WASHINGTON — The U.S. government is imposing new duties on imports of steel pipes from China, the latest sign of trade tensions between the two countries.
The case is the largest steel trade dispute in U.S. history and will impact about US$2.8 billion worth of Chinese imports.
A group of U.S. steelmakers and the United Steelworkers union sought the duties in April, arguing that the Chinese steel industry was flooding the U.S. market with pipes sold at unfairly low prices, a practice known as “dumping.”
The Chinese companies also benefited from government subsidies, the U.S. industry said.
The dumping harmed the U.S. industry, USW President Leo Gerard said earlier this month, and has caused the loss of more than 2,400 jobs since the beginning of this year.
Imports of the Chinese steel pipes rose by nearly 360 per cent from 2006 to 2008, according to the Commerce Department.
The U.S. International Trade Commission voted Wednesday to impose duties between 10.36 per cent and 15.78 per cent on the pipes, which are mostly used in the oil and gas industries. Those duties are intended to offset the government subsidies that the U.S. government says China provides its steelmakers.
The ITC will decide in the spring whether to impose additional tariffs of up to 96 per cent to penalize Chinese steelmakers for dumping.
Roger Schagrin, counsel for the United Steelworkers and five steel manufacturers, said the decision could enable the U.S. steel industry to ramp up production and re-hire workers by the second half of next year, once current inventories of steel pipe are sold off.
Prices for steel pipe fell by half from their peak in 2008 through September 2009, he said, driven down by low-priced Chinese imports.
The six-member ITC voted unanimously that the U.S. industry was harmed or threatened with harm by the imports.
But Daniel Porter, a lawyer representing the Chinese steel exporters, said the U.S. industry was hurt by a boom-and-bust cycle that resulted when the price of oil soared to about $140 a barrel in the summer of 2008, only to drop below $50 less than a year later.
Higher oil prices spurred more drilling, which caused oil companies to order more of the pipes. Those orders dried up when prices fell, Porter said.
“If demand collapses, that affects everyone,” he said. “It has nothing to do with imports.”
Porter wouldn’t comment on whether the Chinese exporters will appeal the ruling. The companies could appeal to the U.S. Court of International Trade in New York, or China’s government could take the fight to the World Trade Organization.
The Chinese embassy couldn’t be reached for comment.
In addition to the USW, the complaint was filed by U.S. Steel; V&M Star LP; V&M Tubular Corp.; TMK IPSCO; Evraz Rocky Mountain Steel; Wheatland Tube Corp.; Maverick Tube Corp.; and Northwest Pipe.
China and the U.S. are engaged in several trade disputes over market access for goods ranging from poultry and tires to Hollywood movies.
In another steel dispute, the Commerce Department said Tuesday that it may impose antidumping tariffs of 14 per cent to 145 per cent on $91 million of steel grating imported from China. It defines steel grating as two or more pieces of steel joined by any assembly process. The department will make a final decision in that case in April.
China is the world’s biggest steel producer and has faced complaints it is harming foreign producers by dumping steel in foreign markets. China has been involved in trade disputes with the United States, the European Union and Canada.
Last month, the Canada Border Services Agency made a preliminary determination that certain Chinese steel products used in the oil and gas industry have been subsidized or dumped into the Canadian market and imposed a preliminary duty of up to 182 per cent.
Welland, Ont.,-based Lakeside Steel Inc. (TSXV:LS) initiated the complaint — along with Tenaris (NYSE:TS) and Evraz, two international steel producers with operations in Canada — and said it will actively participate in the ongoing investigations to ensure fair trade.
(With files from The Canadian Press)