Six U.S. pipe makers and the United Steelworkers (USW) applauded the U.S. Department of Commerce for its preliminary finding that the Chinese government has been providing improper subsidies on Chinese circular welded steel pipe exports to the U.S.
The Department of Commerce and ITC determinations were preceded by a trade suit, filed June 7, 2007 by the Ad Hoc Coalition for Fair Pipe Imports from China and the United Steelworkers.
The Ad Hoc Coalition includes:
- Allied Tube & Conduit
- Ipsco Tubulars
- Northwest Pipe
- Sharon Tube
- Western Tube & Conduit
- Wheatland Tube
According to the Coalition, pipe imports subject to the petition against China have surged from 10,000 tons in 2002 to more than 750,000 tons in 2007 — a 6900% increase.
In its preliminary determination, the Commerce Department will impose tariffs on China pipe exports to offset the unfair advantage of subsidies. Chinese pipe was found to be subsidized by an average rate of 16.59%. Individual rates ranged from a high of 264.98% down to zero for one company. Most Chinese producers will be subject to a duty of 16.59%. The Department of Commerce has also applied critical circumstances, determining that this duty could be applied retroactively by 90 days.
The pipe imports subject to the petition against China have surged from 10,000 tons in 2002 to more than 750,000 tons in 2007—a 6,900% increase. The result has been the loss of approximately 25% of the total workforce employed in this segment of the domestic pipe industry.
The Commerce Department’s determination regarding circular welded pipe from China follows a July 20, 2007 determination by the International Trade Commission (ITC) that circular welded pipe from China was causing material injury to the U.S. industry. Previously, on June 7, 2007, the Ad Hoc Coalition for Fair Pipe Imports from China and the United Steelworkers had filed a trade suit regarding these products with both the ITC and the Department of Commerce.
“This important decision sends a strong message to China and other countries that government subsidies to pipe and tube producers will not be tolerated by the U.S. government,” said Armand Lauzon, CEO of John Maneely Co. (parent company of Wheatland Tube and Sharon Tube). “All we ask for is a chance to compete based on quality without the intervention of foreign governments, because when it comes to quality, U.S.-made pipe is the best. Over the past 18 months our company has had to close production facilities in Sharon, Pa.; Little Rock, Ark.; and Houston, Texas, because of the surge of unfairly traded imports from China.”
Rick Filetti, President of Allied Tube and Conduit, stated, "Surging imports from China at prices below our raw-material costs have had a significant adverse impact on our employees and on our company's pricing and profitability. We understand that additional subsidies will be investigated between the preliminary and final determinations by the Department of Commerce and we look forward to a beneficial resolution of these cases."
Once the new tariffs are published in the Federal Register, typically within five days, importers will be required to post bonds in the amount of the subsidy margins calculated by the Department. A preliminary determination in the companion antidumping investigation is due on January 3, 2008. Countervailing duties are intended to offset the impact of government subsidies, while antidumping rules address instances when foreign producers sell at prices in the U.S. that are below the prices or costs in their home market.
"This is only the second time the Department has imposed countervailing duties on Chinese exports, and is the first U.S. countervailing duty case covering Chinese steel products,” said Gilbert B. Kaplan, a partner at King & Spalding, one of the law firms representing the pipe makers. “The imposition of duties on imported Chinese pipe should have a positive impact on U.S. pipe manufacturers and their employees. China is a major participant in the global marketplace, and it must abide by the laws that ensure fair trade."
“This is an important day for the U.S. pipe industry, which until now has been forced to compete against heavily subsidized imports,” added Roger Schagrin, of Schagrin Associates, also representing the petitioners. “Today's decision is an important first step in the process of obtaining trade relief against unfairly traded imports from China.”
After the Department of Commerce makes final determinations in both the countervailing duty and antidumping duty investigations, the U.S. International Trade Commission is scheduled to complete its final investigation in the spring of 2008.