Why New Restraints on Steel Imports Are Not the Answer

1. Because They Do More Harm Than Good

American steel consumers - many thousands of metalworking companies, manufacturers of machines and conveyances, and others serving diverse markets - must compete globally, and therefore must have access to steel that is internationally competitive in quality and price. Restraints on steel imports deal these steel-using manufacturers a double whammy: (1) increased raw material costs; and (2) greater competition from abroad for the products they make. There are more than 50 American workers in steel-consuming industries for every steelworker. Steel-using jobs are threatened when trade restrictions cause work to leave the country for foreign destinations. In fact, a CITAC Foundation study finds that H.R. 808 (which contains quotas on steel imports and a steel surtax) could cost nine jobs in steel-using industries for every single job it protects in the steel industry. Also, H.R. 808 would cost American taxpayers $14.5 billion over five years. The cure is worse than the disease.

2. Because They Don't Address the Problem

We need a strong and vigorously competitive domestic steel industry, but restraints on steel imports will not make U.S. producers stronger or more competitive. Thirty years of protectionism have amply demonstrated this. Steel imports are the result, not the cause, of certain integrated mills' inability to compete internationally. (The mini-mills are quite profitable and account for about half of all U.S. steel production.)

The root cause of the integrated producers' woes are high energy and raw material costs, poor productivity, unfortunate management decisions, outdated work rules and technology, and other factors -- not low-priced imports. (For example, "legacy costs" for retiree health benefits add nearly $30 per ton to integrated producers' costs.) Indeed, for major products, U.S. steelmakers are actually underselling imports. The recently published U.S. market price for hot-rolled sheet was $240 per net ton. The import value (from the Census Bureau) was $261 per ton for the same product. For cold-rolled the spread was $320 (U.S.) vs. $392 (import); and for hot-dipped galvanized, $331 (U.S.) vs. $426 (import). How can foreign sheet products, coming in at higher prices, be hurting U.S. producer profits?

3. Because Steel Imports Are Essential

Since domestic steelmakers can supply only about 75-80 percent of the nation's demand for steel, imports are not optional. They are a necessity for the well being of our industrial economy. Quality and availability, as well as price, are reasons why steel is imported. In fact, U.S. steelmakers themselves import foreign steel, and account for about 30 percent of all steel imports.

4. Because Adequate Protection Already Exists

Steel is one of America's most protected industries. Antidumping and countervailing duty laws, created expressly for the steel industry, are already in place. In fact, more than 50 percent of steel imports are currently covered by antidumping actions, and nearly every major steel producer in the world has been sued under these laws. Dumped and otherwise unfairly traded steel is not the issue. We support the strong enforcement of existing trade laws. Unfortunately, the harmful new trade restrictions proposed by the steel industry would affect fairly traded as well as unfairly traded steel.

5. Because New Trade Restraints Would Threaten America's Relationships

The quota provisions of H.R. 808 are a direct violation of our WTO obligations, and have already caused concern among many of our trading partners. These and other arbitrary trade restraints on steel could produce damaging retaliation by the international community, and threaten future trade agreements, to the ultimate detriment of American consumers.

Accordingly, CITAC Proposes That Trade Policymakers:

  • If you are not a co-sponsor of H.R. 808/S. 957, do not become one. If you are a co-sponsor of H.R. 808/S. 957 and cannot drop off the bill, agree not to sign a discharge petition.
  • Give consumers a voice in the steel policy formulation by including consumers in hearings and meetings directed at steel policy making, including the ITC Section 201 investigation and hearing on H.R. 808/S. 957.
  • Refuse to impose more quotas or tariffs on top of the existing protective "umbrella" of import restrictions already in place on major steel products.
  • Ensure unrestricted availability of imports of any steel products that are not available from U.S. suppliers by including effective short supply provisions in U.S. law.



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