April 18, 2016

Deal With China To End $1 Billion In Export Subsidies Not Enough For Steel Industry

Reuters reported last week that the United States and China have reached an agreement under which China will halt a program that gave $1 billion in export subsidies over three years to Chinese companies in seven economic sectors. 

The industries and products affected by this agreement are: textiles, light industry, specialty chemicals, medical products, hardware, agriculture and advanced materials and metals, including specialty steel and aluminum products. The wire service reported that members of the steel industry do not think the agreement, which the Office of the U.S. Trade Representative discussed with reporters, will have much of an impact. 

According to Reuters, “One source knowledgeable about the agreement said it was not comprehensive enough to do much to help the U.S. steel industry, given its focus was only on specialty steel products.” Reuters also noted, “China still has other forms of support for industry in place, including relatively cheap and easy credit from state banks, state-regulated power prices that have often favored industry, and low prices for other inputs such as water.”