Reading international trade reports, I became engrossed in an article entitled “Steel tariffs working but China needs stronger enforcement” published by FOX Business, a detail I had not grasped as I started going through the text. I reproduce some of the most salient statements below.
Quote.
Peter Navarro: President Trump is delivering on his promise to ‘Buy American, Hire American’
After holding steady during the late 1990s, the number of U.S. employees working in metal manufacturing, including iron, steel, and aluminum plants, declined drastically from 608,000 in 2001, the year China was admitted to the World Trade Organization, to 368,000 the month that Trump was elected. By last month, there had been a solid turnaround to 383,000 jobs in the sector. Importantly, the previous negative trend has been stopped and reversed. Steel companies are optimistic and expanding. Unemployment in the sector is a scant 2.3 percent—lower than at any point in the previous administration.
But there is more work to do. In particular, the government should crack down further on China’s attempt to destroy the U.S. steel industry.
China is the worst offender. Chinese steel firms, many of which are state-owned enterprises that benefit from essentially free capital and tax “rebate” handouts, have dumped their products at prices below cost in order to drive the steel industries in other countries out of business.
One mechanism China uses to circumvent U.S. tariffs is to export steel pipes to South Korea, where they are finished into other goods like these. South Korea faces a U.S. quota by tonnage but not the 25 percent tariff China faces. Last year, the administration imposed duties of more than 250 percent on certain steel exports from Vietnam after it determined they contained a significant portion of Chinese steel.
For example, in just three years, Chinese producers have taken over the market for the lower-end couplings used to connect pipes in oil and gas drilling. Imports of these couplings have doubled during that time. Now Chinese producers are expanding their reach from low-quality steel couplings to higher-end varieties.
Let’s hope it takes this strong approach with other enablers of Beijing’s trade misdeeds in order to defend U.S. steel jobs and safeguard the supply chain of our vital oil and gas industry.
The Trump administration should close this loophole by adding penalties for any country that is facilitating China’s evasion of the law
Unquote
The more I read, the more I realized that the article was not even a biased report but a pure piece of propaganda. There is no way that low end couplings cannot be manufactured almost instantly, albeit at a higher cost, by US manufacturers.
I recalled from my past experience that, although China was the largest steel exporter in the world, steel products exported were at the low end and benefited mainly the civil and naval constructions interests in the importing countries. After reaching a peak of over 110 million tons Chinese exports have plummeted to about 66 million metric tons in 2018. No doubt notwithstanding trade effect slow down, this was the result of Trade Remedies in the Steel Sector available under WTO. A substantial antidumping duties and countervailing duties against certain Chinese products were imposed during the Obama administration. This remedy has also been used during the Trump administration. This is what the writer of the article is evoking when he is talking about additional penalties. But the real question is: really, where does the US import its steel? The Chart below for the US steel imports reveals that China does not figure in the 10 top exporters. (the smallest exporter is Taiwan with 3%). A deeper research reveals that US steel imports from China represent a mere 1.1% of the total. Statistics for 2016, the year Donald Trump was elected, reveal very similar percentages with the absence of China in the 10 largest steel exporters to the US and 0.8% import share from China.
It is clear that my initial hunch of a typical Trumpist article devoid of fundamental truth and deformed to the maximum possible excesses was verified. This is not an isolated incident but part of a well coordinated China-bashing propaganda destined to induce the electorate into an extreme sinophobia. The public in the US is now convinced that all Huawei equipment is equipped with spyware. China competitiveness is only based on cheap labor, subsidised economy and intellectual property theft.
But what I exposed above is part of a complex underground media campaign, destined to debase, as many players on the world and on the US scenes as possible, to portray the President as the only possible savior of the US and the free world! In the process he is questioning the relevance of every international organisation and treaties that have protected the world well to avoid cataclysmic world conflicts for almost three quarters of a century.
Does not this remind you of the thirties?
By Digenes 22 July 2019
Antidumping duties (AD), countervailing duties (CVD), associated suspension agreements, and safeguards are often referred to collectively as trade remedies. These are internationally agreed upon mechanisms to address the market-distorting effects of unfair trade, or serious injury or threat of serious injury caused by a surge in imports.