In China, U.S. Steel Move Is Seen as Self-Destructive
April 21 2017 - 7:28AM
Dow Jones News
By Chuin-Wei Yap
As the White House threatened new U.S. barriers to steel
imports, officials and experts from the world's biggest
steel-exporting nation, China, said the real loser might be America
itself.
The U.S., these people say, has high steel costs because rising
American tariffs have failed to stem an erosion of domestic
competitiveness, and not directly due to a flood of Chinese
exports.
"Why would one or two million metric tons of Chinese exports
matter that much to a country that imports 100 million tons a
year?" said Chi Jingdong, deputy secretary-general of the
state-backed China Iron and Steel Association. "What they're doing
is not reasonable."
American President Donald Trump is taking a stand on steel for a
difference reason. He ordered a probe on Thursday into whether
steel shipments to the U.S. constitute a threat to national
security due to its military and civilian uses, invoking a rarely
used statute.
The scope of the probe is unclear, but broad sanctions on steel
imports could hurt the U.S. economy's competitiveness by raising
costs for manufacturers of goods ranging from oil pipes to factory
equipment to cars, these people say.
They also would complicate Mr. Trump's campaign vows to
accelerate infrastructure building, said Tomas Gutierrez, a
Shanghai-based analyst for the steel consultancy Kallanish
Commodities.
China on Friday said it was premature to comment. "First, we
need to see the details of that investigation to see the target of
this investigation," a Foreign Ministry spokesman said.
In South Korea, the world's sixth largest steel producer, the
government said it was wary of rising U.S. protectionist threats
while closely studying them and their impact on the economy before
considering any action.
"South Korean businesses have growing concern about increasing
import restrictions on steel recently. We're scrutinizing them case
by case," Yeo Han-koo, director general of the trade ministry's
Trade Policy Bureau, said in an interview.
Vice Trade Minister Woo Tae-hee, who is now visiting the U.S.,
plans to deliver Seoul's concern to the Trump administration about
an American decision in April to impose tougher punitive duties on
some Korean steel producers, the ministry said.
Seoul also plans to raise an issue with the "irrational" U.S.
import restrictions when a World Trade Organization panel meets on
state subsidies and anti-dumping in Geneva next week, the ministry
said.
South Korean Trade Minister Joo Hyung-hwan himself plans to meet
with local steel companies next week to discuss countermeasures to
take against any U.S. import restrictions. "The government is open
to all possible options," the ministry said.
In Japan, the second-biggest steel producer, chief government
spokesman Yoshihide Suga said the probe's impact was still unclear
but "the Japanese government would naturally like to closely watch
the impact it would give to Japan-U.S. relations and Japanese
companies."
Experts say that any U.S. protectionist move isn't likely to
hurt China much despite its outsize role in the global steel
industry, producing half the world's steel.
The U.S. imported less than one million of the 110 million tons
of steel products that China produced last year , according to U.S.
data. Under pressure from global industry, Chinese steel exports
have declin ed in recent months, down 28% in March this year from
the same month a year earlier.
China has acknowledged its steel industry has built too much
capacity, though its officials often reject accusations that the
factories weigh on global markets. Beijing has set a goal to cut
14% of this capacity by 2020 and says the reductions are coming in
ahead of schedule.
Over the last decade, the U.S. steel industry has steadily built
a range of tariffs on Chinese products from oil pipes to rolled
coil--a period corresponding with ever higher U.S. steel prices
versus Europe and Asia. Analysts say the tariffs are now so
numerous that there are relatively few other steel products left to
tax.
"I find it hard to believe their claims that imports are
undermining prices unfairly when U.S. prices are higher than most
major markets," Mr. Gutierrez said.
The Trump administration is studying the use of Trade Expansion
Act of 1962 to achieve its aims. The U.S. has used it on only a
handful of times for major purposes, including oil embargoes on
Iran in 1979 and Libya in 1982. The WTO's creation in 1995 further
sidelined the statute; the global body discourages unilateral
sanctions, in part, analysts say, because the "national security"
provision lends itself to opaque decision-making.
"It's like using the 'state-secrets' argument in China--you can
justify anything with it," said an analyst with a major Western
commodity trading house.
Chieko Tsuneoka in Tokyo and Sofia McFarland in Beijing
contributed to this article.
Write to Chuin-Wei Yap at chuin-wei.yap@wsj.com
(END) Dow Jones Newswires
April 21, 2017 07:13 ET (11:13 GMT)
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