Tag Archive | "countervailing duties"

Five New Antidumping/Countervailing Duty Petitions Filed In April Ending Recent Lull In Trade Remedy Filings

The following article appeared in the King & Spalding Trade & Manufacturing Alert here.

In response to petitions filed by members of various domestic industries, the Administration initiated five antidumping (“AD”) and countervailing duty (“CVD”) investigations on April 19-20. The five industry-specific cases were brought against (a) bottom mount refrigerator-freezers from Korea and Mexico, (b) steel wheels from China, (c) galvanized steel wire from China and Mexico, (d) stilbenic optical brightening agents from China and Taiwan, and (e) steel nails from United Arab Emirates. A major factor in initiating these cases was the increase in imports during 2010 after lower imports in 2009. In most of these cases, the total value and/or volume of imports of the subject merchandise decreased from 2008 to 2009, but increased from 2009 to 2010. These increases appear to be following the trend of growth in the U.S. economy, indicating that conditions may be ripe for more trade petitions.

These new petitions came after a significant lull in trade remedy petitions. Only one investigation was initiated from May 2010 to April 2011. Several U.S. government officials and private practitioners offered their views on the lull in the April 12, 2011 program “Are AD/CVD Remedies Still Viable For U.S. Producers?” held at American University’s Washington College of Law. Christian Marsh, Deputy Assistant Secretary for AD and CVD Operations at the Department of Commerce suggested that the dip in AD and CVD petitions during 2010 may be related to circumvention issues. Mr. Marsh stated that because of the continuing burden on petitioners to fight circumvention after the initial case is won, an industry may perceive the that the cost of bringing a new trade petition to be high. The newly filed petitions, however, suggest that the real reason for a decline in filings may have been a temporary decline in imports caused by the recession.

Bradford Ward, Deputy General Counsel & Acting Assistant U.S. Trade Representative for Monitoring and Enforcement remarked that industries will continue to file AD and CVD petitions if they experience distortions in the market because trade remedies are one of the last tools available to combat international unfair trade practices. Mr. Ward also commented that industries may file AD and CVD petitions if they believe that the government is not responding to their concerns through legislation or other government-to-government dialogues.

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Lawmakers to relaunch China currency bill Thursday

This article appeared on the Reuters site here on February 9, 2011.

(Reuters) - A bipartisan group of lawmakers plan to begin a new drive on Thursday for China currency legislation that was approved last year by the House of Representative but failed in the Senate.

The lawmakers include Representative Sander Levin, the top Democrat on the House Ways and Means Committee, who spearheaded last year’s successful push to pass the bill in the House by a bipartisan vote of 348-79.

They have scheduled a mid-afternoon press conference on Thursday to discuss the legislation.

The bill would clear the way for the Commerce Department to treat undervalued currency as a subsidy under U.S. trade law. That would allow companies, on a case-by-case basis, to seek higher countervailing duties against imports from China that compete with U.S. production.

Despite the strong House vote, the Senate failed to take up the measure and it died at the end of last year.

The bill faces tougher going in the House now that Republicans control the chamber. However, supporters remain hopeful Congress will act if China doesn’t take steps to allow its currency to rise more quickly against the dollar.

Critics saying China’s yuan is undervalued by 15 percent to 40 percent against the U.S. dollar, giving Chinese companies an unfair trade advantage.

(Reporting by Doug Palmer)

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Obama Has To Tell Beijing Some Hard Truths

The following article appeared as an opinion by Fred Bergsten in the Financial Times on on November 28, 2010.

With policymakers failing to make progress on the critical issue of global imbalances, America has no alternative but to put China on notice. Privately but promptly, Washington has to inform Beijing it will label it as a currency manipulator, back legislation treating the manipulation as an export subsidy, and take it to the World Trade Organization if it does not let the renminbi rise significantly.

The renewed increases in the external imbalances of the two main economies pose major risks. China’s surplus is again climbing while it tightens monetary policy because of concerns over overheating. It thus maintains its rapid expansion partly at the expense of other countries and damps global growth. It should instead let its currency rise and limit the cutback in domestic demand. That would help contain inflation and offset the resulting decline in its trade surplus.

US output growth has been cut in half in the past six months by the renewed sharp expansion of its current account deficit. The Federal Reserve’s second round of quantitative easing and the likely extension of some form of the Bush tax cuts are efforts to provide offsetting boosts to domestic demand – but they may not succeed.

