Gov't lifts dumping bond on Russian steel imports

The Department of Trade and Industry (DTI) has lifted the dumping bond on imported steel from Russia following the closure of the National Steel Corp. (NSC) which filed the original petition asking for protection against dumped products.

Downstream users of Russian steel billets lauded the move, but other billet makers are still lobbying for government to extend the imposition of the bond despite NSC's closure, arguing that there are other steel billet makers being hurt by Russian imports.

However, the DTI lifted the imposition of the bond and said it could consider the pending petitions first to determine whether the extension would be warranted and allowable under the rules of the World Trade Organization (WTO).

The bond was lifted last week by an order issued by Trade Undersecretary Lilia Bautista. This will allow importation of Russian steel to resume without the added burden of posting an anti-dumping bond.

Under WTO rules, anti-dumping bonds can only be imposed for a certain period and would have to be lifted eventually since it is a form of protection and trade restriction.

The WTO also requires that anti-dumping bonds be imposed only if the dumped products cause injury to a domestic industry.

According to the DTI, the closure of NSC effectively removes the second condition since a domestic industry no longer exists with the NSC having ceased producing steel billets.

A top DTI official explained that while other local steel billet manufacturers are seeking for protection under the anti-dumping bond rule, the department has first to determine whether they qualify as a domestic industry based on specific definitions provided under WTO rules.

To be considered a domestic industry under the rules of WTO, you have to be a manufacturer that doesn't use the product yourself or import the same for use in the production of your downstream products," the official explained.

"Otherwise, you won't qualify for protection through the imposition of anti-dumping bonds on competing imports."

According to the official, the remaining steel billet makers were mostly downstream producers which use the billets for their downstream operations. Most of them also import steel billets to supplement their own billet production.

"We have to establish first if a domestic industry still exists," the official said. When this question is settled, the official said government will have to determine where to impose the anti-dumping bond.

The bond was originally imposed on 3Mx6m steel billets but the official said there were no mechanisms to stop leakages because importers can import bigger billets and just cut them down to the size required by domestic users.

"Steel Asia, for instance, has a plant calibrated to handle 12x12 billets, anything smaller than this would compromise its sufficiency," the official said. "The DTI's worry is how to prevent leakages because a 12x12 billet is easy to cut down to the usual sizes required by other billet users."

One possibility being considered, according to the official, was to impose the bond on all Russian billets regardless of dimensions. This way, all imports coming from Russia would be equally covered by the anti-dumping bond and leakages would be pointless.

The official said government will also have to consider the impact of current prices on whether the bond is necessary in the first place since Russian steel is no longer as cheap as when the bond was first imposed.

Since the closure of the NSC, prices have gone up from $145 per metric ton to $190 per metric ton as Russian exporters have taken advantage of the fact that Philippine importers have no other source of steel billets.

The official said current prices may not even be considered as dumped prices, thus making the issue moot and academic. -