The U.S. International Trade Commission (ITC) today announced the remedy proposals it will forward to the President and the U.S. Trade Representative (USTR) in its China safeguard investigation concerning circular welded non-alloy steel pipe from China.

Today's action follows the Commission's October 3, 2005, determination on market disruption in the investigation. Chairman Stephen Koplan and Commissioner Charlotte R. Lane voted in the affirmative, finding that circular welded non-alloy steel pipe from China is being imported into the United States in such increased quantities or under such conditions as to cause market disruption to the domestic producers of like products. Commissioners Jennifer A. Hillman and Shara L. Aranoff voted in the affirmative, finding that circular welded non-alloy steel pipe from China is being imported into the United States in such increased quantities or under such conditions as to threaten to cause market disruption to the domestic producers of like products. Vice Chairman Deanna Tanner Okun and Commissioner Daniel R. Pearson voted in the negative.

Chairman Koplan and Commissioner Lane announced that they will propose that the President impose an annual quota of 160,000 short tons on imports of circular welded non-alloy steel pipe from China for a period of three years. They further announced that they will recommend that, if applications are filed, the President direct the U.S. Department of Labor and the U.S. Department of Commerce to provide expedited consideration of Trade Adjustment Assistance for firms and/or workers that are affected by subject imports.

Commissioners Hillman and Aranoff announced that they will propose the imposition of a tariff-rate quota for a three-year period on imports of the subject welded non-alloy steel pipe from China. They will propose that such imports be subject to a tariff-rate quota with the within-quota quantity set at a level of 267,468 short tons in the first year of relief, and increasing by a rate of 5 percent in the second and 10 percent in the third year of relief. The proposed tariff-rate quota is based on 2004 imports from China. Imports over these quota levels will be subject to an ad valorem tariff of 25 percent. They further announced that they will recommend that, if applications are filed, the President direct the U.S. Department of Commerce and the U.S. Department of Labor to provide expedited consideration of any petitions for trade adjustment assistance filed by firms or workers affected by the subject imports.

Vice Chairman Okun and Commissioner Pearson announced that while they did not find market disruption to exist, they will submit their views on remedy to the President and the USTR, as provided for in the law and as has been done previously in section 421 investigations.

The Commission will submit its report to the President and the USTR by October 21, 2005. The report will include the Commissioners' determination, views, and remedy proposals. The President, not the Commission, will make the final decision whether to provide relief to the U.S. industry and the type and amount of relief.

The Commission's public report to the President, Circular Welded Non-Alloy Steel Pipe from China (Inv. No. TA-421-06, USITC Publication 3807, October 2005), will contain the views of the Commissioners and information developed during the investigation. A copy may be requested after November 11, 2005, by calling 202-205-1809 or writing to the Office of the Secretary, 500 E Street SW, Washington, DC 20436. Requests may also be faxed to 202-205-2104.

United States International Trade Commission
Investigation No. TA-421-6
Circular Welded Non-Alloy Steel Pipe

Commission Vote on Remedy
October 11, 2005

Statement of Chairman Stephen Koplan and Commissioner Charlotte R. Lane:

In accordance with Section 421 of the Trade Act of 1974 I have determined that imports of circular welded non-alloy steel pipe from China are being imported into the United States in such increased quantities that they are causing market disruption to the domestic producers of such pipe. Under Section 421(f) of that Act, I have the responsibility of recommending actions which will remedy the market disruption.

In making this recommendation I have considered relevant factors, including:

domestic and foreign production capacity and capacity utilization;
present and projected demand for subject pipe;
the quantity of subject imports;
pricing impacts;
elasticities of supply, demand and substitution; and
the material injury to the domestic industry, including the drop in employment levels experienced by production and production related workers in the industry.

Effective March, 2002, the President imposed temporary import relief on certain steel products, including subject pipe. Prior to the imposition of that import relief, subject imports were 163,866 short tons in 2000 and 157,035 short tons in 2001. Those levels of subject imports represented 6.4% of the domestic market in 2000 and 6.8% in 2002. While the market share of subject imports was 6.8% in the first half of 2004, it increased to 15.7% in the second half of 2004 and to 16.6% in the first half of 2005.

