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US welded pipe producers urge to maintain Section 232 relief

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World Pipelines,

The American Line Pipe Producers Association (ALPPA), a domestic coalition of large diameter welded pipe (LDWP) producers, urges the US Administration to maintain Section 232 relief on imports from Canada and Mexico. In addition, both countries have and continue to engage in unfair trade practices with respect to LDWP products.

The United Steelworkers (USW) recently called for the removal of Section 232 tariffs and quotas on Canada ahead of the US-Mexico-Canada Agreement's (USMCA) ratification. However, while ALPPA supports the USMCA, it strongly rejects that USMCA should be tied to removal of Section 232 tariffs, particularly given the trade-distortive practices of Canada and Mexico:

Canada: Last month, the Department of Commerce concluded that Evraz and other Canadian LDWP producers are dumping LDWP in the US at a rate of 12.32%. A final injury determination vote will occur next week at the US International Trade Commission. Further, even with Section 232 tariffs and dumping duties in place, Canadian LDWP producers have continued to ship massive volumes of LDWP into the US market. US imports of Canadian LDWP increased by more than 25% in the past year alone. This increase has directly and adversely impacted domestic LDWP producers and their workers, including USW workers working at ALPPA members Dura-Bond (McKeesport and Steelton, Pennsylvania) and Stupp Corp. (Baton Rouge, Louisiana).

Mexico: The Mexican large diameter pipe market is closed to US producers. Mexico's most recent WTO Trade Policy Review indicates that current tenders for oil and gas pipeline projects issued by Mexico's National Hydrocarbons Commission require 25% local content; this requirement will reach 35% by the end of 2025. Further, reports indicate that, in practice, Mexico's local content requirement for oil and gas pipeline projects may be much higher.

It is imperative that Section 232 tariffs relief be maintained on both Canada and Mexico in order to uphold the President's goal of increasing US steel capacity, including domestic LDWP capacity, to support US national security needs. The failure to do so will directly undermine LDWP production in the US and increases the possibility of Canada and Mexico becoming platforms for circumvention by China and other countries. Nonetheless, to the extent that Section 232 tariffs are removed on Canada and Mexico, the tariffs should be replaced by a quota to ensure that US national security is protected, and that Section 232 relief benefits US companies and workers, including USW workers. Such a quota should be well below the 2016 to 2018 average volumes for US imports from Canada – any quota set at historic levels would improperly reward Canada for its surge of LDWP imports at dumped prices.

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