Shielding U.S. pipe makers from China’s assault is vital

Vindicator Editorial: January 4, 2010 at 12:00a.m.

Even as China rejects demands by the United States and Europe that it stop manipulating the value of its currency to give it a trade advantage, China squeals like a stuck pig when the U.S. takes defensive action to protect the American companies and workers who produce steel pipe from unfair trade.

Which is exactly why the United States must get tough when dealing with China on trade issues. Those who say the U.S. is flirting with a trade war ignore the fact that China has been pursuing a cold-war strategy in trade for more than a decade — and it’s been winning to the tune of more than $1 trillion in trade imbalance during that time. The evidence is plain enough: China now holds about $800 billion in U.S. Treasury debt. It bought all those U.S. notes with the proceeds of its lopsided trade.

Sharing the blame

Certainly much of that trade imbalance is attributed to a concerted effort by some of the big-box stores to stock their shelves with the cheapest goods — almost always imported — and the American consumers’ unquenchable thirst for such bargains. That part of the imbalance will continue as long as American consumers operate under the mistaken assumption that a nation doesn’t have to produce products to be great; all it has to do is consume them in prodigious quantities.

But much of the imbalance can also be attributed to China’s eagerness to subsidize production of materials destined for export, to its artificial deflation of its currency and to its tolerance of intellectual piracy. International companies that want to sell big-ticket items in China can dream about importing them, but that’s as far as they’ll get. Want to sell generators or cars or airplanes in China? Then plan on building them in China.

Last week, the U.S. International Trade Commission ruled that a four-fold increase in “oil country tubular goods” being imported to the U.S. from China between 2006 and 2008 had harmed or threatens to harm the U.S. industry.

It’s one of the largest ever trade cases involving the two countries, and is getting national and international attention, but thousands of workers in the Mahoning and Shenango valleys have known first-hand about the harm Chinese imports can do to American industry.

As to potential harm, the Youngstown area could have been one of the largest victims of continuing unbridled oil-country pipe imports from China. The area has been doing everything it could to attract a $1 billion expansion of the V&M Star Steel plant in Youngstown. China’s saturation of the U.S. market with underpriced pipe could have doomed that project.

Exporting unemployment

As long as China is willing to artificially bolster employment at home by actively undercutting its competitors, other countries will bear the economic and social costs of unemployment, not China.

The ITC’s ruling was in response to complaints by six U.S. companies and the United Steelworkers, who said Chinese government subsidies to steelmakers allowed the Chinese firms to overwhelm their U.S. rivals.

Years ago, China successfully undercut U.S. production of common pipe, with little resistance from the Bush administration. The Obama administration is sending a message that it will not stand idly by while oil-country pipe producers are put out of business.

The ruling is good news for pipe makers, the mills that supply steel for the industry and the men and women who work in both. There are thousands of such workers — or potential workers — in Youngstown, Sharon and Warren.

It’s also good news for a country that is battling high unemployment, and perhaps it is a wake-up call to all Americans that, yes, it is more important to produce than to buy.