TPAT Wins Historic China Trade Victory, Preserves Opportunities for U.S. Garment Hanger Manufacturer
President George W. Bush, responding to arguments from Tighe Patton Armstrong Teasdale, decided on April 25, 2003 to reject the recommendation of the U.S. International Trade Commission (ITC) to impose heavy tariffs on imports of Chinese steel wire garment hangers. In only the second case to be brought under a new international trade statute related to China’s accession to the WTO, the President determined that the adverse effects on the U.S. economy would outweigh any benefits to the U.S. producers seeking the import tariffs. The President’s decision cited concerns that tariffs would hurt American dry cleaners, many distributors and TPAT’s client, the second biggest U.S. supplier of steel wire garment hangers. President Bush further noted that American wire hanger manufacturers, who continue to dominate the market, have significant resources available to respond to increasing Chinese imports.
“We’re very pleased to have been able to play a part in this historic case,” noted partner Patrick B. Fazzone. “This case proves that the concerns of all interested parties and not just the petitioners will be duly considered in cases brought under this new trade law.” The case was initiated under section 421, a federal statute implementing a key but little-known provision in the U.S.-China agreement that led to China’s admission to the World Trade Organization. Section 421 gives the ITC authority to recommend trade restrictions for any “rapidly increasing” Chinese imports that amount to “a significant cause of material injury, or threat of material injury to the domestic industry.” Several domestic wire hanger manufacturers filed a complaint last November alleging that they had been harmed by Chinese imports. In February, the ITC recommended substantial tariffs on Chinese wire hangers to reduce Chinese imports.
But to TPAT’s client, Laidlaw Corporation (the only domestic wire hanger manufacturer to oppose the complaint), the ITC’s decision was short-sighted. Several years ago, Laidlaw signed a cross supply agreement to source some of its hangers from a leading Chinese manufacturer and to supply other dry cleaning related products to its Chinese partner. “Laidlaw looks at China and sees opportunity, not danger,” said Patrick Fazzone. “China has a growing middle class which is demanding dry cleaning services that never used to exist in China. They see China as a major new market for their dry cleaning products, and felt that partnering with one of China’s new leaders in the dry cleaning business was the way to exploit this new market.” Laidlaw’s agreement has provided side-benefits helping Laidlaw to compete more effectively in the ever-changing American dry cleaning market. According to Laidlaw President Curt Livermore, “Tighe Patton Armstrong Teasdale was instrumental in keeping destructive tariffs from undermining that relationship.”
“The key to victory in one of these cases is understanding the statutory scheme and the agencies responsible for their enforcement,” Mr. Fazzone remarked. “A section 421 proceeding requires the ability to respond and mount an effective case in a very short period of time. The statute requires the ITC to rule within sixty days of the complaint and instructs the President to issue his decision within sixty days of that. We are very fortunate to have the experience in trade cases generally and the internal resources to meet the demand of these types of proceedings.”
Thomas Bottini, a partner in International Law in Armstrong Teasdale’s St. Louis office and Head of the firm’s International Section, was equally pleased. “With our Washington, D.C. presence and Shanghai office, we are able to offer our clients one-stop services to any client seeking to do business with China. We feel that our victory in the wire hangers case demonstrates once again our ability to deliver full-service, high quality legal solutions to foreign companies seeking to do business in the United States and to American companies seeking to enter or expand further into international markets.”
For further information on the wire hangers case, please contact Patrick Fazzone at (202) 454 2856 or Thomas Bottini at 1-800 243 5070. A copy of the President’s decision can be obtained from the USTR’s web site: www.ustr.gov.