I have determined that the action necessary to remedy the market disruption caused by rapidly increasing subject imports is to limit those imports to levels that were experienced in 2000 and 2001. Therefore, I am recommending that the President impose an annual quota of 160,000 short tons on imports of circular welded non-alloy steel pipe from China. I further recommend that the quota be imposed for a period of three years.

An annual quota of 160,000 short tons represents the average of the 2000 and 2001 level of subject imports and, based on recent domestic consumption data, will allow subject imports to maintain a market share that is close to their 2000 and 2001 levels.

Finally, if applications are filed, I recommend that the President direct the U.S. Department of Labor and the U.S. Department of Commerce to provide expedited consideration of Trade Adjustment Assistance for firms and/or workers that are affected by subject imports.

Having earlier determined that certain welded non-alloy steel pipe from the People's Republic of China is being imported into the United States in such increased quantities or under such conditions as to threaten to cause market disruption to the domestic producers of a like product, we must now propose the amount of import relief necessary to prevent market disruption.

We have considered the relevant factors set out in the statute, the written and oral submission of all parties, and other information obtained in the investigation.

In arriving at our recommendation, we have considered the potential effects of various import remedies using all information and tools available to the Commission, including economic models the Commission has traditionally used to estimate the likely effects of import remedies. We considered the likely effect of these remedies on a broad range of factors, including import volumes and prices, industry revenues, and industry profitability.

In this investigation, we recommend the imposition of a tariff-rate quota for a three-year period on imports of the subject welded non-alloy steel pipe from China. We propose that such imports be subject to a tariff-rate quota with the within-quota quantity set at a level of 267,468 short tons in the first year of relief, and increasing by a rate of 5 percent in the second and 10 percent in the third year of relief. The proposed tariff-rate quota is based on 2004 imports from China. Imports over these quota levels will be subject to an ad valorem tariff of 25 percent. A tariff-rate quota at this level should prevent the domestic industry from experiencing the market disruption we have found to be imminent in light of the rapid increase in subject imports.

Finally, if applications are filed, we recommend that the President direct the U.S. Department of Commerce and the U.S. Department of Labor to provide expedited consideration of any petitions for trade adjustment assistance filed by firms or workers affected by the subject imports.

                    
                             (short tons)
     First Year          Second Year         Third Year     
     267,468             280,841             308,925



FACTUAL HIGHLIGHTS

U.S. Industry:

1.   Employment of production and related workers:
     a. January to Dec. 2004: 2,304
     b. January to June 2004: 2,451
     c. January to June 2005: 2,051
2.   Value of apparent U.S. consumption: 
     a. January to Dec. 2004: $1,819,421,000
     b. January to June 2004: $  862,842,000
     c. January to June 2005: $1,010,758,000
3.   Quantity of apparent U.S. consumption:
     a. January to Dec. 2004: 2,432,259 short tons
     b. January to June 2004: 1,288,509 short tons
     c. January to June 2005: 1,117,722 short tons
4.   U.S. producers' share of domestic consumption:
     a. January to Dec. 2004: 56.4 percent 
     b. January to June 2004: 62 percent
     c. January to June 2005: 51.6 percent
5.   Value of U.S. producers' shipments:
     a. January to Dec. 2004: $1,094,343,000
     b. January to June 2004: $  564,042,000
     c. January to June 2005: $  582,884,000
6.   Quantity of U.S. producers' shipments:
     a. January to Dec. 2004: 1,370,589 short tons
     b. January to June 2004:   798,984 short tons
     c: January to June 2005:   576,579 short tons
 
U.S. Imports:

1.   Value from China: 
     a. January to Dec. 2004: $153,937,000
     b. January to June 2004: $ 44,499,000
     c. January to June 2005: $120,821,000
2.   Quantity from China:
     a. January to Dec. 2004: 267,468 short tons
     b. January to June 2004:  87,890 short tons
     c. January to June 2005: 185,019 short tons

Section 421(f) instructs the Commission to propose the amount of increase in, or imposition of, any duty or other import restrictions necessary to prevent or remedy market disruption. The same section also states that members of the Commission who did not agree to the affirmative determination may submit, in the report to the President and the U.S. Trade Representative, eparate views regarding what action, if any, should be taken to prevent or remedy market disruption. While we did not find market disruption to exist, we intend to submit our views on this matter as has been done previously under section 421 investigations (e.g., Pedestal Actuators).