Monday, September 23, 2013

Are We Winning the Fair Trade Battle?

AEC Past Chairman Duncan Crowdis
At this point, the answer is an easy one – ABSOLUTELY.  There are several key metrics to consider. The first is where we are winning and where we are losing on the various decisions from the Department of Commerce (DOC) and the US International Trade Commission (ITC) that support our case that Chinese aluminum extrusions were being illegally imported. The second question is the one that really counts: whether the orders of the DOC on duties related to aluminum extrusion imports from China are effective.

Let’s first look at the decisions of the DOC and ITC. The big win was the obvious one that culminated in the ITC decision in early 2011 that our industry was being injured by imported Chinese extrusions and then in April 2011 by the DOC that the Chinese producers were causing this injury through government subsidies and by “dumping” extrusions illegally into the U.S. Their decision to help “level the playing field” resulted in duties of up to 400 percent.

Subsequent to this obvious win, the DOC has dealt with numerous appeals (both from us, as well as the importers) and what are known as “scope requests”, which are simply requests for a decision on a specific product from a U.S. importer who believes the products they import from China do not fall under the scope of the Department of Commerce orders. Over the past 26 months, we have had 27 appeals and 51 scope requests. This process has involved the Department of Commerce, the Federal Court of Appeals and the Court of International Trade (CIT). In terms of strategy, we have tried to focus only on key cases which we defined as ones that have either a large direct impact on our industry or that, while perhaps representing a small part of the market, could create a precedent leading to decisions in the future that could be very significant for our industry.

Of the total 78 appeals and scope requests, 28 have been ruled in our favor, 10 have gone against us and 40 remain on-going – A LOT OF WORK and still a lot more to do.

As I mentioned in the last blog, we are currently fighting to turn around a recent trend of the Department of Commerce to simplify their decision-making process which has led to 6 negative rulings in the past 6 months.

HOWEVER, WE HAVE WON A LOT!  Without our involvement, this ratio would have been significantly weighted against us, effectively whittling away the positive impact we have experienced since the end of 2011 with a dramatic reduction in illegal imports.  To give you a feel, here are some significant wins on products that were challenged and ruled “in scope” by the Department of Commerce:
  • Unitized curtain wall systems – this was huge!!
  • The use of aluminum extrusions in heating and cooling systems
  • Solar shading systems
  • Kitted fencing systems
  • Awnings and railing systems
  • Drapery rail kits

Another big win for us was mentioned in the last blog, where we involved ourselves in the GPX tire case in order to attempt to turn around an incredibly negative and ridiculous ruling by the Federal Court of Appeals related to the ability of the DOC to apply countervailing subsidy duties to “non-market” economies like China. In the end, legislative changes were made that ensures both the countervailing subsidy and anti-dumping duties would live on in our case. In addition, we have won several appeals from companies attempting to get “special” rates.

But as you can see, we haven’t won them all.  Several examples of products ruled “out-of-scope” (i.e. no duties applied) were;
  • Heat sinks with significant fabrication called “finished heat sinks”
  • Solar mounting kits
  • Kitted stands and displays

The second key metric is THE goal that we started with and continue to hold up as the only real measurement of success: the need to “level the playing field”. And by doing so, has the industry been able to compete on what truly counts – quality and service? The answer to how effective this has been is a resounding ABSOLUTELY YES!!!

We continue to use the following chart that shows the amazingly dramatic and quick drop-off in imports that perfectly aligns with the dates of the preliminary ruling in Q3 2011. The nearly 500 million pounds that has “come back” to the domestic industry is the equivalent of about 33-35 8” presses working at 100% capacity.  I can’t think of anything more significant to our industry than this and, for now, the level of imports remains at these very low levels:

And so our actions have met with amazing success; however the resilience and persistence of the Chinese industry is clearly not going away and the moment we let down our guard, their march will continue.  I got involved because I care deeply about our business, our employees, our suppliers and our industry. Anyone that feels similarly and wants a hand in helping shape the future of our industry and YOUR BUSINESS should contact Rand Baldwin of the AEC.

Fair Trade – It Matters!

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This post was written by AEC Past Chairman Duncan Crowdis

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