UPDATED ON:
Friday, November 06, 2009
14:12 Mecca time, 11:12 GMT
Business
China condemns US trade action
China has been pressing the US to grant it 'market economy' status before a 2016 deadline [EPA]

China has described as protectionist new US anti-dumping duties on steel pipes and demanded Washington's recognition that it is a market economy.

The reaction came a day after the US imposed preliminary anti-dumping duties ranging up to 99 per cent on $2.63bn in Chinese-made pipes used in the oil and gas industry.

The Chinese commerce department issued its preliminary decision on Friday, a week before Barack Obama, the US president, heads to Asia on a trip that includes stops in Shanghai and Beijing.

"China resolutely opposes the abuse of protectionist measures, and will take measures to protect the interests of our domestic industry," the ministry said on its website.

"We hope that the US will set aside its biases and as quickly as possible recognise China's market economic status, thoroughly overcoming its double standards and giving equal and fair treatment to Chinese firms."

The US decision, unveiled on Thursday, follows countervailing duties on the same product, announced in September.

Market economy

In trade meetings with US officials last week in Hangzhou, the Chinese side pressed for recognition as a market economy, before the 2016 deadline negotiated when it entered the World Trade Organisation.

What is dumping?

 

Dumping is an informal name for the practice of selling a product in a foreign country for less than either the price in the domestic market or the cost of making the product.

  To protect local industries, it is illegal in some countries to dump certain products into them.

That would make it harder for the US in future to rule in favour of such duties.

Washington promised to set up a panel to consider the issue.

"The US should give objective consideration to the fact that the fundamental problem of the concerned US industries is the fall in consumption demand brought on by the financial crisis, and thereby make a just, fair and reasonable final determination" on the steel pipe duties, the Chinese commerce ministry said.

As long as China has no recognition as a market economy, trade partners can compare its products to those of other nations with different cost structures for labour or transport, when assessing whether products have been dumped.

Margins squeezed

Pipes that can carry highly corrosive oil and natural gas presented a new opportunity for Chinese steel processors moving up the value chain.

Exports to the US, their biggest market, tripled to $2.63bn in 2008 compared with 2007.

Similar trade disputes have piled up as the global economic crisis increased competition with US manufacturers.

China is particularly upset over first US use of safeguard duties, against tyres, because safeguard duties only have to show a surge in exports, without proving dumping or subsidies.

Export-dependent Chinese industries are dominated by private firms, which cut margins to the bone by competing with each other at home and for export markets.

 Source: Agencies
 
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