China's sheer capacity to out-produce all other
markets is a looming nightmare for many in the domestic steel
industry, said David Spooner, former Commerce assistant
secretary for import administration.
"In my last two years at Commerce, 80 percent of
the cases had to do with China," Spooner said at AMM's
inaugural State of Steel Conference in New York, and the United
States must balance trade issues with China using "legislation,
negotiation and litigation."
Under Section 421 of the Trade Act, petitioners can
receive relief in the form of duties if they can show injury
from Chinese imports, but during his eight years in the White
House, President George W. Bush refused relief when cases went
before him for final approval (AMM, Dec. 7, 2005).
Perhaps a sign of things to come was Treasury
Secretary Timothy Geithner's much publicized comment that China
is a "currency manipulator," which caused an uproar. Later
reports suggested that Geithner's comments were taken out of
context and President Obama had to apologize to China, but that
doesn't mean the new administration is backing down on its
promise to examine trade issues.
A White House spokesman said the administration
would wait until the Treasury Department submits its report in
the spring before making a decision on currency manipulation.
Until that time, current trade laws will have to be enough.
Whether Section 421 will provide enough relief from unfair
subsidies and dumping depends greatly on how "aggressive"
domestic groups are, Spooner said.
While Obama attempts to repair the economy, some
trade issues will have to wait-leaving the industry guessing to
his trade stance. But it seems that Obama is "fair trade,"
Spooner said. "My best guess is that he understands the
importance of open markets, but I don't think it will be high
on the agenda."
At the AMM conference luncheon, Spooner warned that
stronger "Buy America" provisions could cause problems if they
aren't in compliance with WTO regulations.
Supporters said the new provisions were in
compliance with U.S. trade laws and WTO agreements; opponents
argued that protectionist measures could cause retaliation by
foreign countries. Spooner said that what side you are on and
whether or not it could help depends greatly on the perspective
of consumer or producer.
A better way to help the domestic industry would be
to make China subject to market forces, he said. "In my
experience, they still don't have a grasp of how markets work.
They are not subject to the same market forces."