[Senate Hearing 115-576]
[From the U.S. Government Publishing Office]
S. Hrg. 115-576
TRADE ENFORCEMENT AND INFRASTRUCTURE:
SAFEGUARDING OUR INDUSTRIAL BASE FROM
PRESENT AND FUTURE CHALLENGES
=======================================================================
HEARING
before the
SUBCOMMITTEE ON INTERNATIONAL TRADE, CUSTOMS, AND GLOBAL
COMPETITIVENESS
of the
COMMITTEE ON FINANCE
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
(MONACA, PA)
__________
FEBRUARY 16, 2018
__________
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Finance
_________
U.S. GOVERNMENT PUBLISHING OFFICE
35-941 PDF WASHINGTON : 2019
COMMITTEE ON FINANCE
ORRIN G. HATCH, Utah, Chairman
CHUCK GRASSLEY, Iowa RON WYDEN, Oregon
MIKE CRAPO, Idaho DEBBIE STABENOW, Michigan
PAT ROBERTS, Kansas MARIA CANTWELL, Washington
MICHAEL B. ENZI, Wyoming BILL NELSON, Florida
JOHN CORNYN, Texas ROBERT MENENDEZ, New Jersey
JOHN THUNE, South Dakota THOMAS R. CARPER, Delaware
RICHARD BURR, North Carolina BENJAMIN L. CARDIN, Maryland
JOHNNY ISAKSON, Georgia SHERROD BROWN, Ohio
ROB PORTMAN, Ohio MICHAEL F. BENNET, Colorado
PATRICK J. TOOMEY, Pennsylvania ROBERT P. CASEY, Jr., Pennsylvania
DEAN HELLER, Nevada MARK R. WARNER, Virginia
TIM SCOTT, South Carolina CLAIRE McCASKILL, Missouri
BILL CASSIDY, Louisiana SHELDON WHITEHOUSE, Rhode Island
A. Jay Khosla, Staff Director
Joshua Sheinkman, Democratic Staff Director
______
Subcommittee on International Trade,
Customs, and Global Competitiveness
JOHN CORNYN, Texas, Chairman
CHUCK GRASSLEY, Iowa ROBERT P. CASEY, Jr., Pennsylvania
PAT ROBERTS, Kansas DEBBIE STABENOW, Michigan
JOHNNY ISAKSON, Georgia BILL NELSON, Florida
JOHN THUNE, South Dakota CLAIRE McCASKILL, Missouri
DEAN HELLER, Nevada BENJAMIN L. CARDIN, Maryland
(ii)
C O N T E N T S
----------
OPENING STATEMENTS
Page
Casey, Hon. Robert P., Jr., a U.S. Senator from Pennsylvania..... 1
Wyden, Hon. Ron, a U.S. Senator from Oregon...................... 4
WITNESSES
Paul, Scott N., president, Alliance for American Manufacturing,
Washington, DC................................................. 6
Galiano, Rick, president, Beaver Lawrence County Central Labor
Council, New Castle, PA........................................ 9
Mitchell, Petra B., president and CEO, Catalyst Connection,
Pittsburgh, PA................................................. 11
Young, Todd, managing director, government affairs, United States
Steel Corporation, Pittsburgh, PA.............................. 12
ALPHABETICAL LISTING AND APPENDIX MATERIAL
Casey, Hon. Robert P., Jr.:
Opening statement............................................ 1
Prepared statement........................................... 25
Galiano, Rick:
Testimony.................................................... 9
Prepared statement........................................... 26
Mitchell, Petra B.:
Testimony.................................................... 11
Prepared statement........................................... 28
Paul, Scott N.:
Testimony.................................................... 6
Prepared statement........................................... 31
Wyden, Hon. Ron:
Opening statement............................................ 4
Young, Todd:
Testimony.................................................... 12
Prepared statement........................................... 37
(iii)
TRADE ENFORCEMENT AND
INFRASTRUCTURE: SAFEGUARDING
OUR INDUSTRIAL BASE FROM PRESENT
AND FUTURE CHALLENGES
----------
FRIDAY, FEBRUARY 16, 2018
U.S. Senate,
Subcommittee on International Trade,
Customs, and Global Competitiveness,
Committee on Finance,
Monaca, PA.
The subcommittee was convened, pursuant to notice, at 9:53
a.m., at the Learning Resource Center, Conference Room 103,
Community College of Beaver County, Monaca, PA, Hon. Robert P.
Casey, Jr. presiding.
Present: Senator Wyden.
Also present: Senator Casey's staff from Pittsburgh:
Elizabeth Fishback, Regional Director; Jim Ferruchie, Regional
Representative; Jordan Ball, Regional Representative; Jacklin
Rhoads, Press Secretary; and Nico Starr, Special Assistant to
the Senator. Senator Casey's staff from DC: Livia Shmavomian,
Legislative Assistant; and Andrew Usyk, Legislative Assistant.
Finance Committee staff: Jayme White, Chief Advisor for
International Competitiveness and Innovation; Elissa Alben,
Senior Trade and Competitiveness Counsel; Jewel Harper, Senior
Deputy Clerk; and Susanna Segal, Deputy Clerk.
OPENING STATEMENT OF HON. ROBERT P. CASEY, JR.,
A U.S. SENATOR FROM PENNSYLVANIA
Senator Casey. This hearing will come to order. This is the
Subcommittee on International Trade, Customs, and Global
Competitiveness of the United States Senate Committee on
Finance. We are grateful that everyone is here. We are sorry
that we are a few minutes late.
I am privileged to be joined by Senator Wyden from Oregon.
He is the top Democrat, what they call in Washington the
ranking member, of the Committee on Finance.
And we are late for a good reason. We just had a phone call
that both of us will talk a little bit about.
But I want to make sure that we first and foremost thank
the Community College of Beaver County. Dr. Reber, we are
grateful you are with us today, and grateful to have the
benefit of the report that you gave me about the work, the
tremendous work, being done here on a whole range of workforce
issues and preparing for the future of Beaver County and
southwestern Pennsylvania.
We don't have time to get too far into that today, but I
think a lot of what we are talking about today on trade and
especially infrastructure has relevance to those discussions
about our workforce.
So, Doctor, thank you for having us here. We are grateful.
I want to thank our witnesses, whom I will be introducing
in a moment before we get into their testimony.
We are here today to discuss what I view and what I think
most Americans view as two of the most critical issues that
relate to the competitiveness of our Nation--manufacturing and
infrastructure--which have, of course, a substantial impact on
jobs and wages.
I am honored to be joined by Senator Wyden, who came from
Washington to be with us, but, as you know, he represents the
State of Oregon and has worked for years on all these issues:
trade issues, economics and jobs issues, manufacturing,
infrastructure, and the like.
We know that steel overcapacity, as well as trade cheating
and China's efforts to literally steal our future by stealing
our companies, are some of the most fundamental trade
challenges of our time because they directly impact
Pennsylvania jobs and wages. I have said for years and I will
say it again: when China cheats, Pennsylvania loses jobs. It is
that simple. So we have to face that reality when we are
confronting these issues.
China is going after America's competitive advantage by any
means necessary. If China can't buy it or if China can't run it
out of business, they usually steal it. Unfortunately, that is
a harsh reality.
So you don't need to look far in our State to find
companies and unions that have been hacked by the Chinese
Government. Just talk to U.S. Steel, talk to Steelworkers, talk
to other institutions in southwestern Pennsylvania that have
been victims of these actions.
I went to the White House this past Tuesday to meet with
the President in a bipartisan, bicameral group--both Houses of
Congress, Senators and House members of both parties, including
Senator Wyden, who was with us at that meeting--to discuss
steel and aluminum principally, but to talk more generally
about a number of these issues. At that meeting, I told the
President how Pennsylvania companies have been hammered, and I
use that verb purposefully, hammered by a surge in imports
since the Commerce Department announced its section 232
investigation last April, which was focused on rising steel and
aluminum imports and how they represent a threat to our
national security.
I also heard from Senators telling the President to
exercise caution. That is what a number of Republican Senators
and House members were telling him. I have a different view,
which we will get into later.
When the Commerce Department launched this investigation in
April of last year, I along with steelworkers across
Pennsylvania were hopeful that the Commerce Department would
quickly complete their study and the President would take
decisive action. And then we waited, and we waited, and we
waited. Through the spring and the summer, rumors were
swirling, but still, steel imports were surging.
The Commerce Department seemed ready to transmit the report
by the end of the summer, and then the President told The Wall
Street Journal in July that he did not intend to move forward
on a final determination on the steel section 232 case until
``everything finished up between health care and taxes and
maybe even infrastructure.'' So said the President at that
time.
Meanwhile, we watched imports rise for the first 11 months
of 2017. Total steel and finished steel imports were up 17.5
percent and 14.6 percent, respectively, from the same period in
2016. So total steel basically up 18 percent, imports up, and
finished steel imports up basically 15 percent in that time
period.
Imports of electrical steel, which many of you know is the
steel used to ensure that we have an electricity grid--which is
another infrastructure issue that we are going to be dealing
with--imports of that kind of steel, electrical steel, have
more than doubled from 2016 to 2017.
Pipe and tube surged 82 percent from 2016 to 2017. So
electrical steel up 100 percent, and pipe and tube up 82
percent.
The Commerce Department had 270 days to transmit the report
to the President. They submitted it just shy of that by a few
days. The President now has 90 days--actually, now it is 60,
because it was almost a month ago, so, basically, 60 days to
make a determination.
Now, when you have these meetings, you do not have 25
minutes to make your point. You have to make it in about 2
minutes. So my point was to raise the issue with the President
on 232, because the discussion started to meander off into
other issues, and I wanted to keep it focused on these issues.
I made two basic points to the President. One was that number
on electrical steel, to remind him about that, and two, to ask
him to make a determination not using the whole 90 days. I
wanted him to bring a sense of urgency to this issue right now.
And he listened, listened to our pleas, and I hope will make a
decision.
So why were we a few minutes late? Well, Senator Wyden just
got a call from Commerce Secretary Wilbur Ross. They obviously
talk on a regular basis, but I thought it was particularly
opportune that this hearing was supposed to start at 9:45, and,
all of a sudden, we got a call at 9:40 from the Commerce
Secretary about this issue. Senator Wyden can tell us more. But
apparently, there is going to be a press conference or a press
call at 10:30, which is good news. That means that, somehow,
between the meeting the other day and today's hearing, we have
gotten some people's attention. I will leave it at that for
now.
Let me go back to China and then wrap up.
I said earlier we cannot allow China to steal our future.
That is not drama and hyperbole. That is the truth. If we allow
them to continue on the pathway they have been on, they will
steal our future. Actions matter, and the actions we take today
must be directed at long-term outcomes we want for our children
and our grandchildren. This means an economy that creates
opportunities for all Americans and a system that creates a
fair environment for our workers to find jobs that pay family-
sustaining wages.
This also means investing in our roads and bridges,
schools, locks and dams, which are so important to commerce
here in southwestern Pennsylvania, and, of course, our
electricity grid. And I did not mention broadband, and we could
go down a longer list. You get it. Infrastructure matters. It
is about our security. It is about our safety. And it is about
our jobs.
So this means putting real Federal dollars behind
infrastructure that is fundamental to our combined
competitiveness. I am never opposed to public-private
partnerships or other ideas to finance infrastructure, but we
have to have significant Federal dollars. I believe you can do
infrastructure one of two ways. You can do it the corporate
way, which is not the way to do it, or you can do it the
American way.
I want an American infrastructure bill. It means we are all
in this together. We are all one American family. We ought to
put public dollars in, and big dollars, to really make a
difference and create jobs. So this means making sure that the
inputs to that infrastructure are made in America.
I think both parties agree on that, and I am grateful that
Senator Wyden is here today to make these points and to discuss
these critical matters for the economy of Pennsylvania and jobs
in Pennsylvania, as well as American jobs and American
competitiveness.
So I am happy to turn the microphone over to Senator Ron
Wyden, the ranking member of the Committee on Finance. And I
hope--this is just my hope; I am not allowed to say more than
this--I hope a year from now, he will be the chairman of the
most important committee in the United States Senate when it
comes to our economy.
[The prepared statement of Senator Casey appears in the
appendix.]
Senator Casey. Senator Wyden?
OPENING STATEMENT OF HON. RON WYDEN,
A U.S. SENATOR FROM OREGON
Senator Wyden. Thank you, Senator Casey. I do not want to
make this a bouquet-tossing contest, but I want to note that
Senator Casey's hearing could not be more timely. Sometimes in
the Congress you hear about a hearing on such and such subject,
and everybody says, well, we will come back in a couple years
and see if anything is going on. With respect to Senator
Casey's hearing, we just heard from Secretary Ross indicating
that here in maybe 20 minutes or so the country is finally
going to be told what are going to be the options to protect
American jobs, protect American industries. And particularly in
our case--and I heard Senator Casey talk about this at the
White House--is the need to try to make sure that we actually
use all the tools to keep foreign companies from making an end-
run around our trade laws.
And what we have done over the years--and Senator Casey and
I have been a team, with several colleagues--is we have put in
place a variety of new tools to deal with how these countries
rip us off with, for example, dumping practices and subsidy
practices and the like.
But as Senator Casey noted at the White House, these tools
haven't always been used. And to sum it up, what we want is
trade done right, and that means using all the tools and using
them in a timely way.
Now, as Senator Casey mentioned, if you look at this past
year, what you have to say is, by some measures, steelworkers
are actually worse off than they were a year ago, because there
was a lot of tough talk early on that led to a surge in steel
imports, and so a lot of struggling steel communities were
wondering what was next.
I think what we learned in this call this morning from the
Secretary, from Secretary Ross, is, as a result of this kind of
effort, and with Senators like Bob Casey weighing in as they
have, this administration is finally realizing they had better
act sooner rather than later. That is how I would sum it up.
And here in 20 minutes, we will get an inkling of what the
major recommendations are with respect to both steel and
aluminum. Of course, the President has legal authority to set
all of them aside. He does not have to do any of them. But we
will finally get this long-overdue report that we wanted, in
some sense. A number of us said at the White House that, to
make thoughtful recommendations about matters like the 232 law,
you have to have the report. We have been pulling and prying
and pushing to get it out, and now, finally, it is getting out.
One last point, and then, like Senator Casey, I want to
hear from all of you.
When I talk about using all the tools in the toolbox, you
cannot afford, in a time like this, to pass up opportunities. I
will close with a point with respect to infrastructure. We all
understand that for big-league economic growth, you cannot have
little-league infrastructure. So when the infrastructure plan
came out this week, I just kind of rushed through it to see
what was going to be in it to talk about using more American
steel and more American goods and services. There is
essentially nothing there, no mention of Buy America, vital to
American steel.
