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Steel Manufacturing Association Opposes Anshan Investment Into U.S. Steel Industry
May. 20th, 2010
Steel Market Update received a copy of the following letter which the Steel Manufacturer's Association (SMA) sent to U.S. Department of Commerce Secretary Locke and the U.S. Trade Ambassador Kirk. The purpose of the letter is to advise the U.S. government that the SMA members are opposed to Anshan Iron & Steel participation in the building of any new steel mills in the United States.
Here is a copy of the letter:
Dear Secretary Locke and Ambassador Kirk:
I am a strong supporter of market-based policies that create and support American steel jobs and American steel manufacturing. However, U.S. steel companies cannot compete with government-owned and subsidized Chinese companies.
As you may know, China’s Anshan Iron & Steel Group Corporation (“Anshan”) announced on Monday, May 17, that it had signed an agreement with the Steel Development Company of Mississippi to build multiple steel mills in the United States. Anshan is a state-owned enterprise and instrumentality of the central government, controlled by China’s State-owned Assets Supervision and Administration Commission of the State Council (or SASAC).
According to press, the Chinese central government has stated that their steel industry should emulate Japan’s auto strategy and build production capacity in the United States in order to evade trade remedies. As such, it is clear that this investment by the Chinese government is based on political strategic considerations, rather than valid market-based principles.
There is also a matter of equity and reciprocity. Current Chinese policy restricts investments into Chinese steel production. It is extremely unlikely that China would ever approve a substantial investment such as this by a U.S. company, let alone one controlled by the U.S. government, where it sought to build new steel capacity in China. This obvious lack of reciprocity begs the question of whether and why the U.S. should support such an investment.
As President of the Steel Manufacturers Association (SMA) and as a member of the Industry Trade Advisory Committee on Steel (ITAC 12), I urge you to raise these concerns with your Chinese counterparts as part of the upcoming meetings of the Strategic and Economic Dialogue next week.
Sincerely,
Thomas A. Danjczek
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