China slams US duties on steel pipes

By Ding Qingfen in Beijing and Chen Weihua in Washington (China Daily)
Updated: 2010-01-01 09:05
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China Thursday decried a US decision to impose duties ranging from 10 to 16 percent on Chinese steel pipes, the biggest US trade case to date against the country, saying it had been made a scapegoat of protectionist interests.

The Ministry of Commerce (MOFCOM) said it was "strongly dissatisfied with and resolutely opposed" to the vote of the US International Trade Commission (USITC) for countervailing duties, which Washington said were needed to balance out unfair state subsidies to Chinese makers of pipes for oil wells.

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Experts warned the countervailing duty decision, also the largest case against China worth $2.8 billion, will further escalate trade conflicts between the two and spark a series of more US trade remedy cases against China.

On Wednesday, the USITC agreed China's government subsidies have helped its exporters grab market share from US counterparts, and voted 6-0 in nodding to the measure of imposing anti-subsidy duties ranging from 10.4 to 15.8 percent on the import of steel pipes from China, which was proposed by the US Commerce Department in November.

This is the largest ever trade remedy case that the US has initiated against Chinese products, and comes three months after President Barack Obama said "yes" to the tire remedy case worth $1.2 billion involving China.

It also comes in the backdrop of US government officials, including Obama, repeatedly claiming that they were against any sort of trade protectionism.

The MOFCOM said on its website Thursday that China was "extremely dissatisfied" about the result and is "strongly against" it.

"The financial crisis since late 2008 has led to a quick decline in demand for steel pipe used in oil and natural gas production. The US industry associations were wrong when they attributed the sluggish business to the Chinese imports and blindly charged Chinese products with dumping and subsidizing," said the statement.

"The move and measure is groundless, Chinese exports do not harm the American industry," it added.

However, Thomas Gibson, president and CEO of American Iron and Steel Institute, said "full and strict enforcement of laws against dumped and subsidized imports of steel and other manufactured products from China is essential to maintaining a viable US manufacturing sector, at a time when the nation is struggling with double-digit unemployment."

In April 2009, industry associations and companies represented by the United Steelworkers Union and US Steel, the largest steelmaker in the US, brought up the case and asked for anti-dumping and anti-subsidy investigation.

In April this year, the US Commerce Department will make a ruling on whether Chinese exporters have also dumped steel pipes on the US market at comparatively low prices, following which the USITC will make the final decision.

The MOFCOM said in the statement that China had urged the US to make a "fair and reasonable" decision to "fulfill the promise of battling trade protectionism."

Steel products have been the focus of increasing trade conflicts between China and the US. On Tuesday, the US slapped preliminary anti-dumping duties of as high as 145 percent on imports of steel grating from China.

The tire case approved by Obama in September has strained bilateral relations, and now the two are involved in cases against each other in sectors ranging from poultry, automobile, steel and copper print paper.

"This is just a beginning. China will continue to be the target by the US in the coming year, with more sectors expected to get involved," said He Weiwen, a council member of China Society for American Economy Studies.

Pang Zhongying, a professor and expert on international affairs from Renmin University of China, agreed. "More such cases will be put to harass China at a time when the unemployment rate remains high. The nation should consider appealing to the World Trade Organization and taking retaliatory measures at a proper time," Pang said.

"The punitive measure is due to US concerns over the threat from the growing share of China-made steel pipes in the American market," said Yu Liangui, vice-director of Mysteel Research Institute.

China was a large importer of steel before 2005. But during the past few years, China's steel exports have witnessed rapid growth after its output capacity got strengthened. Steel pipes have ranked the highest among steel product exports to the US.

"But China should not be blamed as its exports also decreased a lot since late 2008," said Yu.

In 2008, China's exports of steel pipes reached $3.2 billion, accounting for over half of the total US imports of steel pipes. But from January to November 2009, China's exports to the US made up for merely 14 percent of the US total imports. And, according to US figures, US imports of steel pipe shrank by 50 percent during the first 10 months of 2009.

Lei Xiaoxun contributed to the story.