By the way, the plan actually gives the States the ability
to walk back current law with respect to using American steel
and American products.
So Senator Casey and I feel really strongly that in this
battle to deal with global competition, we feel we can beat the
pants off everybody as long as our government uses the tools
that it has at its disposal.
So we are anxious to hear from all of you. One of the few
benefits of seniority is you can give all the difficult
questions to Senator Casey and anything easy to me.
It is nice to be here. Thank you for inviting me, Senator
Casey.
Senator Casey. Senator Wyden, thanks very much. We are
grateful you are here. We have lots to talk about.
Let me introduce our witnesses, who have been in their
seats for a good while. So I will do a brief introduction, but
I don't want to skip over it. Many of you know these witnesses
already, either personally or by way of their work.
Scott Paul is president of the Alliance for American
Manufacturing, which is a partnership established in 2007--I
can't believe it is that long now--by some of America's leading
manufacturers and the United Steelworkers Union. Scott
currently serves as the board chair of the National Skills
Coalition and is on the board of visitors of the Political
Science Department at Penn State, his alma mater. Scott also
has an M.A. in security studies from Georgetown University
School of Foreign Service.
Scott, welcome.
I will do all our introductions, and then we will go to the
testimony after that.
Petra Mitchell, in the third chair, obviously, is president
and CEO of Catalyst Connection, a private, nonprofit economic
development organization dedicated to helping manufacturers
grow their businesses and create new jobs. She currently serves
on the board of directors of the Advanced Robotics and
Manufacturing Institute, Leadership Pittsburgh, and
Pennsylvania Industrial Resource Center Network, the so-called
IRC Network. Petra received numerous honors for her leadership,
including being named one of the 2016 most-admired CEOs in
Pittsburgh by the Pittsburgh Business Times.
I have known Petra for years. Petra, thank you for being
here with us.
Rick Galiano is the president of the Beaver Lawrence County
Central Labor Council and a representative for the United
Steelworkers. Before his career in the Steelworkers Union, Rick
worked at the TMK IPSCO Koppel steel facility. He is a graduate
of Lawrence County Vo-Tech School in New Castle in Lawrence
County.
Rick sits on the Lawrence County United Way board and is a
member of the Lawrence County Drug and Alcohol Commission. He
lives with his wife of 40 years, Maryann, in New Castle.
Rick, thank you for being with us, and thanks for all that
work you do on a lot of issues.
Todd Young serves as the managing director of government
affairs for the United States Steel Corporation, reporting to
the president and chief executive officer, David Burritt. Todd
manages U.S. Steel's Federal, State, and local government
affairs.
Todd, thank you.
Scott, why don't we start with you? And we will try, if you
can, to keep it to 5 minutes, because we want to get to as many
questions as possible.
STATEMENT OF SCOTT N. PAUL, PRESIDENT, ALLIANCE FOR AMERICAN
MANUFACTURING, WASHINGTON, DC
Mr. Paul. Certainly, Senator Casey. Thank you so much for
hosting this hearing in western Pennsylvania, which, in many
ways, was America's foundry for so many generations. And,
Senator Wyden, thank you for venturing here as well. I want to
commend both of you for your leadership, your work on
manufacturing, trade, and infrastructure issues.
I especially want to commend the role that you played just
earlier this week at the White House. I thought that the
feedback that you delivered to the President obviously was
heard. I know that Senator Wyden said, ``Let's see these
reports,'' and, 3 days later, we had them.
And, Senator Casey, you mentioned, as you said in your
opening statement, what the consequences of this delay have
been, which are very real. In addition to the imports that we
have seen increase, it is stunning that at a time when you have
seen modestly positive economic growth, overall the steel
industry is struggling. That does not make any sense. And you
can only draw a correlation to the rise in imports, which you
can clearly attribute to companies and countries trying to game
the system and get in before any relief is provided.
So I will be eagerly awaiting the recommendations of those
reports as well. But I want to commend both of you on your
leadership. And I hate to refer people to Twitter a lot, but I
thought, Senator Casey, you had some especially poignant
thoughts after the meeting at the White House about what the
impact of this has been for Pennsylvania that are worth
pointing out to the audience.
I want to say that trade has traditionally been a very
bipartisan issue that impacts red States, blue States, every
State. And in that vein, I was excited to serve on the
President's manufacturing jobs initiative. I had hoped, at the
beginning of it, that there would be a robust role on it for
trade. That did not occur. Instead, we were not able to
accomplish much of anything.
I was also--as I think a number of us from industrial
States were--hopeful based on some of the President's rhetoric
with respect to trade enforcement and very specific commitments
that he made, that we would see a substantial amount of
progress. The way I would characterize it to this point is, we
have seen a lot of trains that have left the station, but none
of them has arrived, and a couple of them have been derailed.
We need to get them on track for America, and for American
workers in particular.
I have a lot of content in my written remarks, and I won't
bother repeating that, but I just wanted to focus on a couple
principles in the time that I have. I think you both recognize
that, for too long, trade enforcement has been viewed as an
appendage of our trade policy rather than a core of it, and
that has had extraordinary consequences.
We have seen a rising trade deficit with China that reached
a record $375 billion in goods last year. You have seen
countries that feel like they have a blank check to dump, to
subsidize, to engage in market-distorting practices,
intellectual property theft. And while you have seen
enforcement in past administrations, it is hard to make the
argument that it was central to their trade strategy.
Oftentimes, it was designed to deliver votes on something else
or, in the case of Reagan, Congress wanted to take much
stronger action than he did. George Bush saw a political
opportunity in West Virginia by offering some relief for steel.
But you haven't seen it at the core of an administration's
trade policy.
I think you understand that, and that is something that we
encourage this administration to pursue as well. And I am going
to return to that in a second, because there certainly has been
a real disconnect and a real division in our country on
economic lines, on what is happening with respect to
manufacturing, on the outlook for trade, that I think has been
colored by this fact that trade enforcement has not been a
central part of America's economic philosophy for a very long
time.
Second, I want to expand on this idea that the President's
promises and the lack of follow-through so far have had some
real consequences, because I think they have.
You pointed out, Senator Casey, the 232 announcements, the
rhetoric, and then the lack of follow-through that has occurred
so far. And you have seen in Conshohocken some layoffs
announced, in Steelton at Dura-Bond. We have seen a steel mill
in Kentucky that has closed down. You have seen challenges in
the aluminum industry as well.
To add to your data on surging imports, in oil country,
tubular goods, which are a specific high-margin product for the
steel industry, one that is very essential to the energy
infrastructure, you have seen a 200-percent increase in imports
just from 2016 to 2017.
Just yesterday, at a major energy project in Texas, the
Gulf Coast Express Pipeline Project, the funders of that
project announced that more than half of the pipe would be
coming from Turkey as opposed to American producers. And we
know that Turkish steel is often dumped and subsidized. So this
raises, to me, real questions about another commitment that the
President made, and that was that we would have American-made
pipelines.
There was a memorandum signed with great fanfare a year ago
at the White House, and there has been no palpable follow-
through that I have seen with respect to that.
I also want to say that I commend the role that both of you
have played in trade enforcement and the improvements that we
have seen in the law in the last couple years. They have had
real, tangible, and helpful impacts that I am happy to expand
upon in Q&A, if we should arrive at that, but they have made a
real difference for American industry and for American workers.
I will say a word about infrastructure, and then I will
close with a thought back on trade expansion.
So all of the trade actions in the world will not make a
difference if we do not have a robust public investment to
increase demand in this country. We have fallen behind. It
obviously has an impact for commuters. It has serious impacts
for manufacturing with respect to logistics, competitiveness
when it comes to global trade, and for attracting both talent
and moving materials and people back and forth.
And by infrastructure, I speak very broadly, I think like
you do, that we need everything from our broadband, our energy
grid, to our bridges, our roads--we need a serious upgrade.
I share your belief that this has to be public investment.
We are not opposed to public-private partnerships. We also see
the strong benefits of ensuring that it is made with American-
made iron and steel. That is how we built the most magnificent
achievements in our country, and there is really no reason to
think that we cannot do it now other than some vague,
philosophical objections and maybe perhaps some envy that other
nations may have.
I want to end on a very wonky note, but one that I think
resonates today, and that goes back to the underlying
legislation of section 232, which no one I think had focused on
a lot before the President said he was going to take this
action. It was part of the Trade Expansion Act of 1962, which
was perhaps the biggest legislative achievement of that
Congress, pushed by President Kennedy.
It is notable that, at the signing ceremony of the act,
George Meany, the president of the AFL-CIO, was there
supporting a bill that dramatically cut tariffs on products,
gave the President broad authority to do that. But embedded in
that legislation were a number of trade enforcement tools,
including section 232.
The fact that over the years you have seen that trade
expansion and tariff authority take off and you have seen free-
trade agreements, where you have seen the real sporadic
enforcement of trade laws like through section 232, speaks to
kind of the situation we are in where our politics have become
more radicalized, our communities have become less hopeful. In
a way, there is an eroded sense of trust in the government's
ability to respond to problems. And part of it is precisely
because we have not exercised these trade enforcement tools.
I think that needs to be a central part of our trade agenda
as we move forward.
I want to commend the role that, Senator Wyden, you have
played in the past, and Senator Casey as well, both with the
ENFORCE Act and the Leveling the Playing Field Act. I look
forward to working with you in the future on that.
Thanks so much.
[The prepared statement of Mr. Paul appears in the
appendix.]
Senator Casey. Scott, thanks so much for your testimony and
for that perspective from history as well.
Rick Galiano.
STATEMENT OF RICK GALIANO, PRESIDENT, BEAVER LAWRENCE COUNTY
CENTRAL LABOR COUNCIL, NEW CASTLE, PA
Mr. Galiano. Good morning. Mr. Chairman, members of the
caucus, it is an honor for me to speak at this field hearing on
the trade enforcement infrastructure.
My testimony to you is straightforward. I try to do
everything in my power to improve the livelihood of our union
brothers and sisters, our communities, and our country. I would
like Congress and the administration to also do the same.
My concern is that the tools our country has to defend its
manufacturing base and move it further into the new era need to
be improved, but much more must be done. Since Congress passed
the Leveling the Playing Field Act and the ENFORCE Act, a slew
of trade enforcement cases followed.
Our union sees the day-to-day results when a worker gets a
job back and their hours are increased. I also see the
potential. We have to do more. Restoring fair play and ensuring
that we have a fair chance to compete internationally is all we
ask.
For example, since USW successfully brought forward trade
cases on the passenger vehicle and light truck tires from China
and off-road tires from India, close to $3 billion have been
invested in U.S. tire plant expansions and factories. Seven
thousand, two hundred union workers at Goodyear reached a 5-
year agreement with wage improvements and extension of plant
protection guarantees where no USW plants will close during the
term of the agreement.
To the doubters of the value of trade enforcement, I dare
them to look at those workers in the face and tell them they
are not worth protecting.
I wish I could say there is a similarly positive outcome in
the steel industry as in the tire industry. Since the passage
of the Leveling the Playing Field Act, 67 new tariffs against
multiple countries have been put in effect on steel.
While these trade enforcement acts have slowed the tide of
the illegal imports, too many of the 19,000 steelworkers who
have been laid off since 2015 are still waiting for idled and
underutilized facilities across the country to restart.
And let's remember, trade cases are simply about addressing
unfair foreign trade as agreed upon in international rules. We
were not asking for anything that the law was not designed to
provide. USW has been cautiously optimistic about the chance
for unilateral relief through implementation of section 232
steel and aluminum investigations currently in President
Trump's hands.
When President Trump and administration officials pledged
to unveil the findings of the section 232 investigations by
July 1st of 2017, we were hopeful at first and left wondering
the day after. The USW firmly believes that our Nation's
military and critical infrastructure needs are essential to our
national security.
By delaying the 232, the foreign steel industry saw an
opening. While the U.S. has shipped more steel this year, the
finished steel import market share was 27 percent for the full
year of 2017. Total and finished steel imports are up 15.4
percent and 12.2 percent, respectively.
The economy has grown, but the U.S. steel industry
continues to fight because of foreign steel products. Most of
the growth in our market is going to imports, not to our steel
mills and our steelworkers.
Our trade laws need to reflect a more globally connected
world and the potential for abuse of bad actors. Modern
steelworkers in this country can make 1.9 tons of steel per
man-hour. I want our country's trade laws to be more efficient
and effective.
You asked me to speak on infrastructure, and no amount of
trade enforcement will matter if we cannot get our goods from
coast-to-coast. The Finance Committee has the potential not to
just upgrade our trade laws but also seek the path to renew our
Nation's infrastructure.
It is simple. If I paid half my mortgage payments, I would
lose my home. Yet this country is paying only half of America's
infrastructure bill, leaving an investment gap and commuters
stuck in gridlocked traffic.
Please think about this. Eighty-eight million citizens in
urban and rural America lack affordable broadband access. One
out of 5 miles of highway pavement is in poor condition.
I do not know all the solutions to these problems, but just
like every USW member, I am willing to roll up my sleeves and
fix these problems. We need to ensure that our tax dollars are
used to maximize the economic benefit and domestic policies,
like Buy America.
In closing, I know that with a strong trade enforcement
strategy combined with a concerted effort to renew our
infrastructure, we can create a better America.
Thank you for your time.
[The prepared statement of Mr. Galiano appears in the
appendix.]
Senator Casey. Rick, thanks very much. I was noting that
one number you had there on, I guess it was page 4. A modern
steelworker can make 1.9 tons of steel per man-hour. That is a
good number to remember.
Petra Mitchell.
STATEMENT OF PETRA B. MITCHELL, PRESIDENT AND CEO, CATALYST
CONNECTION, PITTSBURGH, PA
Ms. Mitchell. Good morning. Senator Casey, Senator Wyden,
welcome to southwestern Pennsylvania, and thank you for having
me here today.
This morning, I would like to address our Nation's supply
chain, which is made up of small and medium-sized manufacturers
that serve many sectors including our infrastructure, metals,
advanced materials, DOD, and our national security sectors.
At Catalyst Connection, we are dedicated to serving these
companies. We provide technical assistance, management
consulting, and workforce development, such that, when
individual companies grow and succeed, collectively they impact
the region's economy and our Nation's supply chains.
To enable us to do our work, we are funded, in part, by the
Manufacturing Extension Partnership, or MEP program, and the
Industrial Resource Center program here in Pennsylvania, which
was started by Governor Robert Casey, Senator Casey's father,
and was a model for the national program. So I feel this was
very, very insightful on Governor Casey's part to start this
program.
