To the Editor:
The U.S. International Trade Commission (ITC) held its preliminary anti-dumping and countervailing duty injury hearing Sept. 25 on rebar from Mexico and Turkey. American Institute for International Steel (AIIS) staff David Phelps and Alexandra Jopp attended the all-day hearing. The following are AIIS comments about the substance of that hearing.
AIIS believes in open markets and free and responsible trade in steel, including, of course, for rebar. At the ITC hearing, the domestic industry made its usual appeal for trade protection, claiming increased imports from Mexico and Turkey had injured the domestic industry. The data supported the claim that imports increased, butas pointed out by the respondentsthe petitioners used as the starting point for their analysis the depths of the recession, when demand was extremely depressed and both domestic shipments and imports were low. The petitioners especially highlighted the increase in imports from Turkey, which they stated had targeted the U.S. market with its large and excess capacity compared to domestic demand in Turkey.
Representatives from the Mexican and Turkish industries countered, pointing out that increased demand had attracted the increase in imports from the two countries and that imports had merely recovered in 2012 to more normal levels. They also pointed to the domestic industrys profitability during the period under review, noting that while the construction market had improved since the depths of the recession, it had not as yet reached pre-recession levels. In fact, as the market continues its slow improvement, the domestic mills shipments and profitability are likewise improving, too. Imports are increasing in response to these improved market conditions.
It was notable that one of the specific statements made during the hearing by the petitioners lead attorney was "there is no need for imports." This comment was questioned by several attendees and was considered telling because the evidence showed that the elimination of imports from countries where the petitioners do not have rebar mills actually appears to be the goal of these cases.
Currently, Belarus, China, Indonesia, Latvia, Moldova, Poland and Ukraine are all covered by prohibitive duties, with only one Latvian company with a single-digit margin. The rest have rates like 114 percent for Belarus; China, 133 percent; Indonesia, 71.01 and 60.46 percent; Moldova, 232.86 percent; Poland, 52.07 percent and 41.13 percent; and Ukraine, 41.69 percent. The other potential significant suppliers to the U.S. market not controlled by the U.S. petitioners in this case? Turkey and Mexico. It seems that the petitioners lead attorneys statement was a real look at what motivates this case: the elimination of imports using another trade case, instead of competition.
One of the subjects of discussion at the hearing was Puerto Rico, and its need for rebar in the steel-short island that would be covered by trade duties if domestic petitioners are successful. Currently, the Turkish industry is the major supplier to the small Puerto Rican market and competes with other foreign suppliers, including a Dominican Republic mill partly owned by Gerdau SA. There are other mills that could benefit if the petitioners win this case, such as in Colombia, where Gerdau owns two mills.
The petitioners spent a lot of time at the hearing arguing that Turkey had "targeted the U.S. market." It was countered, however. Turkey exports rebar to 180 countries and the U.S. market represents only 5 percent of its exports. The logic here is that if Turkish mills had wanted to target the U.S. market, 5 percent is a pretty poor job, as stated by respondents during the hearing.
Turkish and Mexican rebar producers have a long history of participation in the U.S. market, and the increase of rebar imports from their mills reflects a return to more normal and historically typical shipment levels. As discussed above, we at AIIS believe this case reflects just what the petitioners lawyer said at the hearing: "There is no need for imports." If the petitioners win the case, and with all the other trade orders in place, rebar buyers in the United States will have few options other than domestic production and offshore production owned by the petitioners.
We respectfully urge the ITC to find no injury and end this unnecessary trade case. Open markets and competition benefit the U.S. economy, and in our quest for free and responsible trade in steel the AIIS must support the respondents, both our North American Free Trade Agreement (Nafta) partners from Mexico and Turkish rebar producers.
American Institute for International Steel