TELECOMMUNICATIONS TRADE BATTLES, ANTIDUMPING AND 337 DEVELOPMENTS

TELECOM FIGHT

On September 13th, there was a major development in the Telecommunications Trade area as the House of Representatives held a hearing on Chinese telecommunications companies and called Huawei and ZTE to testify.

As indicated in the attached statement,  TELECOM FIGHTin opening the hearing, Chairman Congressman Rogers of the House of Committee on Intelligence discussed the threat posed by Chinese telecommunications companies stating:

We invited these companies today as part of our ongoing investigation into the threat posed to the United States by telecommunications equipment manufactured by companies with believed ties to the Chinese government.

Huawei and ZTE have become dominant global players in the telecommunications market leaving the world increasingly dependent on their telecommunications goods and services.

They do not yet dominate the U.S. market, but they seek to expand their footprint here.

The Chairman went on to complain about the theft of trade secrets, subsidies from the Chinese government, economic espionage, and cyber security.  Chairman Rogers further stated,

A sophisticated nation-state actor like China has the motive to tamper with the global telecommunications supply chain, and the United States is a significant priority.   . . .Huawei and ZTE provide a wealth of opportunities for Chinese intelligence agencies to insert malicious hardware or software implants into critical telecommunications components and systems. And under Chinese law, ZTE and Huawei would likely be required to cooperate with any request by the Chinese government to use their systems or access for malicious purposes.

We must get to the truth and see if these companies are tied to or influenced by the Chinese government; whether they provide a means for further economic and foreign espionage by a foreign nation-state known to be a major perpetrator of cyber espionage.

At the hearing Huawei and ZTE, both attempted to respond to these charges. HUAWEI STATEMENT ZTE STATEMENT

Attached are the statements by Chairman Rogers, Ranking Republican Member Ruppersberger, Huawei, ZTE and a very interesting attack on ZTE’s law firm, DLA Piper. REP CRIT TELECOM  ZTE REP DLA

In a very unusual development, in the attached letter two Congresspersons actually attack DLA Piper for representing ZTE, warning the law firm to reconsider its representation of ZTE because the company acts contrary to the interests of the US government.

This hearing must be considered in the context of section 337 patent cases against ZTE and Huawei at the US International Trade Commission.

Often these attacks at the ITC and the US Congress on Chinese companies are signals that more serious trade actions will be brought against the Chinese companies in the form of antidumping and countervailing duty cases.  Trade bomb fuses have been lit, and the trade war continues.

STEEL SINKS CASE

The Commerce Department on Friday issued preliminary antidumping rates in the Steel Sinks case and the rates are high.

Preliminary AD rates are as follows

Zhongshan Superte Kitchenware         – 63.87 %

Guangdong Dongyuan Kitchenware        – 54.25 %

Separate Rate                                                   – 59.06 %

China Wide Rate                                               – 76.53 %

Cash Deposit rates are as follows:

Zhongshan Superte Kitchenware              – 56.31 %

Guangdong Dongyuan Kitchenware        – 50.28 %

Guangdong Yingao Kitchen Utensils        – 58.49 %

Separate Rate                                                   – 53.30 %

China Wide Rate                                               – 76.15 %

Attached is the fact sheet that was issued on Friday. factsheet_prc-sinks-ad-prelim-20120928  The interesting point is that the AD rate has been adjusted downward to offset the CVD rate.  As the Department states in the fact sheet:

“The cash deposit rates take into account the applicable export subsidy rates of 0.10 percent (Superte), 0.090 percent (Dongyuan and the Separate Rate Companies), and 0.080 percent (Yingao and the China-Wide Rate) and domestic subsidy rates of 7.46 percent (Superte), 3.88 percent (Dongyuan and the Separate Rate Companies) and 0.30 percent (Yingao and the China-Wide Rate).”

