U.S. sets preliminary penalties on China's oil pipes in record case

15:19, November 06, 2009      

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The U.S. Commerce Department on Thursday set preliminary anti-dumping duties on imports of Chinese-made oil pipes, the biggest U.S. trade action against China.


The Commerce Department said it "preliminarily determined that Chinese producers/exporters have sold OCTG (oil country tubular goods) in the United States at prices ranging from zero to 99.14 percent less than normal value."

The OCTG are widely used in oil and gas drilling.

As a result of this preliminary determination, a 36.53-percent levy will be imposed on the OCTG from 37 Chinese companies, while some other Chinese companies will receive a preliminary dumping rate of 99.14 percent.

The tariffs go into effect immediately, but since the finding is preliminary, U.S. Customs and Border Protection officials will collect cash deposits or bonds.

If the preliminary finding is not upheld, the money will be returned.

From 2006 to 2008, imports of OCTG from China increased 203 percent by value and amounted to an estimated 2.6 billion dollars in 2008, according to the U.S. Commerce Department.

In September, the U.S. Commerce Department also issued a preliminary countervailing duties ranging from 10.9 percent to 30.6 percent on oil pipe imports from China.

The department said that it will make its final determination of antidumping and countervailing duties next year.

With the Commerce Department's determination, the U.S. International Trade Commission (ITC) will make an affirmative final determination that the imports of wire decking from China materially injure, or threaten material injury to, the domestic industry.

The Commerce Department will issue an anti-dumping duty order or a countervailing duty one based on the ITC's decision.


China strongly opposed the U.S. decision, calling it a protectionist move.

"China expressed strong dissatisfaction and is resolutely opposed to this," said China's Ministry of Commerce (MOC) spokesman Yao Jian in a statement in September.

"This does not comply with WTO agreements on subsidies. The U.S. used an incorrect method to define and calculate the subsidies, which has resulted in an artificially high subsidy rate, hurting the Chinese firms' interests," said Yao.

He noted that in the first quarter, the volume of Chinese OCTG exports to the U.S. fell 55 percent from a year ago.

The U.S. industries expressed strong dissatisfaction with the trade case, saying such a move would hurt U.S. companies.

The trade restrictions would "hurt U.S. using industries by raising their costs and making sources of supply uncertain," Eugene Patrone, executive director of the Consuming Industries Trade Action Coalition (CITAC) told Xinhua in September.

He noted that the tariffs would make oil and gas exploration and production be more expensive, projects be delayed, "which is against our national goal of being less dependant on imported energy."


The onset of the global recession appears to have set off an increase in trade disputes around the world.

Globally, new requests for protection from imports in the first half of 2009 were up 18.5 percent over the first half of 2008, according to the World Bank-sponsored Global Anti-dumping Database organized by Chad P. Bown, a Brandeis University economics professor.

That increase followed a 44-percent increase in new investigations in 2008.

And China has become the main target of the rising protectionism.

Earlier this week, the U.S. Commerce Department imposed preliminary countervailing duties (CVD), ranging from 2.02 percent to 437.73 percent, on imports of steel wire decking from China.

On Wednesday, the United States, together with EU and Mexico, requested the World Trade Organization (WTO) to establish a dispute settlement panel to rule on China's export restraints on raw materials.

The cases followed U.S. President Barack Obama's recent decision to impose punitive tariffs on all car and light truck tires from China for three years, a move quickly denounced by China as a "serious act of trade protectionism."

The protectionist moves by the Obama administration will ultimately hurt the U.S.-China trade relations, which are becoming more and more important due to the global financial crisis, economists warned.

The moves will also hurt the interests of U.S. consumers.

"We're worried about increasing costs for people using these products," said Lewis Lebowitz, counsel to the Consuming Industries Trade Action Coalition.

"China is the number one target of these duties and anti-dumping measures and the primary reason is that China is very competitive," said Edwin Vermulst, a trade lawyer with Vermulst Verhaeghe Graafsma & Bronkers.

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