Daewoo and Samsung will be required to post cash deposits on imported clothes washers while the federal government considers whether to impose permanent duties on the products, the U.S. Commerce Department said.
The deposits will cover estimated duties while the agency and the U.S. International Trade Commission (ITC) determine whether manufacturer subsidies from the South Korean government harm the U.S. appliance industry.
The Commerce Department issued a preliminary finding yesterday showing that South Korea provides countervailable subsidies to Daewoo, LG and Samsung of 70.6 percent, 0.22 percent and 1.2 percent, respectively.
LG is not required to post cash deposits on its imported washers due to the negligible net subsidy rate, the Commerce Department said.
Whirlpool initiated the investigation by filing an anti-subsidy petition with the federal agencies in December. The case, which covers full-size front- and top-load washers and certain subassemblies from Korea and Mexico, could have a profound impact on Korea’s U.S. washer exports, which totaled about $568.5 million last year.
The Commerce Department is scheduled to make a final determination on the subsidies in August. If the initial findings are confirmed, the case will move on to the ITC, which is scheduled to make its final injury determinations in September. An affirmative finding of material injury or even the threat of material injury to the U.S. majap industry would lead to the imposition of countervailing duties (CVD). No CVD order will be issued, and the cash deposits returned, if the ITC finding is negative.
In a statement, Whirlpool said it is “pleased with this favorable preliminary decision, given the proven record that South Korean appliance producers have benefitted from their government’s subsidies that violate trade law. We look forward to participating fully in the thorough investigation by the U.S. Department of Commerce, and we are optimistic that the final determination will further validate that these subsidies undermine competition and cause material harm to the U.S. appliance industry.”
For its part, Samsung said that it “respects the trade rules in the U.S. market, and is confident that once the full investigation is concluded, the U.S. Department of Commerce will confirm that Samsung is in compliance with U.S. trade laws. We will continue to meet the demand from U.S. consumers for our superior washing machines.”
Samsung sells 16 top- and front-load washers in the U.S., many featuring the manufacturer’s proprietary vibrationreduction technology (VRT) for decreased vibration and noise, and a PowerFoam feature that produces a deep-cleansing foam from water, air and detergent.
Daewoo Electronics America deferred all queries to headquarters in Korea. The company offers 14 front-load washer SKUs in the U.S., and recently announced plans to introduce new products here through the 11-dealer NATM Buying Corp. “Daewoo will tap NATM’s networks for sales and marketing activities,” a Daewoo spokesman said earlier this spring.
Whirlpool also filed anti-dumping petitions in December against large residential clothes washers from South Korea and Mexico. A preliminary determination in the anti-dumping case is expected from the Commerce Department in July, although a final determination by the ITC, if warranted, won’t come until February 2013.
The company lost its last anti-dumping round in April, when the ITC determined after a year-long investigation that subsidies and below-market prices for South Korean bottom-mount refrigerators, although confirmed by the Commerce Department, haven’t harmed the domestic majap industry.
The requirement of cash deposits over the course of the subsidiary inquiry supplants a previous rule requiring importers to post bonds to cover estimated duties between the preliminary determination and any subsequent order, the Commerce Department said.