the largest domestic customers of U.S. 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 the U.S. steel industry has suffered from these developments, as measured by demand for carbon steel, which is reflected in service center shipments. Today, MSCI member company shipments are only 65 percent of peak shipments just prior to the 2008 recession,” Robinson testified.

MSCI recommends that the U.S. government:

• Engage with U.S. trading partners directly to reduce global excess capacity through negotiation and make it a stated principle objective of U.S. trade policy to target excess capacity in countries that increase capacity through market-distorting policies;

• Increase efforts to address currency manipulation; and

• If the U.S. government imposes additional tariffs on imported steel, avoid unintended damage to U.S. manufacturers that utilize steel by imposing a corresponding and offsetting tariff on steel-containing products identified by the 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.”

In addition to its comments to the USTR, MSCI has joined Manufacturers for Trade Enforcement, a coalition of leading U.S. industry groups opposed to the automatic granting of market economy status for China. Through this coalition, MSCI will advocate for measures to address global steel oversupply.


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Tuesday, October 17, 2017