So, the rebalancing strategy is moving in the wrong direction. The huge US budget deficit and the Fed’s easing have replaced the US private sector as “consumer of last resort” and trade is impeding rather than leading the recovery. China’s reserve hoard grew faster in the latest quarter than ever before. Its global trade surplus for the past six months is more than 50 per cent above last year’s. The trade imbalance between the two countries has recently hit record levels.

In the medium run, this pattern will lead to further retreat from open trade and free financial flows. In the longer term, the enlarged imbalances will sow the seeds of renewed crises. The huge capital flows from surplus to deficit countries, Germany to the eurozone periphery as well as China to America, helped create the loose monetary conditions that encouraged the irresponsible lending that brought on the Great Recession.

The most effective way for President Barack Obama to break the impasse is to start adopting a serious strategy for US budget reform as proposed by the co-chairs of his Fiscal Commission, who rightly urge an ambitious program of deficit reduction. Only such an initiative will convince other countries the US is serious about rebalancing its own economy and so persuade them to rebalance theirs. This would regain the moral high ground for America.

The policy conflict with China now plays out on three fronts. The House of Representatives has passed a bill authorizing countervailing import duties against the export subsidies created by undervalued exchange rates as with China. The Senate needs merely to attach this language to “must” legislation, such as extension of the tax cuts, and it will land on Mr. Obama’s desk for almost certain signature. Another response would be to forge a broad coalition to take China to the WTO under its rule that prohibits countries from “taking exchange action that frustrates the intent of the agreement”.

A second front is the next Treasury report on foreign exchange practices, delayed from its due date of October 15 pending further evidence of China’s exchange rate intentions and the Group of 20 summit. The Seoul outcome was minimal and the average value of the renminbi has weakened since China announced “greater flexibility” in June. So the Treasury must designate China (and a few others) as a manipulator, as Mr. Obama came close to doing publicly after Seoul.

Then there is the visit of Hu Jintao, China’s president, to Washington in January – although it is hard to see what they can agree that they were unable to do at the G20 summit.

The G20 stalemate has intensified the feud over currencies and trade rather than helped to resolve it. Mr Obama has to notify China privately that his administration will designate it as a “manipulator”, support new legislation and take China to the WTO unless it lets the renminbi rise substantially before the Hu visit. The Chinese say they will never move under foreign pressure but have revealed they will do so only under such pressure. The world economy will fare much better under the proposed strategy.

The writer is director of the Peterson Institute for International Economics

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U.S. Prevails in Trade Dispute With China

The following article by Sewell Chan appeared in The New York Times here.

WASHINGTON — The United States claimed victory Friday in a trade dispute with China, after a World Trade Organization panel largely upheld tariffs that were imposed on an array of Chinese-made steel pipes, tires and other products during the Bush administration.

China had used a number of technical arguments in a September 2008 challenge to antidumping duties, which are supposed to compensate for unfair pricing and countervailing duties that are used to offset improper government subsidies. But a W.T.O. dispute settlement panel rejected most of those arguments.

The Bush administration announced levies on $200 million of steel pipe shipments from China, South Korea and Mexico in July 2008, a month after imposing similar countervailing duties involving a different kind of steel pipe. The Obama administration has defended those decisions.

“This is a significant win for American workers and businesses affected by unfairly traded imports,” said the United States trade representative, Ron Kirk. “This case makes clear that the Obama administration, including U.S.T.R. and our colleagues at the Department of Commerce, will vigorously defend the application of our trade remedy laws.”

The duties that were upheld on Friday had been imposed on a variety of specialized goods: circular welded pipe, certain pneumatic off-road tires, light-walled rectangular pipe and tube and laminated woven sacks.

China’s challenge revolved around many technical questions, including whether state-owned enterprises and state-owned commercial banks could be properly considered public bodies that provide subsidies.

The ruling comes at a time of increasing tensions over currency and trade between China and the United States. The Obama administration has agreed to investigate a complaint brought by the United Steelworkers over China’s support for its clean energy industries, and is concerned about Chinese efforts to block exports shipments of valuable minerals known as rare earths.

“These findings are especially important at a time when the United States is vigorously implementing W.T.O.-consistent tools to address China’s unfair trade practices and to address global imbalances,” said Representative Sander M. Levin, Democrat of Michigan, one of the most outspoken House members on China’s decision to hold down the value of its currency, the renminbi. “We should not let the possibility of meritless allegations of W.T.O. inconsistency prevent us from standing up for U.S. workers and businesses.”

