The titanium industry is an example of how trade agreements make the US lose and not win.
The Korea-US free trade agreement (KORUS) was approved in 2011 and implemented in 2012. Korea had no titanium industry before the KORUS deal, but created one to export to the US because of the deal. This was a part of why our trade performance with Korea drastically worsened thereafter.
Here is an excerpt from Allegheny Technologies, Inc. (one of two major US titanium manufacturers) submission to the USITC.
Although Korea had virtually no titanium production at the time, KORUS directly affected the conditions of global competition for titanium production by spurring the development of the Korean titanium industry. In fact, around the same time as KORUS was being finalized and ratified, Korea’s largest steel producer, POSCO, entered into a joint venture with Kazakh titanium producer UKTMP to produce titanium ingots and slabs from UKTMP-provided titanium sponge. The ingots and slabs are shipped to Korea for production into titanium mill products such as plates, sheets, and tubes.
At the same time, as a result of KORUS’ elimination of tariffs on titanium imports from Koeea, the U.S. titanium industry began to see a surge in titanium imports from Korea and a rapid decline in its exports to Korea. U.S. imports of titanium mill products from Korea jumped from 36 short tons in 2013 to 318 tons by 20I5.3t While Korea was the fourteenth largest source of U.S. imports of titanium mill products by volume in2014, it became the fifth largest source by 2015.
The US titanium industry opposes the Trans Pacific Partnership because the same result is likely to happen with Japan and perhaps other countries. They will spur industry development to ship more to the US. And Japan tends not to buy US titanium because, despite the low tariffs, they simply won’t.
It is the same story as with the auto industry. Auto tariffs going into Japan are 0% right now, without the TPP. But we can’t sell cars there because they simply won’t allow them to be sold in sufficient quantities. Because Japan is organized to be an export powerhouse to build wealth, not an importer of last resort like the US is.
(The full submission of Allegheny Technologies will be publicly available from the USITC).
