New Section 201 Safeguard Petition Filed on Mass-Market Bicycles

Two domestic bicycle manufacturers filed a petition Oct. 19 seeking new Section 201 safeguard duties on mass-market bicycles. Detroit Bikes and Bicycle Corporation of America say the dominance of imported mass-market bicycles makes it impossible for U.S. manufacturing to re-establish itself. The companies seek a tariff-rate quota over a period of four years, along with a decrease in the de minimis level for imported bikes and duty-free access for parts used in U.S. bicycle manufacturing operations. The duties would apply to bicycles from all countries, though the International Trade Commission can exempt free trade agreement partners.

According to the petition, a surge of bicycle imports in the mid-1990s, along with the failure of an antidumping duty case at that time, hollowed out U.S. production to the extent that the imported market share still stands at 99 percent. But a resurgence has occurred over the past five years, during which time Detroit Bikes and BCA commenced production. Nonetheless, though domestic manufacturers have made “every effort to successfully compete with increased imports, it is not enough to break the chokehold that imports have on the U.S. market,” the petition said. Temporary safeguards are necessary to allow the domestic industry to adjust to import competition. Without such relief, the renewal of U.S. bicycle manufacturing will be short-lived.”

The petition is unusual in that it does not seek to prove a recent surge in imports, as is normally required for the ITC to impose safeguards. The recent increase in the de minimis level to $800 makes that impossible because a proliferation of smaller shipments doesn’t show up in CBP data, the petition said. Instead, the ITC should focus on the increase in imports that followed the end of the 1996 antidumping duty investigation, the petition said.

Proposed Scope of Duties

The definition of the imported article subject to this petition is complete bicycles having a customs value under $400, without regard to the value of accessories on or imported with the imported article. For purposes of this petition, a complete bicycle includes a fully assembled unit comprised of all component parts and requiring no additional assembly, fabrication or finishing operations. Complete bicycles subject to this petition also include bicycles imported in any partially assembled format with all necessary, dedicated components (with or without pedals) included upon importation; e.g., a knock-down kit.

Complete bicycles subject to this petition may be imported under the following Harmonized Tariff Schedule of the U.S. (HTSUS) subheadings: 8712.00.1510, 8712.00.1520, 8712.00.1550, 8712.00.2500, 8712.00.3500, 8712.00.4400 and 8712.00.4800.

Certain classes of products are specifically excluded from the definition of the imported article, including:

i. Motorized bicycles

These items are distinguishable in terms of physical characteristics because they incorporate an integrated motor as part of the complete bicycle.

ii. Bicycles exclusively for fleet use by bike-sharing services

These items are distinguishable in terms of physical characteristics because they include permanently integrated hardware and/or software interfaces that transmit information to a docking station or a mobile app to enable ride-share use.

iii. High-value bicycles

Items of this type have a declared Customs Value per bicycle in excess of $400 per item.

iv. Tricycles, including industrial tricycles; pedicabs; and commercial vending cycles

These items are distinguishable in terms of physical characteristics. Tricycles are three-wheeled cycles. Industrial tricycles, pedicabs, and commercial vending cycles have a loadbearing and load-balanced design, and typically include structural elements that enable transportation of cargo and/or more than one person.

v. Stationary exercise bicycles

These items are distinguishable in terms of physical characteristics and uses. Stationary exercise bicycles are permanently mounted on an immobile base to prevent transport of any kind. These items cannot be used for either on-road or off-road transportation. These items may also include mechanisms to adjust resistance to increase/decrease the level of difficulty required to operate, as well as hardware and/or software interfaces to monitor output and/or connect to a user interface. These items are used primarily for indoor fitness conditioning and/or physical therapy applications.

With the exception of the above-specified excluded items, the imported articles subject to this petition include all sizes, styles and configurations of bicycles.

Petition Seeks TRQ, Decrease in de Minimis

The petition for safeguard duties seeks a tariff rate quota lasting four years, with an in-quota rate of 11 percent and an out-of-quota rate of 61 percent. The quantity of in-quota merchandise would start at 15 million bicycles in year one, followed by 14 million in year two, 13 million in year three and 12 million in year four.

The petition also requests that the de minimis level be lowered for bicycles from $800 to $50 for at least four years. “Reduction of the de minimis threshold for imported bicycles is necessary to prevent circumvention, specifically in the form of direct-to-consumer sales of imports through online channels of distribution and small shipments direct to online retailer fulfillment centers,” the petition said

Finally, the petition requests “duty-free treatment for component parts imported by U.S. producers of mass-market bicycles, upon certification that such components shall be used in the production of such bicycles, for a period of at least four years.”

Remedy Recommendations Due to President in April

If the ITC decides to institute this investigation, it will publish a notice in the Federal Register. The ITC would then have 120 days from the date the petition is filed to determine whether imports of bicycles are injuring U.S. industry. If it finds injury, it will then recommend what remedies should be imposed. Public hearings would be held for each phase, it said. The ITC would then submit its recommendations to the president, who would decide whether to impose the safeguard duty. The report to the president is due in 180 days (i.e., by April 22).

Though safeguard investigations are not country-specific, and duties would apply to all countries, ITC commissioners who find injury to U.S. industry must make additional separate injury findings for certain countries with which the U.S. has free trade agreements, the ITC said. “These include the NAFTA countries (Canada and Mexico), Jordan, Australia, Colombia, Korea, Panama, Peru, Singapore, the CAFTA-DR countries, and Israel,” it said.

Email ITTNews@warren-news.com for a copy of the petition.