Steel News

AISI Says U.S. Government Must Address China's WTO Violations

9/23/2013 - Almost a dozen years after it acceded to the World Trade Organization (WTO) China continues to fail to comply with its obligations, says the U.S. trade association representing the majority of the nation’s steel producing companies.
In 45 pages of comments filed today with the U.S. Trade Representative (USTR), the American Iron and Steel Institute (AISI) said that "based on an overwhelming amount of evidence…China has largely abandoned its policy of liberalizing its economy and instead adheres to a policy of state capitalism that is antithetical to the principles of free and fair trade. This trend is a major problem for American steel producers, other manufacturers and the U.S. economy as a whole."

In its comments, AISI strongly urges the U.S. government to "rethink its current approach to addressing this issue and adopt a more aggressive strategy that is commensurate with the scope and severity of China’s failure to comply with its WTO obligations."

The current U.S.-China trade relationship is taking a tremendous toll on American manufacturers," said Kevin Dempsey, senior vice president of public policy at AISI.   "Over the last decade, our trade deficit with China has soared 280 percent, we have lost millions of manufacturing jobs, thousands of factories have been shuttered and the American steel industry has been severely disrupted.  The U.S. government must take much bolder and more imaginative steps to address this chronic problem."

AISI’s comments pointed to several facts illustrating China’s non-compliance:
  • From 2000 to 2012, Chinese crude steel production increased by 609 million metric tons (MT) – a volume over seven times total crude steel production in the U.S.   China’s increased production has been made possible, in large part, by massive government subsidies.  
  • Although China pledged as part of its WTO accession that it would not "influence" commercial decisions of its state-owned enterprises, the Chinese government maintains a heavy amount of control over state-owned steel producers.  
  • Despite years of complaints by American manufacturers – and widespread criticism from government officials and other experts – China continues to keep the value of its currency at artificially-low levels that give Chinese producers an unfair advantage in the U.S. market, the Chinese market, and third country markets.
  • China has taken numerous measures to inappropriately aid its producers in securing access to raw materials and to manipulate raw material prices in a manner that gives Chinese producers an unfair advantage over their U.S. competitors.  
  • The U.S. should continue to treat China as a non-market economy for purposes of U.S. antidumping laws, begin to countervail subsidies that were bestowed prior to China’s WTO accession, and ensure that Chinese companies are not circumventing and evading U.S. trade remedy laws by, among other things, shipping merchandise through third countries.
"AISI commends USTR for recent cases it has brought at the WTO that challenge certain export restraints as violating China’s WTO commitments.  However, given China’s pervasive use of export restraints and other measures to control raw material prices, winning these challenges will only be the first step to bring China’s policies into compliance with its WTO commitments.  The fact that China has not fully complied with its WTO obligations underscores the importance of effective enforcement of U.S. trade remedy laws," Dempsey concluded.