U.S. pur­sues ob­scure trade cases abroad

The News-Times - - BUSINESS -

Pres­i­dent Don­ald Trump’s high­pro­file trade of­fen­sives have grabbed head­lines and rat­tled fi­nan­cial mar­kets around the world. He’s bat­tling China over the in­dus­tries of the fu­ture, stron­garm­ing Canada and Mex­ico into re­shap­ing North Amer­i­can trade and threat­en­ing to tax cars from Europe.

But his trade war­riors are fight­ing dozens of more ob­scure bat­tles — over lam­i­nated wo­ven sacks from Viet­nam, dried tart cher­ries from Tur­key, rub­ber bands from Thai­land and many oth­ers.

Un­der the radar, the Trump ad­min­is­tra­tion has launched 162 in­ves­ti­ga­tions into al­le­ga­tions that U.S. trad­ing part­ners dump prod­ucts at cut-rate prices or un­fairly sub­si­dize their ex­porters — a 224 per­cent jump from the num­ber of cases the Obama ad­min­is­tra­tion pur­sued in the same time in of­fice.

If the U.S Com­merce Depart­ment finds that U.S. com­pa­nies have been hurt — and ul­ti­mately if the in­de­pen­dent In­ter­na­tional Trade Com­mis­sion goes along — the of­fend­ing im­ports are slapped with du­ties that can price them out of the mar­ket.

On Thurs­day, for in­stance, the depart­ment an­nounced levies of up to 337 per­cent in com­bat over kitchen and bath­room coun­ter­tops — or at least over the im­ported quartz slabs from China that many of them de­rive from.

Th­ese cases have noth­ing di­rectly to do with the mother of all Trump’s trade wars: a cage match with China over Beijing’s ag­gres­sive push to trans­form Chi­nese com­pa­nies into world lead­ers in cut­ting-edge in­dus­tries like ar­ti­fi­cial in­tel­li­gence and elec­tric cars. In that one, the world’s two big­gest economies have slapped tar­iffs on hun­dreds of bil­lions of dol­lars’ worth of each other’s prod­ucts.

The smaller an­tidump­ing and “coun­ter­vail­ing duty” (aimed at un­fair sub­si­dies) cases are usu­ally brought by U.S. com­pa­nies or in­dus­tries that say they’re be­ing vic­tim­ized by foreign com­peti­tors. But for the first time in more than

25 years, the ad­min­is­tra­tion in

2017 brought a case on its own — against a com­mon al­loy alu­minum sheet from China — with­out wait­ing for an in­dus­try’s plea for help.

“They’re much more ag­gres­sive in ev­ery way,” said Mary Lovely, a Syra­cuse Univer­sity econ­o­mist.

Com­merce Sec­re­tary Wil­bur Ross says that the ad­min­is­tra­tion’s trade poli­cies have “ir­re­vo­ca­bly changed the con­ver­sa­tion on trade” and that the dump­ing and sub­sidy cases “help level the play­ing field for U.S. com­pa­nies and work­ers.”

Like any con­flict, though, the bat­tles over re­mote patches of the com­mer­cial mar­ket­place leave win­ners and losers. Lovely says the Trump ad­min­is­tra­tion’s in­ter­ven­tion in trade cases risks “tilt­ing the play­ing field to­ward par­tic­u­lar in­dus­tries,” driv­ing up prices and mak­ing the econ­omy less ef­fi­cient by driv­ing away com­pe­ti­tion.

What­ever the im­pact, the ad­min­is­tra­tion’s Amer­ica First ap­proach to trade is en­cour­ag­ing more com­pa­nies to bring more cases.

“Every­body knows that this ad­min­is­tra­tion is con­cerned about un­fair trade and is very will­ing to off­set un­fair trade where that is war­ranted.,” said Gil­bert Ka­plan, the Com­merce Depart­ment’s un­der sec­re­tary for in­ter­na­tional trade.

The dol­lar amounts in an­tidump­ing and coun­ter­vail­ing duty cases are too small to make a real dent in the $21 tril­lion U.S. econ­omy.

But for the com­pa­nies in­volved, the stakes of­ten couldn’t be higher.

Amer­ica’s strug­gling news­pa­pers, for in­stance, saw their costs spike when the Com­merce Depart­ment last year im­posed an­tidump­ing and coun­ter­vail­ing du­ties on Canadian newsprint. Some news­pa­per com­pa­nies planned lay­offs as a re­sult. But in Au­gust, the trade com­mis­sion, which acts as an in­de­pen­dent tri­bunal in trade cases, over­turned the du­ties, spar­ing news­pa­pers dev­as­tat­ing cost in­creases.

The newsprint case was brought by a sin­gle com­pany: a hedge fund-owned pa­per pro­ducer in Wash­ing­ton state.

Like­wise, the of­fen­sive against im­ported quartz slabs from China orig­i­nated from a sin­gle com­plaint: Cam­bria, a maker of quartz prod­ucts, in­clud­ing high-end kitchen and bath­room coun­ter­tops, based in Le Sueur, Min­nesota.

Cam­bria CEO Martin Davis says the U.S. mar­ket­place was flooded by low-priced quartz slabs from China. Com­merce Depart­ment fig­ures show that im­ports from China surged 78 per­cent in 2016 and 54 per­cent in 2017. The in­flux, Davis said, was sub­si­dized by the Chi­nese gov­ern­ment.

“My com­pany was go­ing down,” he said.

Davis sought re­lief from the gov­ern­ment. He said that pur­su­ing the case has cost him $5 mil­lion. Com­merce agreed to im­pose an­tidump­ing and coun­ter­vail­ing du­ties on Chi­nese quartz slabs last year.

On Thurs­day, the depart­ment an­nounced its fi­nal de­ci­sion on the du­ties, hit­ting Chi­nese quartz slabs with an­tidump­ing du­ties of up to 337 per­cent and with coun­ter­vail­ing du­ties of up to 191 per­cent.

The levies are bad news for U.S. com­pa­nies that make coun­ter­tops from im­ported quartz. Jeff Keck of Mar­ble Uniques in Tip­ton, In­di­ana, says the higher du­ties struck while his com­pany was work­ing on a con­tract to pro­vide quartz coun­ter­tops to an apart­ment com­plex.

“We will lose money on the pro­ject,” he said.

Mak­ing things worse from his per­spec­tive: The du­ties are retroac­tive to Au­gust.

Paul Nathanson, spokesman for the Amer­i­can Quartz Worker Coali­tion set up to fight the du­ties, said that Cam­bria is abus­ing trade law.

“They are us­ing the U.S. gov­ern­ment to try to wipe out their com­peti­tors,” he said.

The ITC held a hear­ing last week at which op­po­nents of the du­ties ar­gued that high-end Cam­bria doesn’t ac­tu­ally com­pete with in­ex­pen­sive Chi­nese im­ports. The com­mis­sion is ex­pected to rule on the case next month. If it finds that Cam­bria wasn’t hurt by the im­ports, the ITC could strike down the du­ties.

For now, the sanc­tions on quartz im­ports are help­ing some busi­nesses, and not just Cam­bria. Among them is Blackbird Man­u­fac­tur­ing, an Owens­boro, Ken­tucky, com­pany that makes stone coun­ter­tops. CEO David Thomas said that Blackbird couldn’t com­pete with low-priced Chi­nese quartz for con­tracts with pen­nypinch­ing ho­tel chains.

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