The W.T.O. panel was established in January 2009 and held hearings in July and November of that year. Both China and the United States have up to 60 days to appeal the panel’s ruling, which ran to 283 pages and was published on the Web site of the W.T.O., which is based in Geneva. China joined the organization in 2001.

In a separate case, the United States International Trade Commission, an independent federal agency that assesses whether imports unfairly damage American industry, on Friday authorized the Commerce Department to impose both antidumping and countervailing duties on coated paper from China and Indonesia that is used in sheet-fed presses.

The commission found that the papers, which are used to produce high-quality graphics, had been unfairly subsidized and sold in the United States at less than market value.

Senator Sherrod Brown, an Ohio Democrat who had submitted testimony to the trade commission in the coated-paper case, applauded the ruling.

“American producers face an inexcusable flood of dumped Chinese paper — subsidized from 10 to 15 percent of product cost,” he said after meeting with workers at Smart Papers, a coated-paper manufacturer in Hamilton, Ohio.

Mr. Brown said the decision “shows why rigorous trade law enforcement is critical to the economic security of our workers and viability of domestic manufacturing,” but he also argued that China’s currency policies should be considered in future trade remedy cases.

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Trade Clampdown Effort Draws Kudos From Steel Industry

The following article appeared in American Metal Market on August 6, 2010.

PITTSBURGH — Eleven U.S. senators are looking to expand the powers of the U.S. Commerce Department in areas such as anti-dumping and countervailing duty investigations, drawing kudos from steel industry players.

Sens. Ron Wyden (D., Ore.) and Olympia Snowe (R., Maine) introduced what is being called the Enforcing Orders and Reducing Circumvention and Evasion Act, or the Enforce Act, which would give Commerce the tools necessary to prevent foreign countries from evading U.S. trade laws.

The legislation points out that exporters from developing countries-in particular China-have been known to mislabel shipments and re-route goods through third-party countries in an attempt to fool customs officials and circumvent U.S. trade laws designed to promote free and fair trade. The senators say the surging amount of imports from these countries is making it more difficult for U.S. Customs officials to identify cheaters and enforce laws.

The new legislation provides them stronger and more effective tools to do so. The Washington-based Committee on Pipe and Tube Imports (CPTI) and its Customs Task Force were among the first to applaud the measure.

“A lot of us in the manufacturing sector and especially those of us in the steel pipe and tube industry recognize that there is a serous problem with customs fraud and duty evasion,” Dave Seeger, CPTI’s chairman and president of John Maneely Co., said. John Maneely includes under its umbrella tube makers Atlas Tube Inc. and Wheatland Tube Co.

“The introduction of the Enforce Act of 2010 is an important first step and sends a strong message that the Congress is committed to enforcement of the trade laws. We applaud Senator Wyden and Senator Snowe on their leadership and look forward to working with them to enact this legislation,” he said.

The senators, along with nine other Senate supporters, sent a letter to the White House urging the Obama administration to do more to combat unfair trade practices. In it, they once again called on Obama to address China’s alleged practice of currency manipulation along with other illegal trade practices.

Wyden, who chairs the International Trade Subcommittee of the Senate Committee on Finance, said the Enforce Act would dramatically improve enforcement of U.S. trade laws.

“If the government is serious about helping American businesses grow and create jobs, it must ensure that U.S. trade laws are enforced and duties are paid,” he said n a statement. “The Enforce Act is going to unleash the resources of the U.S. Department of Commerce to investigate evasion of U.S. trade laws and ensure that the correct trade remedy duties are applied at the border.”

The Enforce Act is designed to combat the evasion of anti-dumping and countervailing duty orders and enforce trade remedy statutes that are already on the boo ks. It would do so by empowering Commerce to investigate evasion of trade remedy laws, establishing a rapid-response timeline by which Commerce and the U.S. Customs Department would respond to allegations of evasion, and improving the safety of imports.

Thomas J. Gibson, president and chief executive officer of the American Iron and Steel Institute, Washington, also applauded the legislation.

“American manufacturers have been continually put at a severe disadvantage due to unfair trade policies practiced abroad,” he said. “The Commerce Department has already missed two critical opportunities this year to cite China as a currency manipulator. If we want to reach the President’s goal of doubling exports in the next five years, we must enforce the rules that already are in place now and adopt stronger policies that will level the international playing field and help restore good-paying American manufacturing jobs.”

