SOURCE: John Maneely Company

November 06, 2007 15:28 ET

U.S. Department of Commerce Finds That China Improperly Subsidizes Producers of Circular Welded Pipe and Imposes Tariffs to Level the Playing Field

Domestic Pipe Makers, USW Applaud Swift Action Against 6,900 Percent Jump in Chinese Imports

WASHINGTON, DC--(Marketwire - November 6, 2007) - Six U.S. pipe makers and the United Steelworkers (USW) today applauded the U.S. Department of Commerce for its preliminary finding that the Chinese government has been providing improper subsidies on Chinese circular welded steel pipe exports to the U.S.

In its preliminary determination, the Commerce Department will impose tariffs on China pipe exports to offset the unfair advantage of subsidies. The U.S. found that Chinese pipe was subsidized by an average rate of 16.59 percent. Individual rates ranged from a high of 264.98 percent down to zero for one company. Circular welded steel pipe products are also described as standard and structural pipe used in plumbing applications, HVAC systems, sprinkler systems, fencing, and construction.

Most Chinese producers will be subject to a duty of 16.59 percent. The Department of Commerce has also applied critical circumstances, determining that this duty could be applied retroactively by 90 days.

The pipe imports subject to the petition against China have surged from 10,000 tons in 2002 to more than 750,000 tons in 2007 -- a 6,900 percent increase. The result has been the loss of 500 domestic jobs, approximately 25 percent of the total workforce employed in this segment of the domestic pipe industry.

The trade suit, filed in parallel with the International Trade Commission ("ITC") and the Department of Commerce on June 7, 2007, was brought by the Ad Hoc Coalition for Fair Pipe Imports From China and the United Steelworkers. The Ad Hoc Coalition includes Allied Tube & Conduit, IPSCO Tubulars, Inc., Northwest Pipe Company, Sharon Tube Company, Western Tube & Conduit Corporation, and Wheatland Tube Company. On July 20, 2007, the ITC made a finding that circular welded pipe from China is causing material injury to the U.S. industry.

Armand Lauzon, Chief Executive Officer of John Maneely Company (parent company of Wheatland Tube and Sharon Tube), said, "This important decision sends a strong message to China and other countries that government subsidies to pipe and tube producers will not be tolerated by the U.S. government. All we ask for is a chance to compete based on quality without the intervention of foreign governments, because when it comes to quality, U.S.-made pipe is the best. Over the past 18 months our company has had to close production facilities in Sharon, Pennsylvania; Little Rock, Arkansas; and Houston, Texas, because of the surge of unfairly traded imports from China."

Rick Filetti, President of Allied Tube and Conduit, stated, "Surging imports from China at prices below our raw material costs have had a significant adverse impact on our employees and on our company's pricing and profitability. We understand that additional subsidies will be investigated between the preliminary and final determinations by the Department of Commerce and we look forward to a beneficial resolution of these cases."

Leo W. Gerard, USW President, declared: "It is critical for American manufacturing workers that the U.S. actively confront Chinese communist government subsidies by enforcing the countervailing duty laws. We are confident that consistent and tough government enforcement will lead to domestic manufacturers regaining their competitive footing, saving jobs and the rehiring of laid off workers hurt by the onslaught of illegal imports."

Once the new tariffs are published in the Federal Register, typically within five days, importers will be required to post bonds in the amount of the subsidy margins calculated by the Department. A preliminary determination in the companion antidumping investigation is due on January 3, 2008. Countervailing duties are intended to offset the impact of government subsidies, while antidumping rules address instances when foreign producers sell at prices in the U.S. that are below the prices or costs in their home market.

Gilbert B. Kaplan, a partner at King & Spalding, one of the law firms representing the pipe makers, said: "This is only the second time the Department has imposed countervailing duties on Chinese exports, and is the first U.S. countervailing duty case covering Chinese steel products. The imposition of duties on imported Chinese pipe should have a positive impact on U.S. pipe manufacturers and their employees. China is a major participant in the global marketplace, and it must abide by the laws that ensure fair trade." Roger Schagrin, of Schagrin Associates, also representing the petitioners, added, "This is an important day for the U.S. pipe industry, which until now has been forced to compete against heavily subsidized imports. Today's decision is an important first step in the process of obtaining trade relief against unfairly traded imports from China."

After the Department of Commerce makes final determinations in both the countervailing duty and antidumping duty investigations, the U.S. International Trade Commission is scheduled to complete its final investigation in the spring of 2008.

Estimated Timeline for the Investigation

     Case Filed                                        June 7, 2007
     Commerce Preliminary Subsidy Decision             November 6, 2007
     Commerce Preliminary Dumping Decision             January 4, 2008
     Commerce Final Subsidy and Dumping Decision       March 18, 2008
     ITC Final Injury Determination                    Spring 2008

Contact Information

  • Contact information:

    Armand Lauzon
    John Maneely Co.:
    (216) 910-3702

    Rick Filetti
    Allied Tube and Conduit:
    (708) 339-1610

    Gil Kaplan
    King & Spalding LLP:
    (202) 661-7981

    Roger Schagrin
    Schagrin Associates:
    (202) 223-1700

    Gary Hubbard
    (202) 256-8125