By William Mauldin and Andrew Tangel
Whirlpool Corp. plans Wednesday to ask the U.S. government to
impose broad barriers on imports of household washing machines,
part of the company's efforts to fight what it calls unfair trade
practices by South Korea-based rivals spanning half a dozen
countries, company executives said late Tuesday.
The case would go to President Donald Trump's desk if an
independent commission agrees with Whirlpool's claims. Mr. Trump
and his advisers have repeatedly vowed to dust off rarely used U.S.
trade law to block foreign imports and bolster American
manufacturers.
The Benton Harbor, Mich.-based Whirlpool has been fighting since
at least 2011 what it and U.S. officials have called the dumping of
washing machines made by Samsung Electronics Co. and LG Electronics
Inc. in several countries. Samsung and LG have previously denied
violating trade rules. An LG spokesman declined to comment, saying
the company hadn't seen Whirlpool's request to the government. A
Samsung spokeswoman didn't immediately respond to a request for
comment.
Whirlpool is asking the U.S. International Trade Commission to
weigh in on what it says is a doubling of imports of large
residential washing machines and the potential injury the American
industry is facing. If the commission -- an independent body that
includes Democratic and Republican appointees -- finds an increase
in washer imports that may be a substantial cause of serious
injury, the Trump administration could respond this year by
imposing broad tariffs or other measures on washer imports via a
process known as "safeguard" or "Section 201" of trade law.
"We believe in free trade, but it doesn't work if people don't
obey the rules and follow the laws," said Aaron Spira, chief legal
officer for North America at Whirlpool Corp. "We have to look for
other options that will solve the issue."
Whirlpool's long-term battle against Samsung and LG has already
caught the attention of the Trump administration, which has warned
of using rare presidential powers and U.S. legal provisions to
punish trading partners, even at the risk of retaliation. The case
could also provide a window into how far the administration will go
in bigger cases involving steel, aluminum or other industries.
At a gathering of economists earlier this year, Peter Navarro,
head of the White House Office of Trade and Manufacturing Policy,
said the washer fight shows "precisely the kind of trade cheating
that must be stopped."
"This heartland of America icon is grappling with a practice
called country hopping, in which two of its South Korean
competitors, LG and Samsung, simply move their production to
another country each time Whirlpool wins an anti-dumping case
against them," said Mr. Navarro, one of Mr. Trump's most hawkish
advisers on trade.
"Safeguard" actions such as Whirlpool's current case don't
require the company to show dumping by foreign competitors, and
they are much rarer than the run-of-the-mill trade cases that
impose tariffs on dumped or subsidized goods from a particular
country -- and often a particular producer.
Earlier this year, a solar-cell producer petitioned the U.S.
commission for tariffs against imported solar cells. Former
President George W. Bush imposed broad steel tariffs using a
safeguard provision in a case that drew widespread criticism from
the European Union and other major trading partners, highlighting
the risks of such broad actions.
Whirlpool's expected request signals a tougher tack for the
manufacturer in a yearslong battle with Samsung and LG as it has
lost market share.
Whirlpool's brands accounted for 35% of U.S. washing-machine
sales at the end of last year, down from 40% in 2012, according to
TraQline data compiled by the research firm Stevenson Co. Samsung
and LG's combined market share jumped to 35% from 22% four years
ago.
To combat what it has charged is unfair competition, Whirlpool
has sought and won rounds of tariffs from U.S. regulators in recent
years.
But each time, Samsung and LG have been able to avoid the
tariffs by moving production -- first from Mexico and South Korea
to China. Faced with the most recent U.S. tariffs last year,
Samsung and LG moved washer production to Vietnam and Thailand,
rendering American trade actions moot.
Whirlpool estimates that U.S. imports from South Korea, China,
Thailand, Mexico and Vietnam have doubled to about 3.2 million
units in 2016, compared with 2012 levels.
Samsung and LG have denied they are underselling Whirlpool and
insist they obey U.S. trade rules. They have said they are winning
over American customers with greater reliability, better bells and
whistles and sleeker designs.
"We don't have the same innovation they do," a Samsung attorney
told U.S. trade regulators in December, referring to Whirlpool. "We
don't have the same price strategy they do. We don't appeal in all
the same segment of the markets."
The practice of "country hopping" to avoid duties has long
occurred in other industries, such as steel and aluminum. U.S.
companies allege that tariff-eligible metals from countries like
China are shipped to Vietnam, where they are undergo final
processing and are then imported into the U.S. duty free.
But the Whirlpool dispute is unique because involves foreign
rivals that have shifted the entire production of complex consumer
products -- not just commodities -- to other countries. Some
experts predict trade disputes like these will increasingly become
a challenge for Mr. Trump, who has vowed to protect American
manufacturers and factory workers.
Samsung and LG are already planning their next move -- both plan
to start producing in the U.S.
Write to William Mauldin at william.mauldin@wsj.com and Andrew
Tangel at Andrew.Tangel@wsj.com
(END) Dow Jones Newswires
May 31, 2017 00:15 ET (04:15 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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