China Wins Anti-Dumping Steel Case With US

by Mike Godfrey, Tax-News.com, New York

30 May 2002

In a case which may have repercussions for China's case against the United States' steel import tariffs at the WTO, two Chinese steel manufacturers have won anti-dumping cases in the United States. The US Department of Commerce determined after year-long investigations that Maanshan Iron & Steel in Anhui province and Weifang Steel Pipe in Shandong province had not dumped their steel products on the US market.

Patrick Norton, a partner in the Shanghai office of US law firm O'Melveny & Myers, said he thought the cases were the first in which Chinese firms had successfully gone through the lengthy and expensive process. Since 1978, Chinese companies have faced nearly 500 anti-dumping cases against their products, mostly in the US, the European Union and Japan; in the case of Maanshan Steel the Department of Commerce had made a preliminary determination requiring Maanshan Steel to pay a 153% anti-dumping duty.

Both firms will now be free to export their steel products to the US free of anti-dumping duties. Mr Norton says that in the past, many Chinese firms have been reluctant to participate in foreign anti-dumping proceedings, so that they have typically lost the cases and been subject to high duties that closed them out of promising foreign markets.

Now that China is a member of the World Trade Organisation, the Ministry of Foreign Trade and Economic Co-operation (Moftec) is encouraging Chinese firms to be more active and contest anti-dumping charges in the US and elsewhere. The process is time-consuming and expensive, however. Investigators from the Department of Commerce sent questionnaires to the two companies, asking for detailed information on items such as domestic prices and production costs, as well as sending two officials to each factory to verify their figures for costs.

Mr Norton said the legal fees for such a case were usually between US$200,000 and US$400,000. For Maanshan, this was a price worth paying, with exports worth $20m a year at stake.

'Anti-dumping' as a term was hardly known 20 years ago, and for many economists is simply a synonym for 'protectionist'. Free-traders believe that countries should accept low-priced imports with open arms, since they improve a country's competitiveness and benefit consumers; but few governments are brave or educated enough to face down domestic firms which lose out to cheap imports. The US certainly isn't one of them.

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