Views on Commerce National Security Investigation of Steel Imports Emerge During Hearing
A slew of steel industry executives urged Trump administration officials to take action against steel imports in its ongoing Section 232 investigation during a May 24 Commerce Department hearing, as foreign industry and government representatives pleaded for a more measured approach. Commerce Secretary Wilbur Ross during the hearing said that his department is working to conclude the investigation by the end of June, much sooner than the legal deadline of 270 days after the administration’s April 19 launch of the investigation, which would allow the administration to assess tariffs, quotas or other import restraints if the examination finds steel imports endanger national security (see 1704200029).
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Karl Tachelet, director of international affairs for EUROFER, which represents all steel production in the EU, noted that while the U.S. and EU should take action to reduce global steel overcapacity and balance global markets, EUROFER hasn’t considered measures such as the Section 232 investigation. He said defense considerations of the review should be narrowly tailored to focus on direct threats -- specific steel products needed for specific users and necessary for particular national security reasons. “We do not believe that restrictive unilateral action based on national security will allow for lasting solutions we all need,” Tachelet said. Many steel subsectors identified by the Department of Homeland Security as critical for infrastructural applications have little or no relevance to national security, he said.
Furthermore, the administration should consider factors potentially indicating that import constraints aren’t needed, such as whether crucial inputs can be sourced from U.S. allies, like the EU, Tachelet said. He offered to issue questionnaires to U.S. and foreign steel producers if Commerce doesn’t have adequate information to complete its analysis.
Chinese Ministry of Commerce First Secretary Yu Gu said there's no evidence showing Chinese steel imports impact U.S. national security, and that the U.S. has adequate domestic supply to fulfill such needs. Yu also noted Defense Department domestic procurement requirements applying to all steel used in critical national security systems. The U.S. imports steel from 100 countries and territories, and the top foreign source country, Canada, accounts for only 17 percent of U.S. steel imports, he said. Gu also said that the volume of low-priced Chinese steel imports primarily bought by distributors and used in processing centers is down 64 percent since September 2015.
But Nucor CEO John Ferriola said China is at the “heart” of the global steel capacity crisis, and that that country’s steel sector exports more product than the capacity of all NAFTA countries combined. “In a time of national crisis, the U.S. cannot afford to rely on imported steel slabs from foreign suppliers like China and Russia,” he said. “National security begins with primary steelmaking. Broad-based action is the only way to target all imports and also address the root cause of the current crisis: Chronic overcapacity in countries that do not operate on a market basis.”
Imports of oil country tubular goods and large diameter line pipe were among the products executives cited as concerns. David Rintoul, president of U.S. Steel’s Tubular Products division, argued that domestic OCTG production protects national security through enabling a reliable and secure supply of domestic energy. Imports currently compose 50 percent of the U.S. OCTG market, driven in the last several years by Chinese production and more recently by South Korean exports. He claimed that China and South Korea have made OCTG exports a matter for their national security, subsidizing industries and providing as much regulatory support as needed. Very little demand for those goods exists in both countries, and the influx of those imports have resulted in the shuttering of 50 percent of U.S. mills in that sector since 2014, Rintoul said.
Dumped and subsidized imports of large diameter line pipe from China, South Korea, Japan and Turkey are hurting the U.S. as well, said John Stupp, CEO of infrastructure development company Stupp Bros., which manufactures products for the Air Force and Navy as well as “specific products for U.S. strategic defense,” such as steel bridges and munitions. Dumping is threatening Stupp’s ability to continue, he said. Imports from Japan have doubled, and South Korea now accounts for well over 20 percent of the overall U.S. large diameter line pipe market, Stupp said. “This is not just a China problem.”
During the hearing, Rep. Marcy Kaptur, D-Ohio, implored Commerce to take “urgent action” to help save modernized steel manufacturing in the U.S., which can churn out a ton of steel per hour, she said. She suggested Commerce begin taking action on tubular piping, pointing to South Korea, China, Russia, India and Vietnam as major players largely responsible for an influx of U.S. imports of those products. She suggested Commerce employ “immediate retaliatory means” to counteract duty circumvention employed by those actors and any “state-directed economy that continues to harm production in our country.”