April 10, 2008 Carlos M. Gutierrez The Secretary of the U.S. Department of Commerce 1401 Constitution Ave., NW Washington, DC 20230
Re:
DOC’s Determination of Steel Wire Garment Hangers from China under ITC Investigation Number: 731-TA-1123
Dear Mr. Gutierrez: This letter is to serve as a protest to the recent Department of Commerce’s (DOC) Preliminary Determination regarding the Anti-Dumping Order - Steel Wire Garment Hangers from China under ITC Investigation Number: 731-TA-1123 and to request that DOC renders a no tariff determination on the scheduled final determination of June 2nd, 2008 by the ITC and July 16th, 2008 by the ITA and cancel the release of scheduled order of July 23rd, 2008. It is respectfully requested that your office look into this matter more closely and find a reversal and allow free trade to take place, which makes America so great and our economy to prosper to an unprecedented level during the recent years. As a result of the DOC’s Preliminary Determination of March 19th, 2008, the price of the wire hangers imported from China artificially rose to new record high. As a result, US dry cleaners have been devastated paying already double or more for the same hangers which only a few months ago, which was priced at a reasonable rate. Wire hangers are a vital supply item in the operation of the dry cleaning business. There is no replacement for the wire hangers. This artificial rise on price already has made many dry cleaners to raise their cleaning price, passing on the additional costs to the customers. The only people who are financing the tariff are the US consumers. The primary purpose of protective tariffs is to protect our domestic workers and industry as a whole from an unfair competition by foreign producers selling in the US below the fair market price. If a major US industry loses to foreign competition due to an unfair competition, US workers will lose their jobs and will experience financial hardship. As a result, the workers are likely to be laid off from work and unable to pay their mortgages and bills and their children will not be able attend college and workers will even resort to seeking public benefits. Under these circumstances, society as a whole will suffer due to a break down of an industry. Clearly
the spirit and the intent of the tariff law is to protect the US workers and its industry from an unfair foreign competition where the injection of goods from abroad is not for the purpose of competing in the free market but rather to cause harm in the US business infrastructure. Throughout the US history, protective tariffs have been used as a valuable tool to seek justice in the market place. However, in our case, the use of protective tariff fails to meet any reasonable conclusion. Since 2002, under the free market policy embraced by the US government, the import of steel wire hangers increased more than 800 percent, while, unfortunately, all but three US manufacturers have closed down its wire hanger business. Other prior manufacturers have moved their manufacturing operation to China (and thus becoming importer of wire hangers) or retooled and entered a different business line. As of today, it is clear that there is only one meaningful manufacturer left – M&B Metal Products Co., Inc., which is employing approximately 80 workers engaged in the production of wire hangers. The other two companies that are producing hangers in the U.S. are very small and the number of employees involved in the production can not be quantified. Clearly then today, there is no wire hanger industry or US workers to protect other than one hundred workers or so combining all three manufactures. Therefore, the benefit that would derive from the rise of tariff is so minimal and negligible, and the harm that would cause to the US economy is so much greater. The imposition of the tariff will have an effect of protecting only about one hundred US workers, majority of who are working for M&B Metal Products Co., Inc. On the other hand, it will increase the price of dry cleaning services which will pay for the increase in price of the wire hangers at wholesale level, which then will pay for the artificial rise in price due to DOC’s tariff levy. Only the US consumers will be paying for the tariff put on the hangers produced in China and the benefit derived from this drastic act will affect only about one hundred US workers, which is negligible in the context of totality of circumstance. This tariff will be looked as a de facto financial aid and illegal business protection of M&B Metal Products Co., Inc. and it will create unwarranted suspicion behind the DOC’s act. As stated above, the petitioner of the tariff, M&B Metal Products Co., Inc. ("M&B") is the only meaningful US manufacturer who still produces hangers in the US and the other two companies that are producing hangers in the U.S. are very small and the number of employees in the manufacturing of the hangers can not be even quantified. Therefore, a protective tariff levied on the Chinese manufactured wire hangers is a de facto financial assistance for M&B. A protective tariff, that fails to protect a domestic industry as a whole is equivalent to a private bill. In this case, since the number of workers engaged in this low-tech manufacturing business is so negligible, it is reasonable to conclude that there is no industry to protect in the US at this time. If the DOC wanted to protect the US wire hanger industry, then it should have done more than 10 years ago when the Chinese and other foreign made wire hangers started to infiltrate the US hanger market with lower priced items. According to the February 2007 Fortune magazine, CINTAS CORP, a major provider of uniforms to many industries and the last
