news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

【text/observer network yang rong】

on the 4th, u.s. media reported that the biden administration will block nippon steel corporation (hereinafter referred to as "nippon steel") from acquiring u.s. steel this week on the grounds of "national security", causing market anxiety. on the 5th, reuters exclusively disclosed a letter sent by the u.s. government to nippon steel and u.s. steel last week, further confirming that washington did issue a warning about the merger, citing the so-called "oversupply" of chinese steel.

it is worth mentioning that nippon steel issued a statement on the 4th playing the "china card", saying that the acquisition will help the united states cope with "competitive pressure" from china.

according to reuters, the committee on foreign investment in the united states (cfius) sent a letter to nippon steel and u.s. steel last saturday (august 31). the 17-page letter mentioned the problem of "oversupply" of chinese steel in the world and said that as japan's largest steelmaker, under the leadership of nippon steel, u.s. steel is unlikely to impose tariffs on foreign steel importers.

"u.s. steel's decision in the (trade) case will be influenced by nippon steel and may take into account nippon steel's business interests and competitive position in global steel markets," cfius wrote in the letter.

the report said that the cfius letter cited data from 2022, saying that china's crude steel production accounted for about 54% of the world's total, making it the largest exporter. cfius smeared that china "continued to use market-distorting government intervention measures" to export a large amount of excess steel, artificially lowering steel prices in the international market, and gaining a dominant position in the global steel market in an "unfair manner."

according to cfius, u.s. steel's active application for trade relief against foreign imports and nippon steel's occasional opposition to the u.s. relief efforts will pose "national security risks" and lead to a decline in domestic steel production capacity in the united states. the supply of steel is critical to key transportation, construction and agricultural projects.

reuters commented on the 5th that although the companies involved and many industry experts have questioned the strength of the u.s. arguments, the letter still allowed the outside world to see for the first time the so-called "national security concerns" that the biden administration may use as the basis for its expected prevention of the merger.

sarah bauerle danzman, a professor at indiana university and a fellow at the atlantic council, believes that cfius appears to be "significantly expanding" its definition of national security risks. she said: "while the resilience of domestic steel production capacity in the united states is clearly in the national interest, it is unclear how ownership by a company from a major treaty ally could fundamentally threaten this."

in response to the us's questions, the report said that nippon steel sent a 100-page reply on tuesday (september 3) saying that it would invest billions of dollars to maintain and upgrade u.s. steel's facilities, which would otherwise be idle, "indisputably" enabling it to "maintain and potentially increase domestic steelmaking capacity in the united states."

nippon steel and u.s. steel said they have "no economic motivation" to import steel from other countries to compete with or weaken the u.s. steel industry. nippon steel stressed that after the acquisition, it will not transfer any production capacity or jobs of u.s. steel outside the united states, nor will it interfere with any decision of u.s. steel on trade issues, including the decision to take trade measures against the so-called "unfair foreign practices" of the united states in accordance with u.s. law.

the report mentioned that in order to allay us concerns, nippon steel even proposed a national security agreement, promising that the majority of us steel's board members would remain non-dual us citizens, including three independent directors approved by cfius to oversee compliance with the agreement.

last december, nippon steel announced that it would acquire u.s. steel for $14.1 billion. under the terms of the deal, u.s. steel would retain its name and pittsburgh headquarters. as soon as the news came out, it caused a stir in the united states, and the united steelworkers union clearly opposed it.

as a symbol of "made in america", american steel was once the economic pillar of the country. today, its market value is far less than that of the leading american technology companies, which are valued at trillions of dollars. cnn previously commented that the possible end of this independent listed company marks that "the us economy is shifting from manufacturing to service industries such as retail, media and technology."

amid the controversy, nippon steel and u.s. steel remain committed to the deal. nippon steel has vowed to protect jobs, promising to honor its obligations under the union contract, which expires in 2026, and avoid layoffs. the company also hired pompeo, who served as secretary of state in the trump administration, to lobby for the deal, promising to increase investment in u.s. steel facilities if the deal is completed.

on the 29th of last month, nippon steel offered new investment incentives, promising to invest an additional $1.3 billion, of which $1 billion will be used to upgrade the facilities of a steel plant in pennsylvania of us steel to improve the competitiveness of the plant and create more jobs; another $300 million will be used to renovate a steel plant in indiana to extend the service life of its facilities.

on the 4th of this month, nippon steel issued a new statement, announcing the management plan after the pending transaction is completed, proposing that americans become the "core" of the management of american steel after the acquisition. the statement also caters to the biden administration's "china threat" statement, claiming that the transaction will ultimately make the us industrial base and supply chain "more capable of coping with future pressure from chinese competitors, thereby enhancing us national security."

since 2018, the us has selectively imposed tariffs on steel and aluminum products from global trading partners in the name of "national security" and used this to coerce trading partners into accepting unfair conditions, which has been opposed by many wto members. the relevant us measures have been ruled by the wto to violate wto rules. in may, the white house announced that this year it would increase the tariff rate on some steel and aluminum products under the "301 investigation" against china from 0-7.5% to 25%.

the spokesperson of the ministry of commerce responded at the time that the us's accusations against china have no factual basis, and the relevant measures are typical unilateralism and protectionism, which china firmly opposes. the us has ignored the international economic and trade order and rules, politicized economic and trade issues, abused the so-called 301 tariff review procedure, and publicly demanded arbitrary adjustments to tariffs on chinese products to shift contradictions. this is a mistake again and again, and it does not help solve the problems faced by domestic industries in the united states. the us pressure on other countries to restrict chinese products will undermine the security and stability of the global industrial chain and supply chain.

some analysts believe that the argument of the united states for imposing tariffs under the guise of so-called "national security" is untenable. data shows that chinese steel accounts for only 2% of us imports and 0.6% of consumption. only about 3% of us steel is used in the defense sector. moreover, most of the us steel imports come from allies, such as 17% of us imports from canada, accounting for 5.9% of total domestic consumption; 14% of imports from brazil, accounting for 4.7% of consumption; 10% of imports from south korea, accounting for 3.4% of consumption; and 9% of imports from mexico, accounting for 3.2% of consumption.

imports from russia and china that the united states considers to be a threat to its national security only account for 9% and 2% of us imports, and 3% and 0.7% of consumption, respectively. moreover, these steel imports are mainly used for "long steel products" in construction, which will not have an adverse impact on the us defense needs.

this article is an exclusive article of observer.com and may not be reproduced without authorization.