Chinese steel exporters may be able to sleep a little easier following a recent ruling regarding the controversial issue of dumping.
The US International Trade Commission (ITC) has said exporters were not doing anything wrong following accusations they were dumping wire rods. One US lawyer said he had not been so surprised by a verdict in 25 years. An appeal, if there is one, would take years.
The ITC determined there was no reasonable indication the US industry was materially injured or threatened with material injury by imports of carbon and certain alloy steel wire rods from China, Germany and Turkey that were allegedly sold in the United States at less than fair value.
All six commissioners voted in the negative on Friday, bringing an end to an investigation into whether or not dumping was going on; a material injury claim is a necessary step to testify dumping has been happening.
According to ITC records, a 6-0 vote has never happened in any investigation into alleged dumping in which China was involved.
Investigations against the three countries began on November 30. The US steel makers which accused them of dumping called for more than 300 per cent penalty duties on some steel products from China.
The Chinese side stressed that profits of US wire rod makers declined slightly this year from 2004 but were still higher than the average of previous years. They also said the import of certain products did not harm the United States because total imports to the United States from the three countries involved declined in the first nine months of this year, while demand for wire rods exceeded supply in the United States during the investigation.
Dan Porter, a US lawyer with the Willkie Farr and Gallagher law firm which represented Chinese enterprises, said the case showed that a successful injury defence could be undertaken if the industry moved quickly and decisively to defend its interests. Large steel companies involved included
Beijing Capital Steel,
Nanjing Steel in Jiangsu Province and
Xiangtan Steel in Hunan Province. They responded to the dumping charge and appealed for a non-material injury ruling within seven days of the US Government announcing the start of the case.
The lawyer said the decision could affect other claims of Chinese firms carrying out dumping. China is the largest victim of such claims.
Paul Rosenthal, a lawyer on behalf of the US industry, said he was "shocked and very disappointed" at the commission's decision.
"I have not been more surprised by a vote in almost 25 years of appearing before the commission," he said.
The US industry has the right to appeal against the ITC ruling to the US Court of International Trade within 30 days.
However, lawyers said such an appeal would take several years to decide and would not threaten the wire rod trade in the meantime.
"We also doubt that any appeal would be successful," Porter said.
Conflict has increased in the Sino-US trade of steel products. For example, in August the US launched a probe into whether two particular types of Chinese steel pipes are damaging the US industry because of a big increase in exports from China. Over 50 Chinese enterprises are involved, including 20 with an annual export volume of over US$1 million.
The rise in the number of arguments in the steel trade has aroused the concern of both governments.
Franklin Lavin, the US Under Secretary of Commerce for International Trade, expected the steel problem to be a separate item on the agenda in the Joint Commission on Commerce and Trade (JCCT) between China and the United States in 2006, in order to help avoid potential trade disputes in the sector.
The annual meeting of the JCCT, the highest-level dialogue mechanism between the two countries, focuses on the most important issues in the bilateral economic relationship.
