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US makers of steel pipe win against China in trade case

US steel pipe manufacturers, who have been battling a surge in imports from China, won a major victory on Friday when the International Trade Commission cleared the way for the imposition of stiff penalty tariffs for the next five years.

The commission voted 5-0 that the US industry was being harmed by the import of circular steel pipe.

FIRST VICTORY

The decision marked the first time a US industry has won a decision to impose tariffs on a Chinese product based on the argument that the Chinese government was unfairly subsidizing a Chinese industry.

The ruling means penalty tariffs ranging from 99 percent to 701 percent will be imposed on Chinese imports of circular welded pipe, a form of pipe used in a variety of construction jobs, such as home plumbing and sprinkler systems.

For more than two decades, the US government refused to consider subsidy cases against the Chinese government because China was classified as a non-market economy.

But the Bush administration, facing increasing anger over soaring trade deficits with China, reversed course last year and announced it would treat China in the same way as other countries in disputes involving government subsidies.

PAPER IMPORTS

The pipe case is the first to clear all the government hurdles for the tariffs to go into effect. Last year, the Commerce Department imposed penalty tariffs on imports of Chinese glossy paper, but the trade body blocked the tariffs by ruling that the domestic industry had not proven it was being materially harmed by the imports.

In the pipe case, the Commerce Department found the Chinese government was providing unfair subsidies.

It also found that the pipe was being sold in this country below the cost of production, a practice known as dumping. The penalty tariffs for the government subsidies, known as countervailing duties, and the antidumping tariffs were upheld by the trade commission vote.

Chinese exports of circular pipe have exploded since 2002, rising from 10,000 tonnes that year to 750,000 tonnes last year. The US industry said the increase in imports had resulted in the loss of 500 pipe worker jobs, representing about one-quarter of the work force.

WTO

Wang Baodong, a spokesman for the Chinese Embassy in Washington, said China had not decided what its next step would be.

One possibility would be for China to file a case challenging the penalty tariffs before the WTO.

“The Chinese government will study the latest development carefully and take appropriate action,” Wang said.
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