Line Up for Higher Prices on Consumer Goods

May 28, 2004

Various U.S. corporate interests are lining up to use U.S. trade laws to limit competition and hit you where you live -- right in your pocketbook. Read about how these trade laws are being used to increase consumer prices and eliminate product choice.

U.S. trade law -- especially something called the 'anti-dumping law'--is increasingly being used to eliminate competition from the marketplace. And any grade school kid knows that when you limit competition prices go up.

So how can U.S. corporate interests get away with this? Simply by pointing a finger at foreign-made products and claiming that they are somehow "unfairly" traded. U.S. law allows domestic producers to petition the government to "level the playing field" in cases where a producer believes a foreign product is being sold at an unfairly low price. If the producer can convince several government panels that prices are "too low," then two things happen: 1) the U.S. imposes border taxes that make all the imported products more expensive and 2) the U.S. hands the revenue from these taxes, with no strings attached, to the corporations who bring the case.

And that's part of the problem. The trade laws have become as much about corporate welfare, at the consumer's expense, as they are about what is fair and what is "unfair." As a result of the revenue give-away, many more of these cases have been filed, and many of them are now aiming directly at retail consumer products, as opposed to wholesale products like steel or chemicals. Shrimp, TV sets and furniture are just a few of the new cases that now fill up the dockets in Washington.

Let's take a look at the merits of a couple of these cases:
TV Sets: On May 14, the International Trade Commission (ITC) ruled that "unfairly traded" imports of color TV sets from China are harming the U.S. industry. But what exactly is that industry? A single company, Five Rivers Electronic Innovations, which cannot produce enough televisions to meet U.S. consumer demand. In fact, without imports, there would not be enough television sets to go around. The upshot of this ruling is that a new tax of 23% will be imposed on TVs imported from China, effectively pricing these lower-price alternatives from the marketplace. Last year the United States imported $318.9 million worth of Chinese color TVs.
So what will this duty accomplish? Well, Five Rivers will get a nice check at the end of next year that they can use for whatever they like with no strings attached. And you, the consumer, are probably not going to buy a Five Rivers television set, if you need a new one. You'll buy a television made in Japan or Korea or assembled in the United States out of imported components. But that television will be more expensive. That's a guarantee.

It's a heck of thing to realize that the U.S. government, which often steps in to protect consumers and ensure that there is competition in the market place among domestic companies, will partner up with a small number of U.S. companies to limit competition if the competition comes from some place else. And even more shocking, the United States will collect taxes to drive up prices and then hand those taxes over to corporate America with no strings attached, under a provision known as the Byrd law. To refresh your memory of what the Byrd law does, please click here and read CWT's latest blast fax to Congress on this outrageous corporate giveaway.

Furniture: Another example of disgraceful conduct against consumers is the Chinese bedroom furniture case. The trade petition filed against wooden bedroom furniture from China was filed by a group of domestic furniture manufacturers who claimed that China was "dumping" its furniture on the U.S. market -- once again that means selling at a price that someone considers to be too low.

But the shady truth of this case is that these same American furniture manufacturers actually import Chinese bedroom furniture, themselves, for resale to American furniture retailers. In recent years, however, their customers--namely retailers like Crate & Barrel, The Bombay Company, and JCPenney, have wised up and begun importing their inventory directly from China, lowering their costs by side stepping the American manufacturers and the middle man costs. This is great for consumers, but not so good for the middle men. And that's what this "unfair" trade case is all about--it's a cynical attempt to block certain companies from importing so that American furniture retailers will be forced to buy directly from American manufacturers at higher prices. Guess who will end up paying the cost?

Not only will the American furniture manufacturing industry succeed in driving up the cost of bedroom furniture in America with tariffs, thanks to the Byrd Amendment it will be paid handsomely to do so. A conservative estimate is that annual Byrd money payouts for the corporations bringing this case will equal $180 million a year or nearly $6.6 million per company. Byrd Amendment payouts explain why the companies supporting the petition argue for the imposition of unreasonably high duties - as high as 440%! And all of this subsidy will come right from the pockets of American retailers and their customers through the taxes that would be imposed on imported bedroom furniture.

Shrimp: A third case which illustrates how deeply flawed our trade remedy laws and how politically motivated trade cases are is the anti-dumping suit against imports of frozen and canned shrimp. Most imported shrimp are grown on farms, a method of shrimp production which is far more economical than the American method of trawling for shrimp with nets on the ocean floor. American shrimpers cannot hope to meet domestic demand for shrimp, and yet they are trying to limit the supply of shrimp in the American market in order to drive up the price of their own product. Not only do American consumers pay a price for this ploy, but so does the environment which is harmed by trawling practices. To read more about the environmental cost of shrimp trawling, click here. The bottom line is that our American industry is trying to preserve an outmoded way of production, which harms the environment and drives up prices, and they are using international trade laws to get away with something that would never be tolerated otherwise.

Like their compatriots in the furniture industry, the shrimpers petitioning for trade relief will be able to pocket millions of dollars in revenues if they win their case.

As you can see, our government provides plenty of incentive to American industries to cynically exploit our trade remedy laws. And the cases continue to mount - next on the horizon is a case against swine imported from Canada. If the American industry succeeds, we'll be seeing the price of pork chops and ham increase.

Consumers for World Trade urges all American consumers to weigh in with their representatives about the need to reform U.S. trade remedy laws. CWT will help you compose a letter to your representative urging repeal of the Byrd Amendment. Removing this monetary incentive to filing suits against foreign products will reduce the number of cases against imports. Click here to send that fax.

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