I would like to provide you with a brief overview of the
MEP program and then some of the challenges that our small and
medium-sized manufacturers are facing, and the role that the
MEP program and Catalyst Connection are playing in helping to
address those challenges.
And, Senator Wyden, I liked your term of using the tools in
the toolbox. I would like to suggest that MEP is a critical
tool in that toolbox.
The MEP program is the only Federal program dedicated to
serving our country's small manufacturers. These companies make
up 99 percent of all manufacturing establishments. Last year,
we served 26,000 companies across the United States. Many of
these firms are often overlooked by larger for-profit firms
because the cost of sales can be high, and the typical project
size is low. The impact of the work, however, is very high.
The MEP program delivers $8.70 for every dollar of Federal
funding invested. This is according to the Upjohn Institute.
MEP clients themselves reported over $12 billion of new and
retained sales and the creation or retention of over 100,000
jobs just in the last year. Considering that the average
manufacturing worker earns over $80,000, MEP centers are
economic drivers in their communities.
Fortunately, the MEP program has been reauthorized by
Congress through the American Innovation and Competitiveness
Act. Unfortunately, the President's budget once again
eliminates the program.
Catalyst Connection clients have contributed to the
national program results just mentioned. Companies that work
with us are hiring, growing, and adding jobs, but we need to do
more. Sadly, manufacturing employment in our region has
decreased by almost 5 percent in the last 5 years even though
output and productivity are growing. We believe that a majority
of the job losses are from larger firms or plant closures at
some larger firms. But the growth in jobs among small and
medium-sized manufacturers is just not enough to make up for
those losses.
To reverse these trends, companies must accelerate their
pace of growth greater than any productivity gains they need to
remain competitive in a global economy. They have to invest in
new products, automation and robotics, and in their people. And
this is a big challenge.
While many companies are growing and interested in hiring,
the skills gap in manufacturing is another significant
challenge. According to a Deloitte report, the skills gap may
result in 2 million manufacturing jobs going unfilled.
Manufacturing CEOs are looking for help, and the MEP
program can provide it. Our services and operational
improvements, business growth and innovation, exporting, and
training create the foundation for the adoption of new and
advanced manufacturing technologies, and for upscaling of
workers.
So I would urge you to continue your support for policies
that favor small businesses and for the MEP program, to
continue to support small and medium-sized manufacturers that
provide high-paying, family-sustaining jobs.
And I would just like to share that I am personally the
beneficiary of one of those jobs where my father worked in
manufacturing and, even as an immigrant, was able to provide me
with a very comfortable childhood and a college education. I
would like to see many more of our friends and neighbors have
similar experiences. And I feel that, with your support, that
is definitely achievable.
Thank you.
[The prepared statement of Ms. Mitchell appears in the
appendix.]
Senator Casey. Petra, thanks very much.
Todd Young.
STATEMENT OF TODD YOUNG, MANAGING DIRECTOR, GOVERNMENT AFFAIRS,
UNITED STATES STEEL CORPORATION, PITTSBURGH, PA
Mr. Young. Thank you, Senator, for conducting today's
hearing in western Pennsylvania and for inviting testimony from
the United States Steel Corporation, which is proudly
headquartered here in Pittsburgh. Senator Casey, your
leadership in convening the hearing is very much appreciated,
because both trade law enforcement and improving America's
infrastructure are public policy priorities for America's
steelmakers.
U.S. Steel was founded in 1901. It is the largest
integrated steel producer headquartered in the U.S. with
domestic annual raw steelmaking capability of 17 million net
tons. Our major domestic steel operations are located in
Indiana, Michigan, Illinois, and right here in Pennsylvania at
our Mon Valley Works. Our tubular operations are located in
Alabama, Ohio, Arkansas, and Texas. And our two Minnesota
mining operations supply iron ore pellets to all of our steel-
making operations.
U.S. Steel Corporation manufactures semi-finished steel as
well as a wide range of value-added flat role and tubular
products for the automotive, appliance, container, industrial
machinery, construction, and oil and gas industries. When it
comes to trade enforcement, over the past several years,
America's steel companies and workers have been challenged by
significant, persistent, unfairly traded imports flooding our
markets from overseas. Steel at dumped prices and subsidized by
foreign governments targets America's open markets.
As a result, many American steelmaking facilities,
including those of U.S. Steel, have been forced to shut down
temporarily or even permanently, causing thousands of job
losses.
American steel companies can compete and win against anyone
on a level playing field, yet that requires fair enforcement of
our trade laws and strong, prompt action by the Federal
Government. We commend Congress on passing the 2015 Leveling
the Playing Field Act, which significantly strengthened U.S.
trade remedy law by clarifying the injury standard for the
International Trade Commission and antidumping and
countervailing duty, or AD/CVD cases, and providing the
Commerce Department with the additional tools to address dumped
and subsidized imports. This was the result of forceful
bipartisan leadership by steel champions in both the House and
the Senate.
Just months later, the Enforce and Protect Act was passed.
This law provided U.S. Customs with new tools and directives to
aggressively enforce U.S. trade remedy orders and crack down on
duty evasion and Customs fraud. It was critical that this
second law followed as AD/CVD orders only level the playing
field if they are strictly and effectively enforced.
Senator Casey and Senator Wyden, thank you for your roles
in enacting these stronger trade rules.
U.S. Steel and other domestic producers moved swiftly in
the summer of 2015 to utilize these new laws by filing a series
of new AD/CVD petitions on a flood of unfairly traded imports
of hot-rolled, cold-rolled, and corrosion-resistant steel from
12 countries. As a result of these cases and due to the new
laws, 28 new AD/CVD orders were obtained on 11 countries,
providing U.S. Steel Corporation and American producers with
critical relief.
Though these recent flat-rolled duty orders stemmed the
tide of unfairly traded imports from the targeted countries, an
all too familiar story unfolded. Low-priced imports surged in
from other countries.
For example, imports of cold-rolled and corrosion-resistant
steel from Vietnam replaced imports from China nearly ton for
ton. As a result, U.S. producers filed circumvention petitions
with the Commerce Department in September 2016. Last December,
the Department issued a preliminary affirmative finding that
imports of Chinese steel finished in Vietnam should be covered
by the same AD/CVD orders on imports from China. This decision
should put other countries and other foreign producers on
notice that circumvention will no longer be tolerated.
Another egregious situation is imports of oil country
tubular goods, or OCTG, particularly from Korea. In 2014, we
obtained AD/CVD orders on Korean OCTG and, in the years since,
have obtained higher and higher antidumping rates in each
administrative review.
However, dumped OCTG imports from Korea have continued to
surge into the United States. As was noted earlier, total OCTG
imports reached a nearly 200-percent increase in 2017 over
2016. Korea has no domestic use for OCTG products.
Our Nation must not tolerate these trade tactics to
continue. We need American-made steel products to harness our
abundant natural resources so we are truly able to achieve
American energy security and independence.
Of particular significance at this moment is the section
232 investigation that was discussed earlier. I will simply say
that, if the Senator would like to hold a hearing every day
between now and April 11th when the 90 days is up, we may get a
decision much, much sooner.
From U.S. Steel's perspective, we urge a strong, broad
action under section 232 on imports that are threatening our
national and economic security. The threat posed to America's
steelmaking capacity by the unrelenting and growing barrage of
imports merits aggressive action by President Trump. An
effective section 232 remedy must be comprehensive and broad-
based, covering all producing countries and the full range of
steel products, including semi-finished products, with only
limited exceptions for products that are not currently
available from a U.S. maker.
We are encouraged by Tuesday's meeting at the White House,
by the advocacy from members of Congress, as well as the
President's own remarks. We are optimistic that a section 232
action will come soon.
On the hearing's second topic, investment in
infrastructure, this is both a necessity and an opportunity for
a steelmaker. We depend on an efficient, reliable
transportation system to move millions of tons of raw materials
and finished product, and the long-term investment to improve
infrastructure creates direct demand for steel and fosters
broad economic growth and job creation, which further drive
steel demand. As the infrastructure discussion advances, we
encourage you to focus on three priorities.
Increased long-term investment is essential to undertaking
large-scale projects, those that consume steel.
Project streamlining is also critical. It will responsibly
condense the permitting process to lower costs and deliver
projects sooner.
And as has been discussed, the third priority is
maintaining the commitment to the longstanding Buy America
principal that the iron and steel that is purchased with
taxpayer dollars, the iron and steel that is used to rebuild
our Nation's infrastructure, should be produced, both melted
and poured, here in the United States. That is a principle that
must be maintained as the infrastructure debate continues in
the United States Congress.
Senator Casey, thank you again for your leadership in
convening this hearing and the opportunity to provide
perspective to the Senate on priorities of fundamental
importance to U.S. Steel and our country. We stand ready to
support and assist your important work.
[The prepared statement of Mr. Young appears in the
appendix.]
Senator Casey. Todd, thanks very much.
I want to thank our panel for their testimony. Now we will
go to questions. We will just alternate. Senator Wyden and I
will alternate. He has both seniority and rank over me, so
there might be a time when he gets two questions. I can't
control that. I want you to know that up front.
Let me start with the reality of where we have been the
last year with regard to the President. The fact that Secretary
Ross has this press conference, which might be underway now, or
press call, and the fact that he called Senator Wyden and is
announcing something today, that is fine. That is positive, I
guess, when you have the Commerce Secretary engaged, as he has
been, and I have spent some time talking to him. But we need to
hear from the President of the United States. I cannot say it
more plainly than that.
All of us can talk about it, and he can make reports and
all that, but the central person here in terms of making this
determination on 232 as well as other issues is the President
of the United States. The President has talked a lot about
taking action, but so far, we have not seen it. What we need is
action that will lead to concrete, positive results for both
U.S. companies like U.S. Steel as well as United States
workers.
So I guess the first question I have is--I will direct it
to both Scott and Todd, and anyone else who wants to weigh in--
can you tell us what happened to imports of subsidized steel
following the passage of the Leveling the Playing Field Act and
how U.S. industries responded?
Scott, do you want to start?
Mr. Paul. Sure, I will briefly.
Like you, Senator, Todd has seniority over me. He serves on
our board. So I will leave him to hit cleanup on this.
But I will just say, with some of the data you have
articulated already, you saw an otherwise hard-to-explain spike
in steel imports, especially considering there had been some
dumping orders in place, and you can only attribute that to
what I would call gaming the system, where you have raised
expectations that there will be limitations to market access.
Importers and countries respond to that by surging the market
with goods. That relief never came.
And you have heard various data points here, both very high
import penetration to the U.S. market, 27 percent; an increase
overall in steel imports of at least 15 percent; and obviously,
in some items like OCTG, up to 197 percent.
In an environment where there should be expansion in hiring
at local mills, in some cases, you have seen layoffs, as in
Conshohocken at ArcelorMittal, which makes military-grade
steel, one of the few producers that does that.
So it has had real and palpable consequences, and I would
echo what Todd Young said, which is, we need a decision
tomorrow on this. We have had 270-some days almost, more than
that now, of deliberation, and it is time to act.
Senator Casey. And the gap between the commencement of
investigations and the final determination by the President,
the reason why that gap of 270-plus days is important is
because, in that period, you had this import surge of players
in the marketplace taking advantage of that time gap. That is
why the promptness or the urgency is critical.
Todd, do you have something to add on this?
Mr. Young. Briefly, I would like to add, as I referenced in
the testimony, soon after the enactment of the acts--it could
be measured in weeks and days--the industry launched these
three new cases on flat-rolled products, successfully pursued
those with the assistance of the new laws, and relief was
gained. Twenty sixteen was much better than 2015.
The challenge, though, is what is often referred to as the
Whac-A-Mole problem. You address unfair imports from certain
countries only to now see them enter from another country. In
2017, as has been noted, almost every statistic shows an
increase of imports over the prior year. Overall steel imports
are up 15 percent, 2017 over 2016. There is a growing problem.
Part of the reason why we were very optimistic about the
potential of section 232 is, you are dusting off a tool that
has not been utilized for some time, and, importantly, it
grants broad authority to the President to take comprehensive
action to address this problem. Some of these problems, as I
said, are popping up as a result of a recent case. Some of them
are intractable challenges that, no matter what tool industry
has sought to use, it has not stopped the unfair trade.
That is why we are optimistic that a 232 decision can
address some of these challenges--instituted broadly and across
products and countries and for a sufficient time for the
industry to stabilize, to invest in itself, and to strengthen
our base here in the United States, so that we can provide not
only for our national security but our broader economic
security.
Senator Casey. Todd, I think it is significant what you
said just now and also what you said in your testimony. You are
talking about acts of Congress--the Leveling the Playing Field
Act and the ENFORCE Act, which Senator Wyden played such a
leading role in--acts passed by Congress actually having a
positive impact on this issue. And if we can couple those acts
and the tools therein with actions by the President, we can
make real progress.
I will make two points before I turn it over to Senator
Wyden. I worry sometimes that the audience who might listen to
this later might not have a real sense of what we are talking
about when we say ``232.'' Just so they know, Scott mentioned
the 1962 legislation President Kennedy signed. Here is the
basic 232 focus. This review that has been undertaken by the
administration, announced all those days ago, focuses on one
thing: whether imports adversely affect, number one, U.S.
national security, so whether an import from another country,
an unfair advantage, is adversely impacting our national
security, that is one, and could result in trade restrictions
on imports.
So that is what the President's determination will focus
on, and I cannot think of a more urgent issue than our own
national security, as well as our economic security.
So I am going to turn it over to Senator Wyden.
Senator Wyden. Senator Casey, I am going to pick up right
where you left off, because I think now we are going to kind of
try to wrap up what we think the problems are and then go to
kind of the remedies.
In your view, Mr. Young, what as of today are the most
significant trade violations affecting you as a U.S.
manufacturer and, obviously, your workers?
Mr. Young. I discussed several of them in the testimony,
but to sort of summarize them: one, there is the fundamentally
unfair imports that are dumped below the cost of production in
the U.S., which certainly threatens our ability to compete
fairly. There is also the challenge of foreign governments that
are subsidizing those products into the United States. Often,
these are addressed through our antidumping/countervailing duty
portion of the law.
When that portion of the law is successfully pursued, then
we have a question of enforcement. Is it now going to come in
from another country? Is Chinese steel going to Vietnam and
then coming into the United States? A recent decision by the
Commerce Department seeks to address that.
We also have a situation where there is a question as to
whether there is simply fraud involved with the payment of
Customs duties. We have a host of these problems when it comes
to Korean OCTG in general.
So I would say there are just fundamental unfair imports,
and then there is the cheating to get around when our laws put
a duty in place to protect us.
It was referenced earlier, we at U.S. Steel have also been
attacked by a cyberspace attack where we were one of several
Pittsburgh institutions targeted by the Chinese military for
our intellectual property. We have spoken about this publicly.
