The United States has ratcheted up trade tensions with China by saying it will slap penalty duties on imported Chinese steel pipes to offset state subsidies — a move slammed by Beijing.

The US International Trade Commission (ITC) issued a "final" decision saying that the pipes adversely impacted the US steel industry, paving the way for the Commerce Department to impose countervailing duties of up to nearly 16 percent.

This is the largest countervailing duty case filed against China, based on the value of trade, lawyers said.

In Beijing, the Chinese commerce ministry said it "strongly opposed" the decision, and that the US steel industry was "blindly" blaming Chinese imports for its woes after lower oil prices had squeezed demand for steel pipes.

But China stopped short of saying it would take retaliatory action.

From 2006 to 2008, imports of such Chinese pipes increased by a massive 203 percent. In 2008 they were valued at 2.6 billion dollars. The unfair subsidy claims have been under investigation since early 2009.

The American Iron and Steel Institute, an industry group, called the ITC decision "an important step" toward allowing domestic steel pipe producers "to compete on a level playing field unhindered by unfair and injurious Chinese trade practices.

"At a time when the nation is struggling with double-digit unemployment, full and strict enforcement of our laws against dumped and subsidized imports of steel and other manufactured products from China is essential to maintaining a viable US manufacturing sector in the United States," said the institute.

The ITC, an independent federal agency, said in a statement that it had determined that the US steel industry was "materially injured or threatened with material injury" by the imports of the Chinese steel pipes.

The pipes, known as "oil country tubular goods" in trade jargon, are used to deliver oil and gas in the petroleum industry.

The ITC will forward the formal determination to the Commerce Department in writing "within 10 days," an official told AFP, speaking on condition of anonymity.

"This is the final piece in the puzzle," the official said.

The Commerce Department last month cited countervailing duties of between 10.36 percent and 15.78 percent to be imposed on the steel pipes if the ITC concluded that the local steel industry was "injured" by the allegedly unfair subsidies. The duties will be in addition to normal tariffs.

The ITC ruling Wednesday was the latest in a series of tit-for-tat trade measures taken by the United States and China, the world's largest and third-largest economies.

In September, the United States announced it would slap duties on Chinese-made tires, sparking the first major trade dispute of Barack Obama's presidency.

An angry Beijing lodged a complaint at the World Trade Organization and retaliated by launching a probe into possible unfair trade practices involving imports of US car products and chicken meat.

Beijing charged that Washington's move violated WTO rules but Obama has denied that it amounted to protectionism.

The Commerce Department pursued an investigation into the steel pipes after complaints from various US industry groups, including the United States Steel Corporation, and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, the largest industrial union in North America.

The steel pipes are also being investigated in a separate case for dumping, in which Washington alleges the Chinese imports are being sold at below market value. China has also called that move protectionist.

In November, the Commerce Department in a "preliminary determination" said anti-dumping duties of up to 99 percent would be slapped on the pipes, saying they were sold in the United States at prices ranging from as much as 99.14 percent below normal value.

The department said it would make a "final determination" on the dumping case in March.

earlier related report

China slams US steel sanctions
Beijing (AFP) Dec 31, 2009 –

China said Thursday it was "strongly dissatisfied" with a US decision to slap punitive duties on imported Chinese steel pipes Washington says have been given unfair subsidies.

The ministry of commerce said it "strongly opposed" the decision by the International Trade Commission (ITC) on Wednesday but stopped short of saying it would take retaliatory action.

"We think any ruling that deems China's oil country tubular goods caused injury to the US industry will be wrong and disregards the facts that it was the financial crisis that led to the industry's difficulties," said the statement posted on the ministry's website.

The pipes, known as "oil country tubular goods" in trade terms, are used to deliver oil and gas in the petroleum industry.

The ITC, an independent federal agency, found that the subsidised pipes adversely affected the domestic steel industry, paving the way for the Commerce Department to impose countervailing duties of up to nearly 16 percent on the pipes.

This is the largest countervailing duty case filed against China, based on the value of trade, lawyers said.

China said the US steel industry was "blindly accusing" Chinese imports of causing its woes after lower oil prices squeezed demand for steel pipes.

The ITC will forward in writing the formal determination to the Commerce Department "within 10 days," an official told AFP, speaking on condition of anonymity.

The Commerce Department last month cited countervailing duties of between 10.36 percent and 15.78 percent to be imposed on the steel pipes if the ITC decided that the local steel industry was "injured" by the allegedly unfair subsidies. The duties will be in addition to normal tariffs.

The ITC ruling Wednesday came amid rising trade tensions between the United States and China, which for months have been locked in a trade tussle involving World Trade Organization complaints and retaliatory measures on an array of products, including US car products, chicken meat and Chinese tyres.

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