This is my first appearance on this page, but I feel that I am in familiar territory. Domestic metalcasters are rousing themselves to pressure the U.S. Commerce Department to restrict U.S. scrap exports to China. I can’t criticize this effort; it’s a logical move. But, it’s a shortsighted agenda that’s reminiscent of earlier foreign-trade crises I’ve followed, and one not likely to yield a long-term solution. I hope that one day soon U.S. industry leaders and government experts will begin to see the problem’s full dimensions.
To recap, the Non-Ferrous Founders’ Society and the Copper and Brass Fabricators Council have petitioned the federal government to monitor and restrict copper and copper-alloy scrap to China. Prodigious, and sustained, Chinese demand has spurred domestic price spikes and shortages of these materials.
The pattern of this dilemma is not limited to copper and copper alloys, nor are its effects being felt solely by foundries. Steel scrap is equally scarce. Chinese buyers began to source industrial raw materials from the U.S. during the past recession, and their continuing demand is driving up prices just as the domestic economy is rebounding.
According to the NFFS and CBFC, U.S. exports of copper-based scrap to China in 1999 were 86,601 metric tons, or 27% of total U.S. exports. In 2000, that rose to 214,152 metric tons, 43% of total U.S. exports. In 2001 the exports climbed to 316,739 metric tons, or 56% of total exports. By 2003, they reached 532,901 metric tons, 71% of total U.S. copper/copper alloy scrap exports.
“Domestic foundries and brass mills are being doubly hurt by China’s trade practices,” says NFFS executive director James L.
Mallory. “On one hand, they’re being forced to pay higher material costs due to China’s being willing to pay premium prices for scrap, while on the other hand they’re getting underbid by Chinese imports. Under fair market conditions, it’s highly unlikely that these two practices could co-exist for long.”
There’s no doubt this is true. But, recognizing how this problem repeats itself across various industries ought to make us understand that in fact these are battles in an expanding economic war. Let’s not be under any illusion that China is other than an adversary.
That so many U.S. and Western investors see China as an emerging market is part of our confusion. That China portrays itself as a market economy is part of its deception. Its laws do not protect citizens or property owners. Its currency is not allowed to locate a fair exchange rate. Central planners, not free-thinking investors and consumers, dictate its economic expansion.
U.S. law may indicate piecemeal solutions, like tariffs or export restrictions, but such actions are conceived as corrections to free-trade violations. We should let common sense and good judgment, not laws, define our problems with China, and guide our response to its policies — which have little in common with freedom.
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For the past several weeks I’ve been introducing myself over and over again. If I we haven’t yet met, I hope it won’t be too long before I’m able to address that (perhaps at next month’s Metalcasting Congress.) But please don’t wait. Call or write; let me know what you think about my work and my opinions.
When I took this new position I recognized how important it is to make readers familiar with me, but as I write I’m just as mindful of the tradition I’ve inherited. I’ll be working each month to earn your attention, to make this my column, but I know that after more than a century this magazine belongs to its readers.