Steel’s Top Priorities: Global Forum, Block China Market Economy Status

by Jeff Yoders on OCTOBER 19, 2016

The American Iron & Steel Institute, a key lobbying force for the steel industry, is focused on two major policy issues for the remainder of the year: getting the G20-initiated “Global Forum” on steel overcapacity officially in motion before the Obama administration leaves office, and ensuring that the U.S. continues to refuse to recognize market economy status for China.

“If China gets market economy status it will mean 400,000 to 600,000 lost jobs (in steel, other metals and services for the industries) the U.S.,” said Thomas J. Gibson, President and CEO of the AISI in a conference call with reporters yesterday.

When asked what the position of the AISI is, as opposed to that the U.S.-China Business Council, AISI Senior VP for public policy and general council Kevin Dempsey said, “what the Chinese are trying to present is sort of a legalistic argument that, regardless of the facts, they should be granted the status. I don’t think that legal argument stands up to scrutiny.”

My colleague, Taras Berezowsky, recently interviewed Dempsey on the issue and there’s more on what the ascension protocol is and what must be done for China to achieve it in his article, which is the first of a series.

“The question (that could come before the WTO) is can we continue to use non-market methodology?” Dempsey said. “The answer is yes. The Chinese claim it can be expired. One sub-paragraph expires and the rest of article 15 stays in place. You have to allow countries to continue to apply non-market methodologies and have China make the case that it’s a market economy. I don’t think there is any credible economic analysis that says China is a market economy.”

Dempsey also said that current U.S. law requires that commerce determine what trading partners are market or non-market economies. “Our statute is clear. Nothing will change in the U.S.,” he said.

On the issue of infrastructure improvement, Gibson said.

“We are heartened that both campaigns are focused on an infrastructure bill as a priority,” he said. “The biggest single item is a highway bill. The key issue is how it’s funded.”

Gibson explained that AISI would prefer a long-term funding solution as opposed to how the last few highway bills have been funded, moving money from customs enforcement and other places in the federal budget.

“A user fee, a gas tax, something that needs to be permanent,” he said. “(Funding infrastructure improvements) needs to be put on sound financial footing and avoid one-time funding gimmicks. It leads to a lot of uncertainty. It’s caused some states to look to their own means such as increasing their own gasoline tax.”

On one issue, AISI did show marked disagreement with the Trump campaign. That was the North American Free Trade Agreement. Republican nominee Donald Trump has said he would renegotiate the deal between Canada, the U.S. and Mexico.

“NAFTA has been a success for the North American steel industry,” Gibson said. “It has enhanced cooperation among the three industries, increased exports and, while there was a deficit before it passed in 1994, the U.S. now has a small surplus in steel trade with Canada and Mexico.”