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US adds tariffs against china subsidies { February 2007 } Original Source Link: (May no longer be active)
http://www.bloomberg.com/apps/news?pid=20601087&sid=aSlEjVq7p_vk&refer=homehttp://www.bloomberg.com/apps/news?pid=20601087&sid=aSlEjVq7p_vk&refer=home
Commerce Department Applies New Duties Against China (Update2)
By Mark Drajem
March 30 (Bloomberg) -- The U.S. Commerce Department, reversing more than two decades of practice, decided today to levy new duties on imports from China to compensate for Chinese subsidies to exporters.
The change of policy by the Bush administration, which debated the action for months, applies initially to imports of coated paper from China. It also opens the way for steel companies, textile producers and other manufacturers facing competition from China to apply for the same protection.
``This decision is the most significant step toward a stronger trade policy with China than we have experienced in this decade,'' Republican Representative Phil English of Pennsylvania said in a statement today.
Under decade-old practices, antidumping duties are the only ones that have been applied on products from countries such as China with managed economies because it is difficult to identify subsidies in those nations.
Antidumping duties apply to goods sold overseas at or below the price they are sold for in the home country. Separate tariffs, called countervailing duties, aim to offset the benefits of government subsidies, and those are the tariffs Secretary of Commerce Carlos Gutierrez announced today in Washington.
The decision to levy countervailing duties is preliminary. The initial duties will range from 10.9 percent to 20.3 percent. The Chinese government lost a U.S. court case yesterday aimed at preventing this decision.
The overall U.S. trade deficit with China reached $232.5 billion last year, the largest trade gap between two nations in history, and many U.S. companies are feeling the pressure of Chinese imports.
Offset Subsidies
``You are going to see a proliferation of these cases now,'' said James Jochum, a partner at the law firm of Mayer, Brown, Rowe & Maw LLP in Washington and the former top Commerce Department official responsible for deciding import protection complaints. ``This is a significant move. It isn't a one-off thing.''
Gutierrez said that in the 1980s and 1990s, Chinese or other companies in non-market economies wouldn't change their behavior because of other nations' tariffs.
Now, as China becomes a greater participant in world markets, ``Chinese companies do change their behavior,'' he said.
U.S. retailers and companies such as General Motors Corp., which import goods from China, oppose levying countervailing duties, arguing it means duties would be applied twice on many Chinese products -- once for dumping and once for subsidies. Any advantage a company in China gets from a subsidy is already offset by steeper antidumping duties levied against non-market economies, they argue.
Coated Paper
Steel producers, such as Charlotte, North Carolina-based Nucor Corp., and textile makers say that expanded tariffs are necessary to protect them from unfair, subsidized Chinese competition.
The immediate case concerns a complaint by NewPage Corp. that low-cost imports of subsidized glossy paper from China, South Korea and Indonesia are harming its profitability.
The preliminary duties on South Korean paper products will be 1.76 percent with some companies exempted. Indonesian companies will have to pay 21.24 percent rates, Commerce also announced.
China's exports of coated paper more than doubled in 2006 to $224 million from their level in 2004, according to U.S. government data.
Decision to Be Published
Dayton, Ohio-based NewPage, the largest maker of coated paper in the U.S., has operations in Kentucky, Maine, Maryland and Michigan.
Importers of this paper will be charged these duties once this decision is published in the Federal Register. The duties will be adjusted -- and may be withdrawn -- in a final Commerce ruling that must be made before mid-October. After that decision, the U.S. International Trade Commission will rule one last time before the tariffs are officially imposed. If the ITC rejects the duties, companies will be refunded tariffs they paid.
Last Updated: March 30, 2007 13:08 EDT
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