In addition to Wyd en and Snowe, Senate supporters who signed the letter to the White House include Sherrod Brown (D., Ohio), Charles Schumer (D., N.Y.), Debbie Stabenow (D., Mich.), Jim Bunning (R., Ky.), Arlen Specter (D., Pa.), Susan Collins (R., Maine), Ben Cardin (D., Md.), Bob Casey (D., Pa.), and Carl Levin (D., Mich.).

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House Sets China Currency Hearing For September

The following article appeared on Reuters on July 22, 2010.

WASHINGTON - Democratic leaders in the U.S. House of Representative said on Thursday they will wait until at least September before taking any action on legislation to force China to revalue its currency.

House Majority Leader Steny Hoyer said the Ways and Means Committee would hold a hearing on the issue when lawmakers return from their August break the week of September 12th.

House Ways and Means Committee Chairman Sander Levin said the purpose of the hearing would be to review the issue and assess whether any legislation was needed.

They spoke at an event to lay out House Democrats’ plans to pass several pieces of legislation aimed at helping create more U.S. manufacturing jobs.

Import-sensitive U.S. industries like steel and textiles in particular want Congress to pass a bill that would require the Commerce Department to treat China’s “undervalued” currency as a subsidy under U.S. trade law.

That would allow companies to request countervailing duties to offset the amount of China’s currency undervaluation.

China recently loosened its currency from a peg to the dollar, but it has risen only slightly in value since.

“There’s been less than a 1 percent change and that’s very unsatisfactory,” Levin said. “That’s the purpose of the hearing, to determine the progress to date, and if there isn’t, what the next step is.”

Senate Banking Committee Chairman Chris Dodd also has said he wants to hold a hearing on China’s currency policy, but has not yet set a date.

The Senate will be in session until around August 7 before taking its break.

In contrast, the House which is expected to leave at the end of July for its summer recess.

Senator Charles Schumer and several of his colleagues have been pushing for a vote in the Senate on China currency legislation, but so far nothing has been set.

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US Firms Allege Chinese Grating Is Dangerous, Urge Review

Here is yet another piece about Chinese grating found in the Daily Media Report of AISI.

July 27, 2010

Steel Business Briefing

Two US producers are calling for an investigation into potentially hazardous Chinese steel grating. AMICO and Fisher & Ludlow sent letters to the US Occupational Safety and Health Administration (OSHA) and the US Consumer Product Safety Commission (CPSC), alerting them to potential dangers of the Chinese product.

“Chinese producers have admitted that they do not test the steel they use in steel grating, and do not know its chemical and physical properties,” said Alan Price, legal counsel to the two companies. “A failure of this unreliable Chinese steel grating could be catastrophic.”

As Steel Business Briefing has reported, the US Department of Commerce (DOC) found in an unfair trade case investigating Chinese grating imports that Chinese producers have provided unreliable and sometimes false production certifications.

The US-based National Association of Architectural Metal Manufacturers, which sets standards for steel grating, issued an advisory warning to consumers as a result of the DOC’s investigation.

The unfair trade case resulted in antidumping duties of 136-145% and countervailing duties of 62.46%, SBB has reported.

Although it is unlikely that imports from China will continue based on these hefty duties, AMICO and Fisher & Ludlow are now urging an investigation, as the grating is currently being used in a wide range of applications in residential, school, commercial, industrial, recreational, transportation and other sectors.

Some is also still held in inventory, SBB understands.

Steel bearing bars and cross bars are welded together perpendicularly to form steel grating.

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The “punitive tariffs” narrative

The AP says China’s trade surplus will be at an 8 month high.  But notice this throw away comment:

Some American lawmakers are calling for punitive tariffs on Chinese goods if Beijing fails to act.

A narrative is a story line.  The story line for trade, among business reporters and editorial boards, is that you are either for free trade or you are a protectionist and isolationist. The "punitive tariffs" are part of that story line, even though no-one is proposing "punitive tariffs." 

Addressing currency misalignment through countervailing duties, is presumably what the reporter is talking about. 
Leveling the playing field is not punitive, but neutralizing. 
Punishment would go beyond the economic imbalance that currency
manipulation causes. 

This is why logic is hard to get into the debate.  People react with "protectionist" and "punitive" accusations without listening… without thinking.  But while "free trade" is not popular anymore, those labels remain a good rhetorical tool for the wacko free traders.

