ASIANS ASSAIL RULING ON SWEATER DUMPING

ASIANS ASSAIL RULING ON SWEATER DUMPING

Representatives of Taiwan, South Korea and Hong Kong lashed out at the Commerce Department's decision to impose anti-dumping duties on man-made fiber sweaters they export to the United States.

"We don't feel it was a fair pricing analysis," said Sturgis Sobin, a Washington attorney representing Taiwan sweater makers.Mr. Sobin charged that the Commerce Department, which issued its ruling on Monday, erred in using penalty rates for nine of the 14 Taiwan companies cited in the probe, which was prompted by a complaint filed last September by the New York-based National Knitwear and Sportswear Association.

Three of those 14 companies have since gone out of business, a situation he attributed to rising labor costs and the appreciation of Taiwan's currency.

"The textile industry in Taiwan is under severe pressure," he said in a telephone interview Tuesday.

Under the preliminary ruling, which was announced Monday, importers and importing retailers now must post a bond covering the anti-dumping duties. Under U.S. law, it's illegal for foreign producers to pay, reimburse or underwrite these anti-dumping duties in any way.

Commerce is expected to issue a final ruling by July 5.

Mr. Sobin expressed confidence that the results will be different once the department "gets around to using a fair pricing analysis."

A Washington attorney whose firm represents Korean sweater exporters said he was "very pleased" with the extremely low levels of dumping margins cited against them, which ranged from 0.56 percent to 1.17 percent.

"It shows that the petitioners' allegations were totally unfounded," the attorney said.

Hong Kong was also assessed with relatively mild margins, but officials there reacted sharply nonetheless.

"It is an unreasonable move on the part of the U.S. textile industry, which is already protected by quotas and high tariffs," said Chris Jackson, Hong Kong's deputy director of trade.

Myong Hyun Sohn, economics minister at the Korean Embassy in Washington, said the duties were unjustified in light of the fact that the sweaters are already subject to quota restrictions.

"Additional anti-dumping charges would put our exporters at an extreme disadvantage," he said.

For Taiwan, however, the decision created a much bigger problem. Three of its manufacturers were found to be dumping at margins of 36.89 percent, while the margin for a fourth producer was set at 33.91 percent.

A spokesman for Rep. Marilyn Lloyd, a Tennessee Democrat who chairs the House textiles caucus, said, "It's a good thing that Commerce has recognized that the dumping practices are what disrupts the market."

The spokesman noted that the Multi-Fibre Arrangement, an international accord that permits importing nations to set quotas, is supposed to prevent market disruption but has been ineffective in doing so.

Ms. Lloyd introduced a bill on April 4 that would limit growth in textile imports to 1 percent annually.

In Hong Kong, Mr. Jackson called the ruling "protectionist" and said the government will work with the firms involved and the industry as a whole in an effort to get the penalties quashed.

Commerce Department investigators will conduct on-the-spot probes in the three Asian countries before the agency issues its final ruling.

Four Hong Kong companies were cited in the probe. A preliminary investigation exonerated two, Laws Fashion Knitters Ltd. and Crystal Knitters Ltd.

It found the case proven against the others - Prosperity Textiles Ltd., by a margin of 12.04 percent, and Comitex Knitters Ltd., by factor of 1.89 percent.

The main result of the ruling is that U.S. buyers from the companies found to be dumping must post cash or bond with the government equal to the perceived dumping difference.

Mr. Jackson reiterated the point that Hong Kong doesn't subsidize any industry and that textiles and garments are among the most fiercely competitive in the colony. "Man-made fiber sweater manufacturing is a highly fragmented industry. The trade has neither the means nor the motive to dump."

There are more than 7,000 Hong Kong firms engaged in the business. Knitwear exports to the United States last year earned HK$1.6 billion (US$205 million), the largest single market.

The rag trade overall accounts for nearly 40 percent of Hong Kong's domestic exports. Knitwear has been a dominant part of the sector for more than a decade.

"We are looking at whether there is anything we can usefully do direct to the U.S. government," Mr. Jackson said. "But we must be careful how we do this. It is a quasi-judicial procedure and we don't want to appear to be compromising (the team) or putting undue pressure on them. That could backfire."

He believes, however, there are "points we can legitimately make at a higher level" with the United States, particularly in the procedures used.

As an example, he cited the presumption that companies operate on an 8 percent profit margin and 10 percent administrative cost basis.