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China, U.S. Spar Over Steel Duties

Thursday, June 9, 2016

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American steel imports from other countries, especially China, have become a topic of contentious global debate in the weeks since the U.S. announced plans to levy steep duties on companies accused of “dumping” their product.

In late May, the U.S Department of Commerce announced its new duties on corrision-resistant steel from producers in five countries. Chinese producers face the steepest duties—in some cases more than 400 percent.

Steel Rolls
© iStock.com / ictor

In late May, the U.S Department of Commerce announced its new duties on corrision-resistant steel from producers in five countries.

The duties are based on what the department called evidence of dumping (selling product at lower than market value) and countervailing duties (government subsidies provided to manufacturers to provide trade advantages over countries).

International Response

China responded quickly to the new penalties, accusing the U.S. of “deliberately suppressing” its steel imports and vowing to take action. "China will take all necessary steps to strive for fair treatment and to protect the companies' rights," one official said, according to the BBC.

Treasury Secretary Jacob Lew
Department of the Treasury

U.S. Treasury Secretary Jacob Lew brought the steel matter into annual U.S.-China talks, accusing the country’s government of propping up excess production facilities.

China has involved the World Trade Organization in arguments over U.S. steel duties before, as recently as 2014, when the WTO issued a split decision, siding with China on some points and the U.S. on others.

On Monday, U.S. Treasury Secretary Jacob Lew brought the steel matter into annual U.S.-China talks, accusing the country’s government of propping up excess production facilities, distorting supply and demand. Chinese officials argued that they had already cut capacity and continue to do so.

The U.S. isn’t the only country to go after China’s steel exporters: Last month, India imposed duties on Chinese steel based on accusations of dumping. India itself faces duties from the U.S.

Elsewhere, the South Korean Pulse news site reported last week that officials in Seoul were considering legal and diplomatic action to fight back against the American duties.

Attempt to Ban Chinese Imports

At the same time, the U.S. International Trade Commission is looking into a complaint made in April by Pittsburgh-based U.S. Steel, alleging violations made by Chinese manufacturers in relation to trade secrets, false designation of origin and unfair competition.

U.S. Steel is requesting through a Section 337 investigation that the ITC issue “a general exclusion order, a limited exclusion order, and cease and desist orders”—essentially banning Chinese steel from the U.S. market.

U.S. Steel headquarters
By Dllu, CC BY-SA 4.0, via Wikimedia Commons

U.S. Steel (headquarters pictured) is requesting that the ITC issue “a general exclusion order, a limited exclusion order, and cease and desist orders.”

That complaint has garnered criticism from steel producers in China, who say it is unprecedented.

“Never before has a single company sought to use this agency to erect what would be a total blockade of steel trade from an entire country," American representatives of Chinese company Baosteel said in a statement to the ITC last month.

Industry Support, Detractors

The U.S. Steel complaint has support from many U.S. elected officials, in addition to industry organizations, organized labor and companies in industries tied to steel, such as transport and pipeline construction.

But according to the Pittsburgh Post-Gazette, the complaint has many detractors among companies that use steel in their day-to-day operations. The paper reports that in filings with the ITC, manufacturers of cans and tubing said the product and service from Chinese suppliers are superior to domestic companies. One told the commission that banning Chinese steel imports would lead to “short supplies, higher prices and fewer alternatives for companies like ours.”

Reducing Capacity

Elsewhere in the U.S. industry, John Ferriola, C.E.O. of Charlotte-based steel giant Nucor Corporation, told The Wall Street Journal he’d like to see China taking concrete steps to reduce its steelmaking capacity and level the playing field.

“We don’t need any more promises,” he told the paper. “What we need is for China to provide a capacity reduction plan that provides timelines and a mechanism to verify that cuts have occurred.”

   

Tagged categories: Asia Pacific; Department of Commerce; Economy; EMEA (Europe, Middle East and Africa); Latin America; North America; Nucor Corp; Program/Project Management; Steel; Taxes; U.S. Steel

Comment from peter gibson, (6/9/2016, 12:06 PM)

The audacity of China to cry foul.This should have happened years ago. The old story ...no guts ; no leadership. Another ridiculous article on something so obvious. In this case the rules of the WTO should not apply. Why even in the discussion. WTO rules are for fair,equitable world trade.


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