04.14.16

SCHUMER: CHINESE OVERPRODUCTION IS DEVASTATING U.S. STEEL PRODUCERS; HEAVILY-SUBSIDIZED CHINESE PRODUCTS ARE FLOODING AMERICAN & GLOBAL MARKETS, PUTTING JOBS IN HARMS WAY AT STEEL COMPANIES, LIKE KLEIN STEEL, WHICH HAS FACILITIES IN BUFFALO, ROCHESTER & ALBANY; URGES ADMINISTRATION TO STOP CHINA FROM UNDERCUTTING NYS STEEL

Schumer Says Administration’s U.S. Trade Representative (USTR) & Department of Commerce Need To Press Chinese Officials To Cut Their Large Steel Export Subsidies, Which Cause Artificially Cheap Steel & Aluminum To Flood U.S. Market, Putting Jobs At NY Companies At Risk

Schumer Also Calls on USTR & Dept. of Commerce to Implement & Effectively Enforce Current Trade Laws, Like The ‘Level Playing Field Act,’ Which Should Be Used to Better Protect US Companies 

Schumer To Feds: Stop China From Liquefying NYS Steel & Aluminum Industry  

U.S. Senator Charles E. Schumer today urged the Administration’s Office of the United States Trade Representative (USTR) and the U.S. Department of Commerce to press China on its steel and aluminum overproduction, which is caused by large government subsidies. Schumer says these subsidies violate our trade rules and threaten the U.S. industry and Upstate NY manufacturers like Klein Steel,  which is headquartered in Rochester and has locations in Buffalo and Albany, and ‎relies on raw U.S.-produced steel‎ to create its products. Between these three facilities, it employs roughly 170 people in Upstate NY. Schumer explained that, currently, China’s government is providing massive subsidies to its steel and aluminum sectors, which are primarily state-owned, in order to export high volumes of steel and aluminum. These steel and aluminum products are sold at artificially low prices in the U.S. and markets where U.S. producers export, putting jobs at local companies at risk. In addition, Schumer urged the USTR and Dept. of Commerce to implement and enforce previous laws that he has already supported, like the Level The Playing Field Act, which strengthens Commerce’s ability to defend American workers and producers against predatory trade practices.

“The steel and aluminum we use to build our, buildings roads, bridges, aircraft and automobiles should be proudly stamped ‘Made in the U.S.A.,’ and more of it should come from companies like Klein Steel. But in order for that to happen, we must stop heavily subsidized foreign companies, like those in China, from dumping these artificially cheap metals in our markets,” said Schumer. “Great manufactures like Klein Steel are ready to provide high-quality steel to businesses around the country, but China’s overproduction has resulted in substantial downward pressure on steel prices  making  it  almost  impossible  for companies that play by the rules to compete. So I am urging the USTR and the Department of Commerce to press China to cut their subsidies and use our trade laws to effectively guard against this unfair competition.”

A massive amount of Chinese steel has entered global markets, including the U.S., harming American steel producers and the communities that rely on these manufacturers, like those like Klein Steel. According to the American Iron and Steel Institute, steel facilities averaged roughly 70 percent capacity utilization in 2015, well below the levels necessary to be profitable, invest in plant and equipment, or be positioned to hire new workers. Bureau of Labor Statistics data indicates that employment in the steel industry has declined by over 12,000 jobs over the last twelvemonths for which data are available.

According to the Organization for Economic Cooperation and Development, global crude steelmaking capacity more than doubled between 2000 and 2014, with growth during this period led principally by China. However, global demand for steel, including U.S. demand and Chinese demand, has decreased overall during this time. Schumer said this discrepancy is due to the fact that Chinese companies have continued to produce these products at high rates, mainly through the aid of government subsidies and other market-distorting measures. Estimates of global excess steel production capacity range as high as 700 million tons, with as much as 425 million tons coming from China alone. China exported a record 123 million net tons of steel last year, up 350 percent from 2009. Many Chinese mills continue operating at a loss.

Schumer said the USTR and Dept. of Commerce must address this, as China’s overproduction is hurting the U.S. steel industry. Schumer is urging the Administration to work with Chinese officials and similarly situated trading partners to find a multilateral, long-term solution to this unsustainable overproduction.

