Timken Company
Canton, Ohio 44702
February 7, 2007

Hon. Charles B. Rangel, Chairman
Committee on Ways and Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington, DC  20515

Dear Chairman Rangel:

The Timken Company herein submits comments regarding what action, if any, the Committee should take with respect to the modification the Department of Commerce (“Commerce”) has proposed to its calculation of weighted average dumping margins in investigations.   These comments are submitted in response to the Advisory from the Committee on Ways and Means, dated January 31, 2007, requesting comments from the public on this matter.

For the reasons given below, we urge the Committee to vote, pursuant to Section 123(g)(3) of the Uruguay Round Agreements Act (19 U.S.C. § 3533(g)(3)), to indicate the disagreement of the Committee with the proposed contents of the modification announced by Commerce.^[1]  Further, we urge the Committee to take whatever other action may be necessary to ensure that the U.S. antidumping laws are not weakened through the implementation of erroneous and overreaching decisions of WTO dispute settlement panels and the Appellate Body.

The Timken Company is a U. S. manufacturing company that is a global leader in the manufacture of highly engineered bearings and alloy steels and a provider of related products and services.  It produces a wide range of antifriction bearings, including tapered roller bearings, ball bearings, cylindrical roller bearings, needle roller bearings, spherical roller bearings and spherical plain bearings.  It also produces a variety of steel mill products including bearing quality steel, alloy steel, and seamless steel tubing.  Timken is based in Canton, Ohio, and had worldwide sales in 2005 of $5.2 billion. 

The Timken Company is recognized around the world as an efficient producer of high quality bearings and steel.  Timken can compete with any other bearing or steel company so long as it competes on a level playing field.  Government subsidization and international price discrimination are forms of unfair trade that have been addressable under U.S. law for more than eighty years and, when injurious, have been recognized actionable by the GATT and now the WTO since 1948.  Dumping and subsidization distort international competitive outcomes by sending false market signals into the importing country as to sustainable or normal prices.  Our company has faced these types of problems in various markets, but particularly here in the United States, for more than three decades.  Dumping and subsidization reduce the profitability of domestic producers and over time reduce the ability of domestic producers to compete.  Let me be clear, Timken’s largest market for both steel and bearings is the United States.  Because our markets are the most free in the world, Timken is vulnerable to unfair traders that export to the U.S.  Timken also has production, distribution, and sales facilities all over the world. Therefore, Timken supports a liberalized global trading environment coupled with practical and effective means to combat unfair trade practices.   

Commerce’s proposed change in its dumping calculation methodology will potentially limit the effectiveness of the U.S. antidumping law and undermine the ability of the U.S. to combat unfair trade practices.  The Committee should not permit this.  Since the Antidumping Act of 1921, U.S. trade policy has provided a remedy to address the distortions that flow when international price discrimination results in low priced imports hurting producers and their workers.  The longstanding and consistent policy of the United States has been to fully address and remedy one hundred percent of dumping found.

Yet now, in response to a series of decisions of WTO dispute settlement panels and the WTO’s Appellate Body, Commerce proposes to change its approach to measuring dumping.  Making this proposed change to the way investigations are conducted would seriously and systematically reduce the identification and measurement of the actual dumping that has occurred under the comparison methodology Commerce has used in all investigations over the last twelve years.  This course is imprudent and unnecessary.

The WTO decisions that Commerce believes compel it to change its practice were wrongly decided.  They failed to properly interpret the WTO Antidumping Agreement and the GATT, they have failed to accord appropriate deference to the U.S.’ understanding of its rights and obligations, and they have, in fact, created obligations to which the U.S. never agreed, in violation of express provisions of the WTO Dispute Settlement Understanding.  The Administration has repeatedly criticized the reasoning and conclusions of the Appellate Body in the “zeroing” disputes, and other outside observers have likewise highlighted flaws in the reports.  Indeed, panelists with trade remedy backgrounds have repeatedly found that the U.S. construction of its rights was consistent with the Agreement.  However, the Appellate Body in a constantly shifting set of justifications, and without any members at the time of the EC zeroing decision who had trade remedy administration background have simply failed to honor the limits on their authority that are contained in the WTO Dispute Settlement Understanding.  Former U.S. negotiators, who hammered out the details of the Antidumping Agreement in the Uruguay Round, are on record stating they never agreed to demands by a few countries like Japan to change longstanding practice in the U.S. (and in all other major user countries).  The Appellate Body has simply made up new rules, and the effect of these new rules, if implemented, would be to reduce or eliminate the effectiveness of the U.S. antidumping laws.

In the past, Congress has identified the problem of WTO panels and the Appellate Body creating obligations never agreed to by the U.S. as a serious concern.  Congress pointed in the Trade Act of 2002 to a “pattern of decisions by dispute settlement panels of the WTO and the Appellate Body to impose obligations and restrictions on the use of antidumping, countervailing, and safeguard measures by WTO members under the Antidumping Agreement, the Agreement on Subsidies and Countervailing Measures, and the Agreement on Safeguards.”  That pattern has continued unabated and led to the current situation, wherein Commerce proposes to reverse decades of consistent U.S. trade policy in acquiescence to the erroneous and overreaching decisions of the WTO.  This is the wrong course of action.

The proper course is negotiating a resolution in the WTO Doha Round of trade negotiations.  The U.S. is a strong supporter of the WTO and its dispute settlement system, and it has an excellent record of compliance with adverse decisions.  However, the U.S., like all WTO Members, has options when panels and the Appellate Body fail to abide by the rules of the WTO Agreement, which prohibit findings and recommendations that add to or diminish the rights and obligations of WTO Members.  The U.S. may comply, as Commerce has proposed, or it may work to reach a negotiated solution, with the possibility that it may face retaliation.  The flexibility to negotiate a resolution of the dispute is built into the WTO framework.  The U.S. has already begun this process, raising the need for clarification of the Antidumping Agreement with respect to the “zeroing” issue in the Doha Round talks.  Commerce should not abandon its longstanding policy before the U.S. has had the chance to see this negotiation process through to completion.

 WTO dispute settlement panels and the Appellate Body cannot be permitted to create trade remedy rules.  That is what has happened in the “zeroing” disputes.  In light of Commerce’s proposed decision to change its dumping calculation methodology in investigations on the comparison methodology typically (to date always) used by Commerce, Timken urges the Committee to vote, pursuant to Section 123(g)(3), to indicate its disagreement with the proposed contents of the announced modification.  As this vote would not be binding on Commerce, Timken further urges the Committee to take whatever other action may be necessary to ensure that U.S. antidumping law is not weakened through the implementation of erroneous and overreaching decisions of WTO dispute settlement panels and the Appellate Body.

Thank you for your consideration of this important issue, and for the opportunity to submit these comments to the Committee.

Sincerely

Scott A. Scherff

[1] Antidumping Proceedings: Calculation of the Weighted–Average Dumping Margin During an Antidumping Investigation; Final Modification, 71 Fed. Reg. 77,722 (Dec. 27, 2006) (“Final Modification”).