Commissions Advocate for US Competitiveness Word Count

Dumping products into the American market at prices that conceivably could bankrupt an American firm and destroy competition is a constant concern, and the United States has tools in place to combat such activities.
Commissions Advocate for US Competitiveness Word Count
TIRED OF DUMPING: A woman walks by a rack of tires at a bus depot in Beijing, China, in this file photo. Tires imported from China have been under review by the United States International Trade Commission for punitive duties. For a product to be considered as being dumped or subsidized, the International Trade Commission determines whether the domestic industry is suffering material injury as a result of the imports of the dumped or subsidized products. (Frederic J. Brown/Getty Images )
5/18/2011
Updated:
10/1/2015

<a><img src="https://www.theepochtimes.com/assets/uploads/2015/09/tires_89784917.jpg" alt="TIRED OF DUMPING: A woman walks by a rack of tires at a bus depot in Beijing, China, in this file photo. Tires imported from China have been under review by the United States International Trade Commission for punitive duties. For a product to be considered as being dumped or subsidized, the International Trade Commission determines whether the domestic industry is suffering material injury as a result of the imports of the dumped or subsidized products. (Frederic J. Brown/Getty Images )" title="TIRED OF DUMPING: A woman walks by a rack of tires at a bus depot in Beijing, China, in this file photo. Tires imported from China have been under review by the United States International Trade Commission for punitive duties. For a product to be considered as being dumped or subsidized, the International Trade Commission determines whether the domestic industry is suffering material injury as a result of the imports of the dumped or subsidized products. (Frederic J. Brown/Getty Images )" width="320" class="size-medium wp-image-1803863"/></a>
TIRED OF DUMPING: A woman walks by a rack of tires at a bus depot in Beijing, China, in this file photo. Tires imported from China have been under review by the United States International Trade Commission for punitive duties. For a product to be considered as being dumped or subsidized, the International Trade Commission determines whether the domestic industry is suffering material injury as a result of the imports of the dumped or subsidized products. (Frederic J. Brown/Getty Images )
Dumping products into the American market at prices that conceivably could bankrupt an American firm and destroy competition is a constant concern, and the United States has tools in place to combat such activities.

In international trade, the term “dumping” is generally used when a product is sold in a foreign market for less than it costs to produce it, less than it is sold in the home market, or if the respective country’s government subsidized the goods, such as by providing grants or other kinds of incentives for producing and selling the product abroad.

It should be noted that not all products sold at a lower price than a U.S. product are considered a dumped product.

“Unless the conduct falls within the legal definition of dumping as specified in U.S. law, a foreign producer selling imports at prices below those of American products is not dumping,” according to an entry on the Import Administration website.

One tool used when illegal trade activities are alleged is filing charges with the World Trade Organization (WTO), an international body that reviews rules of trade between countries.

Another tool is the United States International Trade Commission (USITC), which is an independent, nonpartisan federal agency that prides itself in sticking to the facts versus advocating policy issues.

Remedial Actions for Violation of Trade Rules

The respective U.S. industry or firm may file “a petition with both Import Administration [IA] and the United States International Trade Commission [ITA]” if it presumes unfair competitive factors by foreign companies, according to the IA and ITA websites.

IA and the ITA must review and provide a preliminary response within 190 days for dumping charges and 130 days when a countervailing duty is alleged. But it can take up to 18 months before a final determination is made and a remedy prescribed.

The importer must post a bond or pay cash during the investigation, which would amount to the projected tax burden if found guilty as charged.

If a violation of U.S. trade laws is found, the U.S. Customs or U.S. Border Protection will impose a tax based on the dumping margin. This margin is calculated by the Department of Commerce. For example, if a dumping margin of 40 percent is assessed by Commerce, U.S. Customs will charge a tax of 40 percent of the value of the product when the product enters the United States.

When the WTO finds that dumping exists, the General Agreement on Tariff and Trade allows the victim country to take action against the country found guilty of the violation. The remedy is generally an additional tax burden on imported products.

