China Slaps Duties On Steel Imports

China slapped antidumping tariffs as high as 55 percent on cold-rolled steel products from five countries, in a move aimed at protecting its booming steel industry.

The trade sanctions have been imposed less than a month after China scrapped safeguard duties on five steel imports, including some cold-rolled steel products, in reaction to a similar move by the U.S. to abandon its tariff regime.

The decision to impose antidumping duties on cold rolled steel could re-ignite international trade friction particularly with some of China's near neighbors.

The duties affect imports from specific steel mills in South Korea, Taiwan, Russia, Ukraine and Kazakhstan accused of dumping cold-rolled steel products on the Chinese market.

China lifted its safeguard measures, which applied to all importers, last month after the U.S. announced it would scrap its 20-month-old steel tariff regime, ruled illegal by the World Trade Organization.

China's across-the-board safeguard duties, imposed in November 2002, were a retaliatory measure against a possible diversion of cheap steel products to its own market after the U.S. decision to levy tariffs on a range of imported steel.

The antidumping tariffs directed against the five steel producing countries, effective for five years, had been suspended pending the outcome of a WTO challenge to the U.S. duties. China was one of a dozen signatories to the WTO complaint, its first since joining the global trade body in late 2001.

Under WTO rules, temporary safeguard tariffs can be used if a country can prove that a sudden surge in imports is hurting its industry. Antidumping tariffs can be levied if the local industry is hurt by imports sold below the price of production in the country of origin.

China has been relying heavily on imports to make up for a shortage of locally made supplies of cold-rolled steel products, used by auto and home-appliance makers.

The tariffs also come at a time of mounting concern about oversupply of other steel products in China.

Rising demand for steel has prompted a massive investment in the expansion of China's capacity, but not entirely at the high-end where the shortfall in local supplies is greatest.

But steelmakers expect the increased capacity, when it eventually comes online, to offset any price rises caused by the new antidumping regime.

Sales and profits at the three companies that made the antidumping claims, China's largest steelmaker, Shanghai Baosteel Group, Anshan and Wuhan Steel Processing Co., have boomed in recent years despite the concerns about unfair competition from foreign producers.

Wuhan Steel, a unit of one of China's top five steel groups, said the antidumping duties will help restore "normal market order" and help its own profitability. An official at Baoshan Iron & Steel Co., the listed arm of Baosteel, said the impact won't be great as the duties only apply to imports from specific regions rather than across-the-board. Dow Jones