SOLAR CELLS CASE

On September 27th, a group of Democratic members of Commerce sent the attached letter to Commerce urging it to close the loophole in the Solar Cells allowing third country solar cells to be put into Chinese modules and panels.  09-27-2012 Senate Letter to Secretary Blank on Solar ADCVC Scope The letter states, “The Department of Commerce has preliminarily defined the scope of the investigation in such a way that, we fear, could undermine trade remedy laws if applied in this and other cases.  Congress intended to have the anti-dumping and countervailing duty laws provide effective relief to U.S. industries that are materially injured by unfairly traded imports. That purpose will be thwarted if foreign producers can simply outsource a small part of their production in third countries to avoid duties intended to level the playing field.”

As an example, the letter says that a Chinese company could make the silicon crystals and wafers used in solar panels, ship those wafers out to a third country that would make them into photovoltaic cells, then bring the cells back into China to be made into solar panels. The resulting panels, since they contain cells made outside of China, would not be subject to the duties, despite that “80 percent of the value of the final product was added in China and that the final product was shipped from China,” the lawmakers said.

The Commerce Department’s final determination comes out October 10th.

NEW HARDWOOD PLYWOOD ANTIDUMPING AND COUNTERVAILING DUTY CASE

On Friday a new antidumping and countervailing duty case was filed against imports of hardwood plywood from China.  See the attached announcement below from the ITC.  If anyone wants a copy of the complaint, please let me know.

Pending Institution

Docket No: 2918

Document Type: 701 & 731 Petition

Filed By: Jeffrey S. Levin

Firm/Org: Levin Trade Law, P.C.

Behalf Of: Coalition for Fair Trade of Hardwood Plywood

Date Received: September 27, 2012

Confidential: Yes

Commodity: Hardwood Plywood

Country: People’s Republic of China

Description: Letter to Lisa R. Barton, Secretary, USITC; requesting the  Commission to conduct an investigation under sections 701 and 731 of the

Tariff Act of 1930 regarding the imposition of countervailing and antidumping duties on U.S. imports of Hardwood Plywood from the People’s Republic of China.

Status: 701-TA-490 & 731-TA-1204

SECTION 337 CASE AGAINST PROTECTIVE DESIGN CASES FOR IPHONES AND IPADS

Smartphone case maker Speck Products asked the U.S. International Trade Commission on Thursday to launch a 337 investigation against Alibaba.com Ltd. and a number of other Chinese and Hong Kong Companies, alleging that the Chinese and Hong Kong companies infringed its design patent for protective device cases.  Speck’s patent is used in its popular CandyShell cases for Iphones and Ipads.

Speck wants the ITC after a one year investigation to issue an exclusion order and exclude the infringing products at the border.  Set forth below is the announcement of the case on the ITC website.

Pending Institution Previous Next

Docket No: 2917

Document Type: 337 Complaint

Filed By: Mark L. Hogge

Firm/Org: SNR Denton

Behalf Of: Speculative Product Design

Date Received: September 26, 2012

Confidential: Yes

Commodity: Cases for Portable Electronic Devices

Description:

Letter to Lisa R. Barton, Acting Secretary, USITC; requesting that the Commission conduct an investigation under section 337 of the Tariff Act of 1930, as amended regarding Certain Cases for Portable Electronic Devices. The proposed respondents are Anbess Electronics Co., Ltd., China; Alibaba.com, Limited, China; Alibaba.com, Inc., Santa Clara, California;  Aliexpress, Ltd., Santa Clara, California; Biying Trading Co., Ltd., Santa  Clara, California; BodyGlove International, LLC, Redondo Beach, California; Fellowes, Inc., Itsaca, Illinois; Jie Sheng Technology, China;  JWIN Electronics Corp., dba iLuv, Port Washington, New York; Project Horizon, Inc., Jacksonville, Florida; ROCON Digital Technology Corp., China; Shenzhen Huafeng Technology Co., Ltd., China; Superior Communications, Inc., dba PureGear, Irwindale, California; SW-Box.com, Hong Kong; Trait Technology (Shenzhen) Co., Limited dba Trait-Tech, China; and Hongkong Wexun Ltd., Wexun Tech (Hong Kong) Co., Ltd., China.

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