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AISI declares China’s trade-distorting practices harmful to U.S.

More than 10 years after it acceded to the WTO, China continues to fail to comply with its WTO commitments. Instead engaging in a policy of state capitalism that is causing severe harm to American steel producers and other U.S. manufacturers, Kevin M. Dempsey, senior vice president, public policy and general counsel of the American Iron and Steel Institute (AISI), said in testimony delivered before the United States Trade Representative’s Trade Policy Staff Committee. He urged the U.S. government to take more aggressive actions to address China’s trade-distorting practices.

“The current U.S.-China trade relationship is taking a tremendous toll on U.S. manufacturers,” Dempsey said. “Over the last decade, the U.S. trade deficit with China has more than tripled, the United States has lost millions of manufacturing jobs, thousands of U.S. factories have been shuttered and the American steel industry has been severely disrupted. The United States must take much bolder and more imaginative steps to address this chronic problem.” Dempsey described numerous trade abuses by the Government of China in direct violation of the terms of its accession to the WTO, including:

  • Providing massive government subsidies to Chinese steel producers, resulting in a tripling of Chinese steel production between 2000 and 2011;
  • Manipulating its value added tax system to promote exports of its steel products, and using its VAT rebate system to disadvantage U.S. and other producers;
  • Continuing government intervention to direct the commercial decisions of its state-owned enterprises, including state-owned steel producers, in violation of China’s pledge to the WTO to allow market forces to operate;
  • Restraining exports of key steel-making raw materials and taking other inappropriate measures with respect to raw materials to give Chinese steel producers an unfair market advantage; and,
  • Keeping the value of its currency at artificially-low levels to give Chinese producers an unfair advantage in the U.S. market, as well as in the Chinese market and third country markets.

“The fact that China has not fully complied with its WTO obligations underscores the importance of effective enforcement of U.S. trade remedy laws,” Dempsey said.