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Manufacturing Companies Are Suffering
Steel Shortages, Quality Problems, Prices Are Concern
Background:
The Department of Commerce (DoC) and International Trade Commission (ITC) will conduct sunset reviews — mandated by law — of anti-dumping and countervailing duty (AD/CVD) orders on steel products that were put into place 5 years ago. A decision will be made whether to terminate, suspend, or continue the duties.
- An ITC hearing on March 2, 2005 will address hot-rolled steel from Brazil, Japan, and Russia.
- Another ITC hearting will take place on April 26, 2005 on stainless steel sheet and strip from France, Germany, Italy, Japan, Korea, Mexico, Taiwan, and the United Kingdom.
Knollenberg Resolution:
This resolution requests the DoC and the ITC to take into account, and report on, the impact of the AD/CVD regimes on domestic steel-consuming manufacturers and the overall U.S. economy.
- The DoC and the ITC have discretion to take this information into account.
- However, the Department of Commerce and ITC have not traditionally done so in the past, essentially stacking the deck in the sunset review process in favor of keeping the AD/CVD orders in place despite clear evidence that circumstances have changed in the past five years.
A Distorted U.S. Steel Market is Hurting Domestic Consumers — Lifting Specific Duties Will Help
- Despite the removal of Section 201 Steel Safeguard tariffs, domestic steel consumers are suffering from a distorted market for steel. Suspending or lifting specific AD/CVD orders that are no longer necessary will remove some distortion in the market.
- The distortion causes decreased availability, reduced quality, delayed deliveries, and artificially high steel prices, higher than anywhere else in the world (e.g., the January 2005 price of hot-rolled steel in the U.S. was $695/ton, on the world spot market $575/ton, and in China $510/ton).
- The artificially high price of steel has contributed significantly to five recent bankruptcies of auto parts suppliers and job losses throughout the country.
Steel Companies are Doing Very Well — Removing Specific Duties Will Not Hurt Them
- Domestic steel producers, on the other hand, noted record earnings in 2004 (including increases as high as 45% over 2003) and analysts predict a strong 2005 for the industry.
- If the AD/CVD duties for specific types of steel were removed, market conditions would become less distorted and steel producers may see some extremely high prices they charge now drop to just very high. A total of 188 AD/CVD orders on imported steel are currently in place.
- If domestic steel consumers do not get relief from current market conditions, the customer base for domestic steel producers will continue to shrink, ultimately harming the steel industry.
Economic Policy Cannot Be Made in a Vacuum
- When making economic decisions, the full effects of those decisions must be considered.
- AD/CVD regimes affect more than just the domestic steel industry and the foreign steel industry. They affect domestic steel consumers and the overall economy as well.
- It is a matter of fundamental fairness that the impact of the duties on steel consumers and the overall economy should be considered as part of the sunset review process.
What the Knollenberg Resolution IS NOT about:
- Arguing that AD/CVD laws are not legitimate
Co-Sponsor H.Res. 84
We Need Fundamental Fairness in the Sunset Review Process
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