Steel Pipe Case Filed Against China

Business Wire, June 7, 2007

WASHINGTON -- Six U.S. producers of welded standard steel pipe and the United Steelworkers (USW) filed petitions with the U.S. Department of Commerce and the U.S. International Trade Commission alleging that imports of welded standard pipe from China into the United States are being dumped and are being subsidized by the government of China. The industry seeks to have the agencies impose duties to off-set Chinese government subsidization and dumping. Chinese imports of circular standard and structural pipe have increased from 10,000 tons in 2002 to 690,000 tons in 2006, a 6,800% increase. Since the unfair trade began four U. S. plants (out of 35) have ceased production and over 500 employees have lost their jobs. And the surge continues, with a 21% rise in imports in the first quarter of 2007. Imports of standard pipe from China represent over 60% of total U. S. imports of such products.

The petitioners in this case are Allied Tube & Conduit; IPSCO Tubulars, Inc.; Northwest Pipe Company; Sharon Tube Company; Western Tube & Conduit Corporation; and Wheatland Tube Company, as well as the United Steelworkers.

Armand Lauzon, CEO of John Maneely Company (parent company of petitioners Wheatland Tube and Sharon Tube), said, "For the past 15 months, we have been working hard to bring more consolidation to the pipe and tube industry in the United States and to further improve its worldwide competitiveness. Unfortunately, in May 2006, we were forced to close our second largest production facility located in Sharon, Pennsylvania with the loss of several hundred jobs because of the surge of unfairly traded imports from China. Unfair Chinese trade practices are severely hampering our efforts to achieve the desired rates of return necessary to attract capital and to maintain competitiveness in this critical U. S. industry."

About the Unfair Trade Practices and Their Impact on U.S. Producers

The unfair Chinese trade practices documented in the filing include sales at less than fair value and subsidies to the Chinese industry. The alleged margins of dumping range as high as 88 percent. The subsidies documented include policy loans, land use programs, tax subsidies, input material subsidies, grants, and export tax subsidies. The petition also addresses an export subsidy nominally known as a value added tax ("VAT") rebate program. The petition alleges that this rebate is discretionary and excessive. The Government of China uses this particular program to provide an advantage to Chinese exports in global markets.

The Chinese steel industry has been nurtured and encouraged by the Chinese government for decades. Even so, as recently as 1990, Chinese steel production was still less than that of the United States, the European Union, or Japan. Today, Chinese steel production exceeds that of the United States, the European Union, and Japan combined. This magnitude of growth is the direct result of multiple subsidy policies and programs established and maintained by the Chinese government.

Rick Filetti, the President of Allied Tube & Conduit, said "Allied operates four of the most efficient pipe plants in the world geographically spread through the U.S. market in Philadelphia, Chicago, Phoenix and Pine Bluff, Arkansas, to serve the entire U.S. market in a freight beneficial manner. However, absent an end to dumping and a reduction in imports from China, we will be forced to make reductions at our plants despite very strong demand for our products. It would be a tragedy for the United States if the most efficient and environmentally compliant plants in the world were shut down and the United States nonresidential construction market became dependent on products imported from inefficient, environmentally noncompliant, high freight costs mills in China for this essential product to the U.S. economy. We are asking for the U.S. government to restore the level playing field and allow the rules of comparative advantage to hold sway."

About the U. S. Pipe and Tube Industry

The domestic industry affected in this case employs approximately 2,000 hourly workers at some 35 plants nationwide, including in Alabama, Arizona, Arkansas, California, Illinois, Iowa, Kentucky, Louisiana, Missouri, Ohio, Oregon, Pennsylvania, and Texas. Most employees are represented by the United Steelworkers Union. Welded standard pipe products are used primarily in nonresidential construction for plumbing, sprinkler systems, structural supports, and in fencing systems. They are also used in industrial applications to carry water, liquids, or gasses at low pressure.

The petitioners allege that the imports have adversely affected the domestic industry and its workers. The U.S. industry has undergone substantial consolidation in recent years. Other major import sources are subject to antidumping and countervailing duty orders. Absent the effect of imports from China, the industry should be thriving; but, on the contrary, mills have shut down, workers have been laid off, market share has been lost, and financial performance has deteriorated.