Hearing of International Trade Commission - Prepared Testimony
Commissioners, thank you for the opportunity to submit testimony on the need to maintain antidumping and countervailing duty orders on hot-rolled steel. Your work in this matter is of vital importance to the industries and individuals in my state whose livelihoods depend not on protection, but on the opportunity to compete on a level playing field.
I know I do not need to explain the importance of steel to our country, or its importance to my State of Ohio, but sometimes it is important to remember just how vital this industry is for our Nation. The U.S. steel industry employs tens of thousands of hardworking Americans, including some 30,000 men and women in Ohio. Ohio is the second largest steel producing state and the number one steel employer in America.
Sometimes, people think that what the steel industry wants is protection -- that they cannot compete and therefore want the government to bail them out. Nothing could be farther from the truth. What the steel industry wants, and what the men and women in our manufacturing sectors deserve, is a fair playing field. A fair playing field requires that everybody plays by the rules, and more important, that those rules are enforced. That is why the ITC acted as it did in 1999, responding to the case of material injury to the steel industry resulting from unfair trade.
We all know the benefits that free trade can offer, but free trade only works if there is fair trade. If we as a government do not respond to countries and companies who engage in unfair trade practices, not only will we dilute America's industrial base, but we also will erode our Nation's confidence in the free trade system. The short-term benefits reaped by companies using dumped goods, although tempting, do not outweigh the long-term consequences of a future without an American manufacturing base.
The answer to unfair trade, of course, is not to pack up our bags and stop trading with others. The answer lies in implementing and enforcing strong and effective trade laws. An example of this is the Continued Dumping and Subsidy Offset Act (CDSOA), which I introduced in 1999. Incorporated into law in 2000 with the help of Senator Byrd, the CDSOA program has been vital to companies injured by unfair trade. I want to be clear that the program is not a hand out. CDSOA is designed to encourage companies to regain their footing and keep fighting when it might be easier to just close their doors when faced with unfair trade.
Yet, if we want the CDSOA program to be as effective as possible, we need to stop the injury. The CDSOA program is just designed to be triage for companies injured by unfair trade. What we need to do is confront the predatory practices. That is why I am submitting this testimony today.
The domestic hot-rolled steel industry remains vulnerable to unfair and injurious trade. Almost immediately after this Commission voted in 1999 to impose orders on subsidized and dumped steel from Brazil, Japan, and Russia, unfairly traded imports from 11 other countries poured into the United States, and again, the imports were found to be a cause of material injury. The situation, however, continued to deteriorate.
The steel industry hemorrhaged billions of dollars in losses, and dozens of steel companies fell into bankruptcy, and thousands of Americans lost their jobs. Ultimately, the President requested that you initiate a Section 201 "safeguard" investigation in 2001, and again, the Commission was unanimous in its decision that the imports were causing serious injury. Although the Section 201 relief was removed prematurely, the threat to the industry remains. Late last year, the Department of Commerce determined that if the orders on hot-rolled steel that you are reviewing today are revoked, dumping is likely to resume at comparable margins to what was injuring the industry when these investigations first began. Even worse, since the WTO wrongly cut short the Section 201 relief, American steelworkers do not have the leverage they need to compel these countries and others to address the underlying causes of the worldwide steel crisis, such as subsidization and overcapacity.
Foreign excess capacity is still approximately double total U.S. consumption, and the countries subject to this review are producing far more hot-rolled steel than they consume. In fact, they are relying on dumping into the U.S. market to prop up their domestic producers. Outside the United States, China has been the only other major net importer of hot-rolled steel. The Chinese market, however, is closing to imports as new Chinese hot-rolled steel capacity comes online. Other large markets, such as Europe, are net exporters of hot-rolled steel, and cannot absorb large import volumes. That means that absent continued relief, the United States, as the most open market in the world, will almost surely become the dumping ground for another surge of hot-rolled steel from Brazil, Japan, and Russia.
Domestic hot-rolled steel producers need the chance to make necessary capital investments. After years of heavy losses, domestic producers of hot-rolled steel are just beginning to have the opportunity to make such investments to ensure their position among the world's most efficient producers of high-quality steel. Lifting this relief could put these plans at risk, with catastrophic long-term consequences for the industry and its employees. I am a strong supporter of the promise of international trade, but I make no illusions that the current international marketplace provides a level playing field where everyone plays by the rules. We must enforce the rules. As such, I urge the Commission to maintain the antidumping and countervailing duty orders on hot-rolled steel products. Thank you.