We cooperated with the Department of Justice here in western
Pennsylvania when they succeeded in pursuing indictments
against these Chinese military leaders.
So we see an array of challenges. Like we said, the
improvements in the law have helped us fight back against
those. The challenge is that, oftentimes, they breed new
attacks and new avenues of unfair trade. The other side is not
resting in their efforts.
Senator Wyden. You are so right about the other side not
resting, and I am going to get into that here in a moment with
respect to one of the more imaginative ways in which they
cheat, because, as you know, the gentleman behind me ran a
sting operation. We set up a dummy website that was designed
solely to try to catch trade cheats and invite people from
around the world to essentially be in touch with the dummy
website, and we were flooded. So we are going to talk about
that, I think on my second round, in terms of merchandise
laundering, as we came to describe it.
But I think what you said--I want to make sure, because it
highlights Senator Casey's point about how valuable 232 is--is
that that begins to, again, deal with this end-run through
relocations and the like. Is that a fair statement?
Mr. Young. Rather than tackling this on a case-by-case,
product-by-product, country-by-country basis, section 232
allows a comprehensive remedy to basically weave together
solutions to each of those challenges.
Senator Wyden. Senator Casey?
Senator Casey. I wanted to focus on the two broad topics we
are here to discuss today, and I open this up to anyone on the
panel.
On the one hand, we are dealing with this issue of
cheating, which is significant, and obviously, anytime you
allow a cheater or a cheating strategy to remain in place or to
be unfettered, you are going to have a bad outcome for the
country that is the victim of the cheating, and that happens to
be the U.S. So that is cheating on trade. That is part of what
we are talking about today. But also, when we under-invest in
our infrastructure, we are cheating ourselves as a Nation.
So you have both at work here. Both are pernicious. One is
imposed upon us by another country or several countries when
they do dumping and take other actions that are adverse to our
workers and to our companies. But the other cheating is on us,
if we don't make the investments we should be making.
So I wanted to open it up to the panel on both of those
issues. In particular, maybe I will direct this to Scott.
One of the tools that we have is Customs and Border
Protection. How do you feel Customs and Border Protection is
doing with regard to efforts to identify, prevent, and address
duty evasion and circumvention, if you can describe what we
mean by both?
Mr. Paul. Sure. Thank you for the question, Senator Casey.
I think it is a great one. And I am glad that Senator Wyden
mentioned the sting operation, because it really brought to
light the type of challenges that we have seen. This goes back
to the point of my testimony, which is that trade enforcement
has not been at the core of our strategy for a very long time.
Customs and duty evasion and circumvention occur because
there is opportunity and because there is lack of enforcement.
The opportunity is that, even though we are only 5 percent of
the population, we have an outsized amount of consumption
compared to the rest of the world, so we are an attractive
target. And our border protections with respect to fairly
traded goods are really underfunded, and that has had serious
consequences for products that range from steel and other
metals to consumer products. And with digital platforms being
available to sell this, it is expanding exponentially.
It is something, again, that I think most average citizens
probably do not think about, but it has a real and palpable
impact on the ability of our companies to be competitive. And
this is where we underperform, to your point.
Our industries that are in global competition have not
grown as fast as the rest of our economy for a very long time.
And it is not because we do not have great workers. You heard
Rick's testimony, in terms of the efficiency of a steelworker.
It is not that we do not have amazing entrepreneurs. We clearly
do. But it is that our public policy has not caught up, and
some of that starts with those very wonky, specific, and boring
but essential enforcement mechanisms that have been underfunded
and underappreciated.
Senator Casey. Along the lines of wonky, can you describe
for the audience what you mean by duty evasion and what we
should do to combat it?
Mr. Paul. Sure. Duty evasion--I guess there are two types.
There is a straight-up duty evasion, which is whatever our
normal tariff schedule is. Then there is duty evasion when it
comes to, say, dumping orders having been opposed, or
countervailing duty orders.
By those I mean--those are essentially extra taxes put on
specific imports, specific lines of products from specific
countries that have been found to have been dumped. They
sometimes range from 5 percent up to 200 percent or 300
percent. There are lots of different ranges there.
But there is a boutique market for both mislabeling and
shielding these types of imports from enforcement. So they are
essentially contraband coming into our country. And they have
harmful impacts in different ways, obviously, than opioids or
other sorts of harmful products, but they harm our economy and
they harm our workers.
And I am glad that the work of the Finance Committee, of
Senator Wyden, has shed some light on this. We need stepped-up
enforcement of this.
Senator Casey. I want to open it up, Rick and Petra, if you
have something on this. And I have a specific question for
Petra after that.
Rick, anything on this, in terms of the worker impact?
Mr. Galiano. Senator, what the worker impact is--I am kind
of a person who sees the end result when an individual gets
laid off and comes to our halls and goes over things that he or
she had in the last 5 years that are all gone, and trying to
get that individual back to work, getting them some relief,
getting them some benefits, after the 6 months of unemployment
that they lose, trying to get them on TRA benefits, trying to
get them another field of employment after education. Like I
said, then I see what happens to communities, the impacts of
what goes on.
So it is disheartening to see these things go on and to try
to get the foreign imports out when our hands are tied
sometimes, and we can't do anything about it until the
government works with us.
Senator Casey. Petra?
Ms. Mitchell. I think the impact on the supply chain is
similar. When the steel industry is impacted and in decline,
that ripple effect goes through the entire supply chain and
puts a lot of added pressure onto smaller companies to continue
to diversify, seek new markets, and look for other ways to keep
their employees, because they certainly do not want to lose
good employees due to the workforce challenges that I mentioned
as well. So there is definitely a significant downstream
impact.
Senator Casey. Petra, I also want to put in a commercial. I
am admitting up-front this is a commercial for your operation.
Ms. Mitchell. I will take it.
Senator Casey. I am not saying this just because Governor
Casey created the program in Pennsylvania back in the 1990s,
but why the hell, if I can say it that way, would any
administration eliminate funding from the Manufacturing
Extension Partnership? I wish someone in the administration
could come to me and show me the report that justifies
eliminating that program. They do not have a report. It is some
budget guy who does not know anything about it, does not care
about it, does not know Pennsylvania and a lot of other States,
saying we do not need this program.
So the only good news here is Democrats and Republicans in
both houses will oppose the elimination of MEP, and that is the
good news. But we cannot assume that is going to happen.
So, Petra, I want you to know, we are going to fight to get
the funding for MEP in place. But this is the second year in a
row now they have tried to eliminate it in their budget.
And I will wait 100 years for an explanation and still not
have it, because there is no explanation other than some green-
eyeshade guy in Washington who doesn't know our States,
certainly doesn't know my State, talking about eliminating it.
So that is my commercial, and I am sticking to it.
Todd, I know we want to go to Senator Wyden, but anything
on these issues?
Mr. Young. Just briefly on the question about duty evasions
and Customs and Border Protection. Following enactment of the
ENFORCE Act, I will credit the agency for their outreach to the
steel industry. That has continued, actually will continue
through 2 weeks from now, when the Acting Commissioner
himself--he is pending permanent Commissioner--is meeting with
the steel industry. We also had a delegation of Customs
personnel from around the country recently, either in 2016 or
early 2017, visit our research and technology center here in
Munhall, PA to learn more about steel, how to identify
products, how to distinguish between those so that they know
that a product that has a rightful duty on it, they are
collecting it. They are not trying to misidentify the product
to evade that duty.
Senator Casey. Todd, thank you for that.
Senator Wyden, we are probably going to be wrapping up in
about 10 minutes.
Senator Wyden. Great. I just want to say, before we leave
this matter of kind of how we go after the trade cheats who get
busted, in effect, for dumping and unfair subsidies, and this
did affect the steel industry, as we have been talking about.
One of the things that Senator Casey and I were very interested
in is, in the past, the reason the government would drag its
feet is there was no trigger to make enforcement mandatory. I
remember you and others told Senator Casey and I, ``You have to
change that. You have to have strict timelines to make sure the
government actually brings down the hammer, and there has to be
action.''
So we have appreciated you working with us, and I think
that was one of the big developments after we did the big sting
operation, and you all told us what was going on.
I am going to wrap up with one point. I may have touched on
it with Senator Casey. But Oregon and Pennsylvania have another
thing in common, something probably both of us would rather not
be the case, be able to pass on it, and that is, both of us had
our companies hacked by the Chinese. And I know that the
Chinese stole intellectual property from you all, Mr. Young.
As you know, our solar manufacturer--we don't have very
many solar manufacturers left in the United States--they also
had intellectual property hacked. And in both cases, the
Chinese were indicted for actually engaging in this kind of
action.
So I will just close, I think, Mr. Young, by having you
tell us, what was the implication of the Chinese hack on you
all, and how, in your view, can the 301 case be used to get
China to eliminate unfair policies?
Mr. Young. As you noted, we were twice the victims of
cyber-
espionage, which included the indictment of members of the
Chinese military. They specifically, in a second spear-phishing
attack, sought to exfiltrate confidential business information
related to advanced high-strength steels. We spent considerable
effort, time, resources, and money to develop this technology.
It is the direction in which steel is moving. It is lighter. It
is stronger. It is what the auto industry needs to meet
efficiency standards but also still protect the occupants of
those vehicles.
The full implication of it is not known. We did bring a
separate legal challenge against Chinese producers based upon
this attack. One of the things we found is that the law passed
several decades ago was not as efficient in processing a cyber-
espionage attack, but we thought that was an important
principle, to not let that matter rest.
The full impact of it is that, if you can steal from us
what we have spent years and extensive resources developing on
the next generation of steel, and you do not go through that
process yourself, certainly a shortcut would help potentially
an entire industry in China which has half of the world's
steelmaking capacity.
Senator Wyden. Does anything about this relate to 301 and
using it?
Mr. Young. We actually filed comments when the 301 process
was initiated, noting, in particular, part of the 301 effort is
targeted on the sort of mandatory voluntary transmittal of
intellectual property in order to do business in China. What we
wanted to have on the record, which was known, but to
reiterate, is that it is not just a matter of them making you
take a step to engage in their markets. They attack us, and
they do it through cyberspace.
The question of exactly how a 301 could be used in that
front, we are very curious to see the outcome of this report,
similar to the 232. We expect that it is coming. But we have,
obviously, taken steps since that time to seek to prevent a
similar outcome. We are not seeking to produce steel in China.
We are happy to produce it here as a 100-percent American
company, from the raw materials to the final steel produced.
To the degree they have some of our confidential business
information and are using it, our priority would be to not let
that product into our country.
Ms. Mitchell. Senator, maybe just a quick comment.
Cybersecurity is a huge, huge issue for small manufacturers
as well. As you can imagine, they are resource-constrained.
They do not have the full IT staff and departments to really
manage that.
But also, they are targets. Small companies are targets for
financial fraud, for financial risk. And we suspect, very soon,
they will be targets for stealing of intellectual property, as
was already mentioned, and also shutting down of production
facilities. One small company can be a critical element of a
supply chain. You shut that company down, and that whole supply
chain can be shut down.
So again, it is a major issue not just for large companies,
but for small ones as well.
Senator Casey. Thanks. That may be the last, unless Senator
Wyden has one. He certainly has the opportunity to ask another
question.
I want to turn to Rick Galiano. Rick, we were with the
President on Tuesday, as I said, around a long table. And that
was a good discussion we had. I brought up--it wasn't by way of
the question, it was just urging the President to act in a time
frame shorter than the 90 days. I probably should have used the
number 60, because there are only about 60 days left for him to
decide.
But I said that because of this delay. I know some people
listening might say, ``Oh, there goes a member of the United
States Senate complaining about government inaction, and
government is always slow. What is different about this one?''
What is the difference, right?
But this one, this delay, has real consequences for the
surge of imports. And obviously, what flows from that are real,
adverse consequences for the workers.
If you can, walk through that a little bit and just give us
a sense of what this means, what this delay means, what this
lack of a remedy means in the real life of a real worker?
Mr. Galiano. Every day it delays is every day an employee
may lose their job, a member may lose their job. As that
continues, with foreign imports, the industry itself slows
down, and the unemployment office gets busier because they lose
their jobs.
So in fact, if this is stalled any length of time, we are
going to have issues dealing with the last depression or
recession that we had 5 or 6 years ago or 7 years ago with the
factories being 50-
percent idle, as it was back then.
The plant that I come out of, it just started getting busy
in the last 2 years. Four years before that, it was slow, and
it came into a cycle that they are busy again. But with the
foreign imports coming into this country as fast as they can, I
fear that the same thing is going to happen going forward if
this doesn't pass within the next 6 months or 3 months.
Senator Casey. In your testimony, when you talked about
recent action to put more tools in the toolbox, you said, I
think it is the first page of your testimony, when you talked
about the passenger vehicle, light truck tires issue, you
talked about a $3-billion investment into U.S. tire plant
expansions and factories because you had that tool available.
Mr. Galiano. Correct.
Senator Casey. Seven thousand, two hundred union tire
workers at Goodyear reached a new 5-year agreement.
In other words, you have tools. You use those tools for
enforcement. And you get results for American workers.
Mr. Galiano. And with a 5-year agreement, no employee will
be laid off for the full 5 years.
Senator Casey. So what we are trying to do together is get
the same results for steelworkers and others just like what
happened in the tire context. So it is a good analogy, a good
comparison.
Senator Wyden?
Senator Wyden. I think this has been very, very helpful,
Senator Casey. We started out, whatever it was, 1\1/2\ hours
ago or something, talking about how, in life, sometimes,
particularly for us in the Senate, you can be talking about
something and everybody says, ``That is interesting. Let's come
back in 6 months or 8 months and find out what is going to
happen.'' But what you have done by scheduling this hearing--
and we have been kidding, we went to the meetings, we scheduled
the hearing, and all of a sudden we are going to get results.
But this is not the first time you have led our committee on
these issues, as we have talked about with respect to the
ENFORCE Act and the Leveling the Playing Field Act. And in
effect, keeping the pressure on day in and day out has helped
us, as I have described it, begin a fresh approach on trade
that I have come to call trade done right.
So I just want you to know I very much appreciate you
giving me this invitation. We have learned a lot of valuable
facts here today. And I think all of you Pennsylvanians can
expect to see Senator Casey and I, to some extent, perhaps as
early as this afternoon, start commenting on some of the things
that the President may want to pursue. And we will talk about
what the voices of Pennsylvania have had to say about it.
Senator Casey. Senator Wyden, thanks very much. We are
grateful you are here and grateful for your leadership on these
issues.
