Manufacturers Claim China Dodges Anti-Dumping Duties

A new coalition of U.S. steel wire producers says it has "compelling evidence" of how certain manufacturers in China and elsewhere are evading anti-dumping duties.

Since China identified steel as a strategic industry, both the central and provincial governments have ramped up steel production with massive subsidies, leaving United States steel producers struggling to determine how best to compete in this crucial industry.

Lately, industry groups have been calling on the U.S. government for relief from imports that are sold in the U.S. at less-than-fair value ("dumped") or which benefit from subsidies provided through foreign government programs. In 2009, U.S. companies and trade groups brought about a dozen trade cases against China, alleging not only government subsidies but also "steel dumping," the act of selling a product in a market below the home-market price it cost to produce it.

China has been the subject of a number of complaints filed over unfair trade of steel products, and recent duties have been imposed in an effort to offset the government subsidies that the U.S. government says China provides its steelmakers.

Last month, the Commerce Dept. imposed preliminary duties of 11 percent to 13 percent on steel pipes imported from China after companies, including U.S. Steel Corp., complained of unfair subsidies. In January, the U.S. Department of Commerce started an anti-dumping and anti-subsidy probe into Chinese steel drill pipes.

In a particularly high-profile case in December, the International Trade Commission voted to impose countervailing duties of up to nearly 16 percent on imported steel pipes from China valued at $2.6 billion in 2008. The case was the largest steel trade dispute in U.S. history.

Now, a new coalition of U.S. manufacturing firms is taking on the task of monitoring compliance by companies slapped with anti-dumping orders.

The Coalition for Enforcement of Antidumping and Countervailing Duty Orders comprises six steel wire producers — from Alabama, Missouri, Ohio and North Carolina — each of which separately petitioned the U.S. government for relief from unfairly traded imports. The group claims it has evidence that some companies are deliberately evading the duties, and that this is costing the Treasury at least $84 million annually.

"In some cases, they are shipping these products to the U.S. via third countries and then falsely designating it as the country of origin to evade the duties, a practice termed 'transshipment,'" the coalition said in a statement. "In other cases, an inconsequential modification is made to the product in third countries to avoid the duties. In yet other situations, false labels displaying a different country of origin are placed on shipments of products actually made in China."

David Libla, president of Missouri-based Mid Continent Nail and a member of the coalition, deemed these techniques "blatant and purposeful." He said, "Not only are they clear evidence of attempts to maintain an unfair advantage in the marketplace, they're also costing taxpayers millions of dollars and reducing job opportunities in this country."

More than 275 jobs have been lost in two specific examples alone, according to the group's statement.

The coalition names Vietnam, South Korea, Hong Kong, Canada and Mexico as countries practicing "transshipment." The Taiwanese and Malaysian economies are also accused of being used by the Chinese-based manufacturers to send the products to the U.S. in an apparent bid to evade duties.

Based on extensive records research, interviews and, in some cases, on-site location inspections, the coalition advocates several administrative and legislative solutions to these evasion schemes.

Among the recommendations:

  • Require collection of cash deposits on suspect subject merchandise at points of entry to the U.S.;
  • Station at least one Customs and Border Protection official at each of the major seaports and land border crossings to concentrate on enforcement of these orders;
  • Incorporate specific enforcement language into the Customs Reauthorization Act; and
  • Expand the authority of the Commerce Department to include investigation of transshipment and other evasion activities.

The Coalition for Enforcement of Antidumping and Countervailing Duty Orders said its members had informed the U.S. government and lawmakers of the problem. A Commerce Department spokesperson told Agence France-Presse that the department "takes seriously allegations about attempts to evade the domestic trade laws and remedies that help ensure a level playing field for American businesses. We will continue to work with our partners across the federal government, including the U.S. Customs and Border Protection agency, to address any such efforts."

In response to the countervailing duties imposed in December, China's Ministry of Commerce (MOFCOM) expressed "strong dissatisfaction and resolute opposition" to the ruling. "The U.S. industry associations were wrong when they attributed the sluggish business to the Chinese imports and blindly charged Chinese products with dumping and subsidizing," a MOFCOM statement said. "The move and measure is groundless..." it added. (Source: China Daily)

Last week, MOFCOM said that the U.S. has been misapplying its own rules by taking action against Chinese imports, including the most recent duties against Chinese steel pipes used in transporting corrosive liquids and gas.

"This is the United States abusing its own trade relief measures," Yao Jian, spokesman for MOFCOM, told reporters.


New Duties Imposed on Chinese Steel

China Accused of Steel Dumping


U.S. Manufacturers Report Compelling Evidence of Evasion of Antidumping Duties on Imported Steel Wire Products

The Coalition for Enforcement of Antidumping and Countervailing Duty Orders / PRNewswire, Feb. 1, 2010

Letter to the Editor: Government Must Enforce Import Duties: Coalition (subscription required)

by Wendy M. Watson

American Metal Market, Feb. 12, 2010

U.S. Probing Charges China Evading Anti-Dumping Duties

Agence France-Presse, Feb. 11, 2010

U.S. Imposes Preliminary Duties on Chinese Steel Pipe (update 1)

by Mark Drajem

Bloomberg News, Feb. 24, 2010

Shedding Light on Energy Subsidies in China: Analysis of China's Steel Industry from 2000-2007

by Usha C.V. Haley

Alliance for American Manufacturing, January 2008

China Slams U.S. Duties on Steel Pipes

by Ding Qingfen and Chen Weihua

China Daily, Jan. 1, 2010

Commerce Initiates Antidumping Duty and Countervailing Duty Investigations of Drill Pipe from the People's Republic of China

International Trade Administration, January 2010

Commerce Preliminarily Finds Subsidization of Certain Seamless Carbon and Alloy Steel Standard, Line, and Pressure Pipe from the People's Republic of China

International Trade Administration, February 2010

China Says U.S. Abuses Trade Measures in Steel Case

by Aileen Wang and Lucy Hornby

Reuters, Feb. 25, 2010

China Accuses U.S. of Misusing Trade Protections

The Associated Press, Feb. 24, 2010

China Evades U.S. Duties by Exporting via Third Nations

The China Post, Feb. 10, 2010

Backgrounder: Recent Major Trade Disputes Between China and the U.S.

Xinhua / People's Daily China, Feb. 27, 2010

All Topics