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Financial News: BRAZIL: Steel Companies To Visit The U.S. To

BRAZIL: Steel Companies To Visit The U.S. To Press Against Import Barriers

02/07/2018 - 15:57:00 (RTTNews)

(RTTNews) - The world steel industry may be under the threat of new import taxes from the United States, but the Brazilian Steel Institute (IABr), an association of steelmakers from Brazil, expects opposition to higher tariffs from the country and plans to send a new mission to the United States this month to avoid new trade barriers.

On January 12, the U.S. Department of Commerce concluded an investigation to verify if steel imports threaten the U.S. national security. The White House received the probe results, and President Donald Trump has 90 days to make a decision based on the reported conclusions.

Analysts see the investigation as a way for Trump to adopt barriers to steel imports using the Article 232 of the Trade Expansion Act of 1962, which grants the country's head of state authority to prevent certain products from entering the territory for reasons of national security.

"Behind the scenes, the U.S. government wants to close its market to protect the industry, but Brazil is not part of this problem, since more than 80% of our steel exports to the country are of semi-finished products, which are used and processed by the U.S. Industry," argues the IABr chairman, Marco Polo de Mello Lopes.

In 2017, Brazil steel exports totaled 15.353 million tons, of which 9,757 million was of semi-finished steel. The United States was among the main export destinations.

Mello Lopes noted that IABr already tried to argue for Brazil's exclusion from new trade barriers in September when the organization promoted a visit to the U.S. that included government officials and Brazilian business people. The mission took part in a series of meetings with U.S. lawmakers and the country's steel producers and consumers.

There was also an attempt to articulate a new mission in October 2017, but efforts to do so failed. Now, a new trade mission is being organized for this month.

"We are trying to consolidate the second trip with the minister to talk to Wilbur Ross [U.S. trade secretary]," Lopes told Agência CMA.

IABr's chairman expects Trump to either give up on new barriers for imported steel or to acknowledge local steel consumer's demands and apply soft obstacles for the commodity.

Wagner Parente, director superintendent of the foreign trade consulting Barral M. Jorge, said that China would be the first to retaliate against the U.S. in the case of new measures against steel.

"There is a lot of room for the Chinese to retaliate, whether in agricultural products, meat, or in manufactured goods, or in areas such as aviation," he noted.

Another possible consequence would be for some country to question the ruling in the World Trade Organization (WTO), which would open a consultation on the issue and could result in the opening of a panel.

To avoid a major showdown, Parente believes that Trump could also choose to place a barrier only on steel imported from individual countries and select the type of restriction, be it a surcharge, quotas, and other measures. However, he points out that the president has adopted a protectionist stance and that the steel sector has been a historical target of trade measures.

According to an IABr report, steel products are the target of a third of the trade defense measures in the world and this movement may continue to occur due to the global steel surplus.

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