A colleague forwarded me this article on a recent anti-dumping case filed by several major domestic steel producers alleging anti-dumping from Chinese imports of OCTG (oil country tubular goods) products. This case, hot on the heels of a recent case involving line pipe, which very recently went in favor of US producers, (US Steel is party to both cases) suggests domestic steel tube producers for the petrochemical industry are coming out swinging.
It’s likely no coincidence that this case comes on the heels of a circular welded carbon quality steel line pipe case. In the line pipe case, several domestic producers filed an anti-dumping case, again, against China for 16 OD (and under) line pipe. What makes the OCTG case interesting relates to this sentence buried in the USITC Final Determination Document dated January, 2009, Line pipe can be produced on the same equipment and with the same workers that produce other forms of welded pipe, including standard pipe, oil country tubular goods (OCTG), and large diameter line pipe.
Last June we posted a piece on what is required to prove anti-dumping has occurred. You can read that post here. But suffice it to say that the main areas the International Trade Commission examines include: the level and type of competition in the marketplace, the effect of the volume of imports into the market, the price effect and the overall impact of the imports on the domestic market. Now as you may also recall, we pontificated last week on potential public policy solutions to the trade deficit. And quite frankly, something is very wacky when one country could have a $1.9t trade surplus and another a $681b deficit (China and the US respectively). Clearly, the US is importing more than it needs as well as more than it should.
But when is a domestic industry truly harmed? One piece of data that I like to look at is how many countries are accused of the dumping? Is it just China or is it China, Korea and another geography? Undoubtedly, if the claim is raised on one country only, the case becomes more compelling in that the domestic industry may have been harmed. It seems less probable that a US industry has been harmed if multiple countries of origin are accused of anti-dumping. In the case of line pipe, this is precisely the case. Chinese subject imports grew disproportionately in 2007 compared to other line and OCTG pipe origin materials from Mexico, Taiwan, Brazil, Korea and Japan, which comprise the majority of US imports.
And as my colleague Stuart recently penned, As committed free marketers, we have always supported global competition providing it is on a level playing field. The problem comes when one or more party looks to distort the rules in its favor.