Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, July 24, 1994 TAG: 9408170004
SECTION: EDITORIAL PAGE: F3 EDITION: METRO
SOURCE: THOMAS N. THOMPSON
DATELINE: LENGTH: Long
Trade disputes have become something of a new Cold War battlefield with Washington, D.C.-based trade attorneys and an assortment of private spies often doing so-called ``market research,'' leading the protectionist charge to ensnare foreigners in the quicksand of U.S. trade law.
These disputes don't always make the headlines, but they have become more than run-of-the-mill business news. One of those spies was recently found murdered, face-down in a drainage ditch on the outskirts of Seoul, Korea.
As a spy for several U.S. law firms until my recent retirement, I traveled throughout Asia, North and South America collecting information on basic industries in otherwise friendly countries. When my research was carefully packaged by trade attorneys and presented to the U.S. Department of Commerce, more often than not it resulted in punitive import tariffs to protect U.S. manufacturers from foreign competition.
The key to understanding this new phenomenon is protectionism's current weapon of choice: U.S. anti-dumping law and the investigatory process, or lack of it, at the Department of Commerce. Dumping occurs when a foreign company charges a lower price for a product in an export market than in its home market. When Commerce finds a foreign company guilty of dumping, and the U.S. International Trade Commission also concludes that the dumped products injured competing U.S. companies, penalty tariffs are imposed on the imports equal to the alleged dumping margin.
If a foreign exporter fails to respond within 30 days in computer-readable format to a 100-page English-language questionnaire, Commerce trade bureaucrats are willing to turn to their well-known, alternative ``best information available'' - in other words, the petitioning U.S. industry's data and analysis. Too often Commerce's relatively young and inexperienced analysts have meager, if any, accounting/financial background, and their industry expertise is even worse.
Not surprisingly, the petitioning U.S. industry often succeeds at portraying the foreign exporter to be particularly villainous - in other words, production-cost data, transportation costs or actual export sales are presented in such a way as to suggest to Commerce that the exporter is spending as much as possible to manufacture a product that it is selling at the least cost possible, all of which bolsters the appearance of unfair, and even irreparable, damage done to the U.S. industry.
What possible motive a foreign exporter might have to do this is never asked. Nor is the data submitted by a U.S. industry usually questioned.
Yet the petitioner's analysis doesn't have to be very well substantiated, thanks to Commerce's helpful double standards. The administrative burden simply of furnishing the required information within the required time in the required form to the department has become so overwhelmingly difficult that more and more foreign companies are either unable or unwilling to even try. The fact that companies of the stature of Matsushita, SKF and Toshiba find compliance impossible suggests that the unfair trade practices are often Commerce's, not a foreign exporter's. Yet when the foreign exporter does provide manufacturing or financial data to Commerce, it is typically met by an on-site verification visit by a Commerce analyst.
Not so for the petitioning U.S. industry's analysis of its foreign competition. In concocting the worst picture of injury to one U.S. industry after another - with aerial photos, data-base searches, interviews with domestic competitors and various clandestinely collected information from inside a plant (photos, inventories, invoices and shipping records, for example) - not once was I ever contacted by a Commerce investigator to verify any data I collected. Even if the current environment wasn't so bad for a U.S. industry, its petitions always underscore the at least potential predatory future intentions of various foreign firms.
Criticism of this unfair and inequitable process falls on deaf ears. The Commerce Department is judge, jury, prosecutor and executioner for dumping allegations. Commerce officials are quick to point out that Congress gives them broad discretion to apply anti-dumping laws, and it's true. So broad is the Commerce Department's discretion in pursuing anti-dumping charges, that it routinely shuts down U.S. companies importing foreign products targeted by anti-dumping investigations through the application of retroactive duties.
But Commerce's success can also be measured by how often its practices are being copied by other countries that want to limit American exports. In fact, most of the requests I receive these days for ``market research'' come from overseas for possible assignments here in the United States.
Thomas N. Thompson is president of Overseas Trade Corp. in Seattle.
The Washington Post
by CNB