Commerce Department: China dumped cheap steel in U.S.

McClatchy NewspapersApril 9, 2010 

WASHINGTON — In a ruling important to many companies across the country, the Commerce Department announced Friday that Chinese steelmakers sold steel tubes used by the oil and gas industry at below-market value in the U.S., a practice that domestic steelmakers say has harmed their operations.

The department issued the ruling late Friday, and the decision affects imported carbon or alloy tubular steel products from China that are used in oil and gas wells. These imports were valued at $1.1 billion in 2009, the Commerce Department said, and steel firms based in Pennsylvania, Texas, Illinois and Colorado brought the case.

In its ruling, the department determined that producers and exporters from China sold the steel products in the U.S. at prices that were less than their fair value. Commerce said goods were sold anywhere from 30 percent to 99 percent less than fair value.

A separate agency, the International Trade Commission, still needs to make its final determination on whether these dumped goods have injured U.S. steelmakers; that decision is expected next month.

The ITC so far has taken action eight times this year affecting products from China. Some of these decisions involved reviewing prior ones, while others were similar to the current action against the tubular steel products.

While the unfair trade case brought against Chinese steelmakers is fairly common, Friday's action takes place against a political backdrop. Democrats control Congress, and there's a growing consensus in the academic community that China's practices_ ranging from an undervalued currency to direct subsidies and failure to patrol exports — are costing Americans their jobs.

Even the Peterson Institute for International Economics, one of the most vocal champions of free-trade policies, has recently warned that China's currency is undervalued by 25 percent to 40 percent, and this could be costing 1.5 million to 2.5 million American jobs.

By law, Treasury Secretary Timothy Geithner was to report back to Congress by April 15 on whether he considered China a currency manipulator. On April 3, however, he caught lawmakers by surprise and announced that he'd take another three months to make that determination to press China in three high-level meetings. Then, while traveling to India this week, he flew to China for direct talks with top Chinese leaders, to seek a face-saving compromise that would allow China to revalue its currency, the yuan, in a way that did not appear that it was acquiescing to U.S. pressure.

The Alliance for American Manufacturing, which represents steelworkers and some U.S. steelmakers, said that many of its domestic steel pipe and tube makers complain that Chinese products had been coming into the country at prices below their price of raw materials.

In a recent interview, the executive director of the alliance, Scott Paul, described a "horrible environment" for U.S. steel companies, which are being battered by cheap products from China and an effort to skirt penalties by those Chinese companies already subject to sanction.

"It came in at prices we couldn't even consider competing with," Bill Kerins, the president of Wheatland Tube, told McClatchy during a visit late last month to his plant in Sharon, Pa., on the Ohio-Pennsylvania border. The company is one of the petitioners in the case.

Kerins said he's pleased with Friday's decision. "When the Department of Commerce is presented with the facts . . . it just shows that the system works," he said.

The unfair trade complaint was brought by Texas manufacturers Maverick Tube Corp. and V&M Star LP, along with the Pennsylvania-based companies United States Steel Corp. and Wheatland Tube. Other U.S. petitioners included TMK IPSCO of Illinois and Evraz Rocky Mountain Steel of Colorado. Two unions also joined the suit, the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union; and the AFL-CIO-CLC.

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