Witnesses Ask Select Committee to Pass Level the Playing Field Act 2.0

Four witnesses asked Congress to pass Level the Playing Field Act 2.0, a proposal that would change trade remedy laws in favor of domestic manufacturers, at a House hearing called the "Chinese Communist Party Threat to American Manufacturing."

The hearing, held at Stoughton Trailers in Stoughton, Wisconsin, on Aug. 30, was hosted by the chairman of the House Select Committee on China, Rep. Mike Gallagher, R-Wis., and attended by the committee's top Democrat and the committee member who also serves on the House Ways and Means Committee, the committee that would take up the bill.

Stoughton has attempted to use trade remedy laws to protect its business for almost 20 years (see 14042520 and 1504100018). Stoughton convinced the Commerce Department in its first filing, but the International Trade Commission said there was no injury (see 1505200023.

They did win a case on imported chassis, a case that was filed with other chassis manufacturers in August 2020 (see 2008030060 and 2103190041) but took until June 2021 to finish. Importers of chassis from China have to pay more than 232% in antidumping and countervailing duties, plus 25% in Section 301 tariffs.

Bob Wahlin, CEO of Stoughton Trailers, said his company has 2,300 workers in Wisconsin and Texas. He said when his company lost its intermodal case at the ITC, Stoughton shut down its container manufacturing. But when the ITC ruled in favor of the chassis coalition, it was able to open a new factory in Texas, adding hundreds of workers.

He said before they got trade relief for chassis, only 5% of chassis used by shippers within the U.S. were U.S.-built, and last year, 50% of demand was met domestically.

Wahlin told Gallagher, Rep. Raja Krishnamoorthi, D-Ill., and Rep. Darin LaHood, R-Ill., that countervailing duty law "must keep up with evolving schemes." He said his company believes that a state-owned enterprise in China that makes shipping containers, CIMC, received subsidies to establish a facility in Thailand. He said passing the Level the Playing Field Act 2.0 to address this "country hopping" could make cases less expensive for petitioners and allow them to be resolved sooner, so companies could get import protection sooner.

He noted the U.S. government announced earlier this month it is opening a tariff evasion case for this company in Thailand (see 2308090008).

He said that CIMC sends Thailand-manufactured goods to China, blends them with chassis made in China and then labels them all as Thai products.

"We’ve had relief for a little over two years, but China’s been avoiding those tariffs for about a year and a half," he said. "We’re just now to the point where it’s able to get attention and be addressed."

He said passing "Level the Playing Field Act 2.0, to speed up the process, to react to that type of tariff evasion is extremely important to keep a healthy industry."

Gallagher said he chose to host the hearing at Stoughton because he is captivated by its story. "Deindustrialization is a policy choice, and it’s been the choice of both political parties for far too long," he said in his opening statement. "Our companies are competing against Chinese firms that literally cannot go bankrupt."

"Congress, in bipartisan fashion, needs to safeguard our industry, push back on China’s rapacious trade practices, and start stamping made in America on more things that are made here in the Midwest," he said.

Gallagher is not a co-sponsor of Level the Playing Field Act 2.0, and did not express his views on the bill during the hearing.

David Rashid, a senior executive with Plews & Edelmann, said his firm, which makes aftermarket power steering parts, is also competing with a Chinese state-owned enterprise. He alleged they are shipping through Thailand "in a blatant effort to evade 301 tariffs." He said Sunsong, which has a U.S. headquarters outside Dayton, Ohio, and manufactures some parts there, engages in "predatory pricing," which is 30% cheaper than he can sell for. He said as a result, he has had to let employees go.

"The federal government needs to do a better job to quickly and efficiently support small and medium-sized companies," he said, and said he'd had no success trying to get either CBP or the DOJ to investigate transshipment in Thailand.

Worthington Industries, a company that makes a variety of steel products, has filed several antidumping cases for pressure cylinder projects, said Sonya Higginbotham, vice president of corporate communications (see 1805250013 and 2004010043). It won in cases against China, but lost a case on Thai products (see 1908270009).

The company recently convinced the Commerce Department to investigate AD/CVD circumvention on steel cylinders from China (see 2305310049), because the company alleges that manufacturers started making slightly smaller products to evade the orders.

"We believe they are taking a systemic, thoughtful, targeted approach on our industry," Higginbotham testified. She said her company supports both the Level the Playing Field Act 2.0 and the Fighting Trade Cheats Act (see 2303160067). The second bill would dramatically increase penalties for fraud and gross negligence, allow temporary import bans for companies found liable under either standard, and create a private right of action for lawsuits from businesses or labor unions injured by customs fraud. Both bills have bipartisan sponsors.

Gallagher asked Wahlin what his firm would do when the AD/CVD protection expires on chassis. He said Stoughton is automating production with robotic welding and other methods, and is going from painting to galvanizing to drive down labor costs.

"We plan to get down to between 15 and 20 hours per chassis total labor, all in," he said. If Stoughton can achieve that, it can compete with imported chassis -- as long as they aren't dumped at below its price of raw materials.

"My fear is that only works if China doesn’t dump, so that is a pretty significant threat to us."

The committee also invited a company that has become famous for success in a trade remedy circumvention case, Auxin Solar.

CEO Mamun Rashid said his company, which has 37 employees, was hacked by China after it filed its complaint that solar panels assembled in Southeast Asia should really be considered Chinese products, and subject to AD/CVD.

"Many call Auxin too small to matter," he said. "But we are small because the Chinese have been good at stifling our growth through unfair competition."

Although Auxin won the case, the Biden administration delayed collection of the duties until next June, because solar energy installers told the government that there is not enough supply available elsewhere in the world to meet installation demand. Rashid asked rhetorically if the U.S. can stomach meeting its carbon goals with solar panels made "on the backs of forced labor" and with intellectual property theft.

Joe Dillon, president of InSinkErator, a company with nearly 1,000 U.S. workers, said "China is constantly stealing our technology," and his company has to fight those patent-infringing products.

Krishnamoorthi, in his closing remarks, said the witnesses have "a common understanding of the problems facing us," which he listed: lack of manpower, dumping, tariff evasion and theft of intellectual property.

He said the question is, can he, LaHood and Gallagher come together and "come up with solutions? And I think the answer is, yes."