US investigates alleged sops for extrusion firms
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The United States Commerce Department said on Thursday it will investigate whether Chinese aluminum extrusion manufacturers have received government subsidies and dumped products at rates below the average market price in the US.
But the department didn't say whether it would probe allegations that China subsidized exports of aluminum extrusion products by undervaluing its currency.
American producers of aluminum extrusion, who recently claimed that Chinese producers enjoyed a subsidy equivalent to $514 million due to the foreign exchange policy, petitioned the US government for duties on imports of Chinese aluminum extrusions, mainly used in the construction and automobile sectors.
A report from Guotai Jun'an Securities pointed out that Chinese aluminum extrusion manufacturers, who target the low end of the overseas market, would have their exports and profits squeezed if Washington imposed anti-dumping and anti-subsidy duties.
China's aluminum exports account for 8.4 percent of total output, and exports to the US make up 1.6 percent. Chinese aluminum exports in the first quarter of 2010 doubled from a year earlier.
"A more noteworthy issue is that Chinese exports in a wide range of other industries would be continuously challenged by the US in the future when there is trade surplus (with the US) and a large-scale revaluation of the yuan did not happen," said He Weiwen, an executive council member of China Society for World Trade Organization Studies.
Since late 2008, China and the US have been involved in a number of trade conflicts over tires, poultry, automobiles and steel products.
China's Ministry of Commerce said, starting on Thursday, the nation will levy anti-dumping duties on "nylon6" imports for five years from the US, European Union and Russia as the imports had hurt local industry.
And last week, the Chinese government decided to impose anti-dumping and anti-subsidy duties on flat-rolled electrical steel from the US and Russia.
China is under pressure from the US to revalue its currency, with Washington claiming that the nation's producers are currently at a disadvantage.
But the US government decided on April 3 to delay a report due to come out in mid-April on whether to label China a "currency manipulator".
"The US can hardly start the investigation into the aluminum complaints if the report has not been released and the Obama administration does not make any official statement on the currency issue," said He.
