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AISI CALLS FOR CHINA TO FULFILL ALL OF ITS WORLD TRADE ORGANIZATION OBLIGATIONS

Chinese trade-distorting practices harm American steel producers and other U.S. manufacturers

Washington, D.C.– The American Iron and Steel Institute (AISI) called for China to end its trade-distorting policies and practices and to finally comply with all of its World Trade Organizations (WTO) obligations in oral and written testimony presented today at the Office of the U.S. Trade Representative (USTR) to the interagency Trade Policy Staff Committee (TPSC).  AISI Senior Vice President of Trade and Economic Policy Barry Solarz stressed in his oral testimony that “China’s ongoing WTO non-compliance continues to have serious, long-term consequences for American steel producers, other American manufacturers and our economy as a whole.”  This was the Institute’s seventh written submission to the USTR on this critical issue.

When AISI first submitted testimony on China’s non-compliance with its WTO commitments in 2004, China was producing 280 million metric tons (MT) of crude steel and had a 26% global market share, whereas, today, it is “on pace to produce over 600 million MT of crude steel, with a 47% share of global production,” Solarz noted.  Meanwhile, “Our trade deficit with China has risen from $83 billion in 2000 to $227 billion in 2009 -- an increase of 173 percent,” the testimony emphasized.  This, in turn, has led to “disastrous” results, including the loss of at least 2.4 million jobs. 

The unprecedented growth in China’s steel industry, Solarz said, has been made possible not by any genuine comparative advantage -- but because of ever-increasing Chinese government market interventions, trade-distorting practices and repeated violations of WTO obligations.   Practices of particular importance to steel, as highlighted in the AISI testimony, include: massive government subsidies to, and ongoing bureaucratic control and direction of China’s steel-producing state-owned enterprises (SOEs); the Chinese government’s recent directives that China’s “national champions” should “go abroad” to further efforts to dominate in world markets; the Chinese government manipulation of its currency, value-added tax (VAT) rebates, raw material markets and trade remedy laws; China’s persistent violations of foreign firms’ intellectual property rights; and China’s ongoing violations of agreements intended to prevent unsafe products from entering the marketplace.  The testimony states that, “despite clear evidence that China has repeatedly violated its WTO obligations, U.S. policy has been largely reactive.  …This approach has not worked and it’s past time for a more aggressive approach.”  It identifies specific examples of “decisive action” and a “more aggressive approach” that must be taken, including that:  Commerce should countervail subsidies provided prior to China’s accession to the WTO; Commerce should investigate currency subsidy allegations; Commerce should treat China’s manipulation of VAT rebates as both a countervailable subsidy and as a prohibited export subsidy; USTR should investigate the allegations of Chinese government subsidies to “green technologies” in the Section 301 case filed recently by the United Steelworkers; the Administration should treat Section 421 (the China-specific safeguard) as an essential trade remedy; and USTR should pursue additional WTO litigation as appropriate against Chinese government subsidies and other WTO-illegal Chinese policies and practices.

The AISI testimony makes clear that, until China complies fully with all of its WTO obligations, the American steel industry and other U.S. manufacturers will continue to be put at a significant disadvantage.  Considering that China’s ongoing WTO non-compliance continues to cause serious, long-term harm to the U.S. economy and to claim valuable American manufacturing jobs, “The U.S. must alter its approach so as to send a clear signal to China that it must end its trade-distorting policies and practices and comply fully with all of its WTO commitments,” the testimony concludes.

Click here to read Barry Solarz’s oral testimony at the Trade Policy Staff Committee Hearing.
Click here to read AISI’s filed comments to USTR.





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