On November 14 and 17, the U.S. Department of Commerce (Commerce) published initiation notices for anti-circumvention inquiries on the antidumping and countervailing duty orders on corrosion-resistant steel and cold-rolled steel products from China. According to the Tariff Act, Commerce can find circumvention of an antidumping or countervailing duty order when a product of the “same class or kind” of merchandise subject to the order is completed or assembled in a foreign country other than the country under the order.
At the heart of these investigations are the allegations made in late September by U.S. steel producers, including AK Steel, United States Steel, Nucor, ArcelorMittal USA, Steel Dynamics, and California Steel Industries that Chinese companies, including the state-owned China Minmetals Corporation, are shipping Chinese produced hot-rolled steel to Vietnam, then making minor or insignificant alterations to create cold-rolled or corrosion-resistant steel to be shipped to the United States under lower duty rates applicable to Vietnamese steel products. The U.S. producers also allege that Chinese steel makers are also sending some Chinese-produced cold-rolled steel to Vietnam to make corrosion-resistant steel. At the conclusion of investigations by Commerce earlier this year, Chinese imports to the United States of cold-rolled and corrosion-resistant steel became subject to antidumping and countervailing duty rates between 238 percent to 456 percent.
After the antidumping and countervailing duty investigations were initiated against Chinese cold-rolled and corrosion-resistant steel imports, volumes of those imports to the United States fell dramatically. As volumes of Chinese products fell, imports of those products from Vietnam, however, increased dramatically. In the first half of 2015, Vietnam shipped 8,686 short tons of cold-rolled steel to the United States. In the first half of 2016, Vietnam shipped 173,094 short tons of cold-rolled steel, an amount almost 20 times greater than during the same period in the prior year. This significant increase is astounding, because Vietnam has no installed capacity to make steel flat products or hot-rolled coil, the input products for both cold-rolled and corrosion-resistant steel.
Commerce will make a determination on these inquiries within 300 days of the day of the publication of the initiation notices, i.e., on or before September 7, 2017 for corrosion-resistant steel and on or before September 10, 2017 for cold-rolled steel.
The United States is not the only country concerned about circumvention schemes used to avoid paying duties on Chinese steel products: Brazil and Australia both took action against circumvention schemes involving steel products from China in the last few years.
