Brown Fights for Ohio Priorities in Trump's 100 Day China Plan

Letter Emphasizes Urgent Need to Address Steel Overcapacity that Hurts Ohio Steel Companies, Workers

WASHINGTON, D.C. — U.S. Sen. Sherrod Brown (D-OH) today proposed four steps President Trump should take as he pursues a 100 Day Plan on trade with China. In a letter sent to Trump, Brown outlined four steps that must be a part of the Administration’s efforts to work with China on trade to produce real results for U.S. companies and workers, particularly those who’ve been harmed by China’s steel overcapacity.

“China cheats and they win; we play by the rules and we lose. That has to stop,” Brown said.  “China can no longer get away with cheating. Any successful 100 day plan must put a stop to Chinese steel overcapacity that is putting Ohio steel mills out of business and Ohio steel workers out of jobs.” 

Brown’s letter urges Trump to:

  1. Demand China eliminate excess steel capacity

Nine of the 10 largest Chinese steel companies are owned by the Chinese government. These companies are propped up by unfair and illegal government subsidies so they can continue to operate even if they lose money. These state-supported factories overproduce and flood the global market with cheap Chinese steel, driving down steel prices which puts Ohio steel mills out of business and Ohio steel workers out of jobs.

2. Strengthen the World Trade Organization so China can’t cheat the system

We need to strengthen the World Trade Organization (WTO) agreement on subsidies and transparency so the U.S. and our allies can more effectively hold China accountable. Earlier this year, the Alliance for American Manufacturing released a report showing that, in decision after decision, the WTO has ruled against the U.S. and weakened our laws designed to fight back against these unfair subsidies and illegal dumping. This is the opposite of what should happen. The WTO should crack down on China’s cheating, not U.S. trade laws that help our workers and steel companies.  China cheats and they win. We play by the rules and we lose. That has to stop.

3. Insist that China drop its WTO case against the U.S.

China currently has a case before the WTO claiming the U.S. needs to treat China as a market economy – but this couldn’t be further from the truth. The Chinese government puts the thumb on the scales for its companies – often companies owned or controlled by the government, including steel. That’s not a free market. If China wins its case at the WTO – as they have too many times before – it would dramatically weaken the U.S.’s ability to fight back against illegal dumping that hurts Ohio steel jobs.

4. Don’t let China set the agenda – no Bilateral Investment Treaty until China cleans up its act

We know the Bilateral Investment Treaty is one of China’s priorities. Rewarding China with expanded U.S. market access is the last thing we should be doing while they cheat. We need to halt negotiations until China complies with the laws already on the books.

Brown authored the Leveling the Playing Field Act, which he worked with U.S. Sen. Rob Portman (R-OH) to pass into law in 2015, in order to give Ohio companies more tools when fighting unfair trade practices by China and other countries.

In March, Brown met with Commerce Secretary Wilbur Ross to discuss how they can work together and with President Trump to negotiate better trade deals for Ohio workers and boost Ohio’s steel industry. In the meeting, Brown raised several of his priorities for working with the Commerce Department, including addressing steel overcapacity, currency manipulation, and maintaining China’s nonmarket economy status.

Brown also joined Portman and U.S. Rep. Marcy Kaptur (D-OH-9) to invite Ross to visit Lorain to meet with steelworkers and steel companies to see the impact of unfair trade on Ohio’s manufacturing sector. Ross committed to visit Lorain in separate meetings with Brown and Kaptur.

In April, Brown and Portman applauded Commerce Department action against unfair oil country tubular good (OCTG) imports from Korea that affected American OCTG producers including Vallourec Star in Youngstown and Wheatland Tube in Warren. Following Brown and Portman’s urging, Commerce found that Korean steel producers have been unfairly dumping imports into the U.S. market, leaving Ohio steelworkers and steel companies at a competitive disadvantage.

Brown has held a series of roundtables with Ohio workers in recent weeks to get their input on what the priorities should be for renegotiated trade deals. Brown wrote to President Trump to outlining a strategy for renegotiations of the North American Free Trade Agreement (NAFTA).

Immediately after President Trump’s election, Brown reached out to his transition team to offer his help on retooling U.S. trade policy. Brown wrote to Trump in November offering specific steps to work together on trade and Trump responded with a handwritten note.

A copy of the letter from Brown is included below.

Dear President Trump:

I write in regard to the Administration’s pursuit of a 100 Day Plan on trade with China.  I appreciate you making it a priority to reset U.S.-China trade relations, and I encourage you to use this opportunity to secure China’s commitment to make specific policy changes, particularly on steel overcapacity and government subsidies.  Unless China is forced to make demonstrated, long-term adjustments to its industrial policies, China will continue to distort global markets and disadvantage U.S. companies and their workers.

