By Jacob M. Schlesinger and Andrew Tangel
WASHINGTON -- Whirlpool Corp. won crucial backing from a
government panel in its bid to limit competition from foreign
washing machine makers, giving the Trump administration another
opportunity to invoke little-used powers to ramp up trade
enforcement.
The U.S. International Trade Commission voted 4-0 Thursday to
approve the petition from the Benton Harbor, Mich.-based
manufacturer seeking protection in the American market from South
Korean rivals Samsung Electronics Co. and LG Electronics Inc. The
vote came under a trade law that allows U.S. companies to win broad
protection if they can show they suffered "serious injury" from a
surge of imports.
The provision -- Section 201 of Trade Act of 1974 -- was last
used in 2002 by the Bush administration to impose steel
tariffs.
The Section 201 "safeguard" law was designed to offer U.S.
industries broader protection than anti-dumping laws.
The members of the ITC -- a bipartisan, independent panel --
will next consider what specific policies they believe should be
implemented. The deadline for the panel to send recommendations to
the White House is Dec. 4. The Trump administration would then be
required to make a decision by early next year on whether to impose
import limits.
The Trump administration hasn't yet commented on this specific
ITC case. But officials have said they would consider invoking the
rarely used "safeguard" law more frequently in their bid to take a
more aggressive stance on trade enforcement.
One of Mr. Trump's trade advisers, Peter Navarro, has spoken
sympathetically on the issue. In a speech earlier this year, he
blasted Samsung and LG for "precisely the kind of trade cheating
that must be stopped."
Mr. Navarro was referring to the fact that Whirlpool had
previously won protection against trade cases imposing duties on
Samsung and LG machines made in South Korea and Mexico under a
different, narrower trade law designed to shield U.S. companies
from goods that are allegedly "dumped," or sold unfairly below
cost. But the Korean makers got around those limits by shifting
production to China. When they would have faced subsequent tariffs
aimed at that country, they moved production to Vietnam and
Thailand.
Under Section 201, an American company seeking relief doesn't
need to prove wrongdoing by a foreign competitor -- only that it is
suffering "serious injury" from a sudden import surge. And unlike
dumping protections, which generally apply only to products from a
specific country, Section 201 curbs can be applied broadly to
imports from all over the world.
Whirlpool didn't immediately respond to a request for comment
after the trade commission's vote.
LG said it would seek a "fair application of U.S. trade
laws."
"This is Whirlpool's third effort to use government trade
actions to restrain competition," LG said. "Imposing restrictions
on imported washers will only hurt consumers by raising prices and
decreasing choices, while jeopardizing U.S. investment and job
growth."
Samsung said it was disappointed with the trade commission's
vote.
"We believe that safeguard remedies should not discriminate in
favor of one group of U.S.-based workers over another and should
not negatively impact a fair appliance marketplace for consumers,"
Samsung said.
But the potential curb could likely run afoul of global trading
rules. The 2002 Bush steel tariffs were removed a year later after
the World Trade Organization deemed them improper, and the law
hasn't been used since.
But the Trump administration has signaled a greater willingness
than its predecessors to dust off dormant trade powers, like
Section 201, and that has encouraged industries to seek such
relief.
The Whirlpool petition was the second such case to reach the ITC
this year after the long hiatus. The agency weighed a similar
request on Sept. 22 from the solar-panel industry seeking safeguard
protection from imports. The ITC voted 4-0 in favor of that
petition too, and is now considering specific remedies to propose
to the White House.
Whirlpool, once the dominant washing machine brand in the U.S.,
has faced rising competition from South Korean rivals and others.
Samsung and LG combined now make up roughly a third of the market,
about the same as Whirlpool's share. Whirlpool has faced a tripling
of imports of large residential washing machines over the past six
years, according to Panjiva, a trade analysis firm.
The South Korean firms say they have gained share through
innovation, not unfair trade practices.
"Consumer preferences shifted to design and style. Whirlpool
didn't keep pace," said John Herrington, a Samsung senior vice
president, during a September commission hearing. "How and where
consumers shopped for appliances changed. Whirlpool didn't
adjust."
Whirlpool attorney Jack Levy dismissed the claim as a "tired
argument," adding: "Whirlpool has made tremendous innovations in
its washer lineup over the years."
Even if the Trump administration does approve strict import
limits, Whirlpool is still likely to face intensifying competition
from Samsung and LG, which are both planning to start production in
the U.S.
LG is building its first-ever major U.S. factory, a $250 million
washing-machine plant near Clarksville, Tenn. Samsung announced
plans earlier this year to take over a former Caterpillar Inc.
plant in South Carolina, and estimated the project could lead to
nearly 1,000 new jobs by 2020.
Write to Jacob M. Schlesinger at jacob.schlesinger@wsj.com and
Andrew Tangel at Andrew.Tangel@wsj.com
(END) Dow Jones Newswires
October 05, 2017 12:26 ET (16:26 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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