U.S. to probe steel im­ports

The probe will fo­cus on whether other na­tions’ sales threaten na­tional se­cu­rity.

Los Angeles Times - - BUSINESS - By Ana Swan­son Swan­son writes for the Wash­ing­ton Post.

The investigation will fo­cus on whether the way other na­tions sell the prod­uct threat­ens na­tional se­cu­rity.

The Trump ad­min­is­tra­tion di­rected the Com­merce Depart­ment on Thurs­day to ex­pe­dite an investigation into whether the way other coun­tries sell steel com­pro­mises U.S. na­tional se­cu­rity.

In a brief­ing, Com­merce Sec­re­tary Wil­bur Ross said the re­view would con­sider how much steel the U.S. needs to de­fend it­self, and whether cur­rent do­mes­tic ca­pac­ity meets those re­quire­ments. Steel im­ports now make up more than 26% of the U.S. mar­ket­place, and the re­port will ex­am­ine to what ex­tent those im­ports im­pinge on U.S. eco­nomic and na­tional de­fense se­cu­rity, Ross said.

That investigation of­fi­cially be­gan Wed­nes­day night, and Pres­i­dent Trump signed the me­moran­dum to ex­pe­dite the investigation at a cer­e­mony Thurs­day.

The investigation could re­sult in a rec­om­men­da­tion that the United States im­pose broad tar­iffs on the steel in­dus­try, Ross said. “The im­por­tant ques­tion is pro­tect­ing our de­fense needs. And we will do what­ever is nec­es­sary to do that, but we’ve come to no con­clu­sion yet be­cause the study is just re­cently be­gun.”

The investigation — which was ini­ti­ated by the Com­merce Depart­ment, not the steel in­dus­try — re­vives a sec­tion of a lit­tle-used trade law, the 1962 Trade Ex­pan­sion Act. Sec­tion 232 of the law al­lows the gov­ern­ment to im­pose a wide va­ri­ety of bar­ri­ers on steel im­ports for na­tional se­cu­rity rea­sons. It does not fo­cus on a par­tic­u­lar coun­try, but an­a­lysts say the or­der is likely to be wielded against China, which has about half of the world’s steel ca­pac­ity and has flooded the global mar­ket with cheap steel in re­cent years.

Thurs­day’s ex­ec­u­tive or­der showed the ad­min­is­tra­tion push­ing ahead with prom­ises to use ex­ist­ing trade laws to crack down more heav­ily on what it con­sid­ers un­fair trad­ing prac­tices, com­ing a week af­ter Trump ap­peared to walk back some of the most prom­i­nent eco­nomic prom­ises of his cam­paign.

Last week, Trump de­clined to la­bel China a cur­rency ma­nip­u­la­tor de­spite cam­paign prom­ises to do so, and he ex­pressed sup­port for the Ex­port-Im­port Bank af­ter pre­vi­ously crit­i­ciz­ing the credit agency.

The pres­i­dent made bold and of­ten in­flam­ma­tory prom­ises about trade pol­icy on the cam­paign trail, pledg­ing to rene­go­ti­ate the North Amer­i­can Free Trade Agree­ment and im­pose tar­iffs of 45% on im­ports from China and 35% on U.S. com­pa­nies that moved man­u­fac­tur­ing fa­cil­i­ties to Mex­ico.

Since com­ing into of­fice, his ac­tions on trade have been more muted. The pres­i­dent signed an of­fi­cial me­moran­dum with­draw­ing the United States from the Trans-Pa­cific Part­ner­ship on Jan. 23 and signed two ex­ec­u­tive or­ders di­rect­ing re­view of trade prac­tices March 31.

The United States has not used Sec­tion 232 since 1995, when the cre­ation of the World Trade Or­ga­ni­za­tion pro­vided other chan­nels to crack down on coun­tries that vi­o­late in­ter­na­tional trade prac­tices. Yet the Trump ad­min­is­tra­tion has ex­pressed skep­ti­cism about the ef­fi­cacy of the WTO and said it would con­sider go­ing around the or­ga­ni­za­tion.

The cur­rent patch­work of steel-re­lated cases brought un­der the WTO are “very, very lim­ited in na­ture to a very, very spe­cific prod­uct from a very, very spe­cific coun­try,” Ross said Thurs­day. “It’s a fairly por­ous sys­tem. And while it has ac­com­plished some fair mea­sure of re­duc­tion, it doesn’t solve the whole prob­lem.”

Scott Paul, pres­i­dent of the Al­liance for Amer­i­can Man­u­fac­tur­ing, which rep­re­sents steel­work­ers and the in­dus­try, said the investigation “hope­fully could pro­vide some breath­ing space for the steel in­dus­try.”

“Get­ting at China’s over­ca­pac­ity in steel and the scale of it is ex­cep­tion­ally dif­fi­cult to do through con­ven­tional ap­pli­ca­tion of trade law. It may take an ex­tra­or­di­nary mea­sure, like Sec­tion 232, to make some progress and to prod China along as well,” Paul said.

The law gives the Com­merce sec­re­tary 270 days to re­port the find­ings of an investigation to the pres­i­dent, and an ad­di­tional 90 days for Trump to make a de­ci­sion on the in­for­ma­tion, though Ross said the investigation prob­a­bly would take less time than that.

The U.S. steel in­dus­try has been shed­ding jobs for decades, partly be­cause of the devel­op­ment of steel fur­naces that are in­creas­ingly ef­fi­cient and au­to­mated, and partly be­cause of the grow­ing ca­pac­ity in coun­tries such as China.

Some an­a­lysts say that if the U.S. were to re­strict steel im­ports, that could raise the price of steel for U.S. com­pa­nies and make it harder for those coun­tries to com­pete in­ter­na­tion­ally.

In the brief­ing, Ross said this con­sid­er­a­tion would be weighed in the Com­merce Depart­ment’s ul­ti­mate re­port. “It’s a ques­tion of bal­anc­ing one’s pri­or­i­ties,” he said.

Shawn Thew Euro­pean Pressphoto Agency

PRES­I­DENT TRUMP shows the signed me­moran­dum to ex­pe­dite the investigation of steel im­ports Thurs­day. It could lead the U.S. to im­pose broad tar­iffs.

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