Steel buyers group: Subsidies to steelmakers violate WTO policies



The trade group representing steel buyers and importers has calculated that U.S. steelmakers have received about $17 billion in subsidies since 2000 in violation of World Trade Organization (WTO) policies that prohibit subsidies. The American Institute for International Steel (AIIS) this afternoon will charge in a new report that the U.S. steel industry gets favorable trades decisions from Washington that keep lower-priced foreign-made steel out of the U.S. market.

The report from AIIS, Still Paying the Price, is an update of a book which in 2000 detailed more than $100 billion in subsidies and trade restraints benefiting the domestic steel industry and detailing an alleged three-decade capture of U.S. trade policy.

The update has been written by William Barringer, Kenneth Pierce, and Matthew McCullough, attorneys at the firm Vinson & Elkins in Washington D.C. “Through consolidation and restructuring, the domestic steel industry has completely changed, emerging with concentrated market power to command high prices and big profits,” according to Pierce, in a statement. He asserts that “costly trade protection had nothing to do with this transformation and there is no sound reason for the import restraints to continue.”

The report discusses the high costs of Section 201 trade restraints, antidumping taxes, and state and local subsidies to the domestic steel industry. It purports to show how bankruptcy process and enormous federal subsidies to remove pension obligations, coupled with a rationalization of labor agreements, resulted in the complete restructuring of the industry, with market power now concentrated in the three megamills of Mittal Steel USA, U.S. Steel, and Nucor.

Barringer contends that the U.S. steel industry has “outsized influence over U.S. trade policy, to the direct detriment of U.S. manufacturing industries” that need global access to affordable steel to be competitive. This complaint has been made continually to trade officials by such metalworking organizations as the Precision Metalforming Association. Yet, “Big Steel still demands and gets huge subsidies and trade restraints, regardless of the cost to the nation and America's manufacturing base,” adds Barringer.