For Immediate Release
Office of the Press Secretary
March 3, 2004
Memorandum for the United States Trade Representative
SUBJECT: Presidential Determination on Imports of Certain Ductile Iron Waterworks Fittings from the People's Republic of China
Consistent with section 421 of the Trade Act of 1974, as amended
(19 U.S.C. 2451), I have determined the action I will take with
respect to the affirmative determination of the United States
International Trade Commission (USITC Investigation TA-421-4) regarding
imports of certain ductile iron waterworks fittings (pipe fittings)
from China. After considering all relevant aspects of the
investigation, I have determined that providing import relief for the
U.S. pipe fittings industry is not in the national economic interest of
the United States. In particular, I find that the import relief would
have an adverse impact on the United States economy clearly greater
than the benefits of such action.
The facts of this case indicate that imposing the USITC's
recommended tariff-rate quota remedy or any other import relief
available under section 421 would be ineffective because imports from
third countries would likely replace curtailed Chinese imports. The
switch to third country imports could occur quickly because the major
U.S. importers already import substantial quantities from countries
such as India, Brazil, Korea, and Mexico. Because importers' existing
inventories of imports will likely cover demand for approximately 6 to
12 months from the imposition of import relief, a switch from China to
alternative import sources would not likely lead to significant
additional demand for domestically produced pipe fittings, even
accounting for a time lag in making that switch. Under these
circumstances, import relief would provide no meaningful benefit to
domestic producers.
In addition, import relief would cost U.S. consumers substantially
more than the increased income that could be realized by domestic
producers. Indeed, the USITC estimated that its recommended remedy
would generate a negative net domestic welfare effect of between $2.3
million and $3.7 million in the first year alone.
While not necessary in reaching my determination that imposing
import relief would have an adverse impact on the United States economy
clearly greater than the benefits, it is also worth noting two
additional points:
$ First, evidence suggests that domestic producers enjoy a
strong competitive position in the U.S. market, and in fact the largest
domestic producer recently announced price increases nationwide ranging
from 8 to 35 percent. The two smaller domestic producers and the major
U.S. importers have publicly indicated that they would follow these
price increases.
$ Second, in 2002 and 2003, imports of this product have been
relatively stable in volume terms and have shown a slight decline in
value terms.
The circumstances of this case make clear that the U.S. national
economic interest would not be served by the imposition of import
relief under section 421. I remain fully committed to exercising the
important authority granted to me under section 421 when the
circumstances of a particular case warrant it.
You are authorized and directed to publish this memorandum in the
Federal Register.
GEORGE W. BUSH
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