Pipelines, Russian Steel, and Buying American

1 min
at 11:43 PM
 (Joe Epstein)

President Obama nixed the Keystone and Dakota pipelines, arguing that allowing them would undercut American leadership in weaning from carbon-based energy.

On January 17th, President Trump signed executive orders to move the pipeline projects forward, boasting about creating tens of thousands jobs and that only U.S.-made steel and steel pipe would be used.

Trump's "buy only-American-steel" declaration could actually doom the Keystone project before it begins.

About 40-50 percent of the Keystone pipe is already made, mostly from foreign steel. About 230 miles of it has been stockpiled along the North Dakota portion of its route since 2011.

Little known is that a large part of the steel used in the pipe is from Evraz, a Russian company that has plants in the U.S. and is owned by Roman Abramovich, a Russian oligarch, close ally of Vladimir Putin, and a Trump family friend.

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The Buy American provision could also face legal push back and be challenged at the World Trade Organization, whose rules require equal treatment of imported and domestic goods.

Trump must realize that you can?t renegotiate the origin of pipe that has already been bought and made by foreign companies.

Evraz's participation takes on added significance because of suspected Russian meddling in the 2016 election and the murky ties among Trump, Putin and Russia's oligarchical business sector.

There is a lot support in the U.S. for finishing the pipelines and for creating a trillion-dollar infrastructure mandate. But finishing Keystone's remaining 700 miles becomes difficult at best if only domestically sourced steel may be used.

I know from personal experience that the Federal Government rules governing "Made in America" are stringent and only allow the use of steel mined and melted in the U.S. If there is any hope to use American-made steel and enforce a Buy America policy as Trump claims he will do, then the definition must be changed to include steel melted abroad and finished in the U.S.

With a Perspective, I'm Joe Epstein.

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Joe Epstein is a past president of the Commonwealth Club of California and a San Francisco-based merchant of foreign and domestic steel.

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