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Legislative Issues: Reducing Competitive Imports

July 20, 2000
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Imports into the U.S. have been growing at a rapid rate for the last several years, far exceeding the growth of exports. Some U.S. based producers of ceramic goods have looked into ways of preventing or inhibiting the import of competing products.

Imports into the U.S. have been growing at a rapid rate for the last several years, far exceeding the growth of exports. The U.S. trade deficit (the excess of imports over exports) for 1999 was the largest in history—$271.31 billion.

Among the imports are a wide variety of ceramic items. As with other industries, some U.S. based producers of ceramic goods have looked into ways of preventing or inhibiting the import of competing products. “Trade wars” have been going on for centuries, with the domestic producers of certain products seeking, through various means, to prevent the importation of similar items made in foreign countries. These producers may be supported by labor organizations and industry suppliers.

Health and Safety Standards

Imported products must meet the same health and safety standards as U.S. produced items. The U.S. Food and Drug Administration (FDA) and the Consumer Products Safety Commission are among the government agencies with health and safety standards applicable to ceramic products. If imported products do not meet these standards they can be barred from importation. Recently, the FDA announced that it would work with the Customs Service to step up enforcement of the FDA’s standards with respect to imports.

Tariffs

A variety of tariff charges are imposed on imported ceramic products. Ceramic items are broken down into a number of categories in what is known as the Harmonized Tariff Schedule of the United States. Each category may have a particular tariff imposed on the item expressed as a percent of the value of the goods. For instance, certain types of glazed ceramic tiles are subject to a 15% tariff, and ceramic washbasins may have a 5.8% tariff imposed. Those concerned about imports of particular items may ask Congress to increase the applicable tariff.

Dumping and Unfair Trade

Dumping refers to the practice of selling foreign-made goods in the U.S. at a lower price than they are sold in their country of manufacture, or selling at a price that is below the cost of production. In addition, the U.S. International Trade Commission may impose countervailing duties if a foreign government subsidizes the production of goods for export to the U.S.

If at least 25% of a U.S. based industry believes it is a victim of dumping by producers of goods from another country, it may file a petition with the Import Administration and the International Trade Commission. The Import Administration first must determine whether dumping actually occurred. If it did, then the International Trade Commission determines whether the U.S. industry is suffering a material injury from the dumping.

The anti-dumping process is subject to tight time schedules, and proceedings can often be completed within 12 to 18 months—fast by government standards. Presently there are over 300 anti-dumping orders outstanding. Such orders mean that anti-dumping or countervailing duties will be levied on goods imported from the offending country.

Prison Labor

U.S. law prohibits the importation of any goods produced by forced labor, including prison labor. It is a total ban on such products, not merely the imposition of additional duties. These actions can be hard to prove as obtaining evidence of forced labor is difficult. In addition, goods made by prison labor may pass through several hands in a particular country before they are exported to the U.S. This makes tracing the product back to its origin point of manufacture very difficult. As a result, there are not many such actions.

Knock-Offs

Goods that violate American patent, trademark, trade name and copyright laws may not be imported into the U.S. For instance, if a product covered by a U.S. patent were produced overseas by someone who did not have permission from the patent holder to do so, the product may be banned from import into the U.S. The same applies for goods bearing a trademark for which no license has been granted.

A number of U.S. companies, including some in the ceramic industry, have started to seek active enforcement to ban these knock-offs. China has been one reported source of a number of “knock-off” items, and it has recently promised to more actively police this practice.

Trade wars will, of course, continue. The World Trade Organization was formed for the purpose of lowering trade barriers, and while this may be good for certain segments of the economy (e.g., consumers) it may harm others (e.g., manufacturers who do not export). In general, free trade raises the economic status of all trading partners—if each follows the appropriate rules.

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