Pennsylvania has a robust steel industry history, as we truly were and should again be the steel capital of the entire world. Steel from our commonwealth has built some of the most notable landmarks in our modern history from the locks of the Panama Canal, to the beams of the George Washington Bridge, to the foundations of the Empire State building. The value added because of the steel industry drove Pennsylvania’s industrial renaissance and with it, unmatched American economic prosperity. That’s because steel is foundational to economic dynamism as it is the primary raw component that creates the most durable and valuable assets in our society.
Today, that dynamism is threatened by the actions of foreign governments, which are outside the bounds of legitimate market competition.
Foreign countries are actively waging economic warfare against our nation in the form of predatory pricing in economic trade. More commonly known as “steel dumping,” foreign governments massively subsidize steel manufacturers in their respective nations; therefore allowing those manufacturers to price steel in the American economy well below market value and in many instances below the cost of production. This practice has been perpetuated by countries including: China, India, the Philippines, Saudi Arabia, South Korea, Taiwan, Thailand, Turkey, Ukraine, and Vietnam. International trade law is not being properly enforced and American manufacturers are paying the price for the federal government’s inaction. The harms of this inaction are definite, as according to the American Iron and Steel Institute there were 12,000 layoffs in 2015.
Currently, the overcapacity production of steel in China is four times the total capacity of the United States. The ONLY conceivable reason that the government of China would subsidize this gross over production is simple: their goal is to bankrupt our steel companies and dominate the international market. Please remember, the steel production capacity that exists in Pennsylvania today represents many decades of investment at the cost of untold billions of dollars. If we allow predatory practices by foreign competitors to shut down our plants, they will never re-open. Once domestic competition has been suppressed to the point of bankruptcy, American consumers will be at the mercy of an under-competitive market and thus, skyrocketing prices.
There are three main offenses that China is currently engaged in: First, they are illegally fixing prices. Second, they are engaging in cyber espionage to obtain trade secrets of our domestic steel producers. And third, they are frequently shipping steel to other countries that then send the steel to the United States to avoid tariffs and taxation, an illegal scheme called trans shipments. It is the responsibility of the United States Department of Commerce to enforce trade agreements by imposing antidumping penalties and countervailing duties when foreign governments subsidize a foreign competitor’s production. We urge the U.S. Department of Commerce to maintain China’s “non-market economy” status to preserve the ability of U.S. companies and workers to access domestic trade law remedies. This is particularly important because it is true and the dictatorship in Beijing should not be rewarded when its economy remains under the control of the central government, the Communist Party, and the People’s Liberation Army.
On the surface, the explosion in global steel capacity over the past ten years would indicate the world’s economy is growing at a staggering rate. Today, China has the capacity to produce one billion tons of steel a year. Ten years ago, the nation could produce only one tenth of their current capacity. Unfortunately, it’s more than supply and demand economics driving the growth; it’s what trade experts call a beggar-thy-neighbor policy. One country attempts to remedy its economic problems by worsening the economies of other countries. Worse yet, it’s government subsidization that’s paving their path to market dominance.
The Alliance for American Manufacturing says that overall imports from the nine countries in question more than doubled from 850,000 tons in 2010 to 1.8 million tons in 2012, a 113 percent increase, with South Korea accounting for half that amount. In that same time period, domestic industry operating margins have dropped from 13.6% to 9.8% with foreign imports often sold at hundreds of dollars per ton less than domestic oil country tubular goods.
This situation is uniquely critical for Pennsylvania as we can and should play a major role in both energy production and the manufacturing of the domestic oil country tubular goods.
The market for oil country tubular goods has expanded rapidly with the onset of drilling in the Marcellus Shale and other newly accessible gas and oil plays….