I have to say that I don't know exactly what was said on
the conference call that Commerce Secretary Wilbur Ross had at,
I guess 10:30. We will learn that soon. But here is what I hope
happened. It is a little bit of fiction, but it lightens the
mood a little bit.
I am hoping that Secretary Ross got on the phone, and
before he walked through too much of his presentation, that he
was there solely to be introducing another person on the phone,
and the President got on the phone and made an announcement. I
do not think that happened, but I am hoping, because we want to
hear from the President on 232. We want to hear from the
President that he is going to use every tool at his disposal to
fight back against China cheating, to fight back against any
country trying to take our jobs, and to put in place bipartisan
approaches to create and retain jobs.
I referred to this letter the other day when I had my 2
minutes of comments. I referred to a February 1st letter the
President received, and this is signed by, if I count the
signatures, by about 25 steel executives. I will not read all
of it, obviously, but the one thing that they said in this
letter, among many important points--and I reiterate this today
for what I hope will be the determination by the President--
they said, talking about a 232 decision, ``We urge you to
implement a remedy that is comprehensive and broad-based,
covering all major sources of steel imports and the full range
of steel products with only limited exceptions for products not
currently available in the United States.''
A lot of words there, but the most important are, they want
a remedy that is comprehensive and broad-based. The President
was advised by some members of Congress in the room to be
narrow and focused and limited and balanced and all that. That
always sounds nice, but when it comes to American workers, we
do not want to be limited. We do not want to be balanced. We
want our workers to win based upon the actions the Federal
Government and the Congress can take.
We do not want to be targeted. We want to win these races.
We want to get these jobs and keep these jobs, because, as was
pointed out earlier--Rick, I think you made the point--when
folks lose jobs in these circumstances, it is not something
that that worker did or that company did. It is because other
companies are cheating, and we are not holding them
accountable, even though we have all the tools to do it. We
have to make sure that becomes the case.
You know, I have said it a thousand times. I will say it
again. We had a statue, a bronze sculpture, I should say, that
was put in front of the Governor's residence in Harrisburg. The
guy that put that there I knew pretty well. And he got support
from every union in the State of Pennsylvania to build that
bronze sculpture of a steelworker putting in place a steel
beam. He said the reason he put it there was to remind every
future Governor about what steelworkers meant to the country,
how they built our country, and how they helped us outproduce
the world to--guess what?--win World War II. That is about all
they did, right?
And it is about time that we take a similar approach and
have a similar determined spirit to fight on their behalf when
it comes to protecting their jobs. If they have a level playing
field, if we enforce the law, if we hold other countries
accountable, and if we bring cheaters to justice, so to speak,
guess what? Steelworkers or all of our workers can outcompete
the world and do as their ancestors did to win World War II and
to win any war, whether it is economic or otherwise.
So that is all we are asking. We are not asking for
something extra here. We are just asking for people to enforce
the law, use the tools that you have, and win these races, win
these fights for our workers.
So I am so grateful that our panel was here with us today
to give us a perspective on this. I am certainly honored to be
here at the Community College in Beaver County.
And, Senator Wyden, we are grateful that you took the time
to travel to Pennsylvania. We are also even more grateful for
your work on the Finance Committee on these issues.
So, unless there is anything further, we are adjourned.
[Whereupon, at 11:19 a.m., the hearing was concluded.]
A P P E N D I X
Additional Material Submitted for the Record
----------
Prepared Statement of Hon. Robert P. Casey, Jr.,
a U.S. Senator From Pennsylvania
We're here today to discuss what I view as two of the most critical
issues that relate to the competitiveness of our Nation: manufacturing
and infrastructure, which have a substantial impact on jobs and wages.
I'm honored to be joined today by Senator Wyden, who came from
Washington to be with us, but as you know represents the State of
Oregon and has worked for years on all these issues--trade issues,
economic and jobs issues, manufacturing, infrastructure, and the like.
We know that steel overcapacity, as well as trade cheating and
China's efforts to literally steal our future by stealing our
companies' IP, are some of the most fundamental trade issues of our
time because they directly impact Pennsylvania jobs and wages. I've
said for years and I'll say again: when China cheats, Pennsylvania
loses jobs. It's that simple. So we have to face that reality when
we're confronting these issues. China is going after America's
competitive advantage by any means necessary; if China can't buy it, or
if China can't run it out of business, they steal it. And unfortunately
that's a harsh reality. You don't need to look far in our State to find
companies and unions who have been hacked by the Chinese government.
Just talk to U.S. Steel, talk to the Steelworkers, talk to other
institutions in southwestern Pennsylvania who have been victims of
these actions.
I went to the White House this past Tuesday to meet with the
President and a bipartisan, bicameral group of legislators--Senators
and House members of both parties, including Senator Wyden--to discuss
steel and aluminum. At that meeting, I told the President how
Pennsylvania companies and steelworks have been hammered by the surge
in imports since the Commerce Department announced its section 232
investigation last April on whether rising steel and aluminum imports
represent a threat to national security. I also heard from Senators
telling the President to exercise caution--that's what a number of
Republican Senators and House members were telling him. I have a
different view, which we'll get into later.
When the Commerce Department launched this investigation in April
of last year, I along with steelworkers across Pennsylvania were
hopeful that the Commerce Department would quickly complete their
study, and the President would take decisive action. And then, we
waited. Through the spring and the summer, rumors were swirling, but
still steel imports were surging. The Commerce Department seemed ready
to transmit the report by the end of the summer and then the President
told The Wall Street Journal in July that he did not intend to move
forward on a final determination on the steel section 232 case until
``everything finished up between health care and taxes, and maybe even
infrastructure.'' So said the President at that time. Meanwhile, we
watched imports rise for the first 12 months of 2017--total steel and
finished steel imports were up 17.5 percent and 14.6 percent,
respectively, from the same period in 2016. So total steel basically up
18 percent, and finished steel imports up basically 15 percent in that
time period. Imports of electrical steel, which many of you know is the
steel used to ensure we have an electricity grid, have more than
doubled from 2016 to 2017. Pipes and tubes surged 82 percent from 16
percent to 17 percent. So electrical steel up 100 percent, pipes and
tubes up 82 percent.
The Commerce Department had 270 days to transmit the report to the
President, and they submitted it just shy of that by a few days. The
President then had 90 days to make a determination. At the White House
this week, I urged him not to take that long and move swiftly on this
long-delayed relief.
I said earlier we can't allow China to steal our future, and that's
not drama and hyperbole, that's the truth. If we allow them to continue
on the pathway that they've been on, they will steal our future.
Actions matter, and the actions we take today must be directed at long-
term outcomes we want for our children and grandchildren. This means an
economy that creates opportunity for all Americans and a system that
creates a fair environment for our workers to find jobs that pay
family-sustaining wages. This also means investing in our roads and
bridges, schools, locks, and dams which are so important to commerce
here in southwestern Pennsylvania, and of course our electric grid, and
broadband. Infrastructure matters. It's about our security, it's about
our safety, and it's about our jobs. So this means putting real Federal
dollars behind infrastructure that is fundamental to our combined
competitiveness.
I believe you can do infrastructure one of two ways: you can do it
the corporate way, which is not the way to do it, or you can do it the
American way. I want an American infrastructure bill. It means we're
all in this together, we're all one American family. We ought to put
public dollars in, and big dollars, to really make a difference and
create jobs. So this means making sure that the inputs to that
infrastructure are made in America. I think both parties agree on that,
and I'm grateful that Senator Wyden is here today to make these points
and to discuss these critical matters for the economy of Pennsylvania,
the jobs of Pennsylvania, as well as American jobs and American
competitiveness.
______
Prepared Statement of Rick Galiano, President,
Beaver Lawrence County Central Labor Council
Mr. Chairman, members of the committee, it is an honor to speak
with you at this field hearing on Trade Enforcement and Infrastructure.
My name is Rick Galiano, and I am president of the Beaver Lawrence
Labor Council and a United Steelworker (USW) member. My testimony to
you today is straightforward; I try to do everything in my power to
improve the livelihood of our union brothers and sisters, our
communities, and our country. I want Congress and the administration to
do the same. My concern is that the tools that our country has to
defend its manufacturing base and move it further into the new
millennium have been improved, but much more must be done.
Since Congress passed the Leveling the Playing Field Act and the
ENFORCE Act a slew of trade enforcement cases followed. The much-needed
trade law improvements in the Leveling the Playing Field Act were
critical to the success of those cases and Senator Wyden's ENFORCE Act
is necessary when those that trade unfairly try to game the system.
Since then, some of our international competitors have tried to deride
these changes as ``protectionist''; instead I see the day-to-day
results when a worker gets a job back or their hours increase. And I
also see the potential if we could do more. Restoring fair play and
ensuring that we have a fair chance to compete internationally is all
we ask.
For example, since the USW successfully brought forward an
antidumping and countervailing duty case on Passenger Vehicle and Light
Truck (PVLT) tires against China in 2015 and off the road tires from
India last year, close to $3 billion have been invested into U.S. tire
plant expansions and factories.\1\ Seven thousand two hundred union
tire workers at Goodyear reached a new 5-year agreement with wage
improvements and an extension of plant protection guarantees where no
USW plants will close during the term of the agreement.\2\ To the
doubters of the value of trade enforcement, I dare them to look one of
those workers in the face and tell them they are not worth
``protecting.''
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\1\ http://www.rubbernews.com/article/20160913/NEWS/309059996/tire-
makers-invest-10-bil
lion-in-expansions-improvements and http://www.rubbernews.com/article/
20170911/NEWS/170919998/tire-makers-spend-big-on-new-plants-expansions.
\2\ https://www.usw.org/news/media-center/releases/2017/usw-
members-overwhelmingly-approve-goodyear-contract.
I wish I could say there is a similarly positive outcome in the
steel industry as there is in the tire industry. Since the passage of
the Leveling the Playing Field Act, 67 anti-dumping and countervailing
duty orders against a multitude of countries have been put into effect.
While those trade enforcement cases in the steel industry worked
through the year-long process to get tariff relief, almost 19,000
steelworkers that were laid off in 2015 at idled or underutilized
facilities across the country waited. Too many are still waiting. And,
let's remember, those trade cases are simply about addressing foreign
unfair trade in line with international rules we weren't asking for
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anything that the law wasn't designed to provide.
While workers waited, the steel industry last year shipped
90,886,717 net tons, a 5.0-percent increase, which is promising on the
one hand but the industry operating capacity hovers in the low 70s,
meaning roughly 25 percent of our country's steel making capability
sits idle or underused.\3\ While global overcapacity still gets talked
to death at the Global Forum of Steel Overcapacity and at the
Organization of Economic Cooperation and Development (OECD), USW has
been cautiously optimistic about the chance for unilateral relief
through the implementation of more exotic trade enforcement mechanisms
like the section 232 steel and aluminum investigations currently in
President Trump's hands.
---------------------------------------------------------------------------
\3\ https://www.steel.org/Steel_org/document-types/news/2018/
decembershipments.aspx?site
Location=c481cc99-d816-4613-805c-b90af33cc162.
As you are aware, section 232 is a part of U.S. trade law that
gives the Commerce Secretary the ability to investigate whether certain
import levels pose a national security threat. USW firmly believes that
our Nation's military and critical infrastructure needs are essential
to our national security. The industry cheered last April when
President Trump announced a section 232 investigation into steel
---------------------------------------------------------------------------
imports--but we are still waiting for results.
When President Trump and administration officials had pledged to
unveil the findings of the section 232 investigations by July 1 of
2017, we were hopeful at first and left wondering each day after. Now
it is over a month since the Commerce Department submitted the 232
steel and aluminum reports to the President, and they're still sitting
on his desk. Those reports initiated over 270 days ago by the Trump
administration appeared to be an attempt to fulfill a campaign promise
to manufacturing workers.
By delaying the 232, the foreign steel industry saw an opening.
While the U.S. has shipped more steel this year, finished steel import
market share was 27 percent for full year 2017. Total and finished
steel imports are up 15.4 percent and 12.2 percent, respectively.\4\
The economy has grown but the U.S. steel industry continues to fight a
barrage of foreign steel products. Most of the growth in our market is
going to imports--not to our own steel mills and steelworkers.
---------------------------------------------------------------------------
\4\ http://www.steel.org//media/Files/AISI/Press%20Releases/2018/
IMP1712.pdf.
However, our union has not been idle, knowing that others would try
to undermine the 232 investigation. USW members across the country have
stood up asking for the Congress and the administration to do its job
and defend the most efficient and advanced manufacturing industry in
the world. Since the initiation of those investigations, over 120
Representatives and Senators submitted letters to the Department of
Commerce or the President urging action on the investigations.\5\
Almost 15,000 Steelworker union members from across the country wrote
the Department of Commerce asking for a conclusion and successful
remedy.
---------------------------------------------------------------------------
\5\ https://www.usw.org/news/media-center/articles/2017/thanking-
those-who-stand-with-us.
Promises and rhetoric can only go so far. The actions we take as a
country to create a better deal for American workers will be the
---------------------------------------------------------------------------
measure by which union members and voters judge our elected officials.
U.S. workers should not fear globalization, but it requires our
elected leaders to focus not just on corporate profits but on the
distribution of that wealth. Our trade laws need to reflect a more
globally connected world and the potential for abuse by bad actors. We
are using tools developed in the last century to fight a war in this
one. A modern steelworker in this country can make 1.9 tons of steel
per man hour; I want our country's trade laws to be that efficient and
effective.\6\
---------------------------------------------------------------------------
\6\ http://www.steel.org/about-aisi/industry-profile.aspx.
The Finance committee has the potential to not just upgrade our
trade laws but also set a path to renew our Nation's infrastructure.
The great accomplishments of the 20th century in this country need
maintaining and unlocking the potential of the 21st century requires
---------------------------------------------------------------------------
leadership from all levels of government including this committee.
Even though the U.S. Congress and some States have recently made
efforts to invest more in infrastructure, these efforts do not come
close to the $2.0 trillion in needs as reported by the American Society
of Civil Engineers (ASCE). Infrastructure is the backbone of the U.S.
economy and a necessary input to every economic output. It is critical
to our national defense.
The cost of deteriorating infrastructure takes a toll on families'
disposable household income and impacts the quality and quantity of
jobs in the U.S. economy. ASCE estimates that from 2016 to 2025, each
household will lose $3,400 each year in disposable income due to
infrastructure deficiencies.\7\
---------------------------------------------------------------------------
\7\ https://www.infrastructurereportcard.org/wp-content/uploads/
2016/10/ASCE-Failure-to-Act-2016-FINAL.pdf.
