Consuming Industries Ask: Is More of the Same the Right Prescription for America's Steel Producers?

The Consuming Industries Trade Action Coalition ("CITAC") calls on the new Administration to consider the effects of trade restrictions on downstream industries before resorting to extraordinary trade protection for US industries such as steel. Trade policies designed to protect a narrow group of US manufacturers from competition by foreign producers frequently have far-reaching negative consequences on a broad range of US consuming industries. Access to low-cost, high quality imports has been an important factor in the expanding US economy - closing the door on imports may protect a handful of companies in the short term, but it also has dire long-term consequences for our economy as a whole.

CITAC is a group of companies and associations representing America's consuming industries-those companies and millions of workers that rely on open markets for their raw materials and components. Our members include major producers and distributors of automobiles, housing and commercial buildings, wire and wire products, electronic equipment, heavy machinery, tires, food processing equipment, clothing and textile products, oil and gas drilling equipment and services, and many other products.

American companies today rely on global markets for their sources of supply. When trade restrictions are imposed, consuming industries often suffer because of lack of available supplies of raw materials, higher prices and longer lead times. CITAC's goal is to assure that where trade relief is implemented, it is provided with a minimum of disruption to US consuming industries.

The Steel Industry is a case in point. CITAC supports a strong US steel industry but does not support proposals for extraordinary trade protection for the US steel industry through such approaches as a "self-initiated" 201 proceeding, or handing over antidumping and countervailing duties to petitioners in those cases. The principal reason for CITAC's opposition to these proposals for protection is that they will not cure the ills of the US steel industry, but they will harm US consuming industries.

Time and again over the last three decades the steel industry has waged skillful and effective campaigns for special protection. These periodic episodes of protection have not restored the long-term economic viability of the steel industry or advanced its global competitiveness, and we have no reason to believe that a repeat dose of protection will be any more effective now than it has in the past.

A guiding principle in the formulation of trade policy should be "first, do no harm." We believe that protection for the steel industry will do much more harm than good because it will rob downstream industries of the raw materials they need to be competitive in their global markets. US companies rely on steel imports because US producers do not make enough steel or the right kinds of steel to satisfy US demand.

Major steel-consuming industries (heavy equipment, industrial machinery, construction and transportation equipment) employ more than eight million workers (over 40 times the number of steel workers in the US) who would suffer if access to steel imports were restricted. Steel consuming sectors will lose market share and jobs if they cannot get the products they need from competitive domestic and international suppliers.

We would be pleased to meet with policy makers in the new Administration to discuss ways to take into account the impact of trade policies on downstream US consuming industries. In particular, we would be happy to discuss ways we believe the steel industry in this country can be made more competitive without punishing downstream steel users and consuming industries.





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