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Tuesday, August 10, 1999 Published at 01:25 GMT 02:25 UK

World: Americas

US rejects oil dumping action

The world's largest producer, Saudi Arabia, is among those accused

By Peter Greste in Mexico City

The United States Department of Commerce has thrown out an anti-dumping petition against four of the world's biggest oil-producing countries.

A coalition of independent American oil producers had filed the petition accusing Mexico, Venezuela, Saudi Arabia and Iraq of dumping cheap, subsidised oil on the American market.

Ever since the coalition, calling itself Save Domestic Oil, launched its action, there have been dire warnings of bitter trade disputes and artificially-inflated energy prices for American consumers.

[ image: Campaigners said subsidised foreign oil damaged US producers]
Campaigners said subsidised foreign oil damaged US producers
But after an extensive review of the petition, the US Commerce Department ruled that there was more opposition to the action than support from within the US oil industry.

Without adequate industry support, the department is prohibited by law from initiating investigations, a department statement said.

The cases are closed and no further action will be taken.

Potential havoc

It has been a tense few months for the countries accused of dumping cheap oil on the US market.

The petition had all the potential to create havoc both inside the US and among the four exporters.

One analyst said it was one of the biggest anti-dumping cases ever filed.

Save Domestic Oil alleged that the four countries had all poured millions of barrels of cheap subsidised oil onto the US market late last year and early this year, causing irreparable damage to oil producing communities.

The coalition wanted the Commerce Department to apply punitive tariffs in response.

But Venezuela is the US's biggest foreign supplier of oil, followed by Mexico, and both countries depend on their oil exports to the US to keep their fragile economies afloat.

Punitive tariffs would have devastated both economies and sharply lifted domestic energy prices inside America.

Now, though, there is only relief. Within minutes, Mexico's energy minister said his country would end a tariff on natural gas imports from the US that had been imposed in response.

But the issue is not quite dead yet. Save Domestic Oil plans to appeal the ruling, although that could take years.

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