China protests US Steel duties and starts probe on US cars
Saturday, 07 Nov 2009
Bloomberg reported that China protested US duties on steel pipes and announced the start of an anti dumping probe into American carmakers as trade tensions escalate ahead of President Mr Barack Obama first visit to the nation this month.
The disputes may test relations between the US and the biggest foreign buyer of its debt ahead of Mr Obama visit on November 16th. The two nations with USD 409 billion of trade between them have swapped complaints about steel, poultry and tires as the worst economic crisis since the Great Depression spurred countries to protect jobs.
Mr Yao Jian a spokesman at the Chinese ministry said in the statement that “Falling demand caused by the financial crisis is the ultimate reason for the problems in the US steel industry. The US should take this into consideration in its further investigations and make a fair and reasonable final ruling.”
According to a government statement the Asian nation is the second-biggest trading partner for the US after Canada. China plans to investigate whether some US made sports utility vehicles and cars sold in the Asian nation benefited unfairly from American government help.
1. Rising Tensions
General Motors Co the largest US automaker is majority owned by the government after bankruptcy reorganization. The carmaker more than doubled September sales in China from a year ago.
Trade tensions are on the rise after Mr Obama imposed tariffs on Chinese tires in September and China responded with a complaint to the World Trade Organization. The US and the European Union this week asked the WTO to end Chinese restrictions on exports of nine commodities.
The US said in a preliminary decision recently after complaints about dumping were received from companies led by US Steel Corp Duties of 36.5% will be imposed for the 37 largest exporters of pipes used in the oil and gas industry. The tariffs will be on top of separate duties announced in September averaging 21% to counter alleged Chinese subsidies.
Mr Li Liancang an export manager at state owned Tianjin Pipe Group Co said “The anti dumping ruling is unfair to Chinese producers who sold the pipes in the US at a 20% premium to our domestic prices. Chinese pipe exports to the US have almost stopped since the preliminary ruling in September.”
The China Iron & Steel Association said last month that Chinese steel exports to the US plunged 73% in the first eight months from a year ago
2. Falling Demand
The Chinese ministry said the value of Chinese steel-pipe exports under investigation reached USD 3.2 billion last year or 46% of the country’s total steel exports to the US. It strongly opposes the duties.
Mr Hu Yanping a Beijing based analyst with Umetal a steel research company said “The US has had a lot of trade remedy measures this year against China. China has bought huge US debts. Why is the US always targeting China?”
The Asian nation’s commerce ministry said in the statement that the US has carried out 13 investigations against Chinese products this year for alleged dumping and illegal subsidies.
Mr Leo Gerard president of the United Steelworkers said in a statement that “China government and exporters are being told we are fed up with their cheating on our fair trade laws and penalties for these transgressions are long overdue.”
The pipe case, the largest so called countervailing and anti dumping duty complaint filed against Chinese made products was brought by the union, US Steel, US operations of Evraz Group SA and Pennsylvania based Wheatland Tube Co.
3. Production Plunges
The two top Chinese exporters of the pipe to the US received their own specific rates. Jiangsu Changbao Steel Tube Co won’t face any dumping duties while Tianjin Pipe was assessed a 36.5% duty. Changbao received a 24% countervailing duty in September.
Mr Tianjin Li said, citing data from the Chinese steel association “Capacity utilization at plants has tumbled to below 50% for makers of the oil pipes. We have to shift to making other products but demand for them is much smaller.”
