ITC Supports Finding of Damage in OCTG Investigation. The US International Trade Commission (ITC) ruled in favor of the domestic petitioners in the $2.7 billion countervailing (CVD) (anti-subsidy) investigation, determining that the US steel industry has been damaged by high-cost Chinese imports of OCTG. The 6-0 vote finding injury affirms countervailing duties ranging from 10% - 16% on OCTG imports from China. Meanwhile, preliminary determinations by both the ITC and the US Department of Commerce (DOC) have also ruled in favor of domestic pipemakers in the anti-dumping trade case imposing preliminary duties ranging from 36% - 99% on the 250-odd Chinese pipemakers. A final decision in the anti-dumping case is expected by spring 2010.
U.S. Just One Voice in the Chorus. There has been an increasingly loud “ouch” in the global steel community about the impact of China’s mercantilist steel policies. China’s steel trading partners have been addressing China’s exports in three separate ways. First, the EU and US are in the midst of a complaint at the WTO level – unprecedented – about China’s “resource hoarding” – controlling exports of steelmaking raw materials – which effectively subsidizes Chinese steelmakers and keeps key steelmaking raw materials off the open market raising the cost to non-Chinese players. Second, many of China’s trading partners have used their own trade laws – consistent with WTO – to target high-cost Chinese steel. Finally, the West has implored the Chinese authorities to take aggressive measures at enforcing their own policies – designed to upgrade Chinese steelmaking overall by cutting production at the country’s regional high-cost players and consolidating these with their lower cost peers.
Chinese Steel Subsidies Are Clear. According to a Eurofer (European steel trade association) report, China supports its steel industry with a variety of mechanisms including grants, capital market interventions, preferential taxes, subsidized loans, access to below-market priced inputs, nominal labor & environmental protection among other mechanisms. Exports are subsidized even more, by an “intricate set of cascading value added tax rebates, export taxes, and even export quotas on inputs, plus tax cuts, export credits and other schemes provided by the China Eximbank and other state-owned financial institutions.”