Download John Foster Chairman, AIIS NPC Opening Remarks

John Foster
Chairman, AIIS
NPC Opening Remarks
Good afternoon and welcome to today’s National Press Club event hosted by the American
Institute for International Steel, or, as we often say, The Institute.
My name is John Foster, and I am the President of the steel trading and trade services company
Kurt Orban Partners. I also have the distinct honor of serving as the Chairman of the AIIS. Ours
is a 67-year-old trade organization representing 120 companies whose tens of thousands of
employees and family members gain all or part of their livelihoods from the international steel
supply chain. The membership ranks of the AIIS span the full spectrum of the steel supply chain,
including:
• Union and non-union stevedores • 20 Blue and brown water ports • Steel handling warehouses, Distributors and Processors • Steamship lines, railroads, truckers and barge lines • Customs Brokers • Insurance companies • Steel Producing companies, both foreign and domestic • And, of course, the trading companies that are so integral to our mission. We are proud to serve as the last real defender in Washington of the free and responsible trade in
steel which includes both imports and exports, and as the voice for the tens of thousands of steel
supply chain members and families I just mentioned. Our purpose today is to highlight our
grave concerns regarding the new attempts to constrain the free and responsible trade in steel.
This is a concern our members share with much of the manufacturing base in this country.
Last spring, the AIIS sat side-by-side with members of the domestic steel producing community
at a key U.S. Trade Representative hearing here in Washington, to address a real problem –
global steel oversupply. State Owned Enterprises, or SOEs, especially in China, are a particular
threat to the global steel market equilibrium.
As a result of this concerted effort, the global steel oversupply issue, and particularly China’s
role in contributing to this trade-distorting over supply, reached the top of then-President
Obama’s G-20 agenda, and was on his bilateral agenda with China last year.
And, I am pleased to say, we saw notable results on two fronts. First, we achieved success with
the formation by G-20 nations of the Global Steel Over Supply Forum, the first meaningful
collective global response to the over-supply crisis in decades. Second, China committed to close
50 million tons of obsolete steelmaking capacity over the course of two years. To put that in
perspective, 50 million tons is just about half of the entire steel producing capacity of the United
States. Such a public commitment by China is an extremely rare and very important
development.
Fast forward to today, and we have a new administration with very different ideas about
globalization and trade, and a focus, some would say, on de-globalization. To be sure, a healthy,
and vibrant domestic steel industry is critical to any developed economy, especially the United
States. As we are fond of reminding ourselves, a rising tide lifts all the boats.
But whether you are a steel mill in Gary, Indiana, or a trading company like mine based in
Burlingame, California, we all ultimately depend on and greatly benefit from the U.S.
manufacturing sector, which enables us to pay our bills day in and day out. It is manufacturing
and the consumers that the manufacturing sector serves that drive the nation’s economy.
Because we live and work in a globally competitive environment, our manufacturers must be
able to compete effectively if they are to flourish and meet the growth objectives of this
administration. Significant elements of our manufacturing sector depend on the availability of
steel imports.
In 2016, for example, 19.8% of all imported steel was purchased by the domestic steel mills
themselves in the form of slabs, blooms and billets - the result of well-considered decisions
based upon quality and cost. This is how the steel supply chain works. It is how the tens of
thousands of men and women who work in our steel supply chain are able to support themselves
and their families.
Today, we will hear several perspectives on the critical importance of this country’s steel
community, both imports and domestic. Our event today underscores our mission: to promote the
responsible balance that we speak of so often, and that is needed to keep our country globally
competitive. We must avoid the siren song of aggressive, unwarranted protection if we are to
maintain the many tens of thousands of jobs that, directly and indirectly, depend upon the steel
supply chain. And we must avoid this type of protection if we are to ensure that our country’s
manufacturing base remains competitive in a global market. This is so important if we are to
achieve strong economic growth.
An April 24 commentary from Morgan Stanley Equity Research stated, “the problem with the
national security angle is that the Department of Defense uses relatively little steel.
The U.S. last attempted a Section232 case in 2001 and found that the military accounted for only
0.3% of U.S. steel demand.” In an American Iron and Steel Institute report from just 3 months
ago, the amount of steel going into national defense and Homeland Security was calculated to be
only 3.0%.
Let us not harm our critical downstream manufacturers, from small businesses like Tennsco to
the likes of General Motors, by confusing the politics of trade with the economics of trade. The
retaliation from our trading partners would be swift, and it would adversely affect many critical
sectors of our economy beyond steel. Put in other words, let us not unnecessarily look to protect
the few at the expense of many.