U.S. seeks to punish China for steel trade violations

McClatchy NewspapersJanuary 4, 2011 

WASHINGTON — The Commerce Department on Tuesday reaffirmed and raised tough penalties on Chinese exports of steel pipe used in oil drilling, upholding relief for U.S. manufacturers and continuing to push China on unfair trade.

The agency announced that it was affirming penalties stemming from its unfair trade investigation and a separate probe on subsidization of Chinese-made drill pipes.

Next, the International Trade Commission, an independent quasi-judicial federal agency, must make a final determination of injury to U.S. manufacturers of drill pipe by Feb. 17. If the ITC agrees with Commerce, Chinese-manufactured drill pipe would be subject to steep trade penalties and a nearly 20 percent tariff because of illegal subsidies.

"We're pleased with the outcome," said Harold Thomas, comptroller for Texas Steel Conversion Inc., a Houston-based manufacturer of drill pipe. "There was significant job loss on our part. ... Jobs were at stake and some were lost."

The United Steelworkers of America had joined the complaint and welcomed the Commerce decision.

"If we allowed the imports to continue without filing a petition, it would have wiped out the jobs and the companies," said union spokesman Gary Hubbard. "We'll never be able to file enough trade cases to solve the problem of the trade violations that China continues to pursue. So we hope the ultimate result will be paying closer attention to their meeting the standards they're obligated to under the world trade rules."

Scott Paul, executive director of the Alliance for American Manufacturing, which represents U.S.-based manufacturers, also applauded Tuesday's decision.

"Our manufacturing sector alone has lost 5.5 million jobs in just the last decade — with 2.4 million lost or displaced as a direct result of our massive trade deficit with China. We risk losing our competitive edge as a nation unless strong enforcement of our trade laws occurs when cheating exists," he said.

The ruling Tuesday affects heavyweight drill pipe and pipe collars of iron or steel used in oil drilling operations. The combined value of imported drill pipe and drill pipe with tool joints attached was $119.2 million in 2009.

Texas Steel was joined in its trade complaint by two other Texas firms, an Illinois manufacturer and unions from western Pennsylvania.

A McClatchy report from Sharon, Pa., last year highlighted the injury U.S. pipe makers suffered from unfair Chinese trade practices. In some cases, Chinese steel product would skirt U.S. trade penalties by being shipped under false documentation as books or other products. A separate report in upstate New York late last year similarly showed how U.S. makers of copper products are suffering from China's industrial subsidies.

Tuesday's action by the Commerce Department affirmed trade penalties of 69.32 percent on DP Master Manufacturing Co. Ltd. and Jiangyin Liangda Drill Pipe Co. DP Master originally faced penalties of 207 percent, so it saw a reduction, while Jiangyin originally faced a 7.64 percent penalty, seeing its tariff rise dramatically.

Three Chinese producers/exporters qualified for the separate penalty rate of 69.32 percent while all other Chinese producers and exporters of drill pipe were hit with a dumping rate of 429.95 percent. Dumping occurs when a foreign company sells a product in the United States at a price below fair value.

The agency also affirmed on Tuesday the penalties stemming from a countervailing duty investigation into illegal subsidies. It determined that five Chinese manufacturers of drill pipe received an illegal subsidy rate of 18.18 percent, and they along with all other Chinese makers of the steel product will be penalized at that rate. The first determination by the Commerce Department had been a subsidy rate of 15.72 percent.

The other companies emerging victorious Tuesday were Texas based VAM Drilling USA Inc. and Rotary Drilling Tools, as well as Illinois-based TMK IPSCO, which also manufactures in western Pennsylvania.

Joining the complaint were the AFL-CIO-CLC of Pennsylvania and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union.

ON THE WEB

Fact sheet on ruling

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