Letter to Barack Obama, President of the United States - Address Long-Standing Steel Issues with Chinese President Xi

Letter

Dear Mr. President,

We write today as members of the Congressional Steel Caucus to request that you address long-standing issues of great importance to the American steel industry during Chinese President Xi's upcoming visit.

Since 2000, Chinese steel production has increased by 695 million metric tons, which is nearly eight times the total amount of steel produced in the United States. China currently produces as much steel as the rest of the world combined. Through the first seven months of 2015, China has exported 67 million metric tons of steel, which is a 27 percent increase over 2014 figures. Much of this Chinese steel arrives on American shores, and is sold artificially low at approximately 25 percent less than the steel that is produced domestically.

We know that America makes the best steel in the world, but we cannot compete against China when they do not play by the same market rules. We request that you specifically address the issues below with President Xi.

Illegal Subsidies -- At the heart of the growth in Chinese steel production are illegal government subsidies. During U.S. trade case proceedings, the Department of Commerce has specifically identified illegal Chinese subsidies, including preferential lending through state-owned commercial or policy banks, assistance providing electricity, inputs, and land, and the direct transfer of government funds to Chinese steel producers.

Currency Manipulation - China continues to manipulate its currency in order to give their steel producers an unfair advantage in the U.S. market. Despite recent announcements, China's currency is not freely tradable and the government still controls its value. Unless China addresses this issue or the U.S. establishes currency manipulation as a countervailable duty, China's currency practices will continue to devastate American steel.

State-Owned Enterprises -- It is estimated that 95 percent of steel produced by the top 20 Chinese steel groups is from state-owned enterprises. These producers operate under bureaucratic policies and not market principles. The Chinese government also has established a policy objective of "more effectively bringing about the role of government and guiding the next ten years of the steel industry's development."

American steelworkers are under attack every day from cheap Chinese imports. It is past time that we take action. We thank you for the opportunity to express our concerns and appreciate your consideration of addressing these critical issues with President Xi.

Sincerely,

Congressman Tim Murphy, Chairman, Congressional Steel Caucus

Congressman Peter J. Visclosky, Vice Chairman, Congressional Steel Caucus