Analysis
December 8, 2017
Final Thoughts
Written by John Packard
I have been pointing to the circumvention ruling as one of those “Black Swan” events that could come back to haunt the way importers do business. The section of the ruling that could potentially have the most teeth is the definition of what constitutes “significant transformation,” which allows substrate from one country to be converted by another thus changing the country of origin.
Here is what a Chicago area service center had to say on the subject: “I think the mills are in a great position. The ruling on the circumvention case will have strong effects even if Chinese substrate hasn’t been used there for a while and even if Vietnam imports into the U.S. have been declining all year. If HR being transformed to CR and HDG doesn’t count as significant transformation, wouldn’t it then be true that HR converted to line pipe wouldn’t be significant transformation either? And how about the other suppliers of HR to Vietnam who themselves have restrictions on shipping HR to the U.S., countries like Korea and Japan? I think this ruling may be bigger and more ‘expensive’ for the U.S. steel buying market than people realize. There’s all kinds of transformation going on with steel being used from countries that can’t ship HR/CR to the U.S. but where the country transforming doesn’t have those restrictions. The lawyers in trade will also be very busy/happy.”
