US steelmakers rummaging in the trade case toolbox for imports relief

It took four years, but we might now know what former Nucor CEO Dan DiMicco meant in 2012 when he said Nucor was “exploring some very new and unique ways” of combating unfairly traded steel imports.

"There are opportunities for us to deal with this today with tools that are in the toolbox and tools that will be added to the toolbox," DiMicco said during an earnings call in October 2012.

Since then, US steelmakers have petitioned for antidumping and countervailing duty (AD and CVD) investigations on oil country tubular goods, rebar, wire rod, welded line pipe, corrosion-resistant sheet, structural tubing, cold-rolled coil, hot-rolled coil, cut-to-length plate and other steel products.

After the wave of AD and CVD duty investigations in the last few years, we’re now hearing US metals companies touting new tools — such as last year’s provision lowering the injury standard — and calling out so many sections of US trade law that it’s starting to sound like trade case bingo.

201. 232. 337. 332. They conjure a sort of trade case numerology that requires a deep understanding of the myriad ways domestic industries can confront unfair trade, although there has been no recent mention of 301, which has been unsuccessful for steel at least thrice, or the mystical Super 301.

“It’s time now that we do something substantial. It’s time now to send the message that we’re not going to have to keep coming back case after case and year after year for 15 more years,” Leo Gerard, president of the United Steelworkers union, said at an International Trade Commission hearing. “It is time that the administration leads a 201. It is time that the administration put forward an investigation on a 232.”

Steel Dynamics Inc. CEO Mark Millett testified that launching a Section 201 proceeding was “likely the only viable solution to restore financial health to steel manufacturers and pipe and tube producers.”

So, what do all these numbers mean?

Section 201, Trade Act of 1974 – A Section 201 action is probably the most commonly known trade action for steelmakers besides AD and CVD cases and it has helped the industry before. Unlike AD and CVD cases that have to be filed on products and name countries individually, Section 201 actions — also called safeguards — impact all imports of specific products no matter the origin. They’re also are enacted more quickly.

In 2001, the ITC recommended a four-year Section 201 program with tariffs for multiple steel products and tariff-rate quotas for import volumes exceeding certain amounts. These actions require presidential approval, and President George W. Bush signed the duties into effect in early 2002. However, under international pressure, Bush removed them in late 2003. Section 201 actions require a more rigorous process because the domestic industry must prove “serious injury,” not just “material injury” to the ITC.

Section 232, Trade Expansion Act of 1962 – Section 232 investigations are used to determine the impact of imports on national security. The Department of Commerce conducts the investigation and then makes recommendations to the president within 270 days of receiving an application. The president has 90 days to decide if he (or she) agrees and will “adjust imports.” This is the tool that steelmakers pulled out recently and said, “Oh, I forgot I had this. I don’t remember if it is any good.” In 2001, Commerce investigated the effect of imports of iron ore and semifinished steel on national security, but in the end, recommended no presidential action.

Section 337, Tariff Act of 1930 – Section 337 makes infringement on intellectual property rights and other forms of unfair import competition unlawful, according to the ITC. This is a tool that’s being used in a different way.  While it is typically used to allege patent infringement, US Steel in April requested Section 337 investigation of all Chinese carbon and alloy steel products, alleging that Chinese steelmakers conspired to fix prices, stole trade secrets and circumvented duties by false labeling. The ITC acts as a sort of patent court in these cases, and if it decides to move forward, it will assign an administrative law judge to the case. In about a year and a half, the judge makes a determination, which is subject to presidential review. The reward for a successful 337 case is an exclusion order, which will instruct US Customs and Border Protection to not permit imports of the subject product.

Section 332, Tariff Act of 1930 – A Section 332 investigation is a fact-finding mission for trade or tariff matters. In these cases, the ITC investigates international trade, tariffs and competition between the US and foreign industries, but in the end, it makes no recommendations. The House Committee on Ways & Means in February requested a study called: “Aluminum: Competitive Conditions Affecting the US Industry,” which people in the market have said will give more detail about the portion of the US market being served by alleged illegally dumped Chinese aluminum.

Section 301, Trade Act of 1974 – Section 301 is intended to enforce trade agreements, resolve trade disputes, and open foreign markets to US goods and services. US steelmakers petitioned the George W. Bush administration in 2007 to investigate allegations that currency manipulation by China was a de facto trade law violation, but Bush refused. Section 301 remedies include the imposition of duties. Bush also rejected steelmaker 301 petitions in 2004 and 2005.

OK, got it? There won’t be a test on this, but it may be wise to be prepared anyway. Sometimes the trade tool box seems more like Pandora’s Box, especially when you consider that other countries have their own tools, too.

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