This month I am honored to report to you a highly significant development in the 65-year history of the AIIS: the creation of the Global Steel Supply Chain Partnership. The Partnership, which was launched on May 21 in concert with the Made in Steel exposition and conference in Milan, Italy, is the result of a new joint venture with our Luxembourg-based partner EUROMETAL and the London-based International Steel Trade Association (ISTA).
The rationale for this exciting new initiative with two distinguished, like-minded organizations is simple: the ultimate success of almost everything AIIS members are engaged in depends on an effective, efficient global steel supply chain. Over one-third of global steel production is traded internationally. In 2013, approximately 400 million tons of steel consumed in the world, representing about 30 percent of global steel supply, crossed a national border.
Although these numbers are illuminating, significant challenges for the global steel supply chain persist. The demand situation is variable. The potential for border delays continues, with at least one major United States trading partner recently instituting restrictive new steel import licensing rules. Important emerging markets pose unique challenges. Transportation and logistics costs are always vexing concerns. In addition to all of this, developments such as the 12-nation Trans-Pacific Partnership (TPP) negotiations may likely result in new trade rules and diplomatic relationships affecting steel-related trade. In the not-too-distant future, a successfully concluded TPP negotiation may result in a much larger, more comprehensive, and more robust trading platform in Asia, which is a stated United States TPP policy goal.
These issues and concerns—and, perhaps more important, issues and concerns we do not even know about yet—will greatly affect the global steel supply chain. We must be prepared to address them proactively.
Our initial action plan for the Partnership focuses on three things.
First, we aim to enhance the information flow among Partnership-affiliated members so they are able to become more agile, that is, able to adapt and adjust to change in a timely way in a highly dynamic international environment.
As AIIS Chairman John Foster put it in his remarks in Milan, “Steel is a strategic asset, but so is information.”
Bearing out Chairman Foster’s comment about the strategic aspect of information, analysis has shown that businesses operating in a supply chain that cooperate in developing and sharing relevant information in a timely way are better able to innovate with other links in the chain. This type of cooperation and information sharing will inform every aspect of the Partnership’s activities.
Second, the Partnership will serve as a forum for interaction and professional development. Our members have long recognized that we have a great deal to learn from one another. The Partnership will seek to enlarge and sharpen opportunities for member interaction and professional development on relevant matters.
Third, the Partnership will seek to better focus attention on steel supply chain issues in the multilateral trading system. To that end, we will seek to establish and make effective use of direct links to appropriate key international organizations such as the World Trade Organization, the World Customs Organization, the Organization for Economic Cooperation, and others.
We will, of course, place a high priority on helping our members better understand and navigate the new global trade architecture that is emerging as a consequence of initiatives such as the Trans-Pacific Partnership negotiations and other bilateral, regional, and multilateral trade initiatives.
What does this mean in practical terms?
In the context of the points just noted, these are just some of the questions we may address:
How do we best promote the most cost-efficient movement of steel and steel-containing goods through international commerce?
How do we best promote relevant trade liberalizing rules?
How do we most effectively identify and tackle excessive, costly regulations that burden all participants in the steel supply chain?
How can we more effectively address unwarranted protectionist measures?
How can we best address in international forums “whole of the supply chain” concerns and issues, rather than taking a more narrowly focused, piece-meal approach?
Some additional final points for now about the Partnership:
It is a separate entity, established by means of a formal, joint agreement; it will have a separate website; and it will be open to new members.
Best of all, if you are an AIIS member, you are also now a member of the Partnership.
If you are not an AIIS member, and the steel supply chain is important to you, this would be a great time to look at the considerable and increasing value of membership, and join now.
Stay tuned for more news!
Finally this month, we have the great pleasure of welcoming a new member to the AIIS family, the LW Steel Corporation, based in Chicago, Illinois. We look forward to a long and fruitful affiliation.