Wire rod antidumping case terminated: fallout to follow

Wire rod antidumping case terminated: fallout to follow

The International Trade Commission's (ITC) announced December 23 that wire rod imports from China, Turkey, and Germany do not cause material damage to the US wire rod mills. The decision took the industry by surprise and depending on what side you are on made for an especially merry or not-so-merry Christmas. In the following days there will be a lot of speculation as to what prompted this unexpected twist. Probably one of the best reasons is that the case was a weak one to start with and that the petitioners were probably outmaneuvered at the public hearing December 3 by the arguments of the US wire industry. The confidential numbers presented by the petitioners may have convinced the commissioners that the injury suffered by the US rod mills probably had more to do with the world market than with rod imports. The wire producers' eloquent argument that without imported rods they would have been out of their raw material last year undoubtedly left an impression. Also, there can be no doubt that the inclusion of high quality grades such the one suitable for tire cord use was a mistake. US wire rod mills cannot fill the entire range and all the needed tons for these critical grades. Be that as it may, the investigation has been terminated and it could well have an adverse impact on the overall rod supply. The market had anticipated supply problems by April 2006. That fear is gone and the current strong pricing trend could be reversed - at least in the short run. What will the US domestic rod mills do? Within the next 30 days they could appeal the decision of the ITC before the Court of International Trade (CIT). Even if the petitioners were to be successful in that court, no action can be taken against the three countries involved pending the final outcome of any appeal. Any decision by the CIT can be appealed again and, eventually, it will land before the COurt of Appeals. This scenario was played out during the previous wire rod antidumping. The petitioners had appealed ITC's ruling that Egypt, Germany, and Venezuela should be excluded. Four years later, there is still no final ruling from the courts. Furthermore, they could conceivably file another case in a few months or so when their numbers will better prove their claim of injury. They could go after China, the single largest exporter of rods to the US, under a different trade law. The so-called Section 421 applies to Chinese exports only and the procedure is a bit different. For one, it is faster, supposedly easier to prove injury, and the president has the last word, i.e. he has to confirm, modify, or reject the recommendations by the ITC.