(Editor’s Note: This letter is a response to an article titled “July 1 ITC Ruling Decks Domestic Manufacturers” that appeared on www.TheMhedaJournal.org in July 2010. The defendant in the trade case asked that his lawyer be afforded the right to share their side of the story. Their letter is included below.)
Recently, the United States completed an extensive review of the Chinese wire decking industry, vindicating Chinese industry claims that sales of Chinese wire decks have not injured or threatened with injury the U.S. wire decking industry.
Countervailable Subsidies. Comments have been made that the Chinese government is not playing on a level playing field and is heavily supporting Chinese industry. In the final U.S. Commerce Department investigation, the Department examined dozens of alleged programs, but the two largest exporters were found to have benefited from countervailable subsidies of only approximately merely 3% each. This amount was derived mainly from a single countervailable program—the provision of steel inputs at “less than adequate remuneration” by state steel companies. When considering that Commerce regulations require it to add some 5% for import fees, more for delivery fees upon import, and 17% VAT to an “international benchmark” when measuring the subsidy and given the built-in bias in the comparison prices (fully delivered imported benchmark versus ex-factory domestic Chinese prices), the 3% countervailing duty margins were remarkably low. Indeed, these margins are relatively inconsequential, to the extent they exist at all in reality, and comparable to advantages a U.S. company may earn from negotiating with its local, state or federal governments for various grants. We note that U.S. industry did not appeal the Department’s final countervailing duty margins.
Antidumping Duties. Recently the Department of Commerce admitted errors in its margin calculations that brought the Eastfound Companies’ antidumping duty margin calculations from 42.61% to 3.52%. Eastfound, the preeminent exporter of this merchandise from China, was the supplier to Atlas Material Handling and later to Worldwide Material Handling. The other major exporter under investigation, Dalian Huameilong, received a revised antidumping duty margin of 18.8%. Various other participating exporters earned rates of 11.16%. As described below, because sales of Chinese decks to the United States were determined not to have injured U.S. industry, neither these antidumping nor the above countervailing duty rates will be collected on Chinese imports. Although U.S. industry has appealed the Department’s final antidumping duty margins, Commerce followed standard procedures in calculating the final rates with one exception. Commerce disregarded part of the price stated on Eastfound’s invoices, claiming it was only associated with international “freight revenue” on the deck sale rather than part of the overall revenue stated and received on the invoice. By denying that the total invoice price was attributable to the sale of the decks, Commerce artificially lowered Eastfound’s U.S. prices for the decks themselves, resulting in the already small final 3% margin, which otherwise was not legally significant or practically impactful considering that Chinese exports bear international freight costs not borne by U.S. industry.
Of particular interest, major U.S. petitioners admitted in public testimony that they were sourcing from China—but certainly not from Eastfound. This can only signify that U.S. petitioners themselves were the reason for imports sold at higher antidumping duty margins than those assigned to Eastfound. That said, the initially alleged rates of 42% to 438% were finally determined to be pure fantasy.
Lack of Injury to U.S. Industry. U.S. industry has filed a broad appeal of the ITC “no injury” ruling. However, the ITC is an independent body. The Commission carefully collected and analyzed reams of information and came to the conclusion that Chinese imports neither depressed nor suppressed U.S. price. Chinese suppliers reduced their U.S. shipments in line with the drop in U.S. consumption and did not take any market share away from the U.S. producers. The U.S. producers’ financial difficulties were due to the drop in demand resulting from the recession, which hit U.S. suppliers and importers alike.
What emerges from the detail of the three U.S. investigations is that the case against Chinese decks was vastly overstated from the onset of the filing of the petitions. Petitioners purchased steeply discounted Chinese decks at will to serve their own purposes while at the same time trying to knock out legitimate competitors such as Eastfound and Atlas/Worldwide by misuse of the U.S. trade laws.
— Gregory S. Menegaz, deKieffer & Horgan,
Counsel to Eastfound Companies and Worldwide Material Handling