Buy American Or Die – Chinese Steel: Part One

Article By: Paul Wideman

Originally Published In The May 2011 Issue Of Cycle source Magazine

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China joined the World Trade Organization (WTO) in December 2001. Upon joining the WTO, member countries are expected to abide by a set of agreed upon principles. Among these expectations are nondiscrimination principles, reciprocity principles, binding and enforceable commitments, maintain transparency and publish trade regulations, and to maintain safety values that allow for trade restriction in special circumstances. To date, China has adhered to little of these expectations, with even less sign of future plans to do so. What does this have to do with buying American? Well, everything, frankly. As we and other countries play by the global rules, China has expanded at a rate not seen since the Industrial Revolution, all the while playing by their own rules. One of the hardest hit sectors of our economy has been the steel industry. As our steel workers have been laid off and plants closed, China has steadily increased production and exports of steel and steel products. One of the major steel products that have been hit hardest is the large, seamless steel pipe and tube used in oil and natural gas drilling. The Chinese government subsidizes the production of said steel, in effect, lowering prices to the point domestic companies cannot compete. Such subsidies are prohibited by WTO rules. Between 2006 and 2008 US imports of these products rose from $681 million to $2.8 billion. And this translates directly into US job losses. In the first nine months of 2009, almost 2500 domestic steelworkers lost their jobs. Currently, China is responsible for over 80% of our manufacturing trade deficit. Many estimate that between 2001 and 2008 our country lost 2.4 million jobs due to China’s overtaking of the manufacturing industry. Resultant of the trade inconsistencies, the Office of the United States Trade Representative (USTR) issued statements proclaiming that instead of making progress toward WTO trade compliance, China is showing a “trend toward a more restrictive trade regime.” In 2009 the US – China Economic and Security Review Commission (USCC) stated they see in China “steps backward to greater government control.” The USCC concluded that China still exercises unfair control over its economy, giving “Chinese exporters a substantial price advantage in international markets and disadvantages to US companies hoping to export to China.”

Again, the nasty term protectionism gets thrown around. This is clearly not a case of protectionism, but instead an instance in which enforcing existing laws would remedy the problems. China has shown no respect for the laws and rules set forth by the WTO, and show no sign of ever doing so. Couple all of this with China’s failure to fairly value its currency, and the pendulum swings further in China’s favor. During the economic down swing of 2008/2009, US steel production decreased 36.4%. Over the same 12 month period, China increased steel production by 13.5%. This saw China’s share of global steel production top 46.6%, up from 37.7% in 2008. Basically China saw a global crisis and took advantage of it. A crisis many would argue they were instrumental in making happen. What we need from our lawmakers is to demand the rules of the WTO be recognized across the board, and that any country that fails to do so be removed from the WTO and all member countries then cease all trade with the ousted member. A fair trade policy is a vital key to global trade. It has been said for centuries that healthy competition is beneficial to all involved; the competitors become more efficient, increasing the bottom line, the product improves, and the consumer gets greater value. If we imposed unfair duties and tariffs on Chinese imports to keep their superior product out of our economy, the protectionism claim would be valid. But the shoe is on the other foot, as America offers a far superior steel product, and China refuses to play by the rules, levying high taxes and tariffs on US imports. China has a grand plan, and controlling steel production is a cornerstone of their plan to be the lone super power in the world. In addition, the US and other countries need to take decisive steps to counter China’s currency manipulation of its currency. This is unfair across the board.

I believe nothing in life is fair, and screaming “China is unfair!” has run its course. It is time that we engage in measures that force them out of our country, and bring our jobs back. It is obvious that the various world organizations that create policy and promote oneworld feel good laws, have absolutely no intentions of ever enforcing the laws set forth. But we can. Even if our elected officials decide to kick back and allow the status quo to continue on, we can refuse to buy imported Chinese steel, and products made of said material. Every time I go to a new steelyard, I ask to see the origin sheets, unless the material already has this info printed on the side of it. You must do the same thing. That steel rack you just put up in the garage or the furniture on the patio you just bought, if it was imported from China, it put another American out of work. This recession we’ve been weathering can be turned around, and bringing manufacturing jobs home is a key step. Let the talking heads say they are imposing sanctions and wording strong letters to the leaders of China. I don’t believe it. But American, or our country will Die. Next moth I will give you an in-depth look into the other problems with Chinese steel; poor quality.

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