Global Fastener News

U.S. Wire Rod Producers Reject Action on Export Taxes

Jason Sandefur

U.S. wire producers rejected a Section 301 petition against Chinese export restraints on key raw material inputs for making wire rod, opting instead to pursue the issue in a long-standing bilateral government/industry dialogue on steel under the U.S.-China Joint Commission on Commerce and Trade (JCCT).
“The decision comes in reaction to China’s placement of an export tax of 15% on wire rod, which is used to make a broad range of products from building materials for buildings or bridges, barbed wire, nails, chain, fasteners, cloth, and netting,” writes Dan Neumann of Inside US-China Trade.

Meeting in Washington DC, the American Wire Producers Association leadership voted against filing a 301 petition after a representative for the U.S. Trade Office discouraged the maneuver.

The industry is exploring other options, including participation in an as-yet unscheduled steel dialogue, a government and industry discussion held under the auspices of the JCCT. The U.S. and China have yet to agree to a meeting of the steel dialogue.

Export restraints are a clear violation of China’s WTO commitments, the industry contends.

China’s protocol of accession limits China to export taxes on 84 specific goods, none of which are wire rod.

Another option would be filing an antidumping or countervailing duty trade remedy case, the argument being that China’s restraints on exports act as a subsidy for domestic industry by lowering the price of wire rod in China, which is currently 40% cheaper than in the U.S.

However, a trade remedy case is unlikely because it’s expensive and would require multiple cases to be filed because wire rod is used in a range of products.

“The wire rod issue is distinct from export quotas and taxes on steel inputs,” Neumann writes. “No export quotas are being used, only export taxes. Similar to the steel dispute, however, China offers a rebate of its value added tax on finished wire products.” �2008 FastenerNews.com