State Intervention and Subsidy Programs

It is very difficult for U.S. companies and their workers to compete against the Chinese government and its policies that have caused global market distortions.  In the steel sector, for example, China accounts for approximately half of global production and more than half of the world’s estimated 700 million tons of excess capacity.  China’s overcapacity has flooded the global market, forcing U.S. steel companies to idle mills and lay off U.S. steelworkers.  Nine of the 10 largest Chinese steel companies are owned by the Chinese government.  Even steel mills not owned by the government are able to operate without market consideration because they get massive support from the government through a variety of provincial and national subsidy programs that allow these facilities to stay open despite not being viable. 

These national and provincial programs include cash grants, capital infusions, equity infusions and conversions, government-mandated mergers and acquisitions, discounted land use, subsidies for utilities, raw material price controls, tax policies and benefits, currency policies, and lax enforcement of environmental regulations.  In addition, the preferential financing of Chinese steel producers by Chinese government-owned banks insulates these companies from market forces and allows them to continue to operate despite huge financial losses.  

China’s involvement and these subsidy programs are not limited to the steel sector, however, and state intervention has created overcapacity in many other sectors, including the aluminum, glass, concrete, and other industries.  I urge you, as part of the 100 Day Plan to demand that China significantly reduce its net steel production capacity.  In addition, I urge you to require China to end these subsidy programs and relinquish state ownership and state control of these steel companies.  I ask you to demand similar commitments in other sectors defined by significant state involvement.  Although these actions will not be achieved overnight, I urge you to establish a specific timeframe with benchmarks that outlines a clear path for China to fulfill these commitments over the next six months. 

Updated and Stronger World Trade Organization Commitments

As part of its commitment to rebalancing the U.S.-China trade relationship, the U.S. should seek to negotiate new and updated World Trade Organization (WTO) obligations to address China’s global market distortions.  According to the United States Trade Representative (USTR), China has never fully complied with all of its WTO obligations since joining the body in 2001.  In addition, some of the problems in the U.S.-China trade relationship have evolved in the last 15 years.   The existing WTO framework has not effectively addressed China’s far-reaching, unfair trade practices, and U.S. manufacturers and workers have paid the price.  Renegotiating WTO commitments would allow the U.S. to establish more comprehensive, updated obligations in key areas, including state-owned and state-controlled enterprises, subsidies, and transparency.  I believe a renegotiation of these and other WTO commitments is critical to achieving an equally beneficial bilateral trade relationship with China, and I urge you to incorporate it into your 100 Day Plan.

Non-Market Economy Status

In addition, I urge you to insist that China drop its WTO case against the U.S. for maintaining China’s NME status in antidumping cases.  Article 15 of China’s WTO Accession Protocol Agreement permits the U.S. to continue to treat China as a non-market economy (NME) in antidumping cases as long as China continues to meet the NME criteria as identified under U.S. law.  I believe the facts make clear that China does not meet the statutory test in U.S. law to be granted market economy status.  And I am pleased that the Commerce Department has decided to conduct a new review of China’s market economy status as part of the agency’s antidumping and countervailing duty investigations of aluminum foil from China. 

It is important to note, however, that China has repeatedly sought to undermine U.S. trade remedy laws at the WTO.  As a result of flawed decisions at the WTO, it has become harder for U.S. companies to defend themselves against China’s unfair trade practices.  I view China’s case against the U.S. for its NME designation as part of this broader effort to weaken U.S. trade enforcement tools.  If the Chinese government is serious about developing a sustainable U.S.-China trade relationship, it will withdraw the case and instead undertake the market reforms necessary for a complete transition to a market economy. 

U.S.-China Bilateral Investment Treaty

Addressing excess overcapacity and state intervention in its economy must be our top trade priorities with the Chinese government.  I urge you to stop negotiations on the U.S.-China Bilateral Investment Treaty to ensure that trade enforcement, including steel sector reforms, remains the focus of talks with China.   President Xi highlighted the BIT during his visit to the U.S., signaling its importance to Beijing.  We should not allow China to make progress on its trade priorities with the U.S. or reward China with expanded U.S. market access until it complies with its existing trade obligations and puts an end to trade practices that are closing steel mills and forcing steelworkers out of jobs. 

I support your efforts to address China’s unfair trade practices, and I am pleased by the progress that has already been made.  For years I have seen talks with the Chinese government produce many press releases but little results.  U.S. companies and their workers cannot afford to wait for tough action any longer.  I urge you to include these requirements in ongoing 100 Day Plan negotiations with China.  I believe these actions will produce meaningful, tangible benefits for the U.S. companies and workers in the steel sector and other industries that have been harmed for too long by China’s unfair trade practices. 

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