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CITAC COMMENDS COMMERCE'S DECISION TO NOT DEDUCT
SAFEGUARD TARIFFS IN CALCULATING DUMPING MARGINS —
A MOVE WHICH COULD HAVE 'DOUBLY' HIT STEEL CONSUMERS

Washington , D.C. The Consuming Industries Trade Action Coalition (CITAC) commended the Department of Commerce's announcement yesterday that it would continue its policy not to deduct safeguard tariffs from U.S. prices in calculating dumping margins, therefore averting the burden of additional import restrictions on steel consumers who are already suffering from severe steel shortages and massive price increases this year.

A deduction of safeguard tariffs would have "double counted" the safeguard duties, as importers already paid safeguard duties when they imported steel products subject to the recent "Section 201" tariffs. Conversely, dumping petitioners and their supporters would have doubly benefited through the so-called Byrd Amendment (formally known as the "Continued Dumping and Subsidy Offset Act" (CDSOA)), which distributes antidumping and countervailing duties to companies that have petitioned the U.S. Government for trade protection, rather than to the U.S. Treasury, where most duties go.

"CITAC has long argued that the deduction of safeguard duties would hurt steel consumers by boosting dumping margins artificially and unfairly, and would also violate WTO laws," said William E. Gaskin, CITAC Board member and President of the Precision Metalforming Association.

"The Department of Commerce has distinguished between the deduction of normal import duties and the special circumstances of a 201 safeguard tariff," he continued. "As the Department indicated in its announcement, it would have created a situation where fairly traded imports could have become liable for antidumping duties simply due to the imposition of safeguard tariffs, hitting steel consumers twice. Steel-consuming companies are suffering from unprecedented disruption in their steel supply including steel shortages, quality problems and huge price increases. We are pleased with Commerce's decision to continue with its policy," he concluded.

The notice released by the Department of Commerce stated: "Deducting safeguard tariffs from the export price in calculating dumping margins would effectively increase the safeguard remedy; in some cases providing a double remedy. Further, it would create a situation where fairly traded imports could become liable for antidumping duties simply due to the imposition of safeguard tariffs."

The Department of Commerce has consistently ruled that countervailing duties (which offset subsidies) and safeguard tariffs (which were in effect on most steel imports in 2002 and 2003) should not be deducted from the U.S. price in calculating antidumping margins, because a deduction would effectively double-count these duties. Legislation has been introduced in Congress that would compel Commerce to change its policy. CITAC urges rejection of this legislation because it would be unfair to American manufacturers.

Lewis Leibowitz, CITAC Counsel explained how the deduction of safeguard and countervailing duties would work: "Suppose the foreign market value of a steel product is $100 and the U.S. price is $110. Countervailing duties (to offset subsidies) are $2.00 and safeguard tariffs through November 2003 were $24.00. If the safeguard tariffs were deducted, the U.S. price would fall to $86.00, leaving a dumping margin of $14.00 or 16.2 percent of the U.S. price. If the countervailing duties are deducted, the margin would increase to $16.00 or 18.6 percent. The correct duty would be zero, because the U.S. price is higher than the foreign market price in this example."

He concluded, "Using artificial means to inflate dumping margins is a grossly unfair process to importers and U.S. users of domestic and imported products. We urge Congress to reject this unreasonable legislation."

For a copy of the DOC decision, listed in the "Notice of Final Results of Administration Review/Decision Memorandum," please go to: .

CITAC is a coalition of companies and organizations committed to promoting a trade arena where U.S. consuming industries and their workers have access to global markets for imports that enhance the international competitiveness of American firms. For additional information, visit the CITAC website at citac.info .