US Steel and a subsidiary of Nucor filed two anti-dumping complaints, covering steel tubes for the oil and gas industry and fasteners just before October 1 which allows both companies (and supporting organizations such as the United Steelworkers) to use market data from early 2009 to support their cases, according to this Bloomberg article. Complaints filed after October 1 can only use market data from the third quarter and as the Bloomberg article notes, import prices had increased making the complaints harder to prove.
The dates have significance because the method of calculating a perceived harm depends very much on the data set included. Here is a link to our explanation of how the DOC determines whether or not anti-dumping has occurred. Two other cases, one involving paper product imports and other detergents and food additives were also filed. The Steelworkers union represents workers for three of the four cases filed (the two steel cases and also the paper import case). All of these casesÃ‚Â involve anti-dumping and not the Section 421 rule that formed the basis of the tire import case in which President Obama had to specifically make a decision.
The steel industry relies on anti-dumping laws as one of only a few vehicles from which they can defend their claims that Chinese producers benefit from subsidies and a favorable currency exchange rate, though the industry believes the exchange rates involve actual manipulation on the part of the Chinese government. We will be examining these points in detail over the coming weeks as we put together some new research on the topic.
In the meantime, a Peking University professor recently published a thought-provoking article in Forbes suggesting that the US trade deficit with China has come about not due to currency manipulation but rather labor and a particular ratio involving the degree to which an economy (expressed as GDP) relies on manufacturing vs. finance. Here is an excerpt from that article of particular interest to those watching these steel dumping cases:
“We found that China’s disadvantage in finance vs. manufacturing can explain 4050% of China’s trade surplus with the United States. China’s low dependency burden can explain another 24%. By contrast, the undervaluation of the yuan vs. the dollar explains less than 2%.
Though an interesting theory, we would like to take a look under the covers to better understand the logic and argument for the findings. We have received a copy of the actual working paper from the author of the study and will write more about that in a future post.