US Agency Approves Steel Duties on China, Other Economies

30 June 2016

The US International Trade Commission (USITC) announced last week that it had approved duties on “cold-rolled steel flat products” from China and Japan, citing results from an investigation that found injury to American domestic industry.

The news from the US agency was announced on 22 June, with all imports of such products from China due to face countervailing duties amounting to 256.44 percent. Such duties are meant to counter instances of allegedly unfair state aid.

The anti-dumping duty rate for Chinese producers is set at 265.79 percent. Such duties are meant to counter “dumping,” a practice where goods are allegedly sold abroad at prices below their normal value. The level of these duties was announced by the US Department of Commerce last month.

In US anti-dumping and countervailing duty investigations, the Department of Commerce first goes through a process to determine whether dumping or unfair government support is at play. However, for the duties to be imposed, the USITC must then confirm that such practices are causing “material injury” to the relevant US domestic industry.

Meanwhile, the imports from Japan were faulted for alleged dumping and will see duties targeted to counter that practice. The level of such duties is set at 71.35 percent for all producers from the country.

Days later, the USITC confirmed duties on another type of steel – specifically, corrosion-resistant steel – on imports from China, along with India, Italy, South Korea, and Taiwan. Specifically, countervailing duties will apply on imported Chinese, India, Italian, and Korean steel. All five countries are set to see anti-dumping duties as well.

The dumping rate for Chinese steel in that case has been set at nearly 210 percent, while the countervailing duty rate ranged between 39.05 and 241.07 percent depending on the producer. Duties for other countries varied, though were all at lower percentage rates than China.

Imports of cold-rolled steel flat products from China and Japan totalled at US$431.5 million last year, according to US government statistics. Meanwhile, imports of corrosion-resistant steel from the five above-mentioned countries hit a total of US$2.1 billion in 2015, with the top sources of such products being Canada, South Korea, Taiwan, and China, in that order.

Growing tensions

The news has reportedly fuelled tensions between Washington and Beijing, who have repeatedly locked horns in recent months due to the fall-out from the global steel crisis.

While a high-level meeting in the Chinese capital city earlier this month saw the two sides sign off on a series of agreed actions and goals aimed at helping address the situation and improve international cooperation on the issue, the confirmation of duties has been followed with an escalation of rhetoric from trade officials. (See Bridges Weekly, 9 June 2016)

In a statement issued after the cold-rolled steel duties were confirmed, China’s Ministry of Commerce (MOFCOM) raised concerns over alleged protectionism on the US side, suggesting that this could be a more likely factor in the struggles facing American industry.

“The Chinese side worries about the US trade protectionism in [the] steel industry and believes that the weak steel industry of the United States is the result of its overprotection,” said an official from MOFCOM’s Trade Remedy and Investigation Bureau.

The official also cited the ramifications from the global financial crisis as another factor, warning that such alleged protectionism would only lead to greater “frictions and conflicts” and urging Washington to ensure that its actions are in line with global trade rules.

“The Chinese side believes that the best solution is to strengthen cooperation, cope with the difficulties together, to dig out the potential of demand and to realise mutually beneficial results,” the official continued.

The US has maintained that Chinese overproduction has led to excessively high levels of steel flooding international markets, leading prices to spiral downward and hurting American producers. Other major players in the sector, such as the EU and Japan, have raised similar concerns, with China countering that the problem is global in nature and that responsibility to address it must be shared, particularly given the efforts Beijing has already undertaken so far.

ICTSD reporting; “China concerned about protectionism in U.S. steel sector: Commerce Ministry,” REUTERS, 22 June 2016.

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