U.S. Secretary of Commerce Penny Pritzker Highlights Urgent Actions to Protect American Jobs Threatened by Global Overcapacity Crisis

Apr132016

AS PREPARED FOR DELIVERY
Wednesday, April 13, 2016

Today, U.S. Secretary of Commerce Penny Pritzker delivered remarks opening the second day of the public hearing convened by the Department of Commerce and the Office of the U.S. Trade Representative concerning “Policy Recommendations on the Global Steel Industry Situation and the Impact on U.S. Steel Industry and Market.” Secretary Pritzker highlighted government policies that distort markets and result in excess capacity, leading to a flood of low-priced steel imports that threaten U.S. firms and workers across the country. She underscored the Administration’s commitment to using all available tools to combat this crisis, including continued strong enforcement of U.S. trade laws, full implementation of new trade-related provisions passed by Congress in 2015 and 2016, and engaging trading partners on the need to discontinue policies that add to or maintain excess production capacity.

This week’s public hearing follows Monday’s joint statement  from the governments of Canada, Mexico, and the United States noting the damaging impact of global excess capacity on the North American economies. The governments emphasized the importance of the April 18 high-level meeting on steel hosted by the Organization for Economic Co-operation and Development (OECD) calling for participating governments to agree to robust commitments curtailing subsidies and other policies that contribute to excess steel-making capacity.

The information presented by stakeholders in their written submissions and testimonies from the public hearing will help inform U.S. positions in a range of upcoming international meetings where excess capacity will be on the agenda – including the OECD meeting, U.S.-China Joint Commission on Commerce and Trade (JCCT) Steel Dialogue, the U.S.-China Strategic & Economic Dialogue (S&ED), and meetings of the G7, G20, and the Asia-Pacific Economic Cooperation forum (APEC). This input will also guide actions being considered by the U.S. government to strengthen its response to the global excess capacity crisis.

Remarks As Prepared For Delivery

Good morning. Welcome to day two of hearings on the challenges facing the U.S. steel industry. I want to thank Ambassador Froman and his team for partnering with the Department of Commerce on this very important event.

I also want to thank our esteemed panelists for participating today. While many of you testifying represent the steel industry or steel communities, we recognize that other industries are also facing similar concerns. Our hope is that the insight offered in this hearing will prove valuable across all affected industries.           

Let me begin by stating the obvious. The U.S. steel industry has suffered from a debilitating influx of low-priced imports, much of it dumped or unfairly subsidized by foreign governments.  Some governments have systematically provided unfair subsidies and implemented other policies that disrupt and distort the operation of market forces both in their own economies and the global marketplace. Such interventions allow and result in non-market based decisions by industry.

In the steel sector, among others, this type of non-market economic behavior has resulted in massive overproduction and overcapacity, well beyond the quantities demanded by the market.   This behavior has had an unacceptable negative impact on competitors and the global economy. We have seen the global price of steel plummet; steel mills around the world close; and thousands of jobs lost, with thousands more at risk.

Two years ago, I met with workers on the shop floor at U.S. Steel’s Irvin Plant just outside of Pittsburgh, where they make finished steel used for appliances and autos.  The men and women I spoke with were proud of where they worked, but they were anxious about the future of their industry. The hard hat I was given during that visit sits in my office to this day.

It serves as a reminder of the contributions that steelworkers and their families make to their communities and to our country. Steelworkers literally helped build America.

That hard hat is also a reminder of our ongoing responsibility to combat unfair trade that threatens the viability of this industry and the good people in our steel-making communities. I get the pain that our steelworkers are experiencing as a result of global excess capacity and foreign government interventions.  The Administration gets it. We are taking concrete steps to address the immediate challenges facing our industries.

At the Department of Commerce, we are fully committed to enforcing U.S. trade laws and ensuring that our trading partners comply with their obligations under the WTO and our free trade agreements.  The numbers tell the story. Steel cases comprise approximately 45 percent of all U.S. final trade remedy measures in place and nearly 74 percent of our ongoing investigations. To put this in perspective, in Fiscal Year 2015, more petitions were filed and investigations initiated than any year since 2001.  Given the persistence of excess capacity globally and current market conditions, this trend shows no signs of abating.

We recognize what steel producers are up against, and we are working hard to address the situation. Congress recently provided us with new tools to more effectively enforce antidumping and countervailing duty laws by closing certain loopholes created by court decisions. For example, the new law strengthens our ability to deal with foreign producers that do not cooperate with our proceedings. We used this new authority recently in cases involving carbon steel flat products from a number of countries, including Brazil, China, Japan, and Korea.

Not only are we pursuing our own investigations vigorously, we are working closely with our partners at Customs and Border Protection to identify and stop fraud and evasion of antidumping and countervailing duties. In late February, Congress passed the Customs Reauthorization Bill, giving Customs and Border Protection more tools to fight antidumping and countervailing duty evasion in steel and other industries. The new law also mandates that evasion allegations are addressed within strict timelines and the structure of an administrative proceeding.

To support these efforts, my Department is sharing information with CBP about possible instances of fraudulent transshipment, mislabeling, and other evasion schemes. This will help CBP detect and prevent attempts by foreign steel producers and their importers to evade the remedies afforded under U.S. law. We also renewed our partnership with CBP and steel industry associations like AISI to educate port personnel on how to spot and stop duty evasion on steel imports. The next seminar will take place later this week at the Port of New Orleans.

While enforcement actions are crucial to address the harm suffered by our steel industry, we know that it is only a partial solution. Meaningful long-term solutions will require steel-producing countries to work together in order to address the underlying causes of the problem, such as government support that creates new capacity, retains inefficient capacity, or prevents loss-making companies from exiting the market.

We must tackle trade-distorting government policies right at their source. This Administration has made reining in overcapacity and the policies and practices that support it a priority through bilateral venues like the U.S.-China Joint Commission on Commerce and Trade and the U.S-China Strategic and Economic Dialogue, as well as multilateral gatherings like the OECD, G-7, and G-20. For example, next week, we will continue to work on these issues in Brussels at a high level meeting organized by the OECD. 

Through enforcement actions and engagements abroad, this Administration is working towards both short-term improvements and long-term solutions to address the challenges facing the steel industry. But in order for us to better address this problem, we need to learn more from both industry leaders and representatives from communities directly impacted. Today, I look forward to hearing from you about the challenges you face, as well as exactly how global excess capacity is affecting your companies, industries, workers, and communities.

We have a busy day ahead of us, so without further delay, I would like to welcome Congressman Rick Nolan to today’s hearing.   Congressman Nolan represents Minnesota’s 8th district and is currently serving in his second stint in Congress after returning to the body after 32 years in domestic and international business. During his time out of congress, Congressman Nolan devoted much of his professional energy to generating Minnesota jobs through exports and trade.   He established the U.S. Export Corporation and worked with Minnesota Governor Rudy Perpich to build and operate the Minnesota World Trade Center in downtown St. Paul.  He later served as President of the Minnesota World Trade Center Corporation and chaired the International Association of World Trade Centers’ Trade and Policy Committee.  Congressman Nolan, I invite you now to provide your testimony. Thank you.

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