The U.S. Commerce Department on Wednesday delayed a decision on investigating whether China's currency practices are an illegal trade subsidy that justify imposing countervailing duties.
We are carefully considering the allegation in a case brought by U.S. aluminum extrusion manufacturers, said a Commerce Department official on condition that he not be identified.
We need additional time. Once we have a decision on it, we'll make a separate announcement, the official said.
Commerce agreed to launch a broader investigation into whether to impose both anti-dumping duties and countervailing duties of imports of aluminum extrusions from China, which totaled $514 million in 2009.
U.S. manufacturers have asked for anti-dumping duties of roughly 33 percent to offset what it says is China's below-market pricing as well as additional duties to offset government subsidies.
The Commerce Department action would mark the second time in a month that President Barack Obama's administration has delayed a decision involving China's exchange rate policy.
Earlier this month, U.S. Treasury Secretary Timothy Geithner announced he was delaying an April 15 decision on whether to label China a currency manipulator until at least June to give diplomacy more time to work.
The Commerce Department's decision to continue to kick the can down the road on investigating China's currency manipulation is yet another disappointment and shows the need for our legislation, said Senator Charles Schumer who is pushing a bill that would require the Commerce Department to investigate such currency complaints.
Western economists estimate that China's exchange rate is undervalued by as much as 40 percent against the U.S. dollar, giving Chinese companies an unfair advantage in trade.
In recent years, the Commerce Department has faced a number of petitions from industry groups asking for countervailing duties against China's yuan.
But Commerce has declined to investigate the matter, saying it did not think currency undervaluation met the statutory definition of a trade subsidy because it did not benefit a specific industry.
However, the Aluminum Extrusions Fair Trade Committee, an industry group representing companies in nine U.S. states, and the United Steelworkers union argued in their petition that China's undervalued currency specifically benefits the country's exporters as opposed to other sectors.
The Commerce Department needs additional time to evaluate the issue because the arguments are more complex than in previous submissions, the Commerce official said.
U.S. construction and automobile industries are two of the biggest consumers of aluminum extrusions, which are made by squeezing heated aluminum into a mold. Uses include doors and window frames, structural framing systems, roofing and exterior cladding.
Both Canada and Australia have already moved to curb imports of aluminum extrusions from China.
China's own aluminum extrusion industry suffers from severe overcapacity, due to massive expansions by both state and private producers in part to get around Chinese restrictions on aluminum ingot exports.