April 4, 2017
Mr. Earl Comstock
Office of Policy and Strategic Planning
U.S. Department of Commerce
Washington, DC 20230
RE: Request for Comment on the Construction of Pipelines Using Domestic Steel and Iron [Docket Number 170309252-7252-01]
Dear Director Comstock:
The Coalition for a Prosperous America supports the Trump Administration’s proposal to develop a plan in which all new pipelines use 100% American iron and steel. The CPA is a nonprofit organization representing farmers, ranchers, manufacturers, and labor groups, working on a national trade strategy that is more conducive to jobs and growth.
Our members support tightening Buy America initiatives, which are riddled with “public interest” exceptions including those that allow override by trade agreements. We support withdrawing from the WTO Agreement on Government Procurement (WTO-GPA) and eliminating public procurement chapters from existing and future trade agreements. Domestic spending should not reward foreign subsidized steel producers with US taxpayer dollars. American taxpayers from both parties overwhelming support1 the proposition that American infrastructure should be built with American plants and labor rather than the lowest international (often subsidized) bidder. This support for Buy America Acts2 holds consistent. American jobs are the top priority for taxpayers, even when presented with the possibility that budget deficits could increase.
China produces over 50%3 of the world’s steel production, and despite pledges and statements by Chinese officials about reducing excess capacity, China continues to increase capacity. China subsidizes its steel industry with national, provincial and local public funds. It dumps steel in world markets, driving down prices and profitability for private firms like those in the U.S. that do not rely on government subsidies. At its peak the U.S. produced 137 million metric tons of steel annually, but current annual output is just 87 million tons. According to Roger Newport, CEO of AK Steel and Vice-Chairman of the American Iron and Steel Institute, the American steel industry is currently operating below 75% capacity utilization and the American steel workforce has been reduced by 14,000 in the last two years alone. A major cause of declining demand is the rise in subsidized imports.
Steel is made here only if it is melted here. We are pleased to see the ‘all manufacturing processes’ standard already included in this plan and ask that you reject any attempts to weaken it.
CPA also supports withdrawing from the WTO Agreement on Government Procurement. The WTO GPA and the domestic procurement chapters of many other bilateral and plurilateral trade agreements signed by the U.S. override Buy America laws via the Trade Agreements Act of 1979. They mandate that we treat products of dozens of foreign nations as though they were our own with respect to procurement by government and government contractors. This treatment has proven to be one-sided. In 20104 the USA opened 48% of its government procurement to foreign competition, but the next five biggest WTO-GPA members opened up only 16%, a third as much. American procurement opened to foreign competition totals more than that of all our WTO GPA and FTA partners combined.
Participation in the WTO-GPA neuters the impact of Buy America laws. The Administration has the power to withdraw from the WTO-GPA with 60 days notice. It should do so. The administration should also work towards eliminating domestic procurement chapters in existing trade agreements and refuse to include such chapters in future trade agreements. Without these actions, the President’s intent for public investment to boost U.S. jobs, production, and domestic profitability cannot fully become a reality.
US infrastructure projects are potentially a major source for jobs… but if foreign resources are used for procurement for those projects many of those job opportunities will turn into job opportunities for foreign workers, while our own unemployed citizens languish in disappointment and idleness. As a result of four decades of trade deficits, foreign institutions and investors already hold some $6 trillion of U.S. debt. Increasing our debt obligations to foreign nations further to buy foreign-produced steel would defeat the purpose of infrastructure projects in revitalizing America and securing our future as a free, prosperous, and sovereign nation.
The CPA sees the President’s directive as a step in the right direction. In a true free market, American steel is highly competitive. There is no reason for us to rely on unfairly subsidized foreign steel. We therefore the Department of Commerce’s effort to develop a plan for requiring the use of domestic steel and iron for the construction of American pipelines.
Michael Stumo, CEO