WASHINGTON, D.C.—U.S. Sen. Sherrod Brown (D-OH) testified on behalf of Akron-based steel wheel maker Hayes Lemmerz before a hearing of the U.S. International Trade Commission (ITC) today. The ITC conducted a hearing on whether unfairly-subsidized steel wheels from China are adversely impacting domestic producers, including Hayes Lemmerz. The facility employs approximately 100 employees.
“Ohio manufacturers like Hayes Lemmerz can compete with anyone, but they deserve access to a level playing field. Unfortunately, the Chinese are providing illegal subsidies to their steel wheel exports, giving them an unfair advantage of American-made products. Steel wheels are produced for our country’s transportation sector—for our trucks, trailers, buses, and cars. Hayes Lemmerz, one of the two petitioners in this case, makes steel wheels in its Akron plant,” Brown said. “Ohio is home to many of the steel producers who sell to the steel wheels industry. But, steel wheels manufacturers are facing unfair subsidies that put jobs and growth at risk.
“Through the use and enforcement of U.S. trade remedy laws, this industry and its workers can receive the necessary relief to reinvest, retool, and regain its place in the market,” Brown said in his testimony. “The laws you are charged with enforcing seem to be the only mechanism we have to force some measure of responsibility and reality into China’s behavior. Meanwhile, China’s predatory and protectionist practices continue, which pose serious challenges to our nation’s economic recovery and growth. If we as a nation are to reach the President’s goal to double exports, we must have an aggressive trade enforcement strategy.
“All that is being asked is that we enforce the basic rules that have been part of the global trading system since its inception,” Brown added. “The steel wheels industry is an important contributor in the sector that we rely on to transport goods and grow our economy. If they can’t compete on a level playing field—we as a nation can’t compete on one.”
In 2010, consumption of wheels totaled 3.1 million wheels, or approximately 125,000 tons of steel. Ohio is also home to many of the steel producers who sell to the steel wheels industry.
Just this week, Congress passed legislation introduced by Brown and a bipartisan group of senators that would maintain a trade remedy that allows American companies, including at least 16 Ohio companies, to compete on a level playing field with non-market economies like China. The legislation came as a response to a December ruling by a federal appeals court that would hamstring the ability of the U.S. to fight back against unfairly-subsidized Chinese imports. The bill clarifies that the Commerce Department can impose countervailing duties (CVD) and tariffs against Chinese imports that benefit from illegal export subsidies.
Brown has been a strong advocate for American workers and businesses in similar cases before the ITC. In September 2010, Brown submitted testimony to the ITC on behalf of coated paper manufacturers in Ohio, and testified before the ITC in September 2010 and December 2009 on behalf of Ohio steel manufacturers. The ITC's ruling in the December 2009 case led to a border measure on imports to support domestic producers of steel pipe like V&M Star and Wheatland Tube in Warren. By addressing illegal Chinese trade practices, this decision helped increase demand for domestic production. It also played a positive factor in V&M Star's decision to build a new, $650 million seamless pipe mill in Youngstown, bringing hundreds of jobs along with it.
In June 2009, Brown also testified before the ITC in support of rubber tire workers in Findlay and Leavittsburg. The ITC eventually ruled in favor of the tire workers, which led President Obama to employ trade safeguards that have protected American jobs and benefited domestic tire manufacturers.
Brown’s full statement, as prepared for delivery, follows.
I’ve had the opportunity to testify before this Commission several times, on cases involving a number of products manufactured in Ohio. From companies that make everything from steel, to paper, to aluminum, to seamless pipes, I appreciate the critical relief this Commission has provided to Ohio industries.
For example, because of this commission, I am happy to report that after having many “oil country tubular goods” (OCTG) mills shut down for a good portion of 2009, these mills are active again and regaining their footing in the marketplace. And last year, I attended the groundbreaking of the V&M Star expansion in Youngstown, Ohio, which will create more than 300 new manufacturing jobs, and additional jobs in the construction of this $650 million investment.
