China's Ministry of Commerce Thursday voiced its "strong opposition" to a ruling by its US counterpart to impose preliminary duties of up to 31 percent on Chinese steel pipe, accusing the allegedly "unfair subsidies" as a miscalculation by the US.
Experts are worried that the move indicates a surge of protectionism in the United States as President Barack Obama has already been weighing a final decision for another trade dispute over Chinese tires scheduled for September 17.
"The miscalculation on the alleged subsidies has hurt the interests of Chinese companies, and China urges the US to rectify its mistakes in the final ruling," said Yao Jian, spokesman of the Ministry of Commerce, in a press release.
Following an investigation into a case appealed in April by American producers, led by the U.S. Steel Corp, the US Commerce Department claims that China-made steel pipe was backed by unfair subsidies, and decided to impose preliminary duties ranging from 10.90 percent to 30.69 percent on steel pipe used to transport oil.
The department is scheduled to carry out arbitration on December 5. After that, the International Trade Center will decide the final duties on China. It is considered to be one of the biggest to move through the US trade-litigation system in recent years.
China's Ministry of Commerce refuted the "unfair subsidies," saying that its US counterpart, regardless of information provided by China, "falsely insisted that China's steel-pipe makers were supported by a government subsidy no matter they purchase raw steel from a private company or a State-owned enterprise."
According to statements by the US Commence Department, the steel pipe to face duties will be that manufactured by Jiangsu Changbao Steel Tube Co, with a 24.33 percent tariff; Tianjin Pipe Group Corp, with 11 percent; Wuxi Seamless Pipe Co, with 25 percent, and Zhejiang Jianli Enterprise Co, with 31 percent. All other producers must pay the trade-weighted average of those figures, or 21 percent.
Wu Xiaofeng, the director of Jiangsu Changbao Steel Tube, told the Global Times that the allegation that the company receives subsidies was groundless.
"In order to get higher-quality steel, we have to pay more money to purchase it from State-owned companies rather than private companies," he said, adding that it is unfair for his company to have such a heavy duty imposed.
"We'll suffer great losses as the third-largest exporter of pipelines to the United States," he said.
Zhou Shijian, a counselor at the All China Lawyers Association, said the preliminary duties go against US trade laws as well as WTO regulations.
"The anti-subsidy tariffs are only applicable to a market economy, but the US has not admitted China's market economy status so far," he said. "Also, an amendment to the US anti-subsidy laws raised in 2007 has not been passed yet."
Zhou said the more than 20 percent duty on China-made pipes is an attempt to evict the whole industry from the US market, which is a blow to China, as the United States is the biggest importer of China-made steel pipe.
"The imposed tariff on steel pipe is essentially trade protectionism, which helps to transfer the US' loss in the economic downturn to other countries," he said.
Steel, a "sunset industry" in the US that cannot compete with the products of other countries, is the industry that has sued the largest number of foreign companies for violating trade rules.
In the first four months of 2009, the US steel industry applied 14 times to investigate counter-dumping and counter-subsidies by the Chinese steel industry, according to the First Financial Daily.
"Every time competitiveness is weak, the US will file anti-dumping lawsuits to protect its own industry," the newspaper quoted an unnamed expert as saying.
US Steel rose 2.4 percent to $44.30 on New York Stock Exchange composite trading and has gained 19 percent this year after imports from China abruptly stopped because of the investigation by the US Commerce Department, according to Bloomberg News.
Trade disputes between China and the US have surged amid the global financial crisis, especially since Barack Obama took office last year. Within a week, he will make the final call on whether to impose up to a 55 percent increase in tariffs on Chinese tire imports.
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