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Leveling the Playing Field for U.S. Manufacturers

April 30, 2015 in Economics

By Daniel R. Pearson

Daniel R. Pearson

The Senate Finance Committee added Sen. Sherrod Brown’s (D-Ohio) poorly named “Leveling the Playing Field Act” to the customs reauthorization bill it passed on April 22. The stated purpose of Brown’s provisions is to “restore strength to antidumping and countervailing duty laws” via a “crack down on unfair foreign competition.” Among other things, Brown’s proposal seeks to change procedures used by the U.S. International Trade Commission (ITC) in deciding whether domestic industries have been “materially injured” by imports. The intent of this legislation is to take a playing field that already is slanted in favor of domestic firms and tilt it even further toward protectionism. It should be rejected.

The existing antidumping and countervailing duty (AD/CVD) statutes instruct the ITC to “evaluate all relevant economic factors” that relate to the effects of imports on the domestic industry under consideration. A number of those factors are specifically mentioned, including the industry’s profits. Not being satisfied with that, the Brown bill adds, “gross profits, operating profits, net profits, [and] ability to service debt.” As a practical matter, the Commission already looks in detail at an industry’s profitability and its ability to repay debts, so this additional wording contributes nothing of substance. The bill also makes other technical and arcane modifications to the statute, none of which grants the ITC authority beyond what it already has.

Although the changes proposed by Sen. Sherrod Brown seem relatively modest, they should not be adopted for a simple reason: litigation risk.”

Although the changes proposed by Brown seem relatively modest, they should not be adopted for a simple reason: litigation risk. The skilled and creative attorneys who represent domestic industries in AD/CVD cases (and who likely drafted Brown’s bill) would be only too happy to have another basis on which to appeal Commission decisions with which they disagree. A claim that the ITC had not adequately considered the newly crafted provisions would provide a wonderful justification for an appeal. Why invite such mischief?

If members of Congress actually are interested in modifying the AD/CVD statutes to make them better serve the interests of the U.S. manufacturing economy, they should propose legislation that would balance the interests of domestic producers that are petitioning for import restrictions against the interests of downstream consumers. Currently the ITC injury determination is limited to the effect of imports “on domestic producers of domestic like products.” In essence, the …read more

Source: OP-EDS

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