2009 FIN McGrath at NIFS/West: ‘Kiss Your Importer’ For Stopping Tariffs

November 18

00:00 2009

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November 18, 2009 FIN – The unanimous U.S. International Trade Commission decision to terminate the antidumping investigation into standard fastener imports “is very rare in a preliminary investigation,” trade attorney Matthew McGrath told attendees of the National Industrial Fastener Show/West in Las Vegas.

The 6-0 unanimous preliminary negative determination reportedly has only occurred three times since 1979.

The ITC unanimously rejected Nucor Fastener’s claims that standard fastener imports from China and Taiwan were being dumped domestically. Nucor Fastener alleged average dumping margins of 145% for Chinese imports, and 74% for imports from Taiwan.

Traditionally the ITC has a fairly low standard of proof at the preliminary stage of an investigation, which had created a level of cynicism among importers in years past and lead many in the fastener industry to consider some level of tariff a foregone conclusion.

“We don’t know what the basis is for the decision,” McGrath, who represented a coalition of U.S. importers, explained to a crowd of 200 conference attendees.

The Commission’s public report, “Certain Standard Steel Fasteners from China and Taiwan” (Investigation Nos. 701-TA-472 and 731-TA-1171-1172 (Preliminary), USITC Publication 4109, November 2009), was released November 24 with the views of the Commission and information developed during the investigations.

Nucor Fastener, which filed the petitions that the ITC rejected, has until mid-December to file a notice of appeal, and an additional 30 days to outline its complaint. The appeal would be heard by the U.S. Court of International Trade.

McGrath credited 11 importers who “took a stand and threw their best case at the ITC.”

“Kiss your importer,” McGrath stated. “These are the folks that really put an effort in this case.”

Importers urged suppliers to provide the ITC as much information as possible, which likely helped their case, McGrath explained.

The battle over tariffs could also have been influenced by testimony from Joe Chen, chairman of the Taiwan Industrial Fastener Institute (TIFI). At the October 14 ITC conference in Washington DC, Chen testified that Taiwan fastener exports have dropped 40% in 2009 due to the global economic crisis, with U.S. exports plunging 47%.

McGrath said Taiwan producers felt they had been responsible partners in this process. And while the European Union tariff process had prepared Chinese producers for the U.S. antidumping investigation, Taiwan fastener makers expressed real fear about the potential for U.S. tariffs to be applied to its products, according to McGrath.

For their part, importers attacked the scope of the case, which reportedly forced Nucor Fastener to amend its petitions twice within a two-week period.

“They were really covering the entire gamut” in a very broad petition, McGrath said. “Nucor was focusing on their target markets.”

While Nucor Fastener has been criticized for seeking tariffs on low-carbon standard fasteners that haven’t been produced in the U.S. since the 1960s, McGrath noted that it’s legal for a company to list products that it doesn’t make so long as those products fall within the spectrum of goods named in the petitions.

Dumping is “sales at less than fair value,” McGrath said, while “injury” has to do with importer price vs. domestic producer price.

“You can’t just have dumping, you have to have dumping that is injurious.”

In this case imports were already down due to the global recession, making it harder for Nucor Fastener to argue that imports were gaining market share. Underselling was also in play, according to McGrath.

Profitability is a key component of the investigation, McGrath explained. The higher the operating profit over the past three years, the harder it is to prove injury.

Nucor could recast the case with a new scope, but they would have to deal with a moving target date for any new claim. The petitions rejected by the ITC involved data from January 1, 2009, through June 30, 2009.

In the mean time, McGrath urged importers to coordinate with foreign manufacturers, as well as review pricing policies and examine contract clauses.

“The case could come back, and it might come back in a more limited fashion.”

But McGrath acknowledged that a quick rejection of the ITC vote seems unlikely.

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