China's Economic Aggression Threatens U.S. Energy Independence
Our Buy American Mention of the Week!
by Roger Simmermaker
June 29, 2019
MMany Americans tend to think of the U.S.-China trade war in terms of theft of intellectual property, technology transfer, or imported steel that goes into Whirlpool washing machines. However, it turns out that this trade war is about a lot more. It is about American independence, which should be the real reason patriotic Americans will soon celebrate Independence Day on July 4th.
Few Americans would disagree that our country should be energy independent. However, as domestic drilling is on the rise, China is dumping drilling equipment in America at prices so low that make it next to impossible for U.S. manufacturers to compete. Specifically, imports of Chinese-made, lower-end couplings have doubled within the last three years, threatening good U.S. jobs that pay good U.S. wages.
The United States needs to remain the world's number one superpower overall, but we must maintain our dominance in home-grown energy in particular.
To its credit, the Trump Administration has applied formidable import tariffs on certain drilling products for gas and oil, but China is dumping finished OCTG couplings (coupling used to connect two joints of casing or tubing) at prices far below the cost of raw steel needed to produce the couplings.
Operations manager Sean Keough at Houston, TX-based AmTex Machine Products testified at a U.S. Trade Representative (USTR) Section 301 Tariffs Public Hearing on May 17, 2018, and said "As the largest independent U.S. OCTG coupling manufacture" it is "operating at under 35 percent" of its capacity. The reason? Finished couplings imported from China due to "Chinese Government policies."
Mr. Keough also sees evidence Chinese producers are moving up the production chain to compete in the semi-premium and premium couplings market. As a result of unfair and predatory competition from China, AmTex now has less than half of the workers it employed in 2014.
China has also flooded the markets of South Africa and the Middle East with its reversed engineered couplings, depriving American producers the ability to compete for these and other export markets which would help lower the U.S. trade deficit.
Chinese dumping is occurring at the same time that drilling in the U.S. is increasing, jeopardizing good-paying American jobs. When China is not dumping its products in our market, it is busy avoiding U.S. import tariffs by trans-shipping its subsidized steel pipes through countries like India and South Korea, which transform couplings and ready them for shipment to American shores. Indeed, imports of couplings made from Chinese steel from India and Korea have risen over 300 percent.
China is operating out of the playbook it used for electronics, furniture, textiles, apparel, footwear, and the like, which says one must sell at prices low enough to drive out the competition. Then, after China has driven out the formidable competition, it can control the market it seeks to dominate. It can then set the terms of pricing, market access and penetration, production quality, and industry and infrastructure standards.
Free trade and free access to the U.S. market is not really free. The true cost to the consumer is not always in the price tag. For example, Forbes.com recently reported that those cheap Wal Mart prices cost U.S. taxpayers $6.2 billion in public assistance. Nothing is free, and there is no free lunch. Freedom isn't free. Our high national standard of living isn't, either. Everything comes with a price, especially when you are doing the right thing and standing up for what is fair and just. Sometimes that price comes in the form of an occasional higher cost to the consumer for imports or American-made goods.
We need to return the what was once called the "American System" of tariffs on imports we once advocated in Abraham Lincoln's day. Doing so would save American jobs and increase government revenue to be used for the general welfare of "We the People" as advocated in the U.S. Constitution.