USTR acknowledges there’s a problem, says the Obama administration is talking to China about it.
U.S. Trade Representative Mike Froman stopped by Bloomberg late last week to sell the Trans-Pacific Partnership (TPP), the proposed trade agreement between the United States and 11 other Pacific Rim countries.
But while Froman might have been there to pitch the TPP, he also touched on China’s massive overcapacity problem, which led to 12,000 steel industry layoffs in 2015 and could lead to more in the new year.
Good news! Froman said he and other Obama administration officials are… talking with the Chinese about it.
There’s a “very good ongoing dialogue” and the U.S. and China are “very frank with each other,” Froman noted.
“Right now, for example, there’s a tremendous amount of overcapacity in steel and aluminum largely coming from China that’s having a very serious impact on our producers,” Froman continued. “Huge effect, huge effect. And over a year ago, we launched a dialogue with them about what are we going to do about overcapacity, because they recognize it’s a problem as well from their own perspective.”
Froman added that U.S. officials will “continue to press” China to make changes toward “more market-determined policies” and toward “more domestic-demand growth rather than export-led growth.”
All of this talk sounds great, but steelworkers and those in other industries impacted by China’s overcapacity don’t need more talk. They need action, and they need it now.
Let’s focus on steel specifically.
State-owned steelmakers in China produced 100 million metric tons of steel in 2015 alone. But property and infrastructure construction is at a standstill in China, which means China is making way more steel than it needs. Those mills aren’t likely to stop producing so much steel, either, since most of the steel companies are directly tied to the government and play a big role as job and tax providers.
But what to do with all that excess steel? China is shipping it to the United States and selling it at rock-bottom prices. On top of everything, China manipulates its currency, which gives its steelmakers another unfair advantage.
This is all hugely unfair to American steelworkers and companies, who operate in an open marketplace and play by the roles. American manufacturing workers are ready to compete with anyone in the world, but they can’t do so if the game is rigged.
The time for talk is over. It’s time for the government to take action to level the playing field.
Now, there are some very positive signs that the Obama administration and some policymakers are paying attention. White House Chief of Staff Denis McDonough visited Minnesota’s Iron Range to meet with laid-off steelworkers in December. One of those workers even came to D.C. as a guest of Sen. Amy Klobuchar (D-Minn.) for the State of the Union address, and met with Members of Congress and administration officials to continue to draw attention to the issue.
There’s a lot that can be done. Here are some action points:
- The Commerce Department should tax products that are unfairly dumped into the U.S. market. There is good news on this front — the department announced a 256 percent tax on China-made corrosion-resistant steel products in December 2015.
- Congress should weigh in on trade, urging the Commerce Department to take action when needed and ensuring the department’s enforcement office is well-funded.
- The Senate should pass the Customs and Enforcement Bill, which provides a package of reforms to the way goods are treated and tracked as they enter the U.S. market. The House already passed the bill and President Obama is likely to sign it.
- The Obama administration should continue China’s non-market economy status well beyond December 2016. The administration also should finally officially name China a currency manipulator.
And of course, YOU can help, too. Do your part to stand up for American workers by urging Congress and the White House to maintain China’s non-market economy status.