The American Line Pipe Producers Association (ALPPA), a domestic coalition of large diameter welded pipe (LDWP) producers, issued a press release today urging the US government to maintain Section 232 tariffs on imports from Canada and Mexico. The ALPPA said both countries have and continue to engage in unfair trade practices with respect to LDWP products.
The United Steelworkers (USW) recently called for the removal of Section 232 tariffs and quotas on Canada ahead of the US-Mexico-Canada Agreement's (USMCA) ratification. However, while ALPPA said it supports the USMCA, it “strongly rejects” that USMCA should be tied to removal of Section 232 tariffs, “particularly given the trade-distortive practices of Canada and Mexico.”
The ALPPA said last month that the Department of Commerce concluded that Evraz and other Canadian LDWP producers are dumping LDWP in the United States at a rate of 12.32 percent. A final injury determination vote will occur next week at the US International Trade Commission. US imports of Canadian LDWP increased by more than 25 percent in 2018, and the ALPPA said this increase has directly and adversely impacted domestic LDWP producers and their workers, including USW workers working at ALPPA members Dura-Bond (McKeesport and Steelton, Pennsylvania) and Stupp Corp. (Baton Rouge, Louisiana).
Additionally, the ALPPA said the Mexican large diameter pipe market is closed to US producers, noting that Mexico's most recent WTO Trade Policy Review indicates that current tenders for oil and gas pipeline projects issued by Mexico's National Hydrocarbons Commission require 25 percent local content; this requirement will reach 35 percent by the end of 2025. Further, reports indicate that, in practice, Mexico's local content requirement for oil and gas pipeline projects may be much higher.
The ALPPA said it is imperative that Section 232 tariffs are maintained on both Canada and Mexico in order to uphold the administration’s goal of increasing US steel capacity, including domestic LDWP capacity, to support US national security needs. The ALPPA said the failure to do so will directly undermine LDWP production in the United States and increase the possibility of Canada and Mexico becoming platforms for circumvention by China and other countries.
However, the ALPPA said the tariffs could be replaced by a quota to ensure that US national security is protected; the quota should be well below the 2016 to 2018 average volumes for US imports from Canada, as the ALPPA said “any quota set at historic levels would improperly reward Canada for its surge of LDWP imports at dumped prices.”