If I paid only half my mortgage payments, I would lose my home. Yet
as a country we are only paying half of America's infrastructure bill,
leaving an investment gap and an electorate stuck in gridlocked traffic
on outdated roads or crammed into unreliable and unsafe mass transit
systems. It diminishes our competitiveness by increasing costs to
business and getting products to markets. I worry that by failing to
meet our country's infrastructure needs we will indeed be at risk of
losing the cohesion of our great country. I want to put a few examples
in front of you today to reflect on. I do not know all the solutions to
these problems but just like every USW member, I am willing to roll up
---------------------------------------------------------------------------
my sleeves to fix these problems.
In today's increasingly digital world, 88 million citizens in
urban and rural America lack affordable or any broadband access.\8\
---------------------------------------------------------------------------
\8\ https://www.recode.net/2017/6/20/15839626/disparity-between-
urban-rural-internet-access-major-economies.
---------------------------------------------------------------------------
It is estimated that leaky, aging pipes are wasting 14 to 18
percent of each day's treated water; the amount of clean drinking water
lost every day could support 15 million households.
Due to the lack of investment, the number of deficient high-
hazard potential dams has also climbed to an estimated 2,170 or more.
It is estimated that it will require an investment of nearly $45
billion to repair aging, yet critical, high-hazard potential dams.
One out of every 5 miles of highway pavement is in poor
condition and our roads have a significant and increasing backlog of
rehabilitation needs.\9\
---------------------------------------------------------------------------
\9\ https://www.infrastructurereportcard.org/cat-item/roads/.
---------------------------------------------------------------------------
The most recent estimate by the American Society of Civil
Engineers puts the Nation's backlog of bridge rehabilitation needs at
$123 billion.
We are fast closing in on 20 years into the new millennium and the
Federal Government cannot just be a partner with States and private
entities. Nor can it improve infrastructure by privatizing or selling
public assets. We need the Federal Government to be a leader. We need
to set policies that maximize the public good for our infrastructure
not just for the short term but the long term.
We need to ensure our tax dollars are used to maximize the economic
benefit with domestic procurement policies like Buy America. We must
ensure that products actually qualify under the act. Foreign producers
have been pushing to undermine our melted and poured standard so that
only 10 percent of the actual work would be done in this country as
they ship slabs into the U.S. hoping that minor transformation here
would confer preferential procurement status. Loopholes and gimmicks
aren't acceptable. We need to avoid privatization for the sake of
privatization. We need to ensure workers receive a living wage for the
work they do to bring our infrastructure into the 21st century.
In closing, I know with a strong trade enforcement strategy
combined with a concerted effort to renew our infrastructure we create
a better America. Workers in Pennsylvania, the country and every USW
member have faith that we can use the last 10 years of economic
turnaround to springboard into the future but we look to you as our
elected leaders to accept that faith and lead.
______
Prepared Statement of Petra B. Mitchell,
President and CEO, Catalyst Connection
Good morning. My name is Petra Mitchell, and I am the president and
CEO of Catalyst Connection, an economic development organization that
for over 30 years has been dedicated to serving our region's small and
medium-sized manufacturers. On behalf of our board of directors, our
staff and our clients, I assure you we are passionate about
manufacturing.
Manufacturing in this country is a $2-trillion sector, with over 11
million workers and approximately 293,000 establishments. Manufacturing
in southwestern Pennsylvania is a $12-billion sector with 93,000
workers and approximately 3,000 establishments. Many of these
establishments are closely held, privately owned, or family owned
businesses, and Catalyst Connection has worked with about half of them
since our inception and 153 in the last year.
To enable us to do our work, Catalyst Connection is funded in part
by the National Institute of Standards and Technology (NIST)
Manufacturing Extension Partnership (MEP) program and by the
Pennsylvania Industrial Resource or IRC program. The IRC program was
started by Governor Robert Casey, Senator Casey's father, and was a
model for the national MEP program, both of which have been in
existence since the late 80s.
This morning I'd like to provide an overview of the MEP program,
the challenges that small and medium-sized manufacturers are facing,
and the role that the MEP program and Catalyst Connection are playing
in helping to address those challenges.
overview of the mep program
The MEP program is a Federal public-private partnership that
provides small and medium-sized manufacturers (SMMs) technology-based
services they need to thrive in today's economy and create well-paying
manufacturing jobs. MEP is managed by the NIST and implemented through
a network of industry-led centers located in every State.
MEP is a proven partnership that can help President Trump achieve
his vision and commitment for American manufacturing and its workforce.
SMMs account for nearly 99 percent of all manufacturing firms in
the United States, and MEP is the only Federal program dedicated to
serving them. These firms comprise the supply chains of Fortune 500
manufacturers and drive our Nation's economy. Due to their need for
manageable and customized services, they are often overlooked by for-
profit consulting and technology firms but need those services to
compete, grow, and create jobs. The MEP centers fill that gap. In 2016
alone, more than 26,000 SMMs utilized the MEP network.
MEP returns $8.70 to the Federal Treasury for every $1 invested.
As a public-private partnership, MEP delivers a high return on
investment to taxpayers. The Upjohn Institute for Employment Research
conducted a study of MEP this past year and found that the program
generates an 8.7:1 return on investment. Each year, an independent firm
surveys manufacturers regarding the impact they have achieved from MEP
Center services. In 2017, MEP clients reported $12.66 billion in new
and retained sales and the creation or retention of 110,721 jobs.
Considering that the average U.S. manufacturing worker earns more than
$82,023 in wages and benefits per year, MEP clients are economic
drivers in their communities. MEP clients are also increasing their
capacity for the production of goods. MEP clients reported $3.5 billion
in new investments directly attributed to their work with MEP.
Manufacturers served by MEP make a substantial economic
contribution.
Since 1988, MEP clients reported 884,596 jobs created and retained,
high-paying jobs that have a large multiplier effect. Each of these
jobs creates 3.4 full-time additional jobs, totaling more than 3
million additional jobs in local communities. The total job impact by
the MEP Program generates significant local, State, and Federal tax
revenues.
Manufacturers pay to utilize MEP--so it's not free.
SMMs pay for the direct costs of the services they receive. This
fee for service meets the Federal cost share requirements, requires MEP
Centers to offer services that are of value to the manufacturing
community, and encourages SMMs to seek a return on their investment,
which is more likely to sustain the improvements and generate local
economic impact.
Congress has just reauthorized MEP through the American Innovation
and Competitiveness Act.
By voting unanimously to pass the American Innovation and
Competitiveness Act (S. 3084) which was signed into law on January 6,
2017 (Pub. L. 114-329), Congress has provided a major boost to the
Nation's economy by encouraging growth in the manufacturing sector
through advanced manufacturing initiatives.
southwestern pennsylvania job losses in manufacturing
Catalyst Connection has been the MEP of southwestern Pennsylvania
since 1994, and has achieved significant results. Companies that work
with us are hiring, growing, and adding jobs. But we need to do more.
Unfortunately, manufacturing employment in our region has decreased by
almost 5 percent in the last 5 years, even though output and
productivity are growing. We believe that a majority of the 4,500 job
losses are coming from plant closures and shutdowns of larger
companies, such as Aquion Energy and Akers National Roll, but the
growth in jobs among smaller companies was just not enough to make up
for these losses. This is particularly concerning for rural communities
where downturns in manufacturing impact rural communities
disproportionately to more urban communities. Considering that almost
all manufacturing-dependent counties in this country are rural, this
can have a big impact on people's lives. Back in our region, at least
four counties (Indiana, Lawrence, Somerset, and Greene) are considered
rural according to the USDA, while many other communities within the
other counties certainly seem rural. Adding to our concerns is that
many of the counties in our region are also coal-impacted, making
things very difficult in some of our communities.
Advanced Manufacturing Technology and Workforce Development Challenges
To reverse the trends in job losses in our region and around the
country, companies will need to accelerate their pace of growth,
greater than any productivity gains that they must achieve to remain
competitive in global markets. They will have to continue to invest in
new products, automation and robotics, and in workforce development.
The technologies of Industry 4.0 are quickly taking shape such that
additive manufacturing, big data and analytics, digital manufacturing,
Internet of Things (IoT), smart manufacturing, and other similar buzz
words are becoming commonly used, yet few manufacturing leaders truly
understand the power of these developments, or more importantly the
impact that they could have on their businesses.
And while many companies are growing and interested in hiring, the
skills gap in manufacturing continues to play a significant role,
hampering growth, since many companies just can't find the workers they
need to fill critical jobs. According to a Deloitte report, The Skills
Gap in Manufacturing, 2015 and Beyond, over the next decade, nearly 3.5
million manufacturing jobs will likely need to be filled in the United
States. The skills gap is expected to result in 2 million of those jobs
going unfilled.
In southwestern Pennsylvania, the news is similar. According to the
Partners4
Work Workforce Investment Board, 26 percent of the approximately 93,000
manufacturing workers in southwestern Pennsylvania are age 55 or over.
This identifies the need for 24,000 people to enter into careers in
manufacturing over the next 10 years to backfill impending retirements.
This is a daunting challenge for one of our most important drivers of
regional economic success and could result in many of the job openings
going unfilled. Similarly, Brookings, in its recently released report
Capturing the next economy: Pittsburgh's rise as a global innovation
city, writes that ``demographic and skills headwinds threaten
Pittsburgh's ability to create the broad workforce needed to compete.''
Brookings notes that this is not a simple issue of supply and demand,
or even of addressing the skills gap, as many workforce training
programs go unfilled. Brookings notes that many ``job seekers don't see
viable pathways to careers in advanced industries, including
manufacturing.''
While the Brookings report suggests that there are unemployed and
underemployed workers available, a recently released report by the
Pennsylvania IRC Network, Advanced Manufacturing Technology Survey
Interviews Report, 60 percent of small and medium manufacturers (SMMs)
report that talent was one of their top three business challenges.
Respondents seem to be concerned both with the lack of knowledge and
skills due to retirements, as well as a lack of skills needed to
support emerging technologies. Companies are being challenged to
respond to workforce needs to upskill and prepare for new technology.
the important role of catalyst connection and the mep program
Manufacturing CEOs are looking to external resources such as the
MEP program and Catalyst Connection to provide valuable business
process and technology adoption services right-sized to meet their
needs. Our foundational expertise in helping companies with strategies
focused on product, process, and people are critical to getting ready
for new technologies.
Product services are those that facilitate manufacturer growth
through improved marketing and sales techniques, new product
development, exporting, and internal and collaborative innovation.
Pennsylvania's research universities are critical partners for product
innovation. Process services are those that reduce operating and
product costs through the implementation of operational improvements,
achievement of quality objectives, successful pursuit of sustainability
and energy/materials efficiencies, and supply chain optimization. And
finally, People-focused services provide assistance in the areas of
talent development, training in specialized skills, improvements in
hiring, HR management, workforce evaluation, and workforce planning
processes.
The bottom line is that products must be innovative, processes must
be efficient and globally competitive, while the people must have the
skills to program, operate, and maintain highly automated equipment.
And employers are in need of assistance in each of these areas.
Catalyst Connection is also engaging in regional workforce
development strategies focused on career awareness and exploration at
the middle school and high school level, and on Employer-led
Apprenticeship programs. Our Middle School Video Contest, ``What's so
Cool About Manufacturing'' attracts over 400 students, parents, and
teachers, and begins the process of changing the image of
manufacturing. Our high school Manufacturing Innovation Challenge
allows students to practice their real-world problem-solving skills by
matching them with local employers and a business challenge. Our
Employer-Led Apprenticeship program is focused on helping companies
register and implement an apprenticeship program that helps to fill
their talent pipeline, while giving workers valuable credentials and
on-the-job training. Our region's community colleges are critical
partners in our apprenticeship programs.
Conclusion
In 2017, Catalyst Connection clients reported almost $130 million
of new and retained sales, $8 million of cost savings, $16 million of
new investments, and 1,164 jobs created and retained. Companies value
the work we do and tell us that our staff's technical expertise and
experience, the cost of our services, the return on investment, and the
reputation for results are the main reasons they choose to work with
us.
I urge you to continue your support for policies and funding that
support our country's small and medium-sized manufacturers, which are
critical to our Nation's supply chains, including the Department of
Defense, and which provide high-paying family-sustaining jobs for
millions of American families and contribute to their local communities
and economies. Workforce development resources, including support for
apprenticeship programs, are a key factor in closing the skills gap in
manufacturing. The MEP program, as the only program dedicated to
serving our country's small and medium-sized manufacturers, is a
critical program, and I would urge you to continue to support funding
for this program at modestly increased levels.
Manufacturing businesses create and retain high-paying, family-
sustaining jobs that are building the foundation for national and
regional economic growth. Manufacturing job growth also has a
significant ripple effect throughout our entire economy, where many
firms will prosper.
______
Prepared Statement of Scott N. Paul, President,
Alliance for American Manufacturing
Senator Casey and members of the committee, thank you for the
opportunity to testify on behalf of the Alliance for American
Manufacturing (AAM) at today's hearing on ``Trade Enforcement and
Infrastructure: Safeguarding our Industrial Base From Present and
Future Challenges.''
The Alliance for American Manufacturing is a non-profit, non-
partisan partnership formed in 2007 by some of America's leading
manufacturers and the United Steelworkers. Our mission is to strengthen
American manufacturing and create new private-sector jobs through smart
public policies. We believe that an innovative and growing
manufacturing base is vital to America's economic and national
security, as well as to providing good jobs for future generations. AAM
achieves its mission through research, public education, advocacy,
strategic communications, and coalition building around the issues that
matter most to America's manufacturers and workers.
Formed in 2007, AAM is proud to have helped call attention to some
of the most pressing trade issues impacting American manufacturing
companies and their workers--including global industrial overcapacity,
dumping and subsidies, State-owned enterprises, currency manipulation,
theft of trade secrets, and the need to better negotiate trade
agreements. And, with respect to infrastructure, we have been at the
forefront of efforts to establish stronger Buy America rules to ensure
that our hard-earned tax dollars create jobs here at home.
u.s.-china trade deficit is unparalleled in its magnitude and adverse
impact
Since Beijing's 2001 entry into the World Trade Organization (WTO),
the U.S. bilateral trade deficit with China has more than quadrupled,
from $83 billion in 2001 to a record $375 billion in 2017. In just 15
years, the impact of the surging U.S.-China trade deficit on U.S.
companies and American workers has been severe and too often
overlooked. Our communities have shed more than 54,000 manufacturing
facilities and we've seen our global market share in manufactured
exports shrink from 14 percent in 2000 to 9 percent in 2013.
