Steelmakers worldwide oppose free market status for China

A worker signals to pour the molten steel into the furnace at a steel factory in Anshan in northeast China's Liaoning province in 2007. The American Iron and Steel Institute and other trade associations around the world are calling upon the World Trade Organization to deny China free market status that could mean lower tariffs.

Many steelmakers around the world blame China for the steelmaking overcapacity that's led to layoffs around the world, including at century-old steel mills that were the last ones remaining in Scotland.

China now makes roughly half the world's steel and exports about 100 million tons of steel annually, which is about the amount of steel made in America during an average year.

The Economist Magazine recently suggested China's "soaring steel exports may presage a trade war."

A concern among U.S. and international steelmakers is that China would export more steel at below-market prices if the World Trade Organization grants China free trade market status.

They say Chinese steelmakers have unfair advantages because they're often state-owned and can receive massive subsidies, such as having the government foot their electricity bills.

The American Iron and Steel Institute and trade organizations in Canada, Mexico, Europe, Turkey, Brazil and Latin America took a unified stance against granting China a free trade status that potentially could reduce the tariffs it faces.

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"Presentations at the Dec. 1 event in Paris reviewed the continued significant role of the state in the Chinese economy, the resultant growth in Chinese steel overcapacity and the surge in Chinese steel exports to world markets in recent years," the trade associations said in a statement.

"Representatives from the various regional associations detailed the negative consequences that would result from granting China MES before Chinese market-distorting policies were fully reformed."

China and Chinese steelmakers must show they're operating in a free market and not heavily subsidized by the government, steel trade associations said.

"Given the continuing significant role of the Chinese state in many key aspects of the Chinese economy, especially in its state-owned and -controlled steel sector, there is no question that China remains very much a non-market economy today," the trade associations said.

"For the steel industry, recognition or treatment of China as a market economy at the end of 2016 would coincide with the peak of Chinese excess steelmaking capacity and record level of exports to international markets, including the U.S., the EU, Turkey and Latin America."

Much is at stake. Imports into the United States are at a 30 percent market share, according the American Institute of Iron and Steel, and thousands of steelworkers nationwide already have lost their jobs.


Business Reporter

Joseph S. Pete is a Lisagor Award-winning business reporter who covers steel, industry, unions, the ports, retail, banking and more. The Indiana University grad has been with The Times since 2013 and blogs about craft beer, culture and the military.