WASHINGTON — A coalition of U.S. manufacturers has compiled evidence that certain foreign companies subject to antidumping orders, including wire hanger manufacturers, are costing the U.S. Treasury at least $84 million annually by deliberately evading import duties.
The Coalition for Enforcement of Antidumping & Countervailing Duty Orders consists of several U.S. manufacturers of steel wire products, including steel wire garment hangers, steel nails, uncovered innerspring units, and carbon steel threaded rod, each of which has petitioned the International Trade Commission (ITC) and the Department of Commerce (DOC) for relief from unfairly traded imports.
In each of these industries, the Department of Commerce issued antidumping orders that levied import duties up to 234% on the products sold in order to balance the effects of foreign manufacturers dumping the products at prices below the cost of production, undercutting U.S. manufacturers’ prices.
According to the coalition, some foreign manufacturers are evading the antidumping duties by shipping via a third country and designating it as the country of origin, a practice termed “transshipment.” In other cases, an inconsequential modification is made to the product in another country to avoid the duty. Sometimes, the companies simply used a false shipping label displaying an incorrect country of origin, the coalition alleges.
“These schemes are blatant and purposeful,” says David Libla, president of Mid Continent Nail and a coalition member. “Not only are they clear evidence of attempts to maintain an unfair advantage in the marketplace, they’re also costing taxpayers millions of dollars and reducing job opportunities in this country.”
According to the coalition, during the six months from January to June 2009, following the issuance of an antidumping order, steel wire hangers imported from Taiwan increased a staggering 93,874% to 144,718,079 from 153,998 in the same period of 2008, despite there being no meaningful production of steel wire hangers in Taiwan. Similar transshipment cases exist involving Vietnam, Korea, Hong Kong, Canada and Mexico, the coalition says, resulting in the evasion of more than $12 million in duties and the loss of 220 domestic jobs.
“We saw business pick up substantially after we won our trade case in 2008, but it wasn’t long before we started hearing from our distributors that their customers were buying hangers in boxes with [false labels],” says Milton M. Magnus III, owner of Leeds, Alabama-based M&B Hangers, another coalition member. “Hundreds of millions of hangers are coming in at very low pricing. Our distributors want to play by the rules, but they have customers who demand the lowest price.”
The coalition is presenting its information to members of Congress, the Department of Commerce, and Customs and Border Protection to seek the stronger enforcement of existing antidumping orders. This includes requiring cash deposits on suspect merchandise at U.S. points of entry, incorporating specific enforcement language into the Customs Reauthorization Act and expanding the authority of the Department of Commerce to include investigation of transshipment and other evasion activities.