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New Safeguard Probe Launched on Clothes Washers

The U.S. International Trade Commission has instituted a global safeguard investigation that could result in a new tariff-rate quota on large residential washers. In this investigation, which will be conducted under section 201 of the 1974 Trade Act, the USITC will determine whether such goods are being imported in such increased quantities as to be a substantial cause or threat of serious injury to a U.S. industry. The relief being sought is a three-year TRQ that would permit a base level of subject goods to enter the United States without safeguard tariffs while ensuring that the domestic industry would not experience further injury due to additional surges in imports.

The articles covered by this investigation are all LRWs and certain parts thereof. For purposes of this investigation, the term LRW denotes all automatic clothes washing machines, regardless of the orientation of the rotational axis, with a cabinet width (measured from its widest point) of at least 24.5 inches (62.23 cm) and no more than 32.0 inches (81.28 cm). Also covered are the following LRW parts: (i) all cabinets, or portions thereof, designed for use in LRWs; (ii) all assembled tubs designed for use in LRWs that incorporate, at a minimum, a tub and a seal; (iii) all assembled baskets designed for use in LRWs that incorporate, at a minimum, a side wrapper, a base and a drive hub; and (iv) any combination of the fore-going parts or subassemblies. The goods covered by this investigation are provided for under HTSUS subheading 8450.20.00 and may also be imported under HTSUS subheadings 8450.11.00, 8450.90.20 and 8450.90.60.

Excluded from the scope of this proceeding are stacked washer-dryers and commercial washers. The term “stacked washer-dryers” denotes distinct washing and drying machines that are built on a unitary frame and share a common console that controls both the washer and the dryer. The term ‘‘commercial washer’’ denotes an automatic clothes washing machine designed for the ‘‘pay per use’’ segment meeting certain conditions. Also excluded from the scope are:

  • automatic clothes washing machines that meet all of the following conditions: (i) have a vertical rotational axis; (ii) are top loading; and (iii) have a drive train consisting, inter alia, of a permanent split capacitor motor, a belt drive and a flat wrap spring clutch;
  • automatic clothes washing machines that meet all of the following conditions: (i) have a horizontal rotational axis; (ii) are front loading; and (iii) have a drive train consisting, inter alia, of a controlled induction motor and a belt drive; and
  • automatic clothes washing machines that meet all of the following conditions: (i) have a horizontal rotational axis; (ii) are front loading; and (iii) have cabinet width (measured from its widest point) of more than 28.5 inches (72.39 centimetres).

The USITC initiated this investigation on 5 June. Hearings will be held on 7 September on the issue of injury and, if the USITC’s injury determination is affirmative, on 19 October on the question of remedy. Requests to appear at these hearings are due by 31 August and 13 October, respectively. Pre-hearing briefs are due by 29 August and 12 October, respectively, and post-hearing briefs are due by 14 September and 22 October, respectively.

The USITC has determined that this investigation is extraordinarily complicated based on the complexity of the issues, including the existence of antidumping and/or countervailing duty orders on certain covered goods. As a result, the USITC has postponed its injury determination from 3 October to 5 October. The USITC intends to submit its report to the president no later than 4 December.

Section 201 of the 1974 Trade Act requires the USITC to determine whether an article is being imported in such increased quantities as to be a substantial cause or threat of serious injury to a U.S. industry. Section 201 investigations do not require a finding of an unfair trade practice such as under the AD and CV duty laws. However, meeting the injury requirement under section 201 is considered to be more difficult than those of the unfair trade statutes because the injury or threatened injury must be serious and the increased imports must be a substantial cause of serious injury or threat of serious injury.

Any relief proposed by the USITC is merely advisory; it is up to the president to make the final decision on whether to provide relief as well as its form, amount and duration. The relief may initially be imposed for up to four years and extended to no more than eight. If import relief is provided, the USITC would periodically report on developments within the industry during the period of relief. At the conclusion of any relief period, the USITC would have to report to the president and Congress on the effectiveness of the relief action.

Mainland China was by far the largest U.S. supplier of LWMs of HTSUS subheading 8450.20.00 in 2016, with a 55.1 percent share of total U.S. imports. However, imports of subject merchandise from the mainland fell by 26.8 percent to US$810.1 million in 2016 and were a massive 85.9 percent lower at US$52.4 million during January-April 2017, compared to the same period a year earlier. These declines were driven by the initiation of an AD duty investigation and the subsequent imposition of AD duties ranging from 38.43 percent to 57.37 percent on subject merchandise.

By contrast, imports from Vietnam surged from zero in 2015 to US$165.9 million in 2016 and US$178.7 million during January-April 2017, while shipments from Thailand grew from US$8.7 million in 2015 to US$128.7 million in 2016, as well as from US$9.1 million during January-April 2016 to US$62.7 million during January-April 2017.

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