This expansion would not be possible without the relief of this Commission – a decision that ensured that our domestic producers could serve domestic markets. Increasingly, a number of the cases before the Commission involve subsidized imports from China. But, critical trade relief for dozens of petitioners was at risk of being revoked since a December federal appeals court ruled that the Commerce Department lacked the authority to apply countervailing duties on imports from countries with non-market economies, like China.
So, I am especially pleased to testify before you just days following Congress passing legislation to fix this problem. A bill I co-sponsored, and worked with colleagues to expedite consideration, now gives clear authority to the Commerce Department to apply this critical trade remedy. Without congressional action, petitioners would be without a major tool in our trade enforcement kit.
At a time when finding bipartisan consensus has been challenging, the Senate and House were able to work swiftly and effectively – which, I believe, speaks to the importance of trade enforcement.
Like the troubling pattern of subsidized imports we saw with oil country tubular steel, we see similar patterns with steel wheels imported from China. Steel wheels are produced for our country’s transportation sector – for our trucks, trailers, buses, and cars. Hayes Lemmerz, one of the two petitioners in this case, makes steelwheels in its Akron, Ohio plant.
The steel wheels industry is an important consumer of flat-rolled steel. In 2010, domestic consumption of steel wheels totaled 3.1 million – equating to the use of approximately 125,000 tons of steel.
That consumption is based on a supply-chain found in my home state of Ohio – which is home to many of the steel producers who sell to the steel wheels industry. But, steel wheels manufacturers are facing unfair subsidies that put jobs and growth at risk.
In fact, as noted in a Commerce Department final countervailing duties (CVD) determination on circular welded steel pipe in 2008, it is estimated that 95 percent of the Chinese steel industry is government owned or controlled. I believe these cases are part of a pattern that can be traced back more than ten years ago to when the U.S. Senate passed Permanent Normal Trade Relations (PNTR) with China.
Back then, there was great enthusiasm from proponents of PNTR, who heralded its passage as a boon of economic opportunities yet to come for U.S. workers and businesses. Members of Congress were told – repeatedly and without equivocation – how 1.2 billion Chinese consumers would soon purchase goods from their districts and states. We heard this from free trade advocates in Washington and on Wall Street through their excessive corporate lobbying.
We read in newspaper editorials and advertisements how China PNTR would promote reform and stability in China and the region. As a member of the House of Representatives at the time, I voted against China PNTR because I simply did not believe what proponents were selling.
More than ten years later, we are seeing just how wrong they were. Instead of abiding by the same set of WTO rules, China received the benefits of WTO membership while blatantly ignoring its rules.
The results are record trade deficits and millions of jobs lost in Ohio and across the U.S. In 2011, our bilateral trade deficit with China hit a new record of $295 billion. It is no secret that China’s trade policies and market distortions have wreaked havoc in numerous sectors in the U.S. and around the globe.
Ohio companies and workers have lived through more than a decade of unfair trade.
The steel wheels sector is not alone in their challenge to fight back these injurious practices. Through the use and enforcement of U.S. trade remedy laws, this industry and its workers can receive the necessary relief to reinvest, retool, and regain its place in the market. The laws you are charged with enforcing seem to be the only mechanism we have to force some measure of responsibility and reality into China’s behavior.
But far too many companies and workers do not have the capacity or means to petition the ITC for relief.
Meanwhile, China’s predatory and protectionist practices continue, which pose serious challenges to our nation’s economic recovery and growth. That’s one reason why I applaud President Obama’s executive order to establish an Interagency Trade Enforcement Unit, which I hope helps fulfills this void.
If we as a nation are to reach the President’s goal to double exports, we must have an aggressive trade enforcement strategy. I hope that includes more cases brought before this Commission.
No one is asking that we do what China does –to break the rules, subsidize our industry, and rig the game in our favor. All that is being asked is that we enforce the basic rules that have been part of the global trading system since its inception.
All that I would urge is that you give our workers and businesses a chance to compete on a level playing field. The steel wheels industry is an important contributor in the sector that we rely on to transport goods and grow our economy. If they can’t compete on a level playing field – we as a nation can’t compete on one.
Thank you for your attention and work on this case.