China and US May Be Heading Toward WTO Case over Steel Dumping and Tariffs

June 29, 2016International Tradeby EW News Desk Team

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China and the United States are set to square off in a suit before the World Trade Organization (WTO) regarding a brewing dispute over steel imports. China, along with several other countries, has been exporting large quantities of corrosion-resistant steel to the United States at rates domestic producers cannot match. As a result, the US has raised tariffs and may take anti-dumping measures. Meanwhile, China has threatened suit if the US does this.

The US International Trace Commission announced last week that imports of the corrosion-resistant steel had been harming US producers. The steel in question has been imported from China, as well as Italy, India, Taiwan, and South Korea. Announcing the harm foreign imports are causing to domestic producers is the final step before imposing anti-dumping fees under WTO rules.

At this point, the US has already imposed duties of up to 450% on Chinese steel, as well as duties between 3% and 92% for steel from Italy, India, South Korea, and Taiwan. These fees are meant to force foreign suppliers to withdraw their goods from the US market by eroding any possible income derived from their sale at a price equal to or lower than US suppliers can match.

China believes these measures go too far, and amount to anti-competition measures. “China’s steel industry export interests will suffer a serious impact and the Chinese steel industry is strongly opposed to this,” a Chinese official said in a written statement. “With regard to the United States’ mistaken methods that violate WTO rules, China is and will continue to take all measures, including filing suit at the WTO, to strive for fair treatment for enterprises and safeguard their export interests.”

China is the world’s biggest producer and consumer of metal. The Chinese government has been attempting to reign in overcapacity production for months, but has had little success. As a result, disputes continue to escalate around the world. Although its most recent statements place the blame on US policy, China has previously acknowledged its own fault in these disputes, as well as the falling demand from foreign buyers.

Nevertheless, should the US continue to engage in its protectionist policies benefiting the US steel sector, China appears ready to escalate the dispute to legal action before the WTO. Legal experts are divided on what the outcome of such a dispute could be, given the legitimate concerns on both sides of the conflict. Such action, however, will likely escalate conflicts with other nations as well and could lead to a protracted, multilateral legal battle.