Volkert Precision Technologies, Inc.
February 6, 2007
The Honorable Charles B. Rangel
Chairman
Committee on Ways and Means
1102 Longworth House Office Building
Washington, D.C. 20515
Dear Mr. Chairman:
On behalf of steel consuming industries, I am writing to
encourage support for implementing the Department of Commerce’s recent decision
to abandon the WTO-illegal practice of zeroing, in which negative price
comparisons are inaccurately treated as though they were zero. Abandoning
zeroing will result in significant benefits to U.S. manufacturers and the
economy as a whole.
In antidumping proceedings the Commerce Department compares
all U.S. sales of an imported product to a normal value (usually the home
market selling price) to determine whether, and the extent to which, dumping
(sales at less than normal value of the product as a whole) has taken place.
Zeroing refers to the practice employed by the Commerce Department of
considering only those U.S. sales where normal value is greater than the U.S.
price, and ignoring transactions where the reverse occurs, instead setting such
negative comparison transactions equal to zero.
Under this practice, the weighted average margin of dumping
is calculated without taking into account negative comparison sales. Zeroing
is currently used in investigations and administrative reviews, as well as
other proceedings under the antidumping law. The Department’s current practice
of zeroing has been ruled inconsistent with U.S. WTO obligations several times.
The effect of zeroing is not only contrary to WTO agreements
that the United States has signed, but it also runs contrary to the best
interest of the United States. The appropriate measure of the effect of
dumping on the U.S. economy is to treat all sales equally. Zeroing does not
accurately assess a sale in the United States of an imported product at a price
greater than its home market selling prices. Rather, the law must recognize
that it counterbalances sales at less than the normal value for that product.
U.S. manufacturers need and deserve an accurate calculation
of dumping duties. Both consumers and producers are entitled to it.
Manufacturers rely on vigorous competition in securing their supplies of raw
materials and components, and face tremendous use competition from global
suppliers of their products. Zeroing inflates the duty (tax) paid by importers
raising costs of U.S. manufacturers, including industrial consumers of steel
and other industrial products used in the manufacture of component parts and
end products making it that much harder to compete in the United States. The
unintended consequence of zeroing is that it encourages manufacturers to look
to other countries as a base for manufacturing the entire product.
The WTO decisions on zeroing are in keeping with the letter
of the WTO Antidumping Agreement, properly concluding that a product “as a
whole” under investigation or review is the subject of a dumping margin
calculation, and not the individual sales transactions. These decisions
represent the law of the WTO, and PMA urges the U.S. authorities not to defy
the law established in these cases, but rather seek changes—if indeed such
changes are in the national interest—through the established processes of the
WTO.
The time has come for zeroing to be abandoned. Zeroing imposes
a tax higher than permitted by international rules and harms U.S. manufacturers that rely on competitive international markets for their raw materials
and other production input.
Yours truly,
KJ Heim
Volkert
serves many markets and countries most major electronics companies among its
customers. Other markets include Cathode Ray and other Tube manufacturers;
Telecommunications; Connectors; Surge Protection; Bearings; Potentiometer;
Automotive; Semiconductor; Relay; Computer; Photographic Suppliers and medical
industries. Volkert employs 52 people and has been in the stamping business
since 1935.
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