The US took the first step Thursday toward possible punitive tariffs against Taiwan steel producers for selling hot-rolled steel in America at below-cost prices, thus harming the troubled US steel industry.
The six-member International Trade Commission, a US government agency, voted unanimously to find a "reasonable indication" that the domestic steel industry has been "materially injured" as a result of steel imports from Taiwan and 10 other countries, including China.
The case now goes to the Department of Commerce for a determination of whether Taiwan steelmakers have been dumping their products on the US market at prices that do not fully reflect their cost of production. The department has already opened an investigation of the complaint, which it is required to do within 20 days of any such petition.
If the department finds that dumping took place, and the trade commission then finds that the harm to the industry resulted from the dumping, the department would be free to levy hefty penalties against the Taiwan producers.
That process is likely to take about one year, a commission spokesman said. The department is expected to make a preliminary anti-dumping duty determination next April 23, the commission said.
The commission acted on a petition submitted on Nov. 13 by nine major US steel producers plus the United Steelworkers Union.
The petitioners charged that a fresh upsurge in imports from Taiwan and 10 other steel producers has led to a glut in the US, substantially depressing prices, cutting into the domestic market share, and forcing companies into bankruptcy at a time when the US economy is weakening and demand for hot-rolled steel products is slipping.
A petition by US firms claims that hot-rolled imports from Taiwan skyrocketed from under 36,000 tonnes in 1997 to nearly 430,000 tonnes in 1999. For the first eight months of this year, the pace continued to accelerate, with imports reaching 676,000 tons, up sharply from 235,000 tonnes in 1999. The latest figures give the Taiwan producers more than a 3 percent US market share in the hot-rolled sector, compared with a negligible position in 1997, US producers say.
The 2000 eight-month figure equals imports of US$188 million, compared with just US$10.7 million for all of 1997.
They charge that Taiwan producers sell at an average of 32.6 percent below cost in the US, with the underpriced "margins" ranging from 27 percent to nearly 44 percent. If the US government agrees with those figures, it could impose tariffs to bring the selling price up to normal levels.
China Steel Corp (中鋼) of Kaohsiung is the dominant hot-rolled steel producer in Taiwan, although An Feng (安鋒) Steel Co Ltd, and Yieh Loong (燁隆) Enterprise Co Ltd, both of Kaohsiung, have been making inroads recently.
American steel companies also claim that "the significant rate of increase [in Taiwan's imports in recent years] indicates the likelihood of substantially increased imports in the near future."
With the price of Taiwan-produced hot-rolled steel having dropping in recent years, "the price of Taiwanese hot-rolled steel is likely to have a significant depressing or suppressing effect on domestic prices," US companies said.
They cite a 1998 analysis of Taiwan's steel industry by an independent securities analyist that Taiwan's steel industry "threatens real and imminent harm to domestic [US] producers."
The report said that as Taiwan becomes self-sufficient, especially in hot-rolled products, "the steel industry in Taiwan is facing a protracted glut ... [and] exports are vital for the health of the industry."
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