Trade Talk Kicks Off Steel Summit in Atlanta

Leibowitz, an international trade attorney, started his presentation with a recap of the historical precedence of trade cases. The current 2016 cases are the eighth set in the last several decades that included trigger price mechanism, VRA, and safeguard measures.

The current problem driving the proliferation of trade suits, said Leibowitz, is the global overcapacity of steel. In 2000 China produced slightly more steel than the U.S.; today it produces eight times the volume. China’s production exceeds its domestic demand and the rest is exported globally often at what is perceived as below fair market pricing.

The most prevalent trade remedies used by the U.S. steel industry are antidumping and countervailing investigations. The AD/CVD cases have three general phases: investigation, order (or not), and administrative review. An administrative review can be requested by parties on an annual basis and every five years a sunset review is conducted to evaluate whether the duties assessed should be continued or lifted.

AD/CVD duties seek to restrict the import of products due to the additional cost. It is an imperfect system that can be bypassed by shipping products through other countries. In some cases, if respondents in a case are confident of a refund following an administrative review, they will continue to bring in the product. In an administrative review, a decision of 3 for and 3 against goes in favor of the petitioner.

Leibowitz stressed that dumping duties are not actually duties, but are cash deposit rates that could be higher or lower than published. The U.S. is the only country in the world where the duty is not the duty, he said.

Leibowitz noted that importers do not dump products they just buy them. The measurement of dumping is whether the product is sold for less than it can be sold or produced in the market of origin. If the importer is unaware of what the reference price is, he is on the hook for the charges. If the importer is a small company that receives a large bill for duties it can result in bankruptcy or liquidation of the business.

Restriction of imports can affect manufacturers who can no longer source foreign steel. The domestic price of steel rises in the short run due to the decrease in supply. The manufacturer can generally manage for a few weeks but if steel prices remain elevated the manufacturer may be faced with lower profits or the choice of importing steel from a new source or moving manufacturing out of the U.S.

The issue of trade is made into a “morality play” by use of phrases like “illegal dumping,” said Leibowitz. Dumping is not illegal. Selling below the competitor’s price is called competition and is not predatory behavior. Trade disputes are issues to be discussed rather than litigated, suggests Leibowitz.