Steel Users Speak Out

Ms. Sarah E. Aker
Office of the Assistant Secretary for Manufacturing and Services
Department of Commerce
Room 3832
1401 Constitution Avenue
Washington, DC, 20230

Sent Via Electronic Mail

Dear Ms. Aker:

This letter is in response to the Department of Commerce’s Notice of Request for Written Comments regarding competitiveness issues and the state of manufacturing in the United States. As the Office of Manufacturing and Services prepares to convene the first Interagency Working Group on Manufacturing, the Consuming Industries Trade Action Coalition (CITAC) Steel Task Force hopes you will consider our comments on the impact of government policy on supply and price of a raw material critical to the success of the U.S. manufacturing economy.

The CITAC Steel Task Force is comprised of a cross-section of the American manufacturing economy — automotive, aerospace, heavy equipment, home appliances, and construction to name a few — employing some 12 million people. These industries have one thing in common — they all need access to adequate supplies of globally priced raw materials.

Despite the removal of Section 201 Steel Safeguard tariffs in December 2003, domestic steel consumers continue to experience market disruptions in the form of unpredictable lead times, unpredictable quality and unpredictable prices. This in turn makes it extremely difficult for U.S.-based steel-consuming industries to be globally competitive. In fact, businesses in the United States that rely on steel products are suffering significant hardships, including job losses, plant closings, and bankruptcies. Many of these businesses have cited distortions in the steel market as a direct cause of their hardships. These problems are due in significant part to the international trade restrictions placed on imported steel by antidumping and countervailing duty actions in the United States.

Steel consumers need a strong domestic steel industry and are delighted at the industry’s healthy status. However, they also need steel imports because the domestic industry cannot produce enough steel to meet domestic demand. Yet U. S. economic and trade policy continues to favor protection for the domestic steel industry, even when unnecessary, dampening the market for imports and robbing U.S. steel users of their international competitiveness. If domestic steel consumers do not get relief from current market conditions, the customer base for domestic steel producers will continue to shrink, with more and more manufacturing jobs moving offshore, ultimately harming the steel producing industry. We believe these factors must be taken into account in the development of economic and trade policy in order to ensure that government actions intended to benefit one sector of the economy do not cause excessive damage to other sectors, as we believe is occurring now.

Access to an adequate, stable supply of competitive raw material is critical to the ability of U.S.-based manufacturers to compete globally. Making sure that our trade laws protect those who need it without causing unintended "collateral damage" to other parts of the economy would help provide that access. There are many reasons for the current imbalance in the U.S. steel market, but at least some of them are related to government trade policies that disadvantage steel consumers. U. S. government policy should strike a balance between providing protection for industries facing unfair foreign competition and ensuring that the protection does not create more economic harm than good.

Some specific recommendations on behalf of steel consumers include:

• Giving industrial consumers of a product equal standing with domestic producers, foreign producers, and importers in trade remedy cases;
  
  
• Requiring U. S. trade laws to include an analysis of the total impact of any decision on the overall economy, including any "downstream" impacts, before implementing any trade remedy;
  
  
• Barring trade remedies against imported products that are not made in the U.S., or are in "short supply;"
  
  
• Providing for an expeditious review mechanism when "changed circumstances" demonstrate the need to alleviate unintended downstream consequences of trade remedies; and
  
  
• Repealing the Byrd Amendment, which distorts the operation of the antidumping and countervailing duty laws and subjects American exports to retaliation.
  
  

We appreciate the opportunity to provide comments to the Interagency Working Group on Manufacturing, and look forward to continued progress in the implementation of the Department’s Manufacturing Initiative.

Sincerely,

Executive Director
CITAC Steel Task Force