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U.S. says China unfairly subsidized its aluminum firms

WASHINGTON — The Obama administration, under congressional pressure to take a tough stance on Chinese trade policies, determined Tuesday that Beijing unfairly subsidized $514 million in aluminum products last year.

The Commerce Department stopped short of making a stronger ruling on claims by U.S. leaders and manufacturers that an undervalued Chinese currency gives Beijing's exporters a lopsided price advantage.

For the subsidies it deemed unfair, the Commerce Department said it would impose countervailing duties ranging from 6.2 to 137.7 percent of the value of the imported aluminum extrusions, shapes squeezed out of aluminum.

The Obama administration wants to address worries by lawmakers who say the United States is losing jobs because China's currency policy keeps the yuan undervalued against the dollar and makes Chinese products cheaper here. But it also wants to preserve good ties with a country seen as crucial to dealing with global economic and environmental issues and with nuclear standoffs with Iran and North Korea.

On the politically sensitive currency issue, the Commerce Department refused to investigate allegations that China's currency practices are an unfair subsidy.

The U.S. aluminum companies that requested the duties alleged that the Chinese industry benefited from its currency policy. If Commerce had chosen to investigate the issue and decided that the currency was a subsidy, that could have opened up a wider range of imports to penalty tariffs.

Sen. Charles Schumer, D-N.Y., a regular critic of China, said the ruling was incomplete. "The Commerce Department made its finding while still managing to ignore the elephant in the room, which is China's currency manipulation. Even when the opportunity is thrust into its hands, the administration has refused to take action," Schumer said in a statement.

Lawmakers have called for imposing stiff penalties on Chinese imports if China doesn't move more quickly to revalue its currency. The Obama administration, however, has so far focused on targeting individual Chinese industries.

The United States and China are also arguing over access to each other's markets for tires, steel, movies, music and other goods.

"What the administration is doing here is like a pressure valve for the Congress," said Derek Scissors, a specialist on Asian economies at the Heritage Foundation think tank. "It's a natural response to not wanting to infuriate the Chinese on currency but wanting to do something about the fact that China's a trade predator."

The Commerce Department in April launched an investigation into whether certain Chinese aluminum products were being dumped, or sold at improperly low prices, because of government subsidies or other aid. Commerce is set to make its final determination in the aluminum case in November.

The U.S. aluminum companies argued that Chinese aluminum exporters benefited from a range of government help, including tax breaks, low-interest loans from state banks and subsidized rents.

U.S. says China unfairly subsidized its aluminum firms 08/31/10 [Last modified: Tuesday, August 31, 2010 10:42pm]
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