Commerce Adds Controversial Exemption to AD/CV Duties on Lawn Mowers, Spares Engines

The Commerce Department is solidifying an exemption from antidumping and countervailing duties on walk behind lawn mowers that creates an “enormous loophole” in the scope that will “ensure that duties are not collected a significant portion of the value of merchandise Commerce will determine has been dumped and subsidized,” according to MTD Products, the domestic manufacturer that requested the investigations on lawn mowers, in comments to Commerce.

In its preliminary AD duty determination, released Dec. 29 (see 2010200033, Commerce amended the scope of its ongoing AD/CVD investigations on walk behind lawn mowers from China and Vietnam to exempt lawn mowers with engines subject to another ongoing set of AD/CVD investigations on small vertical shaft engines from China. That means Chinese and Vietnamese lawn mowers with Chinese engines will not be covered by AD/CV duties stemming from any AD/CVD orders issued on lawn mowers.

Commerce made the change to avoid double coverage of AD/CV duties. It said the change is consistent with past practice “of ensuring that existing orders are not compromised by later petitions.” Commerce began its investigations on small vertical shaft engines in April (see 2004130010), followed by the launch of the investigations on walk behind lawn mowers in June (see 2006190023). The agency had followed the approach since issuing its preliminary CV duty determination on walk behind lawn mowers from China in October, though it did this “for the purpose of CBP’s administration,” and did not formalize the policy in the scope of the investigation.

MTD Products had been pushing for a different approach. It was fine with Commerce exempting Chinese engines to avoid double counting, but it sought to have Commerce declare the rest of the lawn mower (what it called the “residual mower”) potentially subject to AD/CV duties on walk behind lawn mowers. “If a lawn mower within the scope of the lawn mowers investigations has an engine subject to the scope of small vertical engines investigations, duties arising from the lawn mowers investigations would not apply to the value of the engine but would apply only to the residual value of the remaining portion of the lawn mower,” MTD said.

Briggs & Patton, the petitioner in the small vertical shaft engines, supported the approach adopted by Commerce. It noted that the agency had already adopted a similar approach when it exempted mattresses from AD duties on mattresses when they were already covered by an earlier order on uncovered innerspring units from China.

Toro, an importer of small vertical shaft engines, said Commerce should instead create an exemption from the small vertical shaft engine order to exempt engines attached to larger machines. Ningbo Daye, an exporter subject to the walk behind lawn mower investigations, agreed with MTD in that the non-engine portion should remain subject to walk behind lawn mower duties.

Commerce did not explain why it chose to continue its approach of completely excluding walk behind lawn mowers with Chinese small vertical engines. It did, however, include language in the scope to provide that, should the small vertical shaft engine investigations not result in any AD/CV duty orders, the exemption will no longer be in effect: “If the proceedings on small vertical engines from China are terminated, the lawn mowers containing small vertical engines from China will be covered by the scope of this proceeding,” Commerce said in the new scope paragraph.

Email ITTNews@warren-news.com for a copy of Commerce’s preliminary scope memorandum.