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Pipe makers win ITC case - a first against China

China’s subsidies and tax breaks to its industries are tremendously
large.  The alleged "low cost manufacturing" situs argument is
false.  The U.S. International Trade Commission decided, in a 5-0
vote, that China subsidized its steel pipe industry to an extent
justifying 100 percent duties. The domestic steel pipe industry is the

Countervailing and anti-dumping duties are not
protectionist.  They are neutralizing, not punitive.  They
are pro-trade mechanisms because they eradicate trade distortion. 

This is a final decision.  The administration has no
discretion to alter it.  The full Bloomberg article is below the

McCain has not commented.  But Obama has:

Illinois Senator Barack Obama, the presumptive Democratic
nominee for president, in a statement today reacting to the
decision, said, “The United States must always use the full
range of multilateral and bilateral tools to insist that China
and all other nations abide by the rules that govern the economic policies of nations.”

U.S. Trade Panel Backs Duties on Chinese Pipe Imports (Update2)
2008-06-20 13:55 (New York)

   (Adds Obama comment seventh paragraph.)

By Mark Drajem
   June 20 (Bloomberg) — The U.S. International Trade
Commission ruled that domestic steel pipe makers are being harmed
by competition from China, a decision that will lead to tariffs
of more than 100 percent on imports of that product.
   The decision, in a 5 to 0 vote, marks the first time the
U.S. will impose duties to compensate for tax breaks and other
government subsidies to Chinese competitors.
   The finding by the independent trade body means that tariffs
on the imports of the pipe used in plumbing and fencing set in a
decision last month by the Commerce Department will take effect.
   “This marks a fundamental shift in U.S.-China trade
relations,” said Gilbert Kaplan, a lawyer for U.S. pipe makers.
“It’s the first time we’ve confronted their subsidies by putting
duties on imports.”
   The duties would effectively block all imports from China of
these pipes, Kaplan said. China is likely to challenge the duties
at the World Trade Organization, he said.
   U.S. makers of other steel products may now be able to bring
complaints against China using this precedent, said Roger
Schagrin, another lawyer representing the U.S. industry.
   Illinois Senator Barack Obama, the presumptive Democratic
nominee for president, in a statement today reacting to the
decision, said, “The United States must always use the full
range of multilateral and bilateral tools to insist that China
and all other nations abide by the rules that govern the economic
policies of nations.”

Two Types of Tariffs

   Two types of tariffs will apply to the Chinese pipe:
countervailing duties, used to counter subsidies, will average
37.2 percent; and anti-dumping duties, to compensate for goods
sold overseas at prices below those at home, will be 69.2 percent
on 31 of the largest producers. Other companies face higher
   The ITC decision is a win for companies such as Ipsco Inc.,
owned by the Swedish steelmaker SSAB AB, and Sharon,
Pennsylvania-based Sharon Tube Co.
   China has passed Canada to become the largest U.S. trading
partner. The U.S. trade deficit with China reached $256 billion
last year, the largest gap between two nations in history.
   Trade in the pipe products has surged, too.
   From 2004 to 2006, imports of Chinese-made circular welded
carbon pipe increased to $332 million from $138 million.

Final Hurdle

   The decision today by the independent trade panel was the
last of four hurdles domestic producers had to clear to get
duties imposed.
   In the first case that targeted Chinese subsidies — over
coated paper — the panel ruled that American companies weren’t
being harmed by imports, a decision that meant the tariffs didn’t
go into effect.
   The Shuangjie Group and Jiangsu Yulong Steel Pipe Co.
withdrew their participation in the Commerce Department’s
investigation of the case and received an 85.55 percent anti-
dumping tariff, the department said last month.
   In the subsidy investigation, the Commerce Department
calculated final duties for Weifang East Steel Pipe Co. at 29.57
percent and the Kingland Group at 44.86 percent. Shuangjie
declined to participate and got a 615.9 percent tariff.

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China paper subsidies

The International Trade Commission ruled against the glossy paper industry
The ITC did not dispute the claims of NewPage, which brought the case,
that China illegally subsidized its paper industry.  But rather
found that the paper producers had not been harmed by the subsidies.

Vinson & Elkins law firm repreesented the Chinese government. 
I did not follow the case, but they likely argued that NewPage could
not provide a direct link between the subsidies and U.S. industry
harm.  A swirl of other economic factors - transportation costs,
various input costs, pricing decisions, different submarkets - confound
the causation connection.

If the ITC is reticent in connecting
subsidies with industry harm, this is a major loophole in trade
law.  Should the U.S. then increase domestic subsidies where it
can obscure the economic impacts in the maelstrom of other economic
factors, and argue that it may be wrong but nobody was hurt?

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