October, 1998

Some want to try different direction in anti-dumping action

by Matt McCallum

While everyone in the U.S. apple industry agrees something must be done to stop the flood of cheap apple juice concentrate into the country, not all agree on how to get it done.
The U.S. Apple Association is moving forward with an investigation on if and how a dumping petition should be filed with the Department of Commerce and International Trade Commission.
Roy Hackert, president of Mason County Fruit Packers, a Michigan grower-owned cooperative which processes apples and owns Indian Summer, an apple juice manufacturer, believes a different route should be taken.
"This is absolutely killing us," he said. "We have to sell at levels that equate to China. The cheap price is killing growers on both ends because of the low prices for juice apples and on the income statement for the cooperative because of low finished goods prices. We could just have to give it up, but growers need a good home for their fruit. We need some quick action, faster than what USApple is taking."
USApple has hired international trade lawyers to evaluate both the legal and economic merits of an antidumping case - the first step in preparing an antidumping petition with the U.S. Department of Commerce.
The law firm will determine who has legal standing to file a petition, who in the U.S. industry should be defined for purposes of proving injury and the economic factors that would influence the Department of Commerce and International Trade Commission to rule in favor of a dumping petition. Once this is done USApple will give a recommendation on who should file the petition. This recommendation could come by mid November.
If a petition is filed it will take up to six months to get a ruling. If the ruling is in favor of the U.S. industry duties can be imposed immediately.
Hackert believes the industry should instead use Section 201 of the General Agreement on Trade and Tariffs. Under Section 201 if it can be shown that an increase in imports are a "substantial" cause of serious economic injury, as judged by the International Trade Commission (ITC) then the president can impose import duties or put quotas on the imports of that product.
USApple President and CEO Kraig R. Naasz said Section 201 is rarely used because the burden of proof is much higher than by filing an anti-dumping petition with the Department of Commerce. Under 201 it must be proven that the increase in imports are the "substantial" cause of economic hardship. Other causes including increased production and stagnant sales are also factored in and could undercut the case, Naasz said.
Farm Bureau used Section 201 against cheap apple juice concentrate from Argentina in 1986. The ITC ruled 2-1 that it didn't meet the test.
The Michigan Department of Agriculture is considering requesting that Gov. John Engler, under 201, ask the Clinton administration to investigate whether cheap juice concentrate imports are harming apple growers. MDA Director Dan Wyant said the department is looking into the issue.
"We can call on the president to help, but we must back it up," he said. "We are working hard on getting the economic impact data we need to make sure we can make a case. That will take two or three weeks. With that we will then need the support of the apple industry here and across the nation to pursue going to the president."
Hackert hopes the MDA decides to take action soon.
"If we go the way USApple wants us to, it will take too long and we won't be here," Hackert said. "If we put it in the hands of Michigan this problem could be corrected."
Naasz said that he appreciates Hackert's position, but respectfully disagrees.
"We have looked at all potential remedies and come to the anti-dumping statute that will give us the best redress," he said. "We don't want to dive ahead first to no avail. The process is complex and time consuming, but one has to keep in mind we have to do it this way if we want to succeed at the end of the day to secure a kind of relief the system is designed to give."
Wyant also agrees that while growers are frustrated and want action now, the right course of action must be taken.
"It's politically easy to say let's have the president look at it, but we have to respond under the 201 document and if we can we will."
Even if the ITC ruled, under Section 201, that increased imports are a "substantial" cause of serious economic injury, there is doubt that the president would impose import duties or put a quota on the imports of apple juice concentrate because the administration is pro free trade.