Element Electronics Seeks Permanent Duty Suspension on LCD Panels; NCTO Urges ITC Caution

The Miscellaneous Tariff Bill suspension on liquid crystal display (LCD) panel assemblies should be made permanent in order to reverse a "tariff inversion" that makes imported finished TVs cheaper than the LCD panels, Element Electronics said in comments to the International Trade Commission. Last year, the ITC sought comments on the MTB process and "domestic industry sectors or specific domestic industries that might benefit from permanent duty suspensions and reductions, either through a unilateral action of the United States or through negotiations for reciprocal tariff agreements, with a particular focus on inequities created by tariff inversions." The company said that while it "supports free and fair trade, the current US tariff structure is not fair and does not provide a level playing field for American workers."

Finished TVs are imported at a 3.9 percent duty rate, while the normal duty rate on LCD panels, "the critical input to make a TV," is 4.5 percent, Element said. The inversion has been made worse through NAFTA because finished TVs can be imported from Mexico duty free, the company said. "The TV market in the United States is extremely competitive and the tariff rates represent the difference between being able to produce profitably or not produce at all," it said. Making the duty suspension on LCDs permanent is vital and would allow Element to avoid "the uncompetitive tariff landscape we faced during 2018 -- a time when Element was forced to announce the pending closure of its South Carolina facility and the elimination of all its associated jobs," the company said.

The National Council of Textile Organizations urged the ITC to exercise a "high level of caution" while considering permanent suspensions. "We note that temporary duty suspensions provide needed relief to U.S. manufacturers who must import raw materials not available domestically, while still leaving an incentive to return manufacturing to the" U.S., said the NCTO, which largely represents domestic manufacturers. "With regard to products that have not been subject to longstanding duty suspensions, a hastily-enacted permanent suspension could dampen interest in reshoring that production. Furthermore, making a duty suspension permanent effectively removes that tariff classification from the list of articles that USTR can negotiate in future trade deals." The group also remains opposed to any sort of MTB for finished products, it said.

Hitachi Automotive Systems America asked for a permanent suspension for "Electronic Control Unit Motors (Motor/ECU), a product that is not now subject to a duty suspension." The ECU is tariffed at 2.9 percent, while the power steering system that includes the ECU has a 2.5 percent duty rate, the company said. "The Motor/ECU is the most expensive single component in the completed power steering system," it said. "The automotive parts industry runs on tight margins where cost to the OEM can be the primary driver and slight increases can make a company less competitive in the bidding process. Thus, the .4 percent difference between the components we import to do final assembly in the U.S. for this system and importing a completely assembled system is significant for our industry."

Another request for permanent suspensions came from the National Association of Chemical Distributors. The NACD said the ITC should recommend "feedstock, intermediate, functional additives, and other input chemicals for permanent duty reduction." Those chemicals "all fall into the bucket of being lower value chain products that are typically imported because they are relatively simple chemistries and are easily and safely manufactured abroad," it said.

The ITC should also allow petitioners to request permanent suspensions in the MTB process, the NACB said. "Unilateral action, granted by the ITC through the MTB petition process," rather than through trade negotiations, "would be the fastest and most efficient way to provide duty relief to U.S. consumers, purchasers, and producers." Yarn manufacturer Spinirite also asked for a permanent suspension for acrylic fiber. "There has been considerable effort to source an acrylic from a USA supplier" and within the NAFTA regions but "none exist that could provide an acrylic fiber that meets the required characteristics," it said. The written comments were due April 23.

Email ITTNews@warren-news.com for copies of the comments.