Import Tax Waivers

On the flip side, countries may be granted import tax waivers, called Competitive Need Limitation Waivers (CNL), reducing U.S. taxable revenue under the U.S. Generalized System of Preferences (GSP) program.

Under the GSP program, goods from certain countries may be imported for free, reducing costs for manufacturers and consumers alike, as manufacturers can buy raw and other materials at a lesser cost, and consumers have more buying power if a product can be bought for a lower price.

“GSP extends duty-free treatment to several thousand products imported into the United States from more than two-thirds of the world’s countries,” states the Coalition for GSP on its website.

The Coalition for GSP is a program under Trade Partnership Worldwide LLC, a global trade and economics consulting firm. The Coalition consists of 177 U.S. firms and 19 U.S. associations that lobby for the GSP program, as their members derive benefits in the form of lowered import taxes.

In 2010, U.S. industry saved $689 million in import taxes on $22.6 billion of imports and allegedly supported 82,000 jobs.

“GSP is an important way American companies keep costs down. Large and small businesses import products duty-free under GSP,” according to the Coalition for GSP on its website.

Read More...10,500 products were exempted from import tax duties


Last year, imports from 42 countries, including Angola, Bangladesh, Haiti, Madagascar, Nepal, and Yemen were granted import tax waivers. Additionally, certain products from Thailand, India, Brazil, Indonesia, Philippines, Turkey, and Russia received import tax-free status. Under this type of entitlement program, 3,400 products out of 10,500 products were exempted from import tax duties.

Textiles, clothing, steel, certain leather and glass, and agricultural products are not eligible under the GSP program.

Any import tax waiver may be revoked by the U.S. president if it is five or more years old, and if it is for a country that imports more than 75 percent of the total of all of a particular product imported into the United States.

However, at the end of last year, the GSP program expired. The Coalition is fighting for the survival of the GSP program, requesting that it be made permanent. They claim that last year, over $5.6 billion worth of products lost waiver status, resulting in an increase of $300 million in additional taxation for those products.

“U.S. Customs and Border Protection began collecting duties on imports from GSP countries in January 2011. … These new costs are significant, averaging close to $2 million per day,” states the Coalition in one of its publications.

The bill to reinstate the GSP program has been lingering in limbo in Congress, and there are no plans to revive this program.

“Despite strong bipartisan support in Congress, there are no immediate plans to pass legislation to renew GSP. Companies harmed by GSP’s expiration can make a difference by calling and writing their representatives—as often as they feel is necessary to get the point across,” stated an early 2011 article on the Coalition’s website.

USITC Primer

The USITC is America’s quasi-judicial agency with powers similar to those of a court or judge. It has been given the authority to penalize an individual or firm.

The USITC’s tasks are separated into five functions: import injury inquiry, intellectual property inspection, industry and economic research, tariff and trade information review, and trade policy advocacy.

For a product to be considered as being dumped or subsidized, “the International Trade Commission determines whether the domestic industry is suffering material injury as a result of the imports of the dumped or subsidized products. The International Trade Commission considers all relevant economic factors, including the domestic industry’s output, sales, market share, employment, and profits,” according to the Import Administration website.

Understanding Technical Terms

The USITC uses the technical term “Competitive Need Limitation Waivers (CNL)” in many of its publications and presumes that its readers are comfortable with this term.

Under CNL, import items are viewed as adversely affecting the competitiveness of local U.S. industries, especially if large numbers of the product are dumped into a market, or the product is priced below a certain amount. For example, if a product is priced below what it would cost a U.S. firm to produce, it adversely affects the competitiveness of the U.S. firm.

“‘Competitive need limitations’ represent the maximum import level of a product, in terms of the dollar value or share of total imports, that is eligible for duty-free treatment under the GSP,” according to a recent USITC press release.

As soon as the product reaches the threshold, which is presently $145 million, the import items become competitive and are no longer awarded preferential duty-free treatment. However under the GSP program, a waiver of that limitation may be granted, which allows the respective country to export to the United States above the set maximum.

In layman terms, this means that if a country was designated as a least developed or third world country, the USITC may waive import taxes and allow products to be brought into the U.S. duty-free.