Altogether, a staggering 3.4 million jobs, largely in manufacturing,
have been lost because of this massive trade imbalance. Each State and
every congressional district in the United States has experienced lost
jobs. In Pennsylvania alone, 136,700 jobs were displaced, accounting
for 2.34 percent of the Commonwealth's workforce. And the losses extend
into nearly every sector of the economy, ranging from computer and
electronic parts to textiles and apparel, furniture, steel, aluminum,
and other capital-intensive sectors.\1\
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\1\ Scott, Robert E. ``Growth in U.S.-China trade deficit between
2001 and 2015 cost 3.4 million jobs.'' Economic Policy Institute,
January 31, 2017. Web, May 9, 2017.
While the China trade deficit is unparalleled both in its magnitude
and its adverse impact on our economy, we should not overlook that
unfair trade from many other countries--even including our allies--has
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taken its toll:
South Korea. It was promised that the U.S.-Korea Free Trade
Agreement (KORUS) would support 70,000 U.S. jobs and increase exports
of American goods by $10 to $11 billion. Yet, the U.S. trade deficit
with South Korea jumped $15.1 billion between 2011 and 2015 (from $13.2
billion to $28.3 billion), resulting in the estimated elimination of
more than 95,000 jobs.\2\ The trade agreement hailed as a job creator
has not opened new markets for U.S. automobiles and other products, as
was promised, and demands improvement.
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\2\ Scott, Robert E. ``U.S.-Korea trade deal resulted in growing
trade deficits and more than 95,000 lost U.S. jobs.'' Economic Policy
Institute, May 5, 2016. Web, May 9, 2017.
Japan. Meanwhile, it has been estimated that the trade deficit
with Japan--fueled by currency practices--is estimated to have
eliminated nearly 900,000 U.S. jobs as the goods deficit reached $78.3
billion in 2013.\3\ It has remained at unacceptable levels ever since.
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\3\ Scott, Robert E. ``Currency Manipulation and the 896,600 U.S.
Jobs Lost Due to the U.S.-Japan Trade Deficit.'' Economic Policy
Institute, February 4, 2015. Web, May 9, 2017.
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trade deficit reduction matters
Trade deficits matter, and there is compelling research showing
that reducing trade deficits would yield positive outcomes for our
economy. For instance, a reduction of the U.S. global trade deficit by
between $200 billion and $500 billion each year ``could increase
overall U.S. GDP by between $288 billion and $720 billion and create
between 2.3 million and 5.8 million U.S. jobs.'' \4\
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\4\ Scott, Robert E. ``Currency Manipulation and the 896,600 U.S.
Jobs Lost Due to the U.S.-Japan Trade Deficit.'' Economic Policy
Institute, February 4, 2015. Web, May 9, 2017.
To those who have made unfounded claims that the loss of 5 million
U.S. manufacturing jobs, or roughly one-third of the total amount,
since 2000 was the result of increased productivity, and not trade
deficits, the data does not support such a narrative.\5\ According to
the Economic Policy Institute (EPI), between 2000 and 2007, 3.6 million
manufacturing jobs were lost. Yet, productivity growth declined,
falling from 4.1 percent per year in the 1990s to 3.7 percent per year.
The drop in the rate of growth of manufacturing output to 0.5 percent
per year is largely the result of the rapid growth of the manufacturing
trade deficit. Meanwhile, the Great Recession and financial crisis was
largely responsible for the decline in manufacturing output and job
loss from 2007 to 2014. Manufacturing trade deficits continued to surge
over this period following the Great Recession.\6\
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\5\ Gosselin, Peter, and Dorning, Mike. ``After Doubts, Economists
Find China Kills U.S. Factory Jobs.'' Bloomberg Politics, June 18,
2015. Web, May 9, 2017.
\6\ vi Scott, Robert E. ``Manufacturing Job Loss: Trade, Not
Productivity, Is the Culprit.'' Economic Policy Institute, August 11,
2015. Web, May 9, 2015.
proactive trade enforcement approach is
necessary to eliminate trade deficits
For too long, our trade policies haven't been focused on supporting
our manufacturing sector but, in many ways, have undermined it. The
United States is long overdue for a new approach to trade, especially
with China. It is both possible and desirable to create a trade policy
framework to support a resurgent, made in America manufacturing base.
The United States has considerable economic leverage to shrink our
$375-billion 2017 trade deficit with China. U.S. exports to China
account for less than a percent of our GDP, our banks hold less than a
percent of their assets in China, and multinational companies derive
less than 2 percent of their revenue from there.
Using aggressive trade enforcement to strengthen key U.S. sectors
is hardly a radical proposition and there is clear precedent in our not
too distant past of bold leadership and outside the box thinking.
President Ronald Reagan adopted a flurry of measures to address an
uneven playing field with European nations and Japan. His
administration's aggressive actions helped revitalize our semiconductor
industry and the iconic Harley Davidson. The Plaza Accords, which
raised the value of currencies in Japan and Europe relative to the
dollar, had a positive effect in lowering our trade deficits.
it's time for the white house to complete
key trade and manufacturing actions
After a year in office, President Trump has repeatedly promised to
crack down on unfair trade and negotiate reciprocal trade agreements.
Yet, on many key issues, the administration's words have resulted in
either inaction or confusion as to the path forward. A status quo
approach means continued persistent trade deficits, lost jobs, theft of
our innovation base, and the steady erosion of our manufacturing
capacity and workforce.
Currency Manipulation. The President repeatedly promised to
label China a currency manipulator. However, China was not listed as a
currency manipulator on either of the Treasury Department's first two
Semiannual Reports on International Economic and Exchange Rate
Policies.
Section 232. The President initiated section 232
investigations on steel and aluminum imports' impact on U.S. national
security. However, long and unnecessary delays have made matters even
worse as imports continue to surge. I will discuss this issue later in
my testimony.
Section 301. The President initiated a section 301 probe into
China's intellectual property abuses, though since the August 2017
announcement there has been little movement towards an action that
protects American interests.
Pipelines. In January 2017, the President called for a plan to
require American pipelines to be constructed with American steel. More
than a year later, there has been no action taken as imports of Oil
Country Tubular Goods (OCTG)--a key energy product used in oil and gas
extraction--were up nearly 200 percent in 2017.
recommended actions for the administration and congress
Outlined below are some of the issues AAM believes need to be
addressed for the United States both to expand trade relationships in
the Asia-Pacific region in a manner that increases domestic production
and to ensure that our markets do not become flooded with unfairly
traded products.
Trade Enforcement. America's trade enforcement laws are the
backbone of U.S. trade law and represent that last line of defense for
workers facing unfair trade. Strict enforcement is vital to the
preservation of a rules-based trading system--one in which American
workers are not forced to compete against the endless resources of a
foreign government that props up its state-run companies. Timely
enforcement of U.S. trade remedy laws is vital to leveling the playing
field for U.S. companies and American workers impacted by unfair trade
practices--like dumping and subsidies. While our trade remedy laws help
mitigate the damage, rarely do they restore all the lost jobs or make
an impacted community whole again. Significant time and cost--and
injury--is required to proceed with a trade enforcement case. In some
cases, entire plants must be shut down before relief can be delivered.
This makes no sense. We must ensure that timely and effective relief
from such market distortions is available before plants are forced to
close and workers lose their jobs.
We greatly appreciate the leadership and work of this
committee in the passage of the Trade Facilitation and Trade
Enforcement Act of 2015, which provided new tools to speed trade
enforcement and to crack down on evasion of existing trade orders. It
is simply unfair to U.S. companies and their workers for trade remedies
to be circumvented--resulting in further harm and larger trade
deficits.
Global Industrial Overcapacity. Many U.S. industrial sectors
are suffering from unprecedented challenges due to global
overcapacity--largely fueled by China--which dampens prices and has
forced plant closures and massive layoffs. Despite slowing demand in
the Chinese market, Beijing continues to maintain high levels of
production with subsidies and other state support, undermining U.S.
companies that compete based on market considerations. In fact, a
recent report shows that, despite China's claims of capacity closures
in 2016, its net steelmaking capacity actually increased.\7\ China will
only respond, and America will only benefit, if there are enforceable
mechanisms to ensure that Beijing is living up to its commitments. For
the past 10 years, China has delayed concrete action with lofty
promises to cut capacity that never materialize. Despite repeated
public pronouncements dating back to 2009 of plans to aggressively cut
capacity, China's steelmaking capacity has increased over 400 million
metric tons, roughly equivalent to five times the total production of
the U.S. steel industry in 2016. The G20 Global Forum on Steel Excess
Capacity cannot be another tool to be used by the Chinese government to
delay meaningful change.
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\7\ Wong, Edward. ``Greenpeace Links Beijing's Air Pollution Surge
to Steel Factories.'' New York Times, February 16, 2017. Web, May 10,
2017.
Maintain China's Non-Market Economy Status. No one can
seriously claim that Beijing runs a market economy, but the Chinese
government desperately wants to be treated that way. Under U.S. law,
China is and should continue to be treated as a non-market economy
(NME). Any change to this status would severely undermine America's
trade remedy laws and expose U.S. companies and American workers to
more dumped imports. Such changes can only be made if China meets six
specific criteria demonstrating that market forces, and not the
government's party leadership, are directing the economy. Presently,
China fails to meet the six criteria and it should focus on reforms
rather than its attempts to shortcut this issue by way of the World
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Trade Organization (WTO).
Cyber-Theft. It is critical that the government provide
support when foreign interests steal trade secrets to manufacture
products abroad and send them to the United States. Theft of
intellectual property and trade secrets has been a serious problem with
China. U.S. companies report that Chinese interests have not only
stolen sensitive trade secrets, but that Chinese firms are now
commercializing that valuable intellectual property into Chinese
products. It is outrageous that U.S. companies are being forced to
compete against the very products that they spent years and significant
financial resources to develop. If the available trade enforcement
tools--including section 337 of the Tariff Act of 1930--do not work as
intended, Congress should improve them so that our companies are not
subjected to dishonest and criminal activity without the opportunity to
seek effective and timely relief. And, the President should swiftly
complete his section 301 investigation and take meaningful action to
defend domestic companies against foreign theft of intellectual
property and technology transfer.
State-Owned Companies. China has many state-owned and state-
directed enterprises (SOEs) that send dumped and subsidized goods into
the U.S. market. In a disturbing trend, China's SOEs are also now
aggressively seeking to invest here in America, putting further strain
on U.S. firms that make decisions based on market forces. It is vital
that we strengthen our CFIUS system of reviewing foreign acquisitions
of strategic U.S. companies and operations so that they do not fall
under the control of the Chinese government.
Currency Manipulation. China, Japan, South Korea, and other
major trading partners have a long history of currency manipulation,
which contributed to the loss of 5 million U.S. jobs.\8\ Despite claims
that the yuan is no longer undervalued, there is ample evidence that
Beijing continues to play an active, daily role in setting exchange
rates. We urge the passage of legislation to treat foreign currency
manipulation as a subsidy under trade remedy laws. And, we support the
inclusion of strong, enforceable rules in trade agreements to deter and
penalize currency manipulation. We will also be closely watching as the
administration prepares to release yet another Semiannual Report on
International Economic and Exchange Rate Policies, due by April 15th.
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\8\ Peterson Institute for International Economics.
Automobiles and Rules of Origin in Trade Agreements. A trade
agreement's rules of origin determine the national source of a product.
This is important because only those countries bearing the risks and
responsibilities of signing an agreement should obtain its benefits. We
believe the rule of origin on automobiles in NAFTA and other trade
agreements should be strengthened, so that workers in signatory
countries can enjoy more of the benefits, while minimizing the
advantages of non-participating countries. In the context of the NAFTA
negotiations, automobiles and auto parts from countries such as Japan,
South Korea, and China, all of which heavily protect their own
industries, should not be permitted to displace North American
production through rules of origin that are set too low. As it relates
to KORUS, more work must be done to open the Korean market--one of the
most difficult for our automakers to export into despite the signing of
a trade agreement intended to open the market.
it's time to act on the section 232 investigation
Last, but certainly not least, I want to focus your attention to
the pending section 232 investigations on the impact of steel and
aluminum imports on U.S. national security. In April 2017, President
Trump directed the Department of Commerce to complete these self-
initiated investigations under an expedited timeline, saying,
``Maintaining the production of American steel is extremely important
to our national security and our defense industrial base. Steel is
critical to both our economy and our military. This is not an area
where we can afford to become dependent on foreign countries.'' In
late-May 2017, the administration said the reports would be released in
June and, just days later, the President himself publicly said the 232
reports would be coming ``very soon'' and that ``we're going to stop
the dumping.'' In early June, President Trump added, ``Wait until you
see what I'm going to do for steel and for your steel companies. . . .
We're going to stop the dumping, and stop all of these wonderful other
countries from coming in and killing our companies and our workers.
You'll be seeing that very soon. The steel folks are going to be very
happy.''
Despite those assurances, months passed without a clear
understanding of when the investigations would be completed. American
workers were told that the administration needed to complete tax reform
and other legislative priorities before it could again focus on the
section 232 investigations. All the while, the import problem has been
worsening for American workers and U.S. companies. Steel imports soared
21 percent in the 3 months after President Trump announced the section
232 investigation compared to the 3 months before. Overall, total steel
imports were up 15.4 percent in 2017.\9\
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\9\ ``Steel Imports Up 15 Percent in 2017.'' American Iron and
Steel Institute, January 26, 2018. Web, February 12, 2018.
We recently received the painful news that several steel mills in
Pennsylvania would be reducing operations, including one that produces
armor plate for the U.S. military and played an important role in
supporting the production of armored vehicles to protect our service
men and women from IED attacks in Iraq and Afghanistan.\10\ Meanwhile,
the United States is now down to a single manufacturer of the steel
needed for America's essential electric grid--grain-oriented electrical
steel (GOES). Unfortunately, there are no shortage of threats--both
natural and manmade--that could damage or destroy this critical
infrastructure. Already reduced to just one domestic producer of GOES,
electrical steel imports increased by 101 percent in 2017. But, it's
not just a China problem. Electrical steel imports from Japan, China,
and South Korea are up a staggering 156 to 269 percent. Without broad
action to prevent the loss of this domestic production capability, the
United States would be entirely dependent upon foreign suppliers.
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\10\ http://chestertontribune.com/Business/
arcelormittal_closing_part_of_pa.htm.
Our national security rests on a healthy industrial base. Domestic
production of steel and aluminum are vital in the manufacture of
America's military and critical infrastructure, including everything
from ships and tanks to bridges and energy infrastructure. If domestic
manufacturing capabilities deteriorate further, we may be forced to
rely on countries like China and Russia to supply steel for our
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military and critical infrastructure needs. We cannot let that happen.
The President now has up to 90 days to determine what precise
action to take. But, there's absolutely no reason to take that long. He
should take bold action today to protect our national security and
American jobs.
american-made infrastructure investment
Federal investment in infrastructure is critical to a well-
functioning economy and our national competitiveness. U.S.
manufacturers benefit from infrastructure investments not just because
they generate new demand for steel, but also because an efficient
infrastructure network improves their ability to bring goods to market.
