Major U.S. Steel Companies Allege Massive AD/CVD Circumvention Scheme

Four of the largest U.S. steel companies have petitioned the Department of Commerce to investigate and issue a preliminary ruling that steel imports from Vietnam are circumventing the antidumping and countervailing duty orders (“the Orders”) on imports of corrosion resistant steel (“CORE”) from China.  The Petition, filed on September 23, 2016, alleged: “immediately after the Department imposed provisional duties on imports of CORE from China beginning in November 2015, Chinese producers began to divert merchandise through Vietnam to undergo minor processing to complete the subject merchandise, and subsequently to export the finished CORE product to the United States to avoid antidumping and countervailing duties.”  The Petitioner companies, ArcelorMittal USA LLC. Nucor Corporation, United States Steel Corporation and AK Steel Corporation, requested that the Department of Commerce should determine (1) imports of CORE from Vietnam are circumventing the Orders, and 2) such imports from Vietnam should be treated as subject to the Orders with duties imposed accordingly.

The anti-circumvention Petition comes on the heels of the original Orders, which implemented cash deposit rates on CORE imports from China ranging from 26.26 percent to 235.66 percent on November 6, 2015.  The final Orders were published on June 2, 2016 and assessed final countervailing duty rates of 39.05 percent to 241.07 and a final weighted-average dumping margin for all Chinese exporters of 209.97 percent.

The Orders immediately began to achieve the desired effect: to reduce the level of unfairly priced imports of CORE from China.  U.S. imports of CORE from China declined dramatically from nearly 1 million short tons in 2014 to only 20,000 short tons from January 2016 to July 2016.  However, at the same time U.S. imports of Chinese CORE were dropping, U.S. imports of CORE from Vietnam began to surge.  CORE imports from Vietnam were only 2,688 short tons from January to July 2015, then in the last five months of 2015 (August-December) imports increased 10-fold to approximately 30,000 short tons.  Imports continued to balloon reaching 165,950 short tons in the first seven months of 2016, up 61,000 percent from the same time period one year earlier.

To accomplish this massive circumvention scheme, Chinese steel companies are exporting steel, with identifying characteristics that distinguish the products as Chinese steel, to Vietnam for minimal additional processing and then ship the steel to the United States.  To stop this scheme, the American companies requested the Department of Commerce to initiate a circumvention inquiry to investigate its allegations and due to the exceptional circumstances simultaneously 1) issue a preliminary finding of circumvention, 2) suspend liquidation of entries and 3) require cash deposits for inquiries of CORE from Vietnam.  The Petition also explains the Department is permitted to issue such simultaneous remedies under the Tariff Act of 1930, has done so in the past and should do so in this instance.

Commerce has 45 days from receipt of the Petition on September 23 to issue a ruling.  Hopefully, Commerce will grant these American companies their requested relief and provide the steel industry and the American economy the relief that should have originally been afforded by the Orders.