{"id":8383,"date":"2024-01-26T19:39:17","date_gmt":"2024-01-26T19:39:17","guid":{"rendered":"https:\/\/steelorg.wpenginepowered.com\/?p=8383"},"modified":"2024-02-01T19:43:38","modified_gmt":"2024-02-01T19:43:38","slug":"steel-market-update-column-us-trade-laws-must-be-upgraded-to-address-chinas-belt-and-road-initiative","status":"publish","type":"post","link":"https:\/\/www.steel.org\/2024\/01\/steel-market-update-column-us-trade-laws-must-be-upgraded-to-address-chinas-belt-and-road-initiative\/","title":{"rendered":"Steel Market Update Column: US trade laws must be upgraded to address China\u2019s Belt and Road Initiative"},"content":{"rendered":"
\n

By: Kevin Dempsey, AISI president and CEO<\/h4>\n

This piece was originally published in Steel Market Update<\/a>.<\/p>\n

The American steel market, including the stainless steel market, continues to face serious threats from subsidized and dumped imports resulting from foreign government policies creating an unfair playing field. It is no secret that China is a major culprit.<\/p>\n

For many years, Chinese government subsidies and other trade-distorting economic policies have adversely impacted the global steel market, making China a major contributor to massive global overcapacity in steel, estimated to be 610 million metric tons globally last year. But over the past decade, China has increasingly expanded its trade-distorting practices beyond its borders through its \u201cBelt and Road Initiative\u201d (BRI).<\/p>\n

When launching the initiative in 2013, China claimed that the BRI was intended to develop new trade routes connecting China with the rest of the world. The \u201cBelt\u201d referred to economic and overland transport links across China to Central Asia and Europe, while the \u201cRoad\u201d was a network of maritime routes connecting regions through Chinese seaports. But it is clear that the BRI is about far more than roads. It is a thinly veiled effort to grow China\u2019s economic and political power \u2014 at the expense of market-driven steel markets like ours in the United States.<\/p>\n

Last year, crude steel production in China exceeded 1 billion metric tons for the fifth year in a row, ~10 times the annual steel demand in the United States. In addition, through the BRI, Chinese steel producers are building significant additional offshore steelmaking capacity, particularly in Southeast Asian countries like Indonesia. From 2010 to 2020, ASEAN crude steel capacity doubled, and significant additional capacity expansion is underway, over 80% of which is the result of Chinese cross-border investments.<\/p>\n

The stainless steel industry has been particularly affected by the expansion of Chinese-owned steel production into Indonesia, which has the world\u2019s largest mining reserves of nickel, a key component in the production of stainless steel. In return for heavily subsidized Chinese steel investment into that country, the Indonesian government has banned the export of nickel ore, requiring that it be processed domestically in Indonesia \u2014providing yet another benefit to Chinese steel producers operating in that country.<\/p>\n

This Indonesian steel capacity is almost entirely intended for export, as stainless steelmaking capacity in Indonesia is currently nearly 27 times more than Indonesia\u2019s domestic demand for this product. Indeed, Indonesian exports of stainless steel have grown rapidly in recent years, from less than 70,000 metric tons in 2015 to over 4.7 million metric tons in 2022. As a result, the US stainless steel industry remains at risk of suffering injury from a surge in imports of subsidized Indonesian stainless steel.<\/p>\n

Unfortunately, our trade laws have not kept up with China\u2019s efforts to expand its subsidized steel production in Southeast Asia. Cross-border subsidies like those provided through the BRI are not currently subject to our trade remedy laws. That is why the AISI is actively urging Congress to pass the \u201cLeveling the Playing Field 2.0 Act<\/a>,\u201d which aims to strengthen US trade -remedy laws to crack down on new types of unfair trade practices, including China\u2019s BRI subsidies. The bill would expressly provide that the US Department of Commerce can use the countervailing duty law to address such cross-border subsidies as part of its trade investigations.<\/p>\n

The Leveling the Playing Field 2.0 legislation is a thoughtful approach to a complicated problem, and it has received strong bipartisan support in Congress. In fact, a recent\u00a0report<\/a>\u00a0by the House Select Committee on the Strategic Competition between the United States and the Chinese Communist Party recommended passage of this bill to \u201cupdate US trade laws by addressing issues such as cross-border subsidies, simplifying investigations into circumvention and repeated product-related inquiries, and strengthening remedies to minimize PRC predatory economic practices.\u201d<\/p>\n

Another key concern related to China\u2019s cross-border subsidies is how a proposed critical minerals free trade agreement between the United States and Indonesia could set up incentives for electric vehicles (EVs) which might end up benefitting China.<\/p>\n

Due to Chinese investment, Indonesia is now the largest miner and refiner of nickel ore in the world, mainly processing the metal for stainless steel, but now also shifting to refine nickel ore for electric vehicle batteries. Currently, Americans cannot claim a tax credit for an electric vehicle if it contains battery materials sourced or produced by a foreign entity of concern, which includes China.\u00a0However, the Indonesian government is actively lobbying for the negotiation of a new critical minerals free trade agreement, which could allow Indonesia\u2019s nickel ore to be used by US industries and still receive these favorable tax incentives.<\/p>\n

Not only is the Chinese government using countries like Indonesia to continue sidestepping free and fair trade, but it is doing it at the expense of human life and the environment. It is well known that the steel produced in China, and in many Southeast Asian countries, is significantly more carbon intensive than steel produced in the US. In addition, in Indonesia, tropical forests amounting to the area of New York City have been cleared near nickel mining sites. Waters that were once clear blue now run orange with pollution.<\/p>\n

Also, since 2015, 65 people have died in Indonesian nickel mining workplace accidents. Accusations of forced labor and inhuman conditions are surfacing across the country, all from Chinese companies that have no meaningful standards for labor and environmental protections.<\/p>\n

As the Chinese steel industry\u2019s subsidized offshore operations proliferate, the Chinese government\u2019s influence and control over resources, critical raw materials and production also grows. These actions enable China to continue to evade its international trade obligations. That is why AISI remains strongly engaged with policymakers, to update our trade laws and provide the tools needed to address China\u2019s Belt and Road Initiative and the Chinese government\u2019s economic aggression.<\/p>\n<\/div>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

The American steel market, including the stainless steel market, continues to face serious threats from subsidized and dumped imports resulting from foreign government policies creating an unfair playing field. 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