Let's get it straight: China cheats on fair trade rules
U.S. Tariff Order on Steel Oil Pipe – Victory for Workers, Industry
In a victory for the domestic steel industry and its workers in the Ohio Valley, the U.S. government has levied duties of up to 16 percent on imported Chinese pipe used in the oil and natural gas industries.
Duties ranging from 10.5 percent to 16 percent were imposed in mid-January 2010 to offset government subsidies that U.S. trade agencies maintain China illegally provides to its steelmakers.
The case brought by the USW and domestic pipe producers was the largest countervailing duty case filed to date against any Chinese products – valued at $2.8 billion from 2008 imports. About 75 percent of the 6,000 U.S. oil pipe production workers are represented by the USW among eight companies.
The action should improve job prospects for USW-represented pipe workers once massive inventories of Chinese product already in the United States are depleted, allowing the domestic industry to ramp up production. Steelworkers who produce inputs for making steel pipe will benefit too.
Great victory for workers
"This is a great victory for the industry and its workers," said Roger Schagrin, legal counsel to the USW and the domestic producers. "Nothing can create jobs faster in the United States than making China trade fairly."
Let’s get it straight: China has been cheating, and in the process stealing from its trading partners for years, and they just got caught — again! And they’re being punished with the only response available under our trading system, which are those tariffs.
China’s massive manipulation of its currency and illegal subsidies have continued for years, giving it an unfair advantage against U.S. manufacturers. Its labor and environmental protections are grossly inadequate. We need to insist that China abide by the rules they agreed to after joining the World Trade Organization (WTO) in 2000 – the same rules that govern the conduct of responsible member nations.
We should do business with China, but we will not be pushed around or talked to death while they continue to steal our markets.
The United States must confront the challenges of globalization. But we cannot do so by ignoring the deleterious impact that our current international trade and economic policies are having on our nation’s productive capacities, and on the standard of living of the vast majority of our citizens.
America’s trade deficit this year with China alone will exceed $250 billion. Our former overall trade surplus in high-technology products, including high-tech steel, has now turned into a rapidly increasing trade deficit.
The United States has lost more than 5.5 million manufacturing jobs since the beginning of this decade. And the countries to which we are sending our dollars for imported items — especially China, with its more than $2 trillion of foreign exchange reserves — are now using them to buy our vital productive assets.
Most Americans strongly believe that our nation’s current international economic and trade policies are undermining our nation’s standard of living, and ultimately our national security.
Making America’s trade policies fairer and furthering American jobs is absolutely not protectionism. Paul Samuelson, the architect of modern economics, recognized years ago that cost-of-goods subsidies and currency manipulation create "genuine problems for free-trade apologetics." Most important, he recognized that nations, like China, which subsidize their exports are, to use his words, "effectively stealing jobs from other countries."
Measured in tons, U.S. imports of what’s called oil country tubular goods (OCTG) from China, soared from 725,000 tons in 2006 to almost 2.2 million tons in 2008. Another 740,000 tons entered the United States during the first five months of 2009.
This enormous surge of unfairly traded goods resulted in an overhang of inventory that crippled the domestic industry, lowered prices and led to dramatic job losses. Nearly half of the domestic oil pipe industry’s workers were on layoff last year.
China’s dumped and subsidized OCTG pipe imports are a threat to working families and the future of a critical product used in our nation’s energy extraction industry.
U.S. International Trade Commission vote unanimous
The six-member U.S. International Trade Commission (ITC) paved the way for the duties by voting unanimously on Dec. 30, 2009 that the domestic industry was harmed by Chinese steel pipe products. The Commerce Department had earlier determined OCTG pipe was illegally subsidized by the Chinese government.
The decision demonstrates the U.S. commitment under the Obama administration to enforcing trade rules when domestic job losses and industry injury are clearly proven.
We are fed up with China’s constant cheating and false claims of U.S. protectionism, when it is China that practices illegal state subsidization and dumping that seeks to destroy good jobs and fair competition under WTO (World Trade Organization) standards their leaders agreed to abide by.
It is not protectionism when countries such as China are held accountable for the agreements and obligations they freely entered into so they could have access to the U.S. and world markets.
The ITC is an independent, quasi-judicial federal agency that investigates the effects of dumped and subsidized imports on domestic industries and conducts global safeguard investigations. Its six commissioners are evenly split between Republicans and Democrats.
Inquiry began in April 2009
The inquiry got its start last April when the USW and the domestic producers filed anti-dumping and countervailing duty trade cases against China with the ITC and the Commerce Department.
Joining the USW in filing the trade cases were U.S. Steel Corp., Maverick Tube Corp., TMK IMPSCO, V&M Star LP, V&M Tubular Corp., Evraz Rocky Mountain Steel, Wheatland Tube Corp. and NW Pipe Co. Most of the oil pipe production workers are employed in the Ohio Valley, although OCTG pipe plants are in Alabama, Arkansas and Texas.
The final injury hearing featured nine members of the U.S. House of Representatives, three U.S. Senators, the governors from Ohio and Pennsylvania, plus the mayor of Youngstown, Ohio. They joined the USW and the steel companies in calling for trade law enforcement. Members of both congressional houses, including 47 members of the House and 13 senators, signed onto letters sent to ITC Chairman Shara L. Aranoff supporting the petitioners.
China, as was expected, decried the decision saying the global financial crisis and the fall in demand for oil are to blame for the industry’s hardships, not China’s policies.
First of two penalties
The anti-subsidy decision could be the first of two penalties imposed by the U.S. government against unfairly traded pipe produced in China.
This spring, the ITC will decide whether to penalize the Chinese steelmakers with tariffs of up to 96 percent for dumping, or selling their products in the U.S. market at below the cost of production. The Department of Commerce last November confirmed China’s practice of dumping oil country tubular goods into the U.S. market and proposed the anti-dumping tariffs.
The USW will continue to monitor China imports of paper, tires, glass and steel products for fair trade violations, and we will take action when required. Consistent and swift U.S. trade law enforcement must be the standard with our trading partners if we are to retain good jobs and rebuild our economic manufacturing capacity.
Leo W. Gerard is international president of the United Steelworkers and a member of the executive council of the AFL-CIO. The USW represents 1.2 million active and retired industrial workers in the United States and Canada.
