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US Trade Commission Recommends Tariffs On Korean Washers

by Mike Godfrey, Tax-News.com, Washington

28 November 2017


The US International Trade Commission (USITC) has unanimously recommended tariffs of up to 50 percent on large washers imported from Korea.

The decision, announced on November 21, followed an October 5 determination that large residential washers were being imported into the US in such increased quantities as to be a substantial cause of serious injury to the domestic industry.

The investigation was based on a safeguard petition filed by Whirlpool Corp on May 31 under Section 201 of the 1974 Trade Act alleging that Samsung and LG were circumventing anti-dumping duties by shifting production to different countries while continuing to dump their products in the US market.

Dumping occurs when good are sold into a foreign market at below the prevailing market rate in the exporter's domestic market. Countries can respond by levying taxes on imports to prevent unfair competition for their domestic producers, known as anti-dumping duties. Section 201 of the US Trade Act allows the US President to grant temporary import relief by raising import duties or imposing non-tariff barriers on goods entering the US that injure or threaten to injure domestic industries.

The Commission recommended that the President impose an additional import duty above tariff-rate quotas (TRQs) on imports of large residential washers for a period of three years. For imports exceeding 1.2 million units, the recommended rate is 50 percent ad valorem, in addition to the current rate of duty. The Commission also recommended that the in-quota volume remain constant throughout and that the above-quota tariff rate decrease by five percentage points during each year of the remedy period.

An additional in-quota tariff rate of 20 percent was also recommended by two of the four members of the panel. These would fall to 18 percent in the second year and to 15 percent in the third year.

The Commission also unanimously recommended that the President impose a separate TRQ on imports of covered parts of large residential washers for a duration of three years. For US imports of covered parts that exceed 50,000 units, they recommended a tariff rate of 50 percent ad valorem, in addition to the current rate of duty. They recommend that the in-quota volume increase by 20,000 units in each year of the remedy period, and that the above-quota tariff rate decrease by five percentage points each year.

The Commission recommended that imports from Canada and Mexico be excluded from the new TRQs and increased rates of duty. It also recommended that the new rates should not be applied to imports from Australia, Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, Korea, Nicaragua, Panama, Peru, and Singapore, or to imports from the beneficiary countries under the Caribbean Basin Economic Recovery Act.

The decision was made despite representations from Samsung and LG at an October 19 USITC hearing.

The Commission's report and recommendations will be forwarded to President Trump by December 4, following which the President will make a final decision. If imposed, safeguard measures would likely be implemented from February 2018.

TAGS: tax | Nicaragua | tariffs | anti-dumping | Australia | Colombia | Israel | Mexico | Singapore | Canada | Costa Rica | Dominica | Dominican Republic | Guatemala | Jordan | Korea, South | Peru | trade | El Salvador | Honduras | Panama

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