A US trade panel last week approved an anti-dumping probe on grounds that the US steel industry has been affected by Chinese imports. It is estimated that nearly $2.6 billion worth of Chinese steel pipes used for oil production are involved in the investigation.

 

The China Steel Association is organizing its members, including the country's major steelmaker Baosteel, to prepare for an appeal, according to an announcement on its website. The association says it may bring the case to the WTO dispute settlement mechanism.

 

"Steel exports are market practices initiated by the enterprises themselves, and there is no dumping action from the Chinese side," the announcement said.

 

The case is one of several prickly trade issues between the US and China as trade protectionism is on the upswing amid the global economic downturn.

 

Several US steel pipe producers filed the case after imports of the product from China jumped to $2.6 billion in 2008 from $749 million in 2007. They said their sales have dropped and they have to lay off workers as a result of the import surge. The producers said China is engaged in dumping and they want the US government to impose duties of between 37 to 99 percent.

 

Li Yu, a lawyer hired by the steel association, said the main argument rests on the troubles for the US steel industry. The sales decline and unemployment are not necessarily caused by China's exports, and are more related to the fall in oil prices and the financial crisis, Li was quoted by a Chinese newspaper as saying.

 

"While the volume keeps increasing, the export price climbed as well, and that shows there is demand for products from China," Baosteel Group Co said in a statement.

 

"The roots for the so-called problem is the financial crisis, and it has nothing to do with China's exports," the country's largest steel producer said.

 

Tianjin Pipe Group Corporation, another major steel producer, has also protested against the investigation and called for the enterprises to unite together to appeal against the case.

 

"If the firms make their preparations early and use the right strategy, it is likely that they would be able to protect themselves and the interests of the whole industry," said an official with the Ministry of Commerce.

 

Many small and medium sized steel enterprises, however, have decided to exit the US market, as the appeal process is expensive and time consuming. Some enterprises do not plan to appeal against the decision, according to Jiang Qiusheng, spokesman, Shanghai Steel Pipe Association.

 

"They will turn to other markets when there are barriers in the US market," said Jiang. "Furthermore, even if the US does not initiate the anti-dumping case, its market is shrinking already," he said.

 

Trade protectionism is on the upswing amid the financial crisis. Over 13 countries and regions initiated 38 anti-dumping or anti-subsidy investigations against China during the first four months of the year, up by 26.7 percent than the same period last year, according to the Ministry of Commerce.