Attempts by Chinese pipe-makers to circumvent anti-dumping duties and compete unfairly with pipes manufactured at local companies like Vallourec Star, TMK IPSCO and Wheatland Tube will be blocked, the U.S. Department of Commerce has determined.
"It's a big win for us," said Scott Barnes, senior vice president and chief corporate officer for TMK IPSCO in Houston. "At our facility in Brookfield, this is the type of product that we produce and sell. Obviously we would not have filed the case if we did not think it was important to block the loophole."
Pipes known as "Oil Country Tubular Goods," or OCTG, imported from China now will be subject to anti-dumping and countervailing duties, according to federal documents released Monday.
Specifically, this case focused on whether alterations made to Chinese OCTG in other countries were enough to change the products' "country of origin." With the new Commerce Department ruling, OCTG made in China and finished in other countries now will face existing trade enforcement penalties.
Chinese manufacturers had been shipping unfinished pipes to third countries such as Indonesia and others, where the pipes were finished with a heat treatment and threading or coupling before being shipped to their final destination in the U.S. The pipes are used domestically in the oil and natural gas drilling industry.
Chinese companies had challenged a May 31 preliminary ruling on the topic, arguing that because the products leave the country of origin in an unfinished state, they should be excluded from duties on products finished within China.
The Department of Commerce ruled against that argument. The case involved pipe-dumping allegations lodged in 2012 by local pipe manufacturers Vallourec of Youngstown, TMK of Brookfield and Wheatland Tube Company of Wheatland, Pa., along with others.
TMK IPSCO's Barnes had testified before the International Trade Commission in a related steel dumping case in 2009. After the U.S. companies won that case, China began circumventing the ruling by shipping through other countries, Barnes said.
Barnes, reached after business hours, said he had not yet seen the determination and did not have access to specific dollar figures outlining the effect the imports have had on his company's profits, but called it "substantial."
He noted that while the case developed over the last several years, Chinese pipes continued to be imported without the anti-dumping duties.
Attorneys representing those companies in July had rebutted the Chinese arguments.
"The scope of the orders at issue here plainly applies to both finished and unfinished OCTG from China. There is no limitation in the scope as to the location of any finishing that is performed on the OCTG from China," they wrote in documents filed with the U.S. Secretary of Commerce.
''The Commerce Department's ruling is excellent news for Ohio's workers and manufacturers like those at U. S. Steel and Vallourec Star," U.S. Sen. Sherrod Brown, D-Ohio, said Tuesday. "This decision makes it clear that countries like China can't use loopholes to circumvent international law and evade anti-dumping and countervailing duties. Our steelmakers can compete with anyone in the world, and now we've taken a step towards leveling the playing field and protecting domestic jobs."
"This ruling is an important step forward in ensuring that American manufactured goods can compete with their global competitors on a level playing field," added U.S. Sen. Rob Portman, R-Ohio. "This is good news to the thousands of American workers who were threatened from the risk of watered-down protections which would have allowed cheap Chinese products to flood our domestic markets."
A message left seeking comment from Vallourec Star Tuesday was not immediately returned.
A determination is expected this week from the Department of Commerce in a separate trade case involving U.S. Steel's petition of alleged dumping of OCTG by Ukrainian companies.