US paves way to raise duties on Chinese steel

 

Chinese workers pack steel rolls in a steel factory in Tangshan, Hebei province, on May 12, 2016. FRED DUFOUR / AFP
©AFP
The US has paved the way for the imposition of duties of as much as 500 per cent on Chinese cold-rolled steel, used to make cars and washing machines, as a backlash escalates against a glut of Chinese steel flooding global markets.

The US Department of Commerce on Tuesday said it had determined that imports of Chinese cold-rolled steel should be subject to anti-subsidy duties of 256.4 per cent and anti-dumping duties of 265.8 per cent. Those duties could come into effect as soon as this summer if a separate review determines that the imports have caused “injury” to the US steel industry.

The case is one of three big anti-dumping cases involving Chinese steel imports launched by the US steel industry, all of which are expected to climax in the coming months. Separately, US Steel, the country’s biggest producer, is seeking a total ban on Chinese imports as a result of hacking attacks in which it accuses China of stealing its intellectual property.

China’s Ministry of Commerce expressed “strong dissatisfaction” with the decision by the US, which it said had employed “unfair methods” in assessing the tariffs. But the US said none of China’s steel producers had responded to its request for their views on the anti-dumping case.

Chinese steel capacity has soared in the past decade to more than 1bn tonnes, sending surplus production flooding into international markets especially after domestic consumption peaked in 2013. Beijing routinely calls on the sector to cut capacity but at the same time it is unwilling to allow the failure of large mills, especially those of state-owned groups that are often the biggest employers, taxpayers and borrowers in their locality.

Although imports of Chinese and other steel have been falling since 2014 the US steel industry has been mounting a campaign to have the government crack down on imports as global prices slump.

That has coincided with rising anti-China trade rhetoric in this year’s US presidential campaign with Donald Trump, the presumptive Republican nominee, vowing to stand up to China and impose sweeping tariffs on its products if he is elected.

Stocks of beleaguered US steel producers surged when initial anti-dumping duties were announced in March. The final ruling involves higher anti-subsidy duties than the commerce department initially indicated.

The hefty tariffs will harden Chinese negotiators’ desire to acquire “market economy status” at the end of this year, as outlined when China joined the World Trade Organisation 15 years ago. Market economy status would protect Chinese exports from being assessed on the basis of prices in third-party countries, which are often higher, and from being assessed for both anti-dumping and countervailing duties.

Pressure from the steel industry in the US and Europe has led to political opposition to automatically granting the status to China. The steel industry fears being further swamped by Chinese exports, although consuming industries from automobiles to construction would benefit from cheaper steel.

When the 15-year delay was agreed, China was unwinding state-set pricing for many industries. However, Washington and Brussels point to the continued role of the Chinese state in investment and industry to argue that China is still not truly a market economy.

“They shouldn’t use other countries’ bases to measure Chinese cost but for 15 years they have,” said Mei Xinyu, a trade strategist advising the Chinese Ministry of Commerce. “Where’s the logic? Are they saying the Chinese economy hasn’t changed?”

Cold-rolled steel accounts for about a 10th of the $2bn in Chinese steel the US imported last year.

 

via US paves way to raise duties on Chinese steel – FT.com

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