China in violation of WTO - But who isn't?

The American Iron and Steel Institute (AISI), Steel Manufacturers Association (SMA), the Specialty Steel Industry of North America, and the Committee on Pipe and Tube Imports came out with a report that details China's violation of World Trade Organization (WTO) rules. This report was forwarded to the US Trade Representative for consideration and in the hope that it might push the US government into action. The report highlights how the Chinese steel capacity expanded to 349 million tons in 2005, more than the combined capacity of the next four largest steel producing countries. And all of this was achieved through massive government subsidies in the form of cash-and-land grants, tax incentives, and tax forgiveness. The report was warmly praised by politicians, steel mill executives, and trade union bosses. The points given in the report are good points and certainly merit being discussed. The problem is: the US steel industry sits in the proverbial glass house and can ill afford to throw stones. There are subsidies galore in force in the US in general and in the steel industry in particular. To begin with, the US steel industry is probably the most protected one in the world by a myriad of antidumping and countervailing duty suits. The WTO found the unilateral trade action by the first Bush Administration illegal and it took months, actually years before the program was rescinded. In the end, it was only the threat of massive retaliation by Japan and the European Union that got this "WTO illegal" steel safeguard program terminated by President Bush. On the state and local level, a lot of incentives are given to companies that want to build new plants. Not many US steel mills can claim not to have received some kind of incentive. It can be in the form of lower taxes for a certain period of time, special utility rates, or special deals on properties. It varies with each project but competition among states and counties to attract new industries is fierce. We are not aware of any debt forgiveness as such. But the Chapter 11 laws, under which companies can restructure their debts and legally wipe out a large chunk of them, comes pretty close to it. Finally, let's not forget that states like to come to the rescue to steel mills (and other industries) by offering loans at below market rates. Two examples in recent years were Illinois giving such a low interest loan to Keystone Industries and South Carolina to Georgetown Steel. Just because these subsidies are not controlled by the federal government does not mean that they do not exist in the US: they are there. So let's just put down those stones ...