President Trump’s Impact on the Steel Pipe Distribution Industry Buy America, National Security and Other Mysteries Presentation to National Association of Steel Pipe Distributors Summer Conference Philadelphia, June 16, 2017 Lewis Leibowitz The Law Office of Lewis E. Leibowitz Washington, D.C.

The Role of Trade in the U.S. Pipe Market The Past Steel pipe was made primarily by integrated steel producers, based in the Eastern United States World War II saw national expansion to assist in the war effort After the war, the national mills were privatized With recovery, former enemies resumed steel pipe production (Germany, Japan) Since the 1980s, other countries have joined in global production (Korea, Taiwan, China, others) The Present Steel initially became a globally traded commodity in 1959, with the steel strike Imports grew as more producers appeared and became competitive Integrated companies dis-integrated, most notably in pipe With the proliferation of suppliers from all over the world, distribution enterprises increased in importance The Future (?) Buy America requirements National security Global safeguards Trade agreements The Law Office of Lewis E. Leibowitz

International Trade Measures Affecting Steel Pipe Buy America Legislation Original Surface Transportation Act Berry Amendment Section 232 Section 201 Antidumping Countervailing Duties Buy America requirements National security Global safeguards Trade agreements The Law Office of Lewis E. Leibowitz

The Law Office of Lewis E. Leibowitz Steel Imports--2016 Total Steel Imports 2016—30.1 MMT Million Metric Tons (MMT) Flat Products 12.2 (41%) Long Products 6.9 (23%) Semifinished 5.9 (20%) Pipe and Tube 4.1 (14%) Stainless Products .9 (3%) Five Largest Import Sources Flat—Canada, Korea, Mexico, Vietnam, Germany Long—Turkey, Canada, Japan, Mexico, Korea Semifinished—Brazil, Russia, Japan, Mexico, Canada Pipe—Korea, Canada, Mexico, Turkey, Japan Stainless—Taiwan, Italy, Mexico, China, India Buy America requirements National security Global safeguards Trade agreements Source: US Department of Commerce The Law Office of Lewis E. Leibowitz

Trump and the Future of Steel Pipe Distribution Themes Steel production is under threat China is a major danger to the future of steel Policies to bring more production and jobs back to the United States Is this true? Scant evidence Steel companies profitable Steel imports have declined sharply since 2014, but not fast enough for domestic producers Steel trade cases have sharply reduced imports from countries subject to AD/CVD orders The Law Office of Lewis E. Leibowitz

The Law Office of Lewis E. Leibowitz Why Now? Buy America requirements National security Global safeguards Trade agreements The Law Office of Lewis E. Leibowitz

The Law Office of Lewis E. Leibowitz AD/CVD Orders Korea Litigation “special market situation” Zeroing WTO disputes China Steel Committee Negotiations on Capacity/Production Non-market economy status NAFTA Renegotiation Rules of origin AD/CVD reviews The Law Office of Lewis E. Leibowitz

National Security (section 232) Decision is imminent (perhaps week of June 19) Reports of disagreement among Cabinet officials regarding relief to be provided Level of restrictions Product coverage (will pipe be covered?) Other issues How long? Country by country or global restrictions? Exclusions—blanket or a process? Not just steel—aluminum too The Law Office of Lewis E. Leibowitz

The Law Office of Lewis E. Leibowitz Buy America Pipeline Exec. Order (Jan. 24, 2017) Secretary Ross to issue report by July 21 (approximate date) on ways to encourage pipelines to have American-made steel These are NOT federal government purchases but private purchases State and local governments State of Texas passed a bill recently on Buy American steel Water projects exempt until 2019 Buy American-Hire American (April 20, 2017) OMB to issue guidance to federal agencies regarding waivers—June 17 Federal policy to “maximize the use of goods, products, and materials produced in the United States” The Law Office of Lewis E. Leibowitz

The Law Office of Lewis E. Leibowitz Thank you! Lewis lewis.leibowitz@lellawoffice.com The Law Office of Lewis E. Leibowitz