National Clothesline

Tariffs on wire hangers and other steel products imported from China are being circumvented, resulting in multi-billion dollar losses to the U.S. treasury and harming domestic makers, according to a coalition of U.S. manufacturers.

Two years ago, after imported hangers from China had come to dominate the U.S. market, the Department of Commerce agreed with the lone remaining domestic manufacturer that the Chinese hangers were being sold at less than fair market value in this country and placed tariffs ranging from 33 percent to 221 percent on hangers made by companies in China.

The immediate affect was an uptick for the domestic industry, but that didn’t last long.

“We started hearing from our distributors that their customers were buying hangers in boxes with labels that said ‘Made in Korea’ or ‘Made in Vietnam,’ said Milton M. Magnus III, owner of M&B Hangers in Leeds, AL. His company is one of six members of the Coalition for Enforcement of Antidumping and Countervailing Duty Orders.

“If you pulled the label off, the printing on the box read ‘Made in China.’ They were shipping through companies in these countries that were supposed to be the manufacturer, but, in fact, were not,” Magnus said. “Then they got more sophisticated, simply printing new boxes that read ‘Made in Korea’ or ‘Made in Vietnam,’ doing away with the re-labeling.”

The coalition identified the practice of shipping products to the U.S via third countries, then falsely designating it as the country of origin to evade the duties as “transshipment.”

According to the coalition, during the six months from January to June 2009, following the issuance of an antidumping order, steel wire hangers imported from Taiwan increased to 144.7 million from 153,998 in the same period of 2008, despite there being no meaningful production of steel wire hangers in Taiwan.

Such practices resulted in uncollected duties of more than $12 million on Chinese hangers transhipped through Taiwan since January 2009, the coalition estimates.

Similar transshipment cases exist involving Vietnam, Korea, Hong Kong, Canada and Mexico, the coalition said.

The coalition, which also includes U.S. makers of steel nails, innerspring units and carbon threaded rod, is calling on members of Congress, the U.S. Department of Commerce, and U.S. Customs and Border Protection for stronger enforcement of existing antidumping orders that were intended to maintain a level playing field for U.S. manufacturers and their workers.

The coalition advocates both administrative and legislative solutions, including collecting cash deposits on suspect subject merchandise at points of entry to the United States, stationing at least one Customs and Border Protection official at each of the major seaports and land border crossings to concentrate on enforcement, incorporating specific enforcement language into the Customs Reauthorization Act and expanding the authority of the Department of Commerce to include investigation of transshipment and other evasion activities.

Magnus said M & B now has hanger machines sitting idle and that employment is down 15 percent over the last 14 months. The factory runs three shifts and currently employs 100, but he estimates that he could add another 50 workers and double production if business was where it should be.

Magnus noted that another U.S. hanger manufacturer that started production after the 2008 ruling has since shut down.

He estimated that there were six large hanger manufacturers in the U.S. a few years ago, but their numbers diminished as Chinese imports increased.

In 2002 M&B joined with several other U.S. hanger manufacturers in petitioning for a tariff on Chinese hangers, saying that the imports were undercutting the market for U.S.-based manufacturers, depressing prices and adversely affecting their businesses.

That appeal for help was turned down in April 2003. The Bush administration noted at the time that domestic producers still had 85 percent of the U.S. wire hanger market and “have the opportunity to adjust to competition from Chinese imports even without import relief.”

In 2002, the International Trade Commission found that 405 million hangers came from China in the first nine months of that year, an annualized rate of about 540 million. By the time M & B filed its second appeal — after most other domestic makers had closed shop — Chinese hangers had taken over the market.

In 2005, the Commerce Department said Chinese imports accounted for just over one billion hangers at a value of $31.4 million, an average of about 3 cents per hanger. In 2006, 1.77 billion hangers were imported and by 2007 it was up to 2.7 billion hangers with a value of $68.5 million, with the average cost per hanger down to 2.5 cents.



