The U.S. steel industry has been aggressively addressing imports of Chinese steel through the filing of multiple anti-dumping and countervailing actions in recent months.
The enforcement of these trade laws is the responsibility of U.S. Customs and Border Protection. In Salt Lake City earlier this month, the American Iron and Steel Institute and Metals Service Center Institute held their general meetings where steel industry executives discussed why Chinese steel imports are of particular concern to the U.S. steel industry.
CBP Chairman R. Gil Kerlikowske explained in his speech, “Protecting Our Borders, Protecting Our Industry” how CBP enforces U.S. trade law, saying that the title of his speech, “really speaks to the duality of CBP’s complex mission, which is facilitating lawful trade and travel while ensuring the safety and security of our borders and the global supply chain.”
The overarching theme of the annual conference was that the U.S. is in an economic war with China, and CBP knows it is on the “front lines of our nation’s economic security.”
The newly elected chairman of AISI — John Ferriola, chairman, president and CEO of Nucor Corp. — said at the conference’s AISI CEO press briefing that one in three tons of steel is produced outside the U.S. while capacity utilization of U.S. steel mills remains around 70%. We at MetalMiner have also painstakingly documented how China manipulates its currency to take advantage of export markets for steel and other products that are overproduced at home.
The Steel Crisis
U.S. producers claim that Chinese overcapacity coupled with decreased Chinese steel demand is creating a crisis for the U.S. steel industry. High levels of dumped and subsidized imports are entering the U.S. market. Nine of 10 of the largest Chinese steel mills are state-owned. Last year, China exported 112 million metric tons. Ferriola said boldly, “The Chinese government is a company disguised as a country, and they are waging economic war on the United States, and they are winning.”
Kerlikowske explained how CBP is enforcing the 270 anti-dumping and countervailing duty actions currently active in metal products. He was insistent upon CBP, AISI and steel companies working together to ensure trade with the U.S. is fair.
Customs’ Enforcement Strategy
CBP, in partnership with the steel industry, conducted seminars for CBP personnel and customs brokers in five locations last year with additional seminars taking place in Detroit, Long Beach, Calif. and Philadelphia this year.
CBP has taken a three-pronged approach which includes detecting high-risk activity, deterring non-compliance and disrupting fraudulent behavior. CBP is now using statistical modeling to identify high-risk steel shipments. CBP has also implemented “live” entry on some Chinese steel plate shipments, meaning that all entry documents and duties must be submitted before CBP releases the cargo into the U.S.
The most important transformation initiative, as termed by Kerlikowske, is the creation of 10 Centers of Excellence and Expertise which are remotely-managed centers aligning CBP with modern business practices, focusing on industry-specific issues and developing greater expertise in particular industries and commodities.
The CBP’s Base Metals Center opened in March in Chicago but it’s supported by CBP employees throughout the U.S. The Base Metals Center enables CBP to sharpen its focus on anti-dumping and countervailing duty evasion particularly involving steel and other base metals products.
The center provides consistency and reliability for metals importers. CBP industry experts at the Center are actively enforcing 270 active orders on metal products, and are working closely with the industry to understand trade risks and target evasion to ensure a level playing field for U.S. steelmakers.
The U.S. steel industry is counting on CPB to create that level playing field for domestic steel producers. The Base Metals Center seems to be the right approach for getting a handle on the complexities of trade in the global steel industry.
The “live” entry of high-risk steel plate shipments could be expanded to other products, too. The U.S. steel industry has successfully placed a great deal of pressure on domestic authorities and regulators. to keep Chinese steel imports at bay, but I wonder for how long that strategy will be successful.
Will the buyers of these metals, U.S. manufacturers, push back against the domestic producers if their products can no longer be competitively priced without abundant, cheap Chinese steel available?