This week a number of nations met in Brussels to agree on a set of rules to reduce the amount of steel on the global market. The steel glut has caused prices to go down and jobs to disappear. China, one of the world’s largest producers of steel, won’t agree to the deal.
Here & Now's Jeremy Hobson speaks with U.S. Secretary of Commerce Penny Pritzker about what she’ll do about the deal, and the importance of trade with Asia.
This interview is part of NPR’s A Nation Engaged project focusing on trade.
Interview Highlights: Sec. Penny Pritzker
What are you and other countries doing in terms of China’s steel production?
“Well, steel is in a state of crisis. We have a massive global excess capacity. Prices are down, profits are decreasing and the United States has lost about 13,000 jobs, so we just this week had meetings with the entire world has come together in Brussels. The NAFTA countries, the E.U. countries, Turkey, Korea and the United States have come together and committed to meaningful actions to address excess capacity. Unfortunately, China has not made commitments and China has about 300 to 400 million tons of excess capacity over their domestic consumption, which is more excess capacity than the rest of the world, so it’s a real challenge that we face and a conversation that we are trying to have with China.”
What are the meaningful actions?
“It includes, for example, refraining from adopting government policies that encourage the net expansion of steel, refraining from subsidies and other forms of government support that maintain loss-making steel enterprises, preventing state-owned enterprises from receiving special benefits that distort competition and exchanging information so that we have reliable data relating to steel production so there’s a better understanding of exactly what is the supply and the demand.”
And you are asking them to do these things?
“These are the actions that the NAFTA countries, the E.U., the U.S., Turkey, Korea have identified as actions they are going to take.”
Is there a way to compel China to do these things?
“Well, compelling is challenging. This is something that voluntarily the world’s steel producing countries are coming together, and you know this is hard because reducing capacity affects jobs and affects local economies but there’s a recognition that by having, I think we have something like 700 million tons of excess global capacity, of which about 300 to 400 million is in China alone, that that excess capacity is affecting the price of steel, the profitability and is costing jobs globally and so we as the world need to come together to address this.”
What can the United States do get China to cut back on its steel production?
“I think one of the most important actions the country could take is to pursue the trade agreements in the Asia-Pacific region. The Trans-Pacific partnership [TPP] is an extremely important part of addressing the United States’ ability to be competitive. Today, 95 percent of consumers are outside the United States, 80 percent of the buying power is outside the United States, and the fastest growing markets in the world and the fastest growing middle class in the world are in the Asia-Pacific region. Other countries, including China, have somewhere around 100 free trade agreements in that part of the world and we don’t. Our economy and our workers benefit from having access to those markets and the Trans-Pacific partnership addresses not only tariffs but also improves environmental standards, improves labor standards, increases U.S. competitiveness and really addresses impediments to digital trade, so taking action on the Trans-Pacific partnership would be another important way that the United States could lead in terms of global trade.”
Even though the TPP does not include China?
“Even though the TPP does not include China, it improves the ability for America’s companies and our workers to compete in the marketplace against China which already has free trade agreements with these countries.”
On Hillary Clinton and Bernie Sanders’ comments against the TPP
“I think the opportunity is for us to explain to the American people and for businesses that are selling their services and goods around the world to explain to their employees, as well as their political leaders, why they need TPP, and that’s something that our administration and the business community is undertaking right now. Now is the time for us to act, we cannot afford to wait. The Peterson Institute has done a study that shows the one year cost of delay on TPP would cost the United States $94 billion.”
This segment aired on April 20, 2016.