U.S. Measures to Protect Steel Sector Do Not Address Root Problem

May 21, 2016, 2:34 PM UTC
China Daily Life - Steel Economy
Photograph by Kevin Frayer — Getty Images

U.S. efforts to protect its steel industry will not solve the sector’s fundamental problems, which stem from past protectionist measures, China’s Ministry of Commerce said on Saturday.

The comments were posted on the ministry’s website following a decision on Friday by the U.S. International Trade Commission to continue probing imports of certain steel products from 12 countries, including China and Korea.

The United States slapped Chinese steelmakers with final import duties of 522% on cold-rolled flat steel on Tuesday after finding their products were being sold in the U.S. market below cost and with unfair subsidies.

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However, the Chinese statement said 30 years of protection and subsidies have distorted the U.S. steel market, resulting in a loss of competitiveness.

In addition, the majority of Chinese steel exports to the U.S. are molded steel and flat steel products which the U.S. does not produce, and therefore have not resulted in real harm to its producers, the statement said.

Currently the global steel industry is facing difficult times and over capacity, and countries need to work together to address the problem rather than resorting to protectionist measures, the Ministry statement said.

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China, which accounts for half the world’s steel output, is under fire after its exports hit a record 112 million tons last year, with rivals claiming that Chinese steelmakers have been undercutting them in their home markets.

In the four months to April, China’s steel exports rose risen nearly 7.6% from the same period last year to 36.9 million tons.

China’s own steel sector is facing deep problems following a sharp slowdown in real estate and construction which is only beginning to abate.

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The nation has pledged to shut down significant portions of excess capacity and lay off workers, but some analysts say the policy response so far has been incoherent.

In December, the Ministry of Finance cut export taxes on some types of steel products in a move analysts said could worsen global oversupply.

The Ministry recently reaffirmed that export tax rebates for some steel exports would remain in place.