Schumer also urged the Department of Commerce to fully utilize trade enforcement tools in the recently passed Level the Playing Field Act (also knowns as the Trade Facilitation and Trade Enforcement Act of 2015), which strengthens Commerce’s ability to defend American workers and producers against predatory trade practices. Specifically, this legislation safeguards the Department of Commerce’s discretion to disregard partial responses from non-compliant foreign producers in investigations of subsidies that harm U.S. manufacturers. Schumer also urged the speedy implementation of the Trade Facilitation and Trade Enforcement Act of 2015, which helps to ensure that that U.S. Customs and Border Protection is properly equipped to collect duties lawfully owed.

“We strongly believe that it is in the best interest of our country and our company to ensure the security of our domestic steel producers by maintaining a fair and level playing field,” said Todd Zyra, Klein Steel President and CEO. “When other countries affect the price of steel, either by flooding the market or artificially lowering the price, it hurts U.S. suppliers who play by all the rules of good business including environmental, safety, insurance, workers comp, transportation, production and so much more.  When the domestic producers we depend on to supply our raw steel are weakened financially by foreign competitors who don’t play by the same rules, it hurts the people who work at companies like Klein Steel, and all of our customers.”

A copy of the letter Schumer sent with members of the Senate Finance Committee to the USTR and Dept. of Commerce appears below:

Dear Ambassador Froman and Secretary Pritzker,

Global overcapacities in steel, aluminum, and other basic commodities are significantly impacting global production, consumption, and trade flows of those products.  Much of this global overcapacity stems from foreign government subsidies and other market-distorting policies that are creating challenges for companies and workers across the United States and abroad.  In anticipation of the public hearing on the global steel industry that the Office of the United States Trade Representative and the U.S. Department of Commerce (DOC) are convening on April 12, 2016, we are writing to express our interest in these issues and to urge the Administration to take all appropriate action to address global overcapacity and related challenges.  In particular, we urge you to accelerate efforts to address global overcapacity through multilateral and bilateral fora.  We also urge you to enforce U.S. trade laws, including the recently enactedTrade Facilitation and Trade Enforcement Act of 2016 and theAmerican Trade Enforcement Effectiveness Act.

As the Organization for Economic Cooperation and Development (OECD) has noted, global crude steelmaking capacity more than doubled between 2000 and 2014, with growth during this period led principally by China.  Certain Chinese industrial policies to encourage capacity expansion, including through subsidies and other market distorting-measures, were an important contributor to this growth.  Meanwhile, global demand for steel, including U.S. demand and Chinese demand, has decreased.  As a result, significant increases in exports of Chinese steel have entered global markets, including the United States, impacting U.S. steel producers, steel consumers, steel industry suppliers, steel industry workers, and communities across the United States.

The current global steel situation highlights the reality of China’s economic system, which involves significant market-distorting policies and government intervention.  In a variety of industries, including steel and aluminum, Chinese firms (including state-owned or controlled enterprises) make investments in capacity that are commercially unjustified.  U.S. trade laws provide the Administration with opportunities to address several of these concerns.  Moreover, the recently enacted Trade Facilitation and Trade Enforcement Act of 2015 helps to ensure that granted relief effectively addresses unfair trade and that U.S. Customs and Border Protection is properly equipped to collect duties lawfully owed.  In addition, the recently enacted American Trade Enforcement Effectiveness Act modifies U.S. antidumping and countervailing duty laws to address aspects of the methodologies used by the DOC and the U.S. International Trade Commission to analyze petitions by companies and workers for relief from unfair trade practices.  However, effective utilization of U.S. trade laws requires that the Administration fully implement and enforce them, including by providing necessary resources for those purposes.  To this end, we will continue to monitor closely the Administration’s implementation and enforcement efforts.

Coupled with effective trade enforcement in the United States, global overcapacity concerns, as well as issues related to global market-distorting policies and government intervention generally, ultimately should be addressed through global solutions.  Therefore, we encourage the Administration to engage immediately with similarly situated trading partners to ensure durable, transparent, and verifiable solutions to address global overcapacities in steel, aluminum, and other basic commodities.

We appreciate your careful consideration of these important issues and look forward to further discussions in the months ahead.        

                                                                                                                                                                                                                   

Sincerely,

Charles E. Schumer

United States Senate

 

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