WTO Rules Chinese Tariffs on U.S. Steel Products Are Illegal

China broke global commerce rules by imposing anti-dumping and anti-subsidy duties on more than $200 million of U.S. steel products, the World Trade Organization said in a ruling today.

Judges agreed with the U.S. that China failed to prove that imports of grain-oriented flat-rolled electrical steel, produced by companies such as West Chester, Ohio-based AK Steel Holding Corp. (AKS) and Pittsburgh-based ATI Allegheny Ludlum Corp. had caused injury to Chinese rivals. The panel also found that China began its anti-subsidy proceedings without adequate evidence showing U.S. companies were receiving illegal government aid.

“China simply has to play by the rules to which it agreed when it joined the World Trade Organization 10 years ago,” U.S. Trade Representative Ron Kirk said today on a conference call with reporters.

President Barack Obama’s administration has engaged in trade disputes with China over issues including tires, raw materials, auto parts, electronic-payment services and wind power, Kirk said. He called today’s decision a “significant victory.”

China, the world’s biggest steel market, announced provisional anti-dumping and countervailing levies on the specialty-steel products, used in large electric machines such as transformers and reactors, in December 2009. The anti-dumping duties were set at 7.8 percent to 64.8 percent and countervailing duties at 11.7 percent to 44.6 percent in 2010.

Chinese Position

The Chinese mission to the WTO said in a statement from Geneva that judges backed China’s “key claims” and ruled in favor of its use of “facts available” in calculating “subsidy rates, the disclosure of information on the dumping margins and the disclosure of information on the subsidy benefit relating to the government purchase of goods.”

Chinese steel producers Wuhan Iron and Steel Corp. and Baosteel Group Corp. (600019) accused AK Steel and ATI Allegheny of benefiting from subsidies provided under U.S. federal and state laws and engaging in injurious dumping.

“By unfairly restricting imports of American steel, China has for too long attempted to tilt the playing field for the global steel trade in their direction,” Leo W. Gerard, president of the United Steelworkers of America (USW), said in a statement. The WTO’s action is an “important step toward leveling the playing field” for U.S. workers, he said.

The U.S. argued that China didn’t follow WTO procedures by failing to disclose the facts underlying its legal conclusions and not explaining its calculations.

Both governments have 60 days to appeal the panel’s findings. China said it “will conduct further evaluation and reserves the right to appeal.”

To contact the reporter on this story: Jennifer M. Freedman in Geneva at jfreedman@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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