A Big Victory for Chinese Steel Sector in U.S. Section 337 Investigations

In a recent update in ongoing Section 337 investigations in U.S. against Chinese steelmakers, a decision has been announced in the favour of China.

In April 2016, U.S.'s steel giant United States Steel Corporation (U.S. Steel) has filed a case with U.S. International Trade Commission (ITC) claiming that Chinese steelmakers are causing injury to the U.S. steel sector by has conspiring to fix prices, stealing trade secrets and circumventing duties by using false labeling. This case involved 40 Chinese steel companies including country's steel major Baosteel. This decision in favour of Chinese steelmakers stops a proposed ban on Chinese steel exports to the U.S.

The lawyers fighting case for Chinese steelmakers said that although the two claims - those of stealing trade secrets and circumventing duties - were dismissed in February and October 2017, winning over the 'anti-trust' claim was the most difficult hurdle to get over. Antitrust laws also referred to as "competition laws," are statutes developed by the U.S. government to protect consumers from predatory business practices by ensuring that fair competition exists in an open-market economy.

The case was given in favour of Chinese steel manufacturers on the grounds that the complainant (U.S. Steel) failed to prove that it had suffered any injury and subsequently it doesn't have any right to make the claim.

What is Section 337 Investigations?

Section 337 investigations conducted by the U.S. International Trade Commission most often involve claims regarding intellectual property rights, including allegations of patent infringement and trademark infringement by imported goods. Additionally, antitrust claims relating to imported goods can also be asserted.

The primary remedy available in Section 337 investigations is an exclusion order that directs U.S. Customs to stop intruding imports from entering U.S. In addition, the ITC may also issue cease and desist orders against named importers and other persons engaged in unfair acts that violate Section 337.

As compared to other investigations, which usually led to additional tariffs, this ITC order under section 337 is more fatal to an industry as it involves a complete ban on the imports from the named importers if found guilty. Often the cases under the section 337 investigations are related to high-tech products.

Other ongoing trade investigations by U.S. against China

U.S. president Donald Trump, on April 20, 2017, directed the Secretary of Commerce to conduct a Section 232 investigation on steel imports. That investigation led to the announcement of a 25% tariff on Chinese steel and a 10% tariff on aluminum in March 2018.

The Section 301 investigation initiated in Aug'17 has resulted in a 25% tariff on a broad range of Chinese origin products worth USD 50 billion.