AISI Op-Ed: Trade remedy legislation is long overdue

The Chinese government is also expanding its unfair trade practices beyond its borders by subsidizing its steel producers in building additional export-oriented steelmaking capacity outside of China — particularly in Southeast Asian countries like Indonesia and Vietnam. From 2010 to 2020, crude steel capacity in the Association of Southeast Asian Nations (ASEAN) region doubled, and significant additional capacity expansion is underway, over 80% of which is the result of Chinese cross-border investments.

These cross-border subsidies are helping build new sources of unfair trade that will follow the China model, putting American steel companies, our supply chain, our workers, and the 2 million jobs the steel industry supports at risk.

While China is the largest and best-known perpetrator of these market-distorting practices, it is not the only country pursuing such policies. India is undertaking its own government-driven steel capacity expansion program that is forecast to make that country one of the leading contributors to further increases in excess steel capacity, along with the ASEAN region and the Middle East.

In order to address these growing challenges, we need more effective trade laws. Unfortunately, US antidumping and countervailing duty laws have not been updated since 2015. As a result, they have not kept up with the efforts of many entities to circumvent and evade US trade enforcement measures.

Furthermore, cross-border or “transnational” subsidies like those being used to subsidize offshore Chinese steel production via its “Belt and Road Initiative” are not clearly addressed by our existing trade remedy laws. This means American steel producers do not have a reliable remedy to address the resulting injury from imports benefiting from these subsidies.

AISI, our member companies, and industry partners have been working with Congress on a solution. The “Leveling the Playing Field 2.0 Act” has been introduced in the House by Reps. Terri Sewell (D-Ala.) and Rep. Beth Van Duyne (R-Texas), and in the Senate by Sens. Sherrod Brown (D-Ohio) and Todd Young (R-Ind.). This legislation is critical to addressing the latest efforts by foreign exporters to evade US trade laws through a variety of schemes, including those subsidies that have been enabled by China’s Belt and Road Initiative, and will help US industries fight back with new tools to crack down on repeat offenders and serial trade cheaters.

This legislation is critical to addressing the latest efforts by foreign exporters to evade US trade laws
through a variety of schemes.

Kevin Dempsey
President and CEO of the American Iron and Steel Institute

Specifically, the bill provides the Commerce Department with the authority to use the countervailing duty law to address the growing problem of cross-border subsidies. It would also address the current lack of statutory deadlines for anti-circumvention inquiries, which results in significant delays in industry efforts to obtain relief against dumped and subsidized imports that are routed through third countries for additional minor processing. In addition, the bill makes needed revisions to existing law to ensure the ability of the Commerce Department to make “particular market situation” adjustments in antidumping investigations in all instances where home market costs or prices have been distorted.

The Leveling the Playing Field 2.0 Act has strong bipartisan support in Congress, with 68 House cosponsors, including 37 Republicans and 31 Democrats, and 19 Senate cosponsors, consisting of 10 Republicans and nine Democrats. In addition, last December, the House Select Committee on the Chinese Communist Party released a detailed report that provided several recommendations to address strategic competition between the US and China. Among these recommendations was the enactment of the Leveling the Playing Field 2.0 Act “to update US trade laws by addressing issues such as cross-border subsidies, simplifying investigations into circumvention and repeated product-related inquiries, and strengthening remedies to minimize [People’s Republic of China] predatory economic practices.”

There have been some recent congressional expressions of interest in legislation to address the challenges we face from China, especially during this election season. But to date, one key piece that has been missing is concrete action to update our trade laws to address the latest forms of unfair trade like those mentioned above.

Through our direct advocacy outreach, AISI and the American steel industry continue to work with congressional leadership to request that any legislative package on China addresses the antagonistic trade practices that destroy American jobs and industries. Readers of Steel Market Update should urge their respective members of Congress to support the Leveling the Playing Field 2.0 legislation and send a strong signal that we will not stand by while China and other countries continue to take steps to undermine fair trade and threaten the health of the American steel industry.

Editor’s note

SMU welcomes opinions from across the steel industry. We’re happy to share the thoughts above from Kevin Dempsey, president and CEO of the American Iron and Steel Institute (AISI). If you have an opinion you’d like to express to the broader steel community, please contact us at info@steelmarketupdate.com.