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China calls US duties on pipes 'protectionist'

By Ding Qingfen (China Daily)
Updated: 2009-09-11 08:10

WTO experts said the US decision is 'unfair and biased'. [CFP]

The Ministry of Commerce (MOFCOM) said yesterday that it "resolutely opposed" a United States decision to impose 31 percent preliminary duties on imports of Chinese-made steel pipes for use in oil and gas wells, and termed the move 'protectionist.'

"The ruling is not in line with the subsidy and anti-subsidy agreements under the framework of the World Trade Organization. The mistakes the US made in evaluation and calculation has led to high subsidies that hurt Chinese companies and exporters," said MOFCOM spokesperson Yao Jian in a statement.

"The result is not acceptable for the Chinese government and the local industry. We urge the US to make the necessary corrections in its final decision," he said.

WTO experts and industry analysts said the US decision is unfair and biased and the ruling, if implemented, will deal a hard blow to China's already fragile steel exports.

Earlier yesterday, the US Commerce Department said it was imposing duties ranging from 10.9 to 30.6 percent on imports of Chinese steel pipes used for oil and gas wells.

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The ruling supports the proposal made by US steel producers led by US Steel Corp, who claimed the Chinese imports were granted unfair subsidies for exports. The decision also concurs with an International Trade Commission ruling that Chinese imports had hurt the US industry.

This is the preliminary decision, and a final decision would be announced on Nov 23. The case involves imports worth $2.6 billion.

"Looking at the previous such cases, there is high possibility that the preliminary decision would be the final one too," said He Weiwen, a council member of the China Society for American Economy Studies.

During the past few months, Chinese steel producers have actively responded to the investigation by providing detailed information. But the US Commerce Department still believes Chinese products were sold at unreasonably low prices.

"The US made the calculation about subsidies in a wrong way," said the MOFCOM.

"Actually, prices for Chinese steel exports have picked up from 2006 to 2008, rather than declined," said He.

China had been a net steel importer before 2005, but thanks to rapid demand worldwide and growing capacity of the domestic industry, Chinese companies began to export steel products in 2006.

"These kind of issues lead to trade remedy cases being launched by other nations," said Yu Liangui, deputy director of Mysteel Research Center.

Exports of steel pipe used for oil and gas wells to the US account for 40 percent of the total exports of this kind, and the category is also the largest contributor for Chinese steel exports to the US.

But amid the financial crisis, Chinese steel exports have been dropping since early this year. From January to July, steel exports grew just 6.6 percent year-on-year, while it was 8.5 percent in 2008.

The ruling, when it comes into effect, would jeopardize the steel industry, Yu said.

"Chinese companies should resort to lawyers for consulting with the US side in the next few months," said He.

China Iron and Steel Association officials were not reachable for comments yesterday.