		National Clothesline


Hanger tariff not working, group says



	Tariffs on wire hangers and other steel products imported from China are being circumvented, resulting in multi-billion dollar losses to the U.S. treasury and harming domestic makers, according to a coalition of U.S. manufacturers. Two years ago, after imported hangers from China had come to dominate the U.S. market, the Department of Commerce agreed with the lone remaining domestic manufacturer that the Chinese hangers were being sold at less than fair market value in this country and placed tariffs ranging from 33 percent to 221 percent on hangers made by companies in China. The immediate affect was an uptick for the domestic industry, but that didn’t last long. “We started hearing from our distributors that their customers were buying hangers in boxes with labels that said ‘Made in Korea’ or ‘Made in Vietnam,’ said Milton M. Magnus III, owner of M&B Hangers in Leeds, AL. His company is one of six members of the Coalition for Enforcement of Antidumping and Countervailing Duty Orders. “If you pulled the label off, the printing on the box read ‘Made in China.’ They were shipping through companies in these countries that were supposed to be the manufacturer, but, in fact, were not,” Magnus said. “Then they got more sophisticated, simply printing new boxes that read ‘Made in Korea’ or ‘Made in Vietnam,’ doing away with the re-labeling.” The coalition identified the practice of shipping products to the U.S via third countries, then falsely designating it as the country of origin to evade the duties as “transshipment.” According to the coalition, during the six months from January to June 2009, following the issuance of an antidumping order, steel wire hangers imported from Taiwan increased to 144.7 million from 153,998 in the same period of 2008, despite there being no meaningful production of steel wire hangers in Taiwan. Such practices resulted in uncollected duties of more than $12 million on Chinese hangers transhipped through Taiwan since January 2009, the coalition estimates. Similar transshipment cases exist involving Vietnam, Korea, Hong Kong, Canada and Mexico, the coalition said. The coalition, which also includes U.S. makers of steel nails, innerspring units and carbon threaded rod, is calling on members of Congress, the U.S. Department of Commerce, and U.S. Customs and Border Protection for stronger enforcement of existing antidumping orders that were intended to maintain a level playing field for U.S. manufacturers and their workers. The coalition advocates both administrative and legislative solutions, including collecting cash deposits on suspect subject merchandise at points of entry to the United States, stationing at least one Customs and Border Protection official at each of the major seaports and land border crossings to concentrate on enforcement, incorporating specific enforcement language into the Customs Reauthorization Act and expanding the authority of the Department of Commerce to include investigation of transshipment and other evasion activities. Magnus said M & B now has hanger machines sitting idle and that employment is down 15 percent over the last 14 months. The factory runs three shifts and currently employs 100, but he estimates that he could add another 50 workers and double production if business was where it should be. Magnus noted that another U.S. hanger manufacturer that started production after the 2008 ruling has since shut down. He estimated that there were six large hanger manufacturers in the U.S. a few years ago, but their numbers diminished as Chinese imports increased. In 2002 M&B joined with several other U.S. hanger manufacturers in petitioning for a tariff on Chinese hangers, saying that the imports were undercutting the market for U.S.-based manufacturers, depressing prices and adversely affecting their businesses. That appeal for help was turned down in April 2003. The Bush administration noted at the time that domestic producers still had 85 percent of the U.S. wire hanger market and “have the opportunity to adjust to competition from Chinese imports even without import relief.” In 2002, the International Trade Commission found that 405 million hangers came from China in the first nine months of that year, an annualized rate of about 540 million. By the time M & B filed its second appeal — after most other domestic makers had closed shop — Chinese hangers had taken over the market. In 2005, the Commerce Department said Chinese imports accounted for just over one billion hangers at a value of $31.4 million, an average of about 3 cents per hanger. In 2006, 1.77 billion hangers were imported and by 2007 it was up to 2.7 billion hangers with a value of $68.5 million, with the average cost per hanger down to 2.5 cents.