The US government is to impose massive new duties on oil industry drill pipes and drill collars bought from China after a knife-edge decision designed to win back American firms more than US$170million in lost sales.
The International Trade Commission (ITC) decided to impose anti-dumping duties and a countervailing tax, designed respectively to raise the price on cheap imports and neutralise any subsidies, despite a split vote of 3-3. Even ITC chairman Deanna Tanner Okun voted against it.
However, according to US law, in the event of a split vote the ITC will act in favour of US industry. It means that from February 24, most of the Chinese producers affected will be hit with an anti-dumping duty of 429.95 per cent plus a countervailing duty of 18.18 per cent, according to the US Department of Commerce. Although three of the Chinese companies will face a reduced anti-dumping tax of 69.32 per cent.
The taxes are a reaction to a doubling of US imports of Chinese drill pipes - from US$80.42million in 2006 to US$170million in 2008 - as China's share of the US market went from 11.5 per cent to 20.9 per cent, according to the ITC.
From 2006 to September 2009, American producers' share of the US market fell from 86.4 per cent to 74.4 per cent. At that time, they provided 1,204 jobs.
'We invented these products a hundred years ago,' said Roger Schagrin, a lawyer for the US producers. Without duties, 'we would be dependent on imports from China for this critical industry', he told Bloomberg.
Edmund Sim, a partner at international law firm Appleton Luff, warned: 'This move can encourage US industries to file more cases against China. This can have a negative effect on US-China relations.'