MSCI Files Comments With U.S. Trade Representative
On Global Steel Industry Situation

Rolling Meadows, Ill., March 30, 2016 — Yesterday, the Metals Service Center Institute (MSCI) responded to the Office of the U.S. Trade Representative’s (USTR) call for comment on policy recommendations on the global steel industry. Winston & Strawn LLP filed the comments, which were due at midnight last night, on MSCI’s behalf.

“The global steel industry today is confronting significant challenges as a result of the growing disjunction between global steelmaking capacity and global steel demand,” MSCI noted. “The causes of the current conditions are not a mystery. The disjunction between capacity and demand has been fueled in large part by the intentional actions of foreign governments, some of whose economies are free market in name only.”

MSCI argued China’s use of anti-competitive mechanisms to “substantially” increase its steel production over the last several years, despite a drop in consumer demand, is the driving force behind global oversupply.

“[T]he health of the U.S. domestic steel industry is critical to the entire U.S. manufacturing sector, as well as to the broader U.S. economy as a whole, and … the problems posed by foreign government-sponsored capacity expansion demand a U.S. government response,” MSCI said. “It is imperative … that the U.S. government join with its trading partners and respond to the challenges posed by global excess capacity in the steel sector if the most severe economic impacts to the U.S. economy are to be avoided.”

To address global oversupply, MSCI said U.S. policymakers must “consider the impact of U.S. trade policy on downstream U.S. markets and U.S. manufacturers, as well as domestic steel producers.” Increasing the price of imported steel, through tariffs or other means, would simply raise the input costs of U.S. manufactured steel products. Instead, MSCI recommended the U.S. government redouble its efforts to enforce existing trade agreements and laws. Specifically, MSCI advised USTR to: 1) Engage with U.S. trading partners directly to reduce global excess capacity through negotiation, both bilaterally and multilaterally, and make it a stated principal objective of U.S. trade policy to target excess capacity in countries that increase capacity through market distorting policies; 2) Increase efforts to address currency manipulation, particularly by China; and 3) If the U.S. government imposes additional tariffs on imported steel, to avoid unintended damage to the U.S. manufacturers that utilize steel, it should impose a corresponding and offsetting tariff on steel-containing products identified by USTR in consultation with domestic steel consuming companies.

With its comments, MSCI notified USTR that Richard Robinson of Norfolk Iron and Metal intends to testify on behalf of MSCI at USTR’s public hearing on this matter on Tuesday, April 12 in Washington, DC.

Founded in 1909, the Metals Service Center Institute is a nonprofit association based in Rolling Meadows, Ill., serving the metals industry. It serves more than 300 members in over 1,200 locations in North America. For more information, visit www.MSCI.org, MSCI’s new online resource MSCI.org/Edge, like us on Facebook, follow us on Twitter, and connect with us on LinkedIn.