Huffpost Business
THE BLOG

Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors

Tom Ridge Headshot

Trade Case Puts Jobs and Security in the Balance

Posted: Updated:
Print

The unprecedented growth of the natural gas industry has been a truly transformative force for the United States.

This flourishing industry has arguably kept our economy afloat in recent years. It has made America more energy independent and has provided an issue around which Democrats and Republicans, and labor and management, can rally.

In my home state of Pennsylvania, gas production along the Marcellus Shale formation has created thousands of direct and indirect jobs and has generated more than $600 million in new revenue for local communities in just the last three years.

Critical to the natural gas industry are Oil Country Tubular Goods (OCTG) -- steel pipe products -- used to build infrastructure for rapidly expanding gas businesses and related companies. No one makes higher quality steel OCTG products than U.S. steelworkers.

But last year, American OCTG producers were compelled to file a trade case with the U.S. Department of Commerce in which they provided clear evidence of a massive surge of illegal OCTG imports from South Korea and other countries. Leveraging a shadowy network of companies, South Korea tried to hide this effort by playing a shell game with production and import costs in violation of our trade laws. Unfortunately, our Commerce Department seemingly bungled key facts in its initial findings on the case.

South Korea sells not a pound of OCTG in its own market, and ships over 98% to the U.S. market. In reviewing the case, Commerce must construct value profit for South Korean OCTG. In the preliminary review, what did they choose as comparable products to the steel industry's most sophisticated, high quality and high safety product that must withstand enormous environmental and chemical pressures? Ordinary construction pipe. This is akin to comparing apples and radishes simply because they are both red!

What should the Commerce Department use as an accurate, comparable profit margin? One of the world's largest producers of tubular goods is Tenaris, with 85% of their production devoted to OCTG, which they sell in different markets all over the world, including the US market. Foreign producer. Same product. Same market. Verifiable, accurate and public data.

Steel dumping by any foreign trade partner is not only unfair; it stunts new investment and destabilizes the domestic steel industry. Should the Commerce Department side with South Korean steel makers in its final determination due by July 10, the United States will lose many of the jobs that the expansion of the natural gas industry has helped to sustain and create.

The Obama Administration must aggressively enforce our trade laws. All talk and no action will only extend the unemployment line!

As a former governor of Pennsylvania, I am concerned about what the final decision may mean for hard working steel workers in the Commonwealth and other states like Texas and Ohio where hundreds of good-paying, middle class jobs have already been lost. But, as a former secretary of homeland security, I have another serious concern.

In 2012, I co-authored a report outlining the dangers posed to our national security by a declining U.S. manufacturing sector. The warnings we issued then are playing out today and our leaders in Washington should take immediate notice.

We face both physical and advancing cyber threats to the electric grid that powers our water systems, hospitals and financial networks. But most transformers that support the grid are manufactured overseas. The digital components that enable critical communications equipment and technology are made predominantly outside of the United States. Life-saving pharmaceuticals, too, are produced mostly outside of our borders. And now, the proud steel industry that supports America's manufacturing sector, transportation infrastructure and military is being challenged by the dumping of cheap, substandard South Korean OCTG products.

A principal role of government is to protect its people and the Commerce Department should not fail in its responsibility to enforce our trade laws in the interests of both our economic and national security.

We do not yet know whose side the Commerce Department will take. But we do know that when the rules are fair, and trade laws are enforced, American steel workers and their companies can compete -- and win--against any player in the global market.

We can only hope that the Administration does not desert these Americans in their fight.

Tom Ridge is CEO of Ridge Global, where he advises U.S. Steel on security issues. Previously, he served as the 43rd Governor of Pennsylvania and was the first Secretary of the U.S. Department of Homeland Security.