National Clothesline

A bid by U.S. hanger makers to have a tariff imposed on hangers imported from China has been rejected by President George Bush.

The president’s decision went against a recommendation from the U.S. International Trade Commission, which earlier this year agreed with the domestic manufacturers that the U.S. industry needed relief from Chinese imports.

The petitioners, which included CHC Industries, M&B Metals Products Corp. and United Wire Hanger Group, alleged that rapidly rising imports of Chinese hangers were undercutting the market for U.S.-based manufacturers, depressing prices and adversely affecting their businesses.

In announcing its decision in January, the trade commission agreed with the petitioners, saying that hangers made in China “are being imported into the United States in such increased quantities or under such conditions as to cause market disruption to the domestic producers of like or directly competitive products.”

The commissioners offered various remedies, including a tariff as high as 30 percent on Chinese imports. Hanger makers were asking for a tariff as high as 50 percent, or about 1.85 cents per hanger.

But President Bush had the final say on the matter, and in late April the White House announced that there would be no tariff on wire hangers imported from China.

In a memorandum dated April 25, Bush said, “I find that import relief would have an adverse impact on the United States economy clearly greater than the benefits of such action.”

Bush noted that while most U.S. hanger makers would realize some benefit, a tariff would “disrupt the long-term adjustment strategy of one major producer, which is based in part in distribution of imported hangers, and cause the producer to incur substantial costs.”

He noted that other U.S. companies are also pursuing “adjustment strategies” that include consolidation, modernization of production facilitators and expansion into complementary products and services. They are also expanding their use of imports, which, he said, has contributed to the increase that the domestic makers decried.

The trade commission cited rapidly increasing imports from China in recommending for a tariff, noting that 405 million units were brought in from China in the first nine months of 2002. But Bush said that domestic producers still have 85 percent of the U.S. wire hanger market and “with this dominant share of the market, have the opportunity to adjust to competition from Chinese imports even without import relief.”

Even if a tariff were granted, Bush said, foreign production might shift to third countries which would not be subject to China-specific trade restrictions and thus domestic producers would not be benefited.

Bush also expressed concern for the impact a tariff would have on drycleaners.

“Additional tariffs would also likely have a negative effect on the thousands of small, family-owned drycleaning business across the United States that would either have to absorb the resulting increased costs or pass them on to their customers,” he wrote.

As an alternative to assisting domestic makers with tariffs on imports, Bush said he would ask the secretary of Commerce and the Secretary of Labor “to expedite consideration of any Trade Adjustment Assistance applications received for domestic hanger producers or their workers and to provide such other requested assistance or relief as they deem appropriate, consistent with their statutory mandates.”

The hanger makers’ petition was filed under a section of the Trade Act relating to China's accession to the World Trade Organization.

U.S. producers can obtain relief under this provision if the commission finds that increases of imports of Chinese products are causing market disruption for the domestic industry.

The statute states that market disruption “exists whenever imports of an article like or directly competitive with an article produced by a domestic industry are increasing rapidly, either absolutely or relatively, so as to be a significant cause of material injury, or threat of material injury, to the domestic industry.”