SAN ANTONIO, Texas -- An initial review of U.S. copper trade with China indicates there has been unfair trade in some products, according to a senior Commerce Department official.

He would not say much more, however, because it is likely his office soon will be involved in an official fast-track investigation of copper scrap trade with Asia.

Robert C. Reiley, director of the Commerce Department's office of metals, materials and chemicals, told attendees at the annual meeting of the Wayne, Pa.,-based Copper & Brass Servicenter Association that his agency's initial tallies of data from the past two years showed sharp increases in U.S. exports of copper scrap.

On average, exports had increased 55 percent during the period, he said, with exports to China up 84 percent and exports to South Korea up 71 percent. "Does the data lead to a conclusion that maybe there is a problem with exports of scrap from the United States?" Reiley asked. "We have to investigate that, but it certainly looks that way to me."

Reiley said the Copper and Brass Fabricators Council, Washington, and the Non-Ferrous Founders' Society, Park Ridge, Ill., were expected to file a petition soon under the Export Administration Act to seek export controls on copper scrap.

Such a petition would be the first attempt to pursue export controls in about 30 years, Reiley said. A separate petition for use of the act to control ferrous scrap exports was being prepared by the Emergency Steel Scrap Coalition, whose members include the Steel Founders' Society of America, Crystal Lake, Ill., and the Steel Manufacturers Association, Washington.

Reiley said he was unable to comment in depth about the planned litigation since he was expecting to be part of the investigating team, which will be under a tight deadline of about 90 days to investigate and make a decision on the filing.

The export law limits investigations to only 30 days and sets short deadlines for decisions, which is one of the reasons the law was being revived and other trade remedies were not being pursued, Reiley explained.

The Commerce Department official said the U.S. copper industry had been aggressively pursuing the steps necessary to be competitive in world trade, but the problems the industry was facing appeared to be coming from outside.

"You're in a transparent industry, you've decreased your costs, you've increased your productivity and you've got an aggressive marketing program," he said. "Is there unfair trade in copper? I would submit that the evidence is yes, there is."

Reiley said the Commerce Department also was reviewing information on China's value-added tax (VAT) rebate system "that leads us to believe that maybe it is not being administered in the way that it is supposed to."

He said the department also was looking into copper pricing on the Shanghai Futures Exchange. "We note that over the past several years the price of copper on the Shanghai exchange has been consistently about 40 percent above the price of copper on the London Metal Exchange and the Comex," Reiley said. "We've asked the Chinese about that and they've explained to us that that price includes freight, the value-added tax and a number of other things which have been in the industry for years.

"One has to wonder how that kind of a price differential can be sustained and why it's there in the first place."

Reiley said senior officials had met with the Chinese on the issues in an attempt to gain better understanding of the situation, which had been under review by the Commerce Department for more than a year.

Joseph D. Rupp, chairman of the Copper and Brass Fabricators Council and the president and chief executive officer of Norwalk, Conn.,-based Olin Corp., made similar unfair-trade charges regarding Chinese copper activities at a congressional hearing Thursday.

Rupp mentioned the undervalued yuan, the suspected refund to Chinese importers of copper-based scrap of most of the VAT when downstream products made from that scrap are subsequently exported from China, and other reported subsidies as key factors in creating the alleged unfair trade situation.

"It is also possible that imports of copper-based scrap into China are not being properly classified and valued and are consequently not paying full import duties and other taxes," Rupp told lawmakers at a House Small Business Committee hearing called to look into metal pricing spikes.

Rupp also testified that there were reports of counterfeiting involving copper tube, in which products manufactured in China were labeled as being of U.S. origin and then sold in third-country markets that council members traditionally had supplied.