1980 FIN – Carter Administration Sets Tariffs on Fasteners from India
August 4, 1980 FIN – A special 18% countervailing duty was imposed July 21, 1980, on nine industrial fastener tariff schedule numbers imported from India. The tariffs include wood screws, lag screws, bolts, nuts, machine screws, cap screws and other miscellaneous screws manufactured of iron and steel.
The Department of Commerce, headed by Secretary of Commerce Philip Klutznick, determined that the government of India is providing bounties, or subsidies, equaling 18% of the f.o.b. value of certain fasteners exported to the U.S.
The DoC investigation came in response to a petition filed by the Industrial Fasteners Institute on January 30, 1980.
The decision is considered significant, in that it is the first ruling under the new, tougher Countervailing Duty Law that went into effect January 1, 1980.
It is also the first countervailing duty investigation to be handled completely by the DoC, a function that, prior to President Carter’s Reorganization Plan, was handled by the Department of Treasury.
The 18% countervailing duty is the direct result of three Indian practices which are in conflict with specific provision of the new U.S. law.
First, the DOC determined that export cash payments, called indirect cash rebates, were being made by the Indian government to the fastener and other selected industries.
Formerly, the Treasury Department considered these payments as offsets. Now, only indirect tax rebates generally recognized in international trade are exempt from the new law.
DoC determined that this subsidy amounts to 17.5% of the f.o.b. value of exported fasteners.
The second factor the DoC found to be in disagreement with the new Countervailing Duty Law is preferential export financing – a practice by which the government of India (through the reserve bank of India) apparently underwrites packing credit loans to exporters by paying the lending bank additional interest without any charge to the exporters. Accordingly, the DoC determined that Indian exporters of fasteners receive a subsidy in the amount of 0.4% of the f.o.b. value.
Lastly, the government of India has a program which allows for a special income tax reduction for export market development. The export Markets Development Allowance provides for a tax deduction of 133% of certain specific expenses, incurred both before and after the sale. Since the expenses allowed under the special deduction would normally be deductible in full, the benefit to manufacturers would be 33% of the allowed amount applied to the corporate tax rate. Based on this program, the DoC determined that fastener exporters receive a 0.1% subsidy.
According to IFI managing director Clyde F. Roberts, “the fastener manufacturing industry in the United States has been fighting for five years to obtain appropriate relief from unfair foreign trade practices. These practices have made it possible for Japan, Taiwan and India to divide up almost 50% of the total domestic fastener market.”
Roberts told FIN that “this is an intolerable situation in light of the critical importance of the fastener manufacturing industry to our industrial base and to our country’s ability to mobilize in a national emergency.”
During 1979, approximately a billion pounds of these fasteners were imported into the U.S. by these countries. Had these fasteners been produced domestically, it would have meant an additional 12,000 jobs for U.S. workers.
India’s share of these imports totaled 44 million pounds, or approximately 540 production jobs” he said. ©1980/2010 Fastener Industry News
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