Memorandum for the United States Trade Representative (China)(Trade)

Subject: Presidential Determination on Pedestal Actuator Imports from the People's Republic of China

Pursuant to section 421 of the Trade Act of 1974, as amended (19 U.S.C. 2451), I have determined the action I will take with respect to the affirmative determination of the United States International Trade Commission (USITC) regarding imports of pedestal actuators from China. The USITC, on the basis of its investigation (No. TA-421-1), determined that pedestal actuators from 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.

After considering all relevant aspects of the investigation, I have determined that providing import relief for the U.S. pedestal actuator industry is not in the national economic interest of the United States. In particular, I find that the import relief would have an adverse impact on the United States economy clearly greater than the benefits of such action.

In determining not to provide import relief, I considered its overall costs to the U.S. economy. The facts of this case indicate that imposing the USITC's recommended quota would not likely benefit the domestic producing industry and instead would cause imports to shift from China to other offshore sources.

Even if the quota were to benefit the primary domestic producer, the cost of the quota to consumers, both the downstream purchasing industry and users of the downstream products, would substantially outweigh any benefit to producers' income. The USITC's analysis confirms this conclusion.

In addition, downstream industries are already under pressure to migrate production offshore to compete with lower-cost imports of finished products. Higher component costs resulting from import relief would add to this pressure. Given the significantly larger number of workers in the downstream purchasing industry when compared with the domestic pedestal actuator industry, I find that imposing import restrictions would do more economic harm than good.

Finally, a quota would negatively affect the many disabled and elderly purchasers of mobility scooters and electric wheelchairs, the primary ultimate consumers of pedestal actuators.

You are authorized and directed to publish this memorandum in the Federal Register.

Just so you all know where I stand on this:

The facts of this case indicate that imposing the USITC's recommended quota would not likely benefit the domestic producing industry and instead would cause imports to shift from China to other offshore sources.

I agree with this. I am not against trade at all, hence this company probably would not get 'overall' protection had I been elected President.

However IMO, it will be a much better boon to America to have that shift. China is not a huge boon market for the US.

If we say, spread $50 billion worth of imports from China, and spread them over say 20 competing smaller countries it will be MUCH better for the US.

First we can guarantee market access for other products under that scheme (let us in or don't get the plant)...Secondly in placing a plant in a smaller economy, it creates much better micro economic environments. For example, if we put an electric motor plant in the tiny island nation of Samoa, it would have several effects: First it would employ much of the population. Secondly it would be a massive boom in their economy. Wages would increase, but the products being shipped to the US would still have import price tags on them (albeit not China cheap, but still pretty darn profit making cheap). On top of that, US companies would be able to sell to these new consumers.

Where the tire meets the road is where we sell our goods. Trying to go cheaper cheaper all the time is not in our best interests.

It would still not 100% protect this company above, but the returns reaped would be much better overall. Old folks get their cheap scooters, the importers make money, and the markets we can tap will expand far greater and faster and our returns will be better.

Such a move though will in effect reverse PNTR. Its not anti-trade, just smart business IMHO.

The only real hitch here is that the electronics industry thinks, and is convinced, that China is going to be the next big tech boom.

Primarily, we can see which considerations are taken in to account, and how decisions actually come down.

Thanks for the ping.
This is an excellent example of how the federal bureacracy wastes our taxdollars in a futile and ineffective attempt to micromanage the economy. Just what the heck is the "pedestal actuator industry" anyway???

Negotiated import quotas and targeted tariffs are totally ineffective and usually do more harm than good. At best they provide only temporary benefit to very narrow special interests.

What IS effective are broad based revenue tariffs that apply to ALL imported goods, regardless of nation of origin. Such tariffs are typically much lower than targetted tariffs, usually between 10~20%, and provide an adequate buffer between goods that are produced under different sets of regulations and restrictions. Additionally, the revenue raised from revenue tariffs can be utilized to decrease other forms of domestic taxation, further stimulating domestic production of goods and making them more competitive without bureaucratic federal micromanagement.

Fundamentally, we believe that the U.S. government needs to devote more resources and put in place new programs to build wider expertise about China and to protect our industrial base from eroding as a result of our economic relations with China.
-- C. Richard D’Amato, chairman
U.S.-China Security Review Commission
(How to improve U.S.-China relations )

A few comments of mine to various posters:

Imagine for a minute that you have a pie. Every single year more and more people want a piece of same old thing. What results is each one having a smaller and smaller piece of the pie. In the case of economics it is a case of over production and not enough consumption. This pressure forces companies into China, whether they like it or not. On the flip side though, if we have a strategy that focuses on making the pie itself grow bigger every year then the pressure isn't so bad. Its a race between the tortise and the hare. The latter is slow but steady 5-6% growth year on year, and the other is a wild eyed, hope for survival in a disjointed economy.

China importers are like a pack of wolves who are fighting over the existing pie, but do very little in trying to make the pie grow bigger.

There are very few, if ANY corporations that will tell you what they sell in China, in US dollars, and how much the margins are on those products.

The SEC should force them to disclose this information.

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As much as I despise the Chinese Communists this couldn't happen if there wasn't complient US companies willing to import.

True.

I would like to say that IMO it is not trading that hurts the US at all, its the lack of trade. We don't trade with China. We purchase from them in an a complex purchasing agreement, which we finance.

When we are able to import from, then export to, a country it makes for more balanced trade and actually creates work here.

When we have a screwed up relationship as the one the corporations have built in China, it is wrong. It is not trading in general, but the nature of the China relationship that I DO NOT LIKE and should be stomped out forever.

Cheaper is not always better.

For every dollar we import from Mexico we have about a 75 cents export opportunity. With China, for every dollar we import we have about a 15-18 cents export opportunity. Of those two, which relationship is better for our economy and job creation?

They argue that China is cheaper, but what has a better long term aspect on growth? With a Mexico type relationship we get cheaper, but profit making, and have export opportunities. With China we get really cheaper, for now, and thats it. The former requires a more efficient business, which has not been the focus as of late. The latter is a way to make ends meet, for now, but neglects realistic longer term, but real return, prospects.

China needs to start buying what it makes, instead of pawning that off on everyone else.

We need a go South campaign, at China's expense.

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I say we should cut our imports of China made products by at least half.

The way we can do that is, first, sign FTA's with various countries. Second, raise the bar of entry to products from non FTA countries. Don't just raise the tax on Chinese made goods, but overall, raise them. Thus China won't be able to say we are picking on them. It will be all nice and legal too and would not require changes to PNTR or China being in the WTO.

It will make using the FTAs the most profitable way to import.

I am all for President Bush, but something here needs to change. Corporate America needs to change its tune.

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