By Jacob M. Schlesinger and Andrew Tangel
WASHINGTON -- Whirlpool Corp. won crucial backing from a
government panel in its bid to limit competition from foreign
washing machine makers, giving the Trump administration another
opportunity to invoke little-used powers to ramp up trade
enforcement.
The U.S. International Trade Commission voted 4-0 Thursday to
approve the petition from the Benton Harbor, Mich.-based
manufacturer seeking broad protection in the American market from
South Korean rivals Samsung Electronics Co. and LG Electronics Inc.
The vote came under a trade law that allows U.S. companies to win
such limits if they can show they suffered "serious injury" from a
surge of imports.
The provision -- Section 201 of Trade Act of 1974 -- was last
used in 2002 by the Bush administration to impose steel tariffs.
The special "safeguard" was designed to offer U.S. industries a
bigger shield against foreign competition than the more widely used
anti-dumping laws.
The members of the ITC -- a bipartisan, independent panel --
will next consider what specific tariffs or quotas they believe
should be implemented. The deadline for the panel to send
recommendations to the White House is Dec. 4. The Trump
administration would then be required to decide by early next year
on whether to impose import limits.
Whirlpool shares were up 0.4% to $186.60 following the trade
commission vote Thursday.
"The ITC vote is an important win for American manufacturers and
American workers," Whirlpool Chairman Jeff Fettig said in a
statement. "This vote sets the stage for the administration to put
in place an effective remedy to create a level playing field for
American workers and manufacturers. This type of corrective action
will create U.S. manufacturing jobs."
LG said it would seek a "fair application of U.S. trade laws,"
adding that "imposing restrictions on imported washers will only
hurt consumers by raising prices and decreasing choices, while
jeopardizing U.S. investment and job growth."
Samsung said it was disappointed with the trade commission's
vote. "We believe that safeguard remedies should not discriminate
in favor of one group of U.S.-based workers over another and should
not negatively impact a fair appliance marketplace for consumers,"
Samsung said.
The White House issued a statement saying it would await policy
recommendations from the ITC before deciding how to proceed, adding
that "the president is committed to revitalizing the U.S.
manufacturing sector and bringing jobs back to America."
And one of Mr. Trump's trade advisers, Peter Navarro, has spoken
out in support of Whirlpool's long-running battles against its
South Korean competitors. In a speech earlier this year, he blasted
Samsung and LG for "precisely the kind of trade cheating that must
be stopped."
Mr. Navarro was referring to the fact that Whirlpool had
previously won protection against trade cases imposing duties on
Samsung and LG machines made in South Korea and Mexico under the
different, narrower trade law designed to shield U.S. companies
from goods that are allegedly "dumped," or sold unfairly below
cost. But the Korean makers got around those limits by shifting
production to China. When they would have faced subsequent tariffs
aimed at that country, they moved production to Vietnam and
Thailand.
Under Section 201, an American company seeking relief doesn't
need to prove wrongdoing by a foreign competitor -- only that it is
suffering "serious injury" from a sudden import surge. And unlike
dumping protections, which generally apply only to products from a
specific country, Section 201 curbs can be applied broadly to
imports from all over the world.
But Section 201 remedies also risk running afoul of global
trading rules, one reason the law has fallen into disuse. The 2002
Bush steel tariffs were removed a year later after the World Trade
Organization deemed them improper, and the law hasn't been invoked
since.
Whirlpool declined to say what trade barriers it might request.
Possible remedies include tariffs or quotas.
The Trump administration, however, has signaled a greater
willingness than its predecessors to dust off dormant trade powers,
like Section 201, and to challenge the WTO. That has encouraged
industries to seek such relief.
The Whirlpool petition was the second such case to reach the ITC
this year after the long hiatus. The agency weighed a similar
request on Sept. 22 from the solar-panel industry seeking safeguard
protection from imports. The ITC voted 4-0 in favor of that
petition too, and is now considering specific remedies to propose
to the White House.
Whirlpool, long a dominant washing machine brand in the U.S.,
has faced rising competition from South Korean rivals and others.
Samsung and LG combined now make up roughly a third of the U.S.
retail market, about the same as Whirlpool's share, according to
TraQline data from the Stevenson Co. research firm. Whirlpool has
faced a tripling of imports of large residential washing machines
over the past six years, according to Panjiva, a trade analysis
firm.
The South Korean firms say they have gained share through
innovation, not unfair trade practices.
"Consumer preferences shifted to design and style. Whirlpool
didn't keep pace," said John Herrington, a Samsung senior vice
president, during a September commission hearing. "How and where
consumers shopped for appliances changed. Whirlpool didn't
adjust."
Whirlpool attorney Jack Levy dismissed the claim as a "tired
argument," adding: "Whirlpool has made tremendous innovations in
its washer lineup over the years."
Even if the Trump administration does approve strict import
limits, Whirlpool is still likely to face intensifying competition
from Samsung and LG, which are both planning to start production in
the U.S.
LG is building its first-ever major U.S. factory, a $250 million
washing-machine plant near Clarksville, Tenn. Samsung announced
plans earlier this year to take over a former Caterpillar Inc.
plant in South Carolina, and estimated the project could lead to
nearly 1,000 new jobs by 2020.
Write to Jacob M. Schlesinger at jacob.schlesinger@wsj.com and
Andrew Tangel at Andrew.Tangel@wsj.com
(END) Dow Jones Newswires
October 05, 2017 14:57 ET (18:57 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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