Ryan Costello: APEX Act will decimate Steel Country

Ahead of the 2020 presidential election, Steel Country is no doubt under strain. Over the past year, industry growth in states like Michigan, Ohio and Wisconsin has slowed to a crawl. Pennsylvania has lost 8,100 manufacturing jobs since January. Despite the president’s best effort of looking out for America’s manufacturers, metalworking industries throughout the Rust Belt have certainly taken some serious heat.

But our Steel Country’s metalworkers are resilient. And much like steel itself, the heat will only make them stronger — unless the federal government makes the mistake of interfering.

The APEX Act is a wrongheaded approach that would undermine the free-market characteristics of the metal market. The House’s version of the legislation, House Resolution 1406, has yet to be introduced to the floor for a full vote. In order to best preserve the stability of the metal market, it should not see its way to the chamber.

The APEX Act would strip private businesses of their ability to accurately and transparently reflect the price of aluminum. Currently, a variety of independent companies compete against one another to offer superior reference prices for aluminum — compendiums of pricing trends designed to be points of reference for business negotiations. The system epitomizes the free market at work, but the APEX Act would change that.

In an ostensible effort to eliminate the potential manipulation of aluminum’s reference prices, the bill would usurp the duty of private business to reflect the value of aluminum. Instead, the Commodity Futures Trading Commission (CFTC) would be given complete authority to regulate aluminum reference prices. The results would likely artificially lower the cost and be disastrous for the aluminum manufacturers in Pennsylvania and across the country.

There are numerous problems with the APEX Act, the first of which being with the legislation’s justification. It’s already been thoroughly refuted. During his testimony to the Committee on Agriculture, CFTC Chairman Christopher Giancarlo plainly stated, “We monitor that (reference prices) very carefully for areas of manipulation, and we have been looking at aluminum for years. There have been concerns about that, but we have not found manipulation in the market.”

Indeed, it’s never a good sign when the same regulatory agency that the legislation relies upon denies the bill’s justification for existence.

Reasonable people can agree to disagree on the effectiveness of tariffs; nevertheless, in an attempt to protect the metalworking industry, the White House implemented aluminum tariffs, which effectively raised its cost. These fluctuations were reflected in aluminum’s reference prices; however, unhappy buyers accused the industry of price manipulation anyway. And that fear of reference price manipulation — as unfounded as it was — led to the creation of the APEX Act, a bill designed to institute federally mandated controls over the industry.

It’s a vicious circle, one our legislators would be smart to avoid. Price controls only serve to damage American businesses’ competitive drive. Just as prior federal mandates have ultimately weakened our Steel Country’s industrial base, so, too, will the APEX Act ravage America’s aluminum manufacturers. And given how much harm foreign dumping has caused to them already, that’s a price this nation can’t afford to pay.

Ryan Costello is a former Republican U.S. representative from Pennsylvania.