As reported in the last issue of WireLine, four domestic rod producers requested that Canada and Mexico be included in the current Tariff Rate Quota (TRQ) Program covering carbon and alloy wire rod imports. Using Section 312 of the NAFTA Implementation Act, they asserted that there has been a surge of imports from these two countries, and that this surge has undermined the effectiveness of relief under the TRQ program.
Despite a vigorous fight from AWPA, including testimony before the International Trade Commission (ITC) from Joe Downes of Leggett & Platt and Kimberly Korbel, AWPA Executive Director, the Commissioners voted 4-2 in the affirmative that a surge in imports of certain steel wire rod has occurred, undermining the effectiveness of the TRQ. Voting in the affirmative were Chairman Koplan, and Commissioners Miller, Bragg, and Devaney. Voting in the negative were Vice Chairman Okun and Commissioner Hillman.
The inclusion of Canada and Mexico in the TRQ could prove to be very detrimental to the business operations of domestic wire and wire products producers. With the more than one million ton shortfall of wire rod due to closures of four domestic rod mills, the inclusion of Canada and Mexico in the program could seriously affect the ability of AWPA members to access an adequate supply of raw materials at competitive prices.
A grassroots effort, begun in early September, targets the President who must make a final decision on the fate of the TRQ program. AWPA has highlighted four major concerns, in testimony and with legislators and Administration officials.
(1) The AWPA opposes the inclusion of Canada and Mexico in the TRQ program. Such restraints would lead to shortfalls in rod supply, disrupting wire manufacturing operations and putting domestic wire producers at a competitive disadvantage internationally.
(2) The AWPA has urged the ITC to recommend to the President that the quota component of the TRQ program be liberalized to compensate for the closure of one-quarter of the domestic industry's production of wire rod ? over one million tons.
(3) The AWPA has opposed separate regional or country-specific quotas under the TRQ program, as some foreign rod producers and the four US rod mills have suggested. Country-specific quotas that lock in each import source to a set number of tons eliminate the ability of US wire drawers to adjust to changes in supply and demand. They would make the TRQ program both inflexible and more restrictive. The law requires that the program be liberalized; not made more restrictive.
(4) The AWPA has also requested that a specific portion of the annual quota be reserved for the fourth quarter of each quota year. Under the current TRQ program, one-third of the annual quota is reserved for each of the first three quarters of the quota year, and only unused quota is available for the fourth. This arrangement has resulted in only a limited amount of quota being available for the final quarter of the quota year; disrupting purchasing plans and adversely affecting inventory programs. The US rod mills and several foreign rod producers have endorsed this AWPA request.
The Commission has sent its findings to the president, as well as its Section 204 report outlining its recommendations on the TRQ program overall. It is assumed that the President will consider the Commission's determination in the Section 312 investigation in conjunction with his review of the Commission's report and recommendations, if any, from the Section 204 mid-point review of the TRQ program.
There is no time deadline by which the President must announce his decisions in the Section 312 and Section 204 investigations.
Back to Wireline Contents
American Wire Producers Association
801 North Fairfax Street, Suite 211
Alexandria, VA 22314-1757
Tel (703) 299-4434 | Fax (703) 299-9233 | E-mail info@awpa.org | Web: www.awpa.org
