enforcement of trade laws will be crucial to keeping
steelmakers margins healthy and maintaining the U.S.
manufacturing sectors strength, according to several top
"The trade laws have been
critical to the survival of ... the steel industry,"
David "Skip" Hartquist, a partner at Washington-based law
firm Kelley Drye & Warren LLP, said at the Steel
Manufacturers Associations annual members
conference May 1. "The U.S. market remains so attractive that
foreign producers are willing to violate trade laws and WTO
(World Trade Organization) rules. If you let your guard down,
theyll swallow you up."
Domestic interests have long
advocated the strict enforcement of U.S. trade laws, but the
outlook doesnt look rosy barring swift congressional
"The real problem (with current
low-margin business) is because of structural headwinds that
need to be addressed if this industry wants to get away from a
zombie decade of extremely low profits," said Roger Schagrin of
Washington-based law firm Schagrin Associates. "If the
governments of the world dont stop the Chinese government
from continuing to subsidize the massive Chinese industry, then
steel in the Western World is in real trouble."
However, many cases already
litigated at the U.S. International Trade Commission and the
Commerce Department are steel-related. Some say that duties on
commodity steel have had the unintended consequence of
encouraging downstream imports.
"We have a fair amount of trade
case coverage against China right now. Whats still
missing is wire rod, corrosion-resistant and cold-rolled
steels" Alan Price, partner at Washington-based Wiley Rein LLP,
said. "Were pretty well-covered at the moment in terms of
direct imports, but theres a substantial amount in terms
of downstream products, including steel grating, wind towers,
high-pressure cylinders. That coverage is pretty spotty."
Looking forward, a number of
potential wild cards may affect the trade arena, including new
appointments at the U.S. International Trade Commission, new
trade agreements currently being negotiated, and further
federal budget cuts due to sequestration. All of these issues
could hurt the steel industry.
"There are some big trade policy
issues out there. The (Obama) administration has been more
focused on trade agreements and free-trade agreements as a
solution to our problems. Its a great idea in theory, but
weve yet to see an FTA (free-trade agreement) yield large
pluses for large corporations and for the manufacturing
sector," Price said.