May 20, 2016
China Confirms Export Support, As US Hikes Steel Duties

The day after the US Department of Commerce (Commerce) imposed final anti-dumping (AD) and anti-subsidy countervailing duty (CVD) on imports from China of cold-rolled steel flat products, the Chinese Ministry of Finance (MOF) issued a policy document confirming its financial support to the domestic steel industry, including export duty rebates.

On May 17, Commerce announced its affirmative final determinations to impose ADs on imports of cold-rolled steel flat products from China and Japan, and CVDs on imports of the same products only from China.

With respect to the investigations on Chinese imports, Commerce reported that no Chinese company had responded to its requests for information, and therefore all producers/exporters in China have received a final AD margin of 265.79 percent, and a final CVD rate of 256.44 percent, "based on adverse facts available." In comparison, all producers/exporters in Japan have received a final AD margin of 71.35 percent.

As a result, Commerce will instruct US Customs and Border Protection to collect cash deposits from US importers equal to the applicable dumping margins. The US International Trade Commission is expected to make its final AD and CVD determinations on June 30, 2016.

While imports of cold-rolled steel flat products from China and Japan in 2015 were only valued at an estimated USD272.3m and USD138.6m, respectively, the increased level of the ADs and CVDs imposed by Commerce on the Chinese imports is being seen as unprecedented.

The dispute is also only one of many affecting steel imports into the United States from China, with others involving, for example, carbon and alloy steel cut-to-length plate, non-oriented electrical steel, corrosion-resistant steel products, and stainless steel sheet and strip. In addition, the imposition of the high duties by Commerce follows a meeting of steel-producing countries last month. Attendees were unable to agree on a way forward to resolve the excess production capacity in the global steel sector.

The Chinese Ministry of Commerce reacted to Commerce's latest determinations by reemphasizing that the current global steel industry overcapacity is down to "shrinking global demand and the economic downturn," and that "simply imposing trade protection measures" will not solve a problem that can only be resolved by working together "to achieve mutual benefit and [a] win-win situation."

However, at the same time, MOF reiterated its continued financial and tax support for the steel industry in China. In a document published on May 18, MOF confirmed that, while it will actively work to reduce steel overcapacity, the policy will take some time to resolve.

Although MOF is to provide RMB100bn (USD15.3bn) in special funds mainly to support job redundancies, as mergers and bankruptcy lead to the exit of loss-making companies from the sector, it said that continued preferential tax policies will also be required to help fund the costly industrial restructuring in the interim.

In that respect, steel export tax rebates will remain available to Chinese producers. As part of a general export development program, China's tax authorities have also recently promised to accelerate the mechanism for obtaining export tax rebates, so as to ensure their full and timely payment.

Source:TAX-NEWS