Ruling clears way for tariffs on Chinese steel pipes

U.S. steel pipe manufacturers, who have been battling a surge in imports from China, won a major victory Friday when the International Trade Commission cleared the way for the imposition of stiff penalty tariffs for the next five years.

The commission voted 5 to 0 that the U.S. industry was being harmed by the import of circular steel pipe. The decision marked the first time a U.S. industry had won a decision to impose tariffs on a Chinese product based on the argument that the Chinese government was unfairly subsidizing an industry.

The commission ruling means penalty tariffs ranging from 99% to 701% will be imposed on Chinese imports of circular welded pipe, a form of pipe used in a variety of construction jobs, such as home plumbing and sprinkler systems.

For more than two decades, the U.S. government had refused to consider subsidy cases against the Chinese government because China was classified as a nonmarket economy.

However, the Bush administration, facing increasing anger over soaring trade deficits with China, reversed course last year and announced it would treat China in the same way as other countries in disputes involving government subsidies.

The pipe case is the first to clear all the government hurdles for the tariffs to go into effect. Last year the Commerce Department imposed penalty tariffs on imports of Chinese glossy paper, but the trade body blocked the tariffs by ruling that the domestic industry had not proved it was being materially harmed by the imports.

In the pipe case, the Commerce Department found that the Chinese government was providing unfair subsidies. It also found that the pipe was being sold in the U.S. below the cost of production, a practice known as dumping. The penalty tariffs for the government subsidies, known as countervailing duties, and the anti-dumping tariffs were upheld by the trade commission vote.

Chinese exports of circular pipe have exploded, rising from 10,000 tons in 2002 to 750,000 tons in 2007. The U.S. industry said the increase had cost 500 pipe workers their jobs.