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US says to drop China currency probe

(Xinhua)
Updated: 2010-09-01 09:36

WASHINGTON - US Commerce Department announced on Tuesday its decision not to initiate investigation on allegations that China's currency practices constitute an unfair subsidy.

The currency allegations under review were made in the context of countervailing duties (CVD) investigations of two Chinese products -- aluminum extrusions and coated paper.

"Two allegations before it that China's currency practices constitute an unfair subsidy under US countervailing duty law failed to meet the requirements for the initiation of an investigation," the Commerce Department said in a statement.

"Today's currency decision was based on a careful evaluation of the specific legal arguments and evidence put before the department, in relation to the standards for the initiation of an investigation under the CVD law," Deputy Assistant Secretary for Import Administration Ronald K. Lorentzen said.

"In these two cases, the Department has determined not to investigate whether the alleged undervaluation of China's currency, the RMB or yuan, is a countervailable subsidy," it said.

Lorentzen said the department made the decision because "the allegations made by domestic producers do not meet the statutory standard for initiating an investigation under the requirement that benefits provided under China's unified foreign exchange regime be specific to the enterprise or industries being investigated."

However, in a preliminary determination, the Commerce Department ruled that 514 million dollars of aluminum products imported from China in 2009 were unfairly subsidized. As a result, importers of Chinese aluminum extrusions will be required to post cash deposits or bonds at rates determined by the department.

Aluminum extrusions are shapes and forms produced via an extrusion process of aluminum alloys, generally used in construction applications, incorporated into window and door frames, and serving as parts for vehicles and furniture.

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The preliminary determination found that Chinese producers or exporters have received countervailable subsidies ranging from 6.18 to 137.65 percent.

If the Commerce Department makes a final determination that Chinese exporters or producers received an unfair subsidy under international law, and the US International Trade Commission finds that domestic industry was harmed, those imports would be subject to countervailing duties.

The Commerce Department is currently scheduled to make its final determination in this case in November.

The move came days after the Commerce Department announced a package of 14 proposals to strengthen trade remedy measures. These steps aim to support President Barrack Obama's National Export Initiative (NEI), which aims to double exports in the next five years and support the creation of several million new jobs.

Analysts said those measures were not in line with the US leaders' promises to fight various forms of protectionism, and might trigger more trade disputes with its trade partners.