We desperately need to identify solutions to the funding challenges
that stand in the way of addressing the backlog of repairs to our
Nation's highways, water systems, and other critical infrastructure.
According to a Duke University report entitled Infrastructure
Investment Creates American Jobs, America has 156,000 deficient
bridges, an investment backlog of $85.9 billion for our Nation's roads,
and $200 billion in lost economic activity annually from inefficient
rail transportation.
Too often the focus of infrastructure has been on ``shovel ready''
projects, which unfortunately has meant that larger projects that are
essential to our steel sector have not moved forward. A prime example
is the Soo Locks system that allows ships to move between Lake Superior
and the rest of the Great Lakes. The larger of the two locks, the Poe
Lock, is nearly 50 years old and the only lock that can accommodate
larger vessels that make up almost 70 percent of the potential capacity
of the Great Lakes fleet. A recent report by the Department of Homeland
Security found that if the Poe lock were to shut down for 6 months, the
Nation would experience economic hardship as mines and steel mills
experienced supply chain disruptions, causing a ripple effect
throughout the manufacturing sector that could impact as many as 11
million workers. Depending on when such a failure occurred, as much as
75 percent of U.S. steel output could go offline in a matter of weeks.
Building a second Poe-sized lock would cost $580 million, but would
spur $1.7 billion in economic activity.
strong buy america policies create jobs here at home
Buy America policies are procurement preferences for iron, steel,
and manufactured goods that are ``produced in the United States.''
These preferences apply to Federal infrastructure programs, ensuring
that U.S. companies and American workers have the first opportunity to
supply the materials used to build our highways, rail, airports, water
systems, and other critical infrastructure. Strong Buy America laws
maximize the return on the Nation's investment in our infrastructure
and are consistent with our international obligations.
I want to offer several recommendations as Congress moves closer to
a debate on infrastructure:
Include Buy America in the infrastructure package. As Congress
looks to funding solutions, it is necessary to ensure that new funding
mechanisms--including public-private partnerships or other new
innovative financing tools--are covered with strong Buy America rules.
Despite his frequent campaign rhetoric on the issue, we were
disappointed to see that President Trump's recently released
infrastructure plan made no mention of Buy America. In fact, it goes in
the completely opposite direction, proposing to weaken existing
applications, resulting in tax dollars going overseas to purchase
foreign steel for our infrastructure needs.
Apply Buy America where it doesn't exist. There are many
infrastructure spending programs that are not covered by a Buy America
preference. We support a top-to-bottom review of all infrastructure
spending programs and enacting Buy America laws where they are absent.
An example of this is the Drinking Water State Revolving Fund (DWSRF),
which is covered by a temporary Buy America provision. Without action
to make this provision permanent, our Nation's drinking water
infrastructure investments will be open to steel and iron from China
and other countries. We cannot let this happen.
Close loopholes and improve existing laws. We should also work
to close loopholes, strengthen weak agency enforcement, and reduce the
number of unnecessary waivers granted. Bipartisan support in recent
transportation bills resulted in language to prevent project
segmentation and increase transparency of the waiver process.
Reject efforts to weaken Buy America by supporting the
``Melted and Poured'' standard. For 35 years, the foundation of our Buy
America laws has been the requirement that all steel manufacturing
processes occur in the United States for a product to be Buy America
compliant--from the actual steel production to the finishing processes.
Regrettably, a few companies whose business model focuses on importing
foreign steel are aggressively lobbying to create a massive Buy America
loophole that would allow steel from Russia, China, or other foreign
sources to qualify as ``produced in the United States.'' This massive
outsourcing loophole should be rejected outright. Steel is made here
only if it is melted here.
no more outsourced infrastructure projects
I want to highlight several high-profile infrastructure projects
that have found ways to evade Federal Buy America laws. In each case,
public resources bypassed U.S. companies and American workers and,
instead, supported jobs in China and other foreign countries.
San Francisco-Oakland Bay Bridge. Completed in 2013,
California State officials used clever accounting gimmicks to bypass
Federal Buy America laws for the construction of the Bay Bridge. They
thought that using Chinese steel would net them $400 million in savings
to the overall project. Rather, the project was plagued with quality
issues and cost overruns, all while thousands of jobs were created in
China instead of here in the United States. The project was a decade
behind schedule and nearly $4 billion over budget.
Verrazano-Narrows Bridge. In 2013, New York State officials
decided to source 15,000 tons of steel, including the fabrication work,
from China for the bridge deck replacement at the Verrazano-Narrows
Bridge. In shocking fashion, the Metropolitan Transportation Authority
(MTA) awarded the contract to a Chinese state-owned company that had
never done such work. MTA used a very specific fabrication design,
called orthotropic decking, and used it as an excuse to bypass U.S.
companies and workers ready to rebuild the bridge.
LaGuardia Airport. Early last year, it was reported that
Chinese and other foreign-origin steel is being used in the $4-billion
LaGuardia Airport renovation. While the project does not appear to be
covered by a Federal Buy America law, it is notable that the Port
Authority of NY and NJ has received $76 million in Federal FAA grants
for improvements at LaGuardia in just the last 10 years. These funds
require U.S.-melted steel to be used. And, the Port Authority will
finance the LaGuardia project with $1 billion in Passenger Facility
Charges (PFCs).
conclusion
Thank you for the opportunity to testify today. We look forward to
working with you to advance policies that will revitalize America's
manufacturing sector--a major economic driver, foundation of U.S.
national security, and source for millions of
family-sustaining jobs. Together, we can Keep It Made in America.
______
Prepared Statement of Todd Young, Managing Director,
Government Affairs, United States Steel Corporation
Thank you for conducting today's hearing in western Pennsylvania
and inviting testimony from United States Steel Corporation, which is
proudly headquartered in Pittsburgh, still known far and wide as The
Steel City. Senator Casey's leadership in convening this forum on trade
law enforcement and improving America's infrastructure is very much
appreciated. Both of these topics are public policy priorities for
America's steelmakers.
U.S. Steel was founded in 1901 and is the largest integrated steel
producer headquartered in the United States, with domestic annual raw
steelmaking capability of 17 million net tons. U.S. Steel manufactures
semi-finished steel as well as a wide range of value-added flat-rolled
and tubular products for the automotive, appliance, container,
industrial machinery, construction, and oil and gas industries. Our
major domestic steel operations are located in the Commonwealth of
Pennsylvania, home to our Mon Valley Works, compromised of the Edgar
Thomson, Irvin and Clairton plants east of Pittsburgh, and the Fairless
Plant near Philadelphia; in the State of Indiana, with our Gary Works
in Gary, our Midwest Plant in Portage, and tin operations in East
Chicago; in the State of Michigan, with our Great Lakes Works located
in Ecorse and River Rouge near Detroit; and in the State of Illinois,
at our Granite City Works east of St. Louis, MO. Our tubular operations
are located in: Fairfield, AL; Lorain, OH; Pine Bluff, AR; and multiple
locations near Houston, TX. Our two iron ore operations in Minnesota
are located in Mt. Iron and Keewatin. These mines supply iron ore
pellets to all our steelmaking operations, as well as to third parties.
U.S. Steel is also involved in several steel finishing joint ventures
in the United States.
U.S. Steel is a leader in both process and product technology and
has three domestic research and development facilities dedicated to
advancing the boundaries of steelmaking: the Research and Technology
Center in Munhall, PA; the Automotive Center, a research and sales
facility in Troy, MI; and the U.S. Steel Tubular Products Innovation
and Technology Center in Houston, TX.
trade enforcement
Over the past several years, America's steel companies and workers
have been challenged by significant, persistent unfairly traded imports
flooding our markets. Steel at dumped prices and subsidized by foreign
governments targets our open markets. As a result, many American steel-
making facilities have been forced to shutdown temporarily or even
permanently causing thousands of hard-working, highly skilled Americans
to lose their jobs. American steel companies can compete and win
against any other producers around the world on a level playing field--
yet that requires fair enforcement of our trade laws and strong, prompt
action by the Federal Government.
We commend Congress on passing the 2015 Leveling the Playing Field
Act, which significantly strengthened U.S. trade remedy law by
clarifying the injury standard for the International Trade Commission
in antidumping and countervailing duty--or AD/CVD--cases and providing
the Commerce Department with additional tools to address dumped and
subsidized imports. This strengthening of the trade law was the result
of forceful, bipartisan leadership by steel champions in both the House
and Senate.
Passed by Congress a few months later yet effectively in tandem
with the Level the Playing Field Act, we applauded enactment of the
2016 Trade Facilitation and Trade Enforcement Act, especially the
Enforce and Protect Act contained therein which provided U.S. Customs
with new tools and directives to aggressively enforce U.S. trade remedy
orders and crack down on duty evasion and customs fraud. It was
critical that this second law followed as AD/CVD orders only level the
playing field if they are strictly and effectively enforced.
U.S. Steel and other domestic producers moved swiftly in utilizing
these new laws by filing a series of new AD/CVD petitions on a flood of
unfairly traded imports of hot-rolled, cold-rolled, and corrosion-
resistant steel from 12 countries in the summer of 2015. Solely through
subsidies and rock-bottom prices--many times below the cost of
production--these imports captured significant U.S. market share at the
direct expense of American steel mills and workers. As a result of
those investigations, however, and due in large part to the new laws,
the domestic steel industry was able to obtain 28 new AD/CVD orders on
11 countries,\1\ many with commercially meaningful duties. This
provided U.S. Steel and American producers with critical relief.
---------------------------------------------------------------------------
\1\ Hot rolled--Australia, Brazil, Japan, Korea, Netherlands,
Turkey, and UK; cold-rolled--Brazil, China, India, Korea, Netherlands,
and UK (*negative on Russia); and corrosion-
resistant--China, India, Italy, Korea, and Taiwan.
Though these recent flat-rolled orders stemmed the tide of unfairly
traded imports from the targeted countries, an all-too-familiar story
unfolded--low-priced imports surged in from other countries not covered
---------------------------------------------------------------------------
by U.S. AD/CVD orders.
For example, even before the orders were in place, imports of cold-
rolled and
corrosion-resistant steel from Vietnam replaced imports from China
nearly ton-for-ton. As a result, U.S. Steel and other domestic
producers filed circumvention petitions with the Commerce Department in
September 2016, arguing that U.S. imports of Chinese steel finished in
Vietnam should be covered by the AD/CVD orders on imports from China.
The Commerce Department's December 2017 preliminary affirmative
circumvention finding represents a critical step toward shutting down
one of the many paths used to flood the U.S. with dumped and subsidized
steel. This decision is an encouraging sign for the steel industry and
should put other countries and foreign producers on notice that
circumvention will no longer be tolerated.
The job is far from done, however. Our trade laws simply take too
long to provide relief from unfairly traded imports, and by the time
relief often comes, foreign steel companies have moved locations and/or
devised sophisticated plans to evade or circumvent any relief.
For example, in 2014 we obtained AD/CVD orders on oil country
tubular goods--or OCTG--from Korea and have obtained higher and higher
AD duty rates in each administrative review. Dumped OCTG imports from
Korea, however, have continued to surge into our market due to, among
other things, subsidized steel and electricity and Korean government-
directed reimbursement of AD duties. These practices not only thwart
the remedial purpose of U.S. antidumping law, but they also threaten
the U.S. OCTG industry, which is integral for the development of U.S.
energy resources and infrastructure (including petroleum refineries,
oil and gas pipelines, off-short rigs, and storage tanks). America
cannot achieve national energy security and independence if our ability
to harness our own abundant resources becomes reliant on foreign steel
from unstable regions of the world.
In addition to the reliance on American steel of critical
infrastructure and energy independence, the U.S. military relies on
steel to protect our troops in conventional and unconventional wars,
from armor for tanks, ships, and submarines to engines, gears,
bearings, and bodies of the F-35 Joint Strike Fighter and other
aircraft. When called upon during World War II, U.S. Steel produced,
among other things, 90 percent of the steel used to make over 21
million helmets. And we invented the landing mat, to project our
airpower wherever and whenever required. Today, U.S. Steel produces the
hot-rolled steel that Stupp Corporation uses to produce Mk82, Mk83, and
Mk84 bomb bodies for the Department of Defense.
Our national security is only as strong as our country's ability to
produce steel from beginning to end within our Nation. That is why we
urge President Trump to complete the section 232 national security
investigation of steel imports initiated last April. The unrelenting
and growing barrage of unfairly traded steel entering our market leaves
no doubt that imports are threatening our national security. The law
provides the President with broad power to implement remedies under
section 232, and we believe the threat posed to America's steelmaking
capacity merits aggressive action by President Trump. The needed remedy
must be comprehensive and broad-based, covering the full range of steel
products--including semi-finished products such as slab--and all
producing countries, with only limited exceptions for products not
currently available in the United States. Comprehensive section 232
remedies would allow American steel producers to restart idled
capacity, rehire thousands of steelworkers, and significantly
strengthen our economy, steel industrial base, and national security.
Significant progress has been made on strengthening trade
enforcement and utilizing new and little-used enforcement tools. We
look forward to continuing to work with Congress and the administration
to further strengthen U.S. trade law enforcement so that no more
American steel mills are shuttered, no more American steelworkers are
laid off, and the American steel industrial base and national security
are no longer threatened by unfairly traded imports or foreign
governments.
infrastructure
For a steel maker, investment in infrastructure is both a necessity
and an opportunity. Efficient, reliable transportation directly impacts
both our ability to move millions of tons of raw materials and finished
product, and our overall competitiveness as a company and industry.
Long-term investment to improve our transportation, water, energy, and
other critical infrastructure also creates direct demand for steel and
enables broad economic growth and job creation that further drives
steel demand in more consumer-oriented markets like appliances, cars
and trucks, and more.
As the national discussion on how best to invest in infrastructure
advances, we encourage a focus on three priorities: increased, long-
term investment; project streamlining; and maintaining the commitment
to Buy America. Long-term funding is essential to undertaking the
large-scale projects needed to modernize and expand our transportation
infrastructure. In addition, responsible regulatory reform that
significantly shortens the permitting and approval process for project
delivery will lower costs and deliver results sooner to system users.
As we invest in America, there must also be an expanded commitment to
the long-standing principle that the iron and steel used to rebuild our
Nation's infrastructure should be produced--melted and poured--in the
United States.
We sincerely appreciate the opportunity to join today's hearing and
to provide perspective to the subcommittee on two priorities of
fundamental importance to U.S. Steel and our country. We stand ready to
support and assist your important work.