U.S. President Donald Trumps administration should keep working on its Section 232 investigation into steel imports instead of tinkering around with the North American Free Trade Agreement (Nafta), U.S. Steel Corp.s top executive advised in the companys third-quarter earnings call.
North American trade is not our highest trade priority. Our focus is more on the unfair trade from overseas, the dumping of steel into our market, U.S. Steel president and chief executive officer David Burritt said during the November 1 call.
The Pittsburgh-based steelmaker benefits from Nafta because of cross-border trade with Canada and Mexico in the automotive sector, Burritt said. U.S. Steel also exports blast furnace pellets to its former Canadian subsidiary, Hamilton, Ontario-based Stelco Inc.
We will continue to watch the Nafta process, and we will engage with the administration as appropriate, he said.
Trump has dubbed Nafta the worst trade deal ever made. A fourth round of talks to renegotiate the deal saw U.S. negotiators at loggerheads with their Canadian and Mexican counterparts after the Trump administration insisted that more U.S. steel be used in vehicles produced within North America. A fifth round of negotiations was slated to be held in Mexico City in mid-November.
U.S. Trade Representative (USTR) Robert Lighthizer is the chief negotiator for the United States. Lighthizer was previously a partner in the international trade practice at Washington-based law firm Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates, a role that has seen him represent U.S. Steel in anti-dumping and countervailing duty petitions.
In the meantime, U.S. Steel remains optimistic that the Trump administration will keep its promise to crack down on overseas imports with the 232, Burritt said. He predicted that a key report in the investigation, which could block imports on national security grounds, would be completed by January 14 and that the president would take action by April.
Its not a question of if but when. We count on the government to do their job in this space, and we are going to be patient and let them do it, Burritt said.
While what impact the 232 has had on the market remains unclear, three major flat-rolled trade cases enacted in 2015
under former President Barrack Obama one each against foreign hot-rolled, cold-rolled and coated product took some of the really bad players out of the market, Dan Lesnak, U.S. Steels general manager of investor relations, said.
Seeing some of those higher (import) offers is a reflection of those trade cases more than anything else, he said, noting that U.S. prices and import offers for some flat-rolled products were roughly the same.
U.S. Steel and other domestic mills announced price increases of $2 per cwt ($40 per ton) for flat-rolled steel in early November.
U.S. Steel has also been stymied on the trade front in its Section 337 petition targeting steel imports from China. The companys Section 337 complaint, filed in April 2016, made three allegations: that Chinese steel producers and distributors illegally conspired to fix prices, that they stole trade secrets through industrial espionage and that they circumvented duties with fake country-of-origin documents.
A U.S. administrative law judge tossed out the country-of-origin claim on October 2, U.S. Steel noted in documents released with its earnings data on October 31. Although we disagree strongly with the [judges] decision, we do not intend to pursue an appeal, the company said.
That setback came after U.S. Steel voluntarily withdrew its trade secrets theft claim in February, although the company retains the right to refile it at a later date. The antitrust allegation remains in play, and U.S. Steel said it was awaiting a decision on the matter from the U.S. International Trade Commission.