major US wholesale customer to the US manufacturer, signed up to purchase all of its wire hangers from China. Clearly today, there is no industry to protect by raising of tariff and no US workers to protect by raising the tariff other than the hundred or so workers. It is only reasonable to conclude that an imposition of the tariff is too high of price to pay by the US citizens to protect only hundred or so US jobs at this time. It would be much more efficient and logical to provide training of different up-to-date usable skills to these individuals if the DOC really wants to assist these hundred or so workers. Therefore, DOC's willingness to implement such a tariff on the Chinese made wire hangers to protect hundred or so employees utterly fails to meet the cost-benefit analysis where the law was clearly passed to protect US workers and an industry, not an individual company. When there is no US industry to speak of, the law should not be applied. The artificial rise of the hanger price would only burden on the US customers, especially during these difficult economic times when the prices for gas, bread and butter are all time high. The DOC's measure will only create additional financial hardship to hardworking US workers who try everyday to put food on their table for their families. Also, this protective tariff is only a temporary savior for these US workers. Even if DOC implements the protective tariff, and thus allows these workers to keep working today, tomorrow will surely bring change. The companies presently manufacturing hangers in China will simply move its production to a nearby country where tariff is not imposed and will manufacture the wire hangers using lower wage workers than current Chinese workers. In this international business world, it will take only a few months to ship the machines and re-establish full production capacity. How will the DOC then protect the hundred or so workers when wire hangers come from countries other than China at even lower prices. In addition, this protective tariff fails to conform to the current President's Administration policy. It has been a long standing tradition and closely followed policy to embrace international free trade. Under this international free trade policy, it was understood that the US government will not protect low-technology industries, such as wire hanger manufactures which is staffed by low paying jobs and will only guard high-technology industries which is serviced by high paying jobs. This international free trade oriented policy made sense because low technology industries usually can only provide low paying jobs and cause environmental harm unlike the high technology businesses. Firm belief in this international free-trade policy was closely followed by the present Administration when it rejected petition for tariff on Chinese manufactured hangers in 2002 by Laidlow Company. In 2002 it would have been reasonable to assume that there was an US industry to protect and a sizable number of US workers to protect by raising tariff. However this is not the situation today. DOC’s analysis in arriving at the rate of tariff is troubling. DOC claims that market price should be determined based on the fair market price of products manufactured by US companies. It is, however, completely unreasonable at this time to determine the domestic fair market
production price of wire hanger when only one company is manufacturing the product. The price can not be considered a fair market value when there is no true domestic competition to evaluate. There is no "fair" in price since one company can determine what a "fair" price is. Therefore, even if the ITC and ITA would want to levy tariff, their formula for calculating the fair market price cannot be considered as being logical or reasonable. It would only result in a sentiment that this protective tariff is only to favor only one small private company, M&B. Finally, the usage of the protective tariff must be always used with greatest caution by the DOC. It can backfire. China, which is our greatest trading partner, can initiate imposition of high tariffs on US high-tech exports to China that US workers produce in the US. Then they will surely suffer too. Then, the loss of jobs of these high-tech workers will certainly cause even greater harm to our economy than the hundred or so jobs that are in jeopardy today. In light of the foregoing, we respectfully request for the ITA and ITC to reconsider the tariff issued under the Preliminary Determination of March 19th, 2008, and find a reversal, allowing free trade to continue which makes our country so great. US workers should not fear the change in the economy but to embrace the new high technology industry and lead into the future of new global economy. It is often said that "Americans are the greatest workers and the bravest people". Let us live true to this motto and not hide behind a futile and ill conceived tariff, which serves no one but the petitioner, M&B Metal Products Co., Inc.
Sincerely Yours,
Name, Title