8 Dec 2017
USITC Recommends Safeguard Measures on Clothes Washers as DOC Self-Initiates AD/CV Cases on Aluminium Sheet
The U.S. International Trade Commission has announced its recommendations for import restrictions on large residential washers following its determination in a section 201 global safeguard investigation that increased imports of such products are seriously injuring the domestic industry. These recommendations were forwarded to President Trump by 4 December, who now faces a 4 February 2018 deadline for making a final decision on which, if any, to implement.
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 commissioners unanimously recommended that the president establish a tariff-rate quota of 1.2 million units on subject washers for a period of three years. Out-of-quota washer imports would face a tariff of 50 percent in the first year, 45 percent in the second year and 40 percent in the third year. Chairman Schmidtlein and Commissioner Williamson also favour a tariff for in-quota washer imports of 20 percent in the first year, 18 percent in the second year and 15 percent in the third year, but Vice Chairman Johanson and Commissioner Broadbent declined to recommend the imposition of such a tariff.
A separate TRQ would be imposed on covered parts of LRWs, with any imports above the TRQ facing a tariff of 50 percent in the first year, 45 percent in the second year and 40 percent in the third year. This TRQ would initially be set at 50,000 units in the first year, and then raised to 70,000 units in the second year and 90,000 units in the third year. Finally, the commissioners recommended excluding Australia, Canada, Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, South Korea, Mexico, Nicaragua, Panama, Peru, Singapore and beneficiary countries under the Caribbean Basin Economic Recovery Act from the recommended measures.
To aid in the determination of which safeguards to recommend, the Office of the U.S. Trade Representative is accepting views and evidence through 11 December and will hold a hearing on 3 January 2018 in Washington, D.C. USTR is specifically requesting comments on the appropriateness of any other proposed action and how it would be in the public interest as well as the short- and long-term effects on the domestic residential washers industry, other domestic industries and downstream consumers of taking or not taking the proposed action. The inter-agency Trade Policy Staff Committee will then make a recommendation for action that will take into account the USITC recommendation, the extent to which the domestic industry will benefit from adjustment assistance, the efforts of the domestic industry to make positive adjustments and other relevant considerations. Possible remedies the TPSC could recommend include tariff increases, TRQs or other quantitative restrictions, voluntary restraint agreements with exporting countries and import licences.
Mainland China was by far the largest U.S. supplier of LRWs 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$809.9 million in 2016 and were a massive 84.4 percent lower at US$119.6 million during January-September 2017, compared to the same period a year earlier. These declines were driven by the initiation of an antidumping 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$418.7 million during January-September 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$56.4 million during January-September 2016 to US$245.0 million during January-September 2017. South Korea and Mexico, which would be exempt from the safeguard measures if the recommendations of the USITC are implemented in their current form, were the third and fourth largest U.S. suppliers of subject washers during January-September 2017, with shipments up by 96.9 percent to US$134.6 million in the case of South Korea and down by 8.9 percent to US$121.2 million in the case of Mexico.
Separately, the Trump administration has used a rarely invoked statutory authority to expand its efforts to enforce U.S. trade remedy laws by self-initiating antidumping and countervailing duty investigations of mainland Chinese common alloy aluminium sheet classified under HTSUS subheadings 7606.11.3060, 7606.11.6000, 7606.12.3090, 7606.12.6000, 7606.91.3090, 7606.91.6080, 7606.92.3090, 7606.92.6080, 7606.11.3030, 7606.12.3030, 7606.91.3060, 7606.91.6040, 7606.92.3060, 7606.92.6040 and 7607.11.9090. The U.S. Department of Commerce is alleging dumping margins as high as 59.72 percent and cash deposit requirements could be imposed as early as February 2018.
The investigations cover common alloy aluminium sheet, which is a flat-rolled aluminium product having a thickness of 6.3 mm or less but greater than 0.2 mm, in coils or cut-to-length, regardless of width. Subject merchandise includes both not clad aluminium sheet as well as multi-alloy clad aluminium sheet. With respect to not clad aluminium sheet, common alloy sheet is manufactured from a 1XXX-, 3XXX- or 5XXX-series alloy as designated by the Aluminum Association. With respect to multi-alloy clad aluminium sheet, common alloy sheet is produced from a 3XXX-series core to which cladding layers are applied to either one or both sides of the core. Common alloy sheet may be made to ASTM specification B209-14 but can also be made to other specifications. Subject merchandise includes common alloy sheet that has been further processed in a third country, including annealing, tempering, painting, varnishing, trimming, cutting, punching, slitting or any other processing that would not otherwise remove the merchandise from the scope of the investigations if performed in the country of manufacture of the common alloy sheet.
Excluded from the scope of these investigations is aluminium can stock, which is suitable for use in the manufacture of aluminium beverage cans, lids of such cans or tabs used to open such cans. Aluminium can stock is produced to gauges that range from 0.200 mm to 0.292 mm and has an H-19, H-41, H-48 or H-391 temper. In addition, aluminium can stock has a lubricant applied to the flat surfaces of the can stock to facilitate its movement through machines used in the manufacture of beverage cans. Aluminium can stock is properly classified under HTSUS subheadings 7606.12.3045 and 7606.12.3055.
There are shorter-than-normal deadlines associated with the aluminium investigations, including a 13 December deadline for foreign producers to submit quantity and value information and a 18 December deadline to submit comments on product coverage. Exports from foreign producers that do not meet the 13 December deadline would be subject to the highest duty rates with little chance of relief.
AD/CV investigations are generally initiated based on petitions from affected industries, but the DOC may also self-initiate if it believes a formal investigation is warranted. The DOC states that in this case it has information warranting an investigation into whether (i) the U.S. price of common alloy sheet from mainland China may be less than the normal value of such or similar goods, (ii) imports of such goods may be benefitting from countervailable subsidies, and (iii) imports of such goods may be materially injuring, or threatening material injury to, the domestic industry producing common alloy sheet in the United States. For example, the DOC states that imports from mainland China have been significant since 2005, have increased rapidly in the last three years, and could increase further based on the “systemic and significant over-capacity” in the mainland Chinese aluminium industry.
The DOC states that while it expects future AD/CV investigations to “normally proceed” based on industry-filed petitions, it will self-initiate additional investigations where warranted “to facilitate the application of the appropriate trade remedy for U.S. industries.” In determining whether to take such actions the DOC may evaluate similar factors as those set forth above for aluminium sheet.