January 21, 2003	Tuesday	Ziqa’ad 17, 1423

BEIJING, Jan 20: China said Monday it will exempt some imported steel products from additional tariffs when they reach their import quota ceilings after complaints from domestic manufacturers.

The Ministry of Foreign Trade and Economic Cooperation (MOFTEC) said on its website that steel including cold-rolled thin sheets, cold-rolled stainless thin plates and colour-coated sheets, would now be exempt from the tariffs beginning from February 1.

MOFTEC’s move came in response to complaints by domestic companies, especially electrical appliance manufacturers, that the higher cost of steel was hitting profit margins and reducing competitiveness.

They accused the ministry of protecting domestic steel makers at the expense of other companies, the China Daily reported.

MOFTEC announced on November 19 it would impose additional tariffs of between 10.3 per cent and 23.2 per cent on imports of five categories of steel which exceeded the quota in a bid to protect its steel market and steel producers.

The ministry said then that import quotas for the five products would be set at 5.1 million tons from November 2001 until May 2002 and be increased to 11.3 million tons from May 2004 to May 2005 when the safeguard measures would be lifted.

The move followed a steep rise in imports as a result of sharply lower import tariffs and the removal of quotas after China’s entry into the World Trade Organization (WTO) in December 2001.

The announcement also followed a controversial United States tariff on steel imports in October 2001.

The US International Trade Commission narrowly voted in favour of a request for relief by US manufacturer Motion Systems Corp and recommended implementing import quotas.

However, local manufacturers claimed the move would cut profits and force them to hike prices.

Yu Xiaochang, vice-president of Galanz, the world’s largest producer of microwave ovens, has said the higher steel prices would raise the company’s costs by one billion yuan (120 million US) this year.

This would leave it with little choice but to hike prices by about 30 per cent.

Countries affected by the tariffs include Japan, Russia, South Korea, Kazakhstan, Ukraine and the European Union.

Japanese steel makers were the most affected by the measures as Japan is China’s biggest source of steel imports, providing 20 per cent of the total. Japan exported some 4.6 million tons of steel to China last year.

China imported 10.09 million tons of the five steel products in 2001, equating to 58.61 percent of the nation’s total steel imports of 17 million tons, according to official statistics.—AFP