Ozarks company lobbies for contentious trade bill
Posted on November 16, 2014 08:48 am CST
Click Here to View Article
WASHINGTON – Carthage-based Leggett & Platt, the world’s largest bedspring supplier, decided earlier this year that Congress needed a wake-up call about the impact of illegal imports flooding the U.S. market from foreign competitors in China and elsewhere.
The company hired a politically wired Washington lobbying firm to convince key lawmakers they needed to crack down on the problem. Rep. Billy Long, R-Springfield, took the lead, sponsoring a bill that Leggett & Platt says will go a long way toward blocking illicit products — including Chinese-made bedsprings — from entering the U.S.
But the measure has been a hard sell in Congress, where trade is a politically divisive issue and resistance from the retail industry and free-trade advocates has stymied Long’s legislation.
At issue is the ENFORCE Act, which would require Customs and Border Protection officials to aggressively pursue allegations that foreign companies are sneaking products into the U.S. without paying required duties. It’s a relatively narrow bill in the sweeping arena of trade policy.
But for Leggett & Platt, which patented the bedspring in 1885 and now makes an array of products, it’s the end-goal in a long-running, multimillion-dollar battle that has cost the company market share and jobs.
In the early 2000s, Leggett & Platt executives began to notice that foreign-made bedsprings were being imported at unprecedented rates — and at prices they said were lower than the cost of production. That’s a practice called “dumping,” and it’s a no-no in the international trade arena.
Leggett & Platt went to the Department of Commerce and the International Trade Commission for help; in 2007, the Commerce Department imposed an “anti-dumping order,” with duties of up to 234 percent on bedsprings imported to the U.S. from China, South Africa and Vietnam.
Karl Glassman, Leggett & Platt’s chief operating officer, said he thought the company had beaten the unfair global competition. But Chinese manufacturers quickly found a way around the dumping order — by shipping their bedsprings to a third country and making it appear the products were made in the pass-through country.
“The goods are off-loaded, marked ‘manufactured in Hong Kong’ and then shipped on to the customer” in the U.S., Glassman said. “It’s just a remarking of the data.”
Experts say that’s a common way that foreign manufacturers and complicit importers use to cheat the system.
“It’s very common in the industry for an importer to work with overseas suppliers to, shall we say, tweak the product or the description so they can avoid (U.S.-imposed dumping) duties,” said Lisa Reisman, founder of MetalMiner, a trade publication that covers the global metals markets.
Long’s bill would require U.S. Customs and Border Protection officials to investigate allegations that foreign firms are evading duties and anti-dumping orders. The bill sets out a quick time frame in which the customs agency would have to investigate and respond to complaints filed by companies like Leggett & Platt.
Long said the bill would ensure that customs officials “aggressively enforce” anti-dumping and duty orders. “The ENFORCE Act is about protecting U.S. jobs and manufacturers by making sure foreign businesses are not able to violate the laws that everyone, including American businesses, follow,” Long said.
Missouri’s two senators — Democrat Claire McCaskill and Republican Roy Blunt — have supported similar legislation in the past, but it has never gained much momentum.
“When Missouri employers compete on a level playing field, they win, meaning more jobs and better business opportunities for our state,” McCaskill said in a statement last week. “Unfortunately, too many industries in too many foreign countries cheat the trade system for their own advantage.”
To give the bill a boost, Leggett & Platt hired the Washington Tax & Public Policy Group — a lobbying firm with ties to influential lawmakers in the GOP leadership and a key House committee that deals with trade — at the beginning of 2014. One of the firm’s lobbyists, Brian Diffell, previously served as a top aide to Blunt in the House and Senate. Another, Gregory Nickerson, was the tax counsel for the House Ways and Means Committee.
Glassman said Leggett & Platt tapped the firm because its lobbyists are well-versed in the issue and have connections to the key lawmakers. The firm’s mission, he said, was to help counter opposition from the retail industry.
“The challenge candidly is we have the retailers’ association blocking it,” Glassman said. “The problem is that they believe that it’s in the retailers’ best interest to have the lowest cost product on the store shelves for the consumer — laws (and) duties be damned.”
“It’s just not true,” responded Marguerite Trossevin, a trade attorney who advises the Retail Industry Leaders’ Association. “Of course retailers look for the best deals for their customers — (But) we believe in fair trade and enforcement of the law. We don’t want to deal with cheaters. They hurt retailers as well as suppliers.”
She said the bill is deeply flawed and could punish “innocent importers” because it’s too broadly worded.
Right now, importers have to pay duties on foreign goods — and she said often they don’t find out how much they will owe until years after the items have arrived. Long’s bill does nothing to fix that, Trossevin said. It also doesn’t give any “due process protection for innocent importers, and it actually retroactively punishes them even in cases where they had no knowledge or reason to know that duties were owed.”
Foreign manufacturers don’t like the bill either.
David Hickerson, a Washington attorney who represents foreign companies in anti-dumping cases and customs proceedings, said the bill is “entirely unnecessary.”
He said there’s already “plenty of enforcement for circumvention” of trade laws, from administrative proceedings before the Department of Commerce to criminal prosecutions by the Department of Justice.
Hickerson said Customs and Border Protection officials are not equipped to investigate complicated trade cases.
Paul Rosenthal, a trade lawyer who represents U.S. manufacturers and exporters, said the bill has sparked quiet resistance from a variety of sources — including free-traders who don’t particularly like the anti-dumping laws and Customs and Border Protection officials who don’t want to be saddled with new mandates.
But those forces aren’t blocking the bill, said Rosenthal, a lawyer in the Washington office of Kelley Drye & Warren. The bill hasn’t gained traction, he said, because there are sharper divisions over bigger trade bills, and so there’s no legislative train on which Long’s smaller proposal can hitch a ride to passage.
Leggett & Platt’s Glassman agreed that “Washington dysfunction” has complicated the company’s push for passage. He said he hopes the next Congress — where trade issues could be front and center — will boost the measure’s chances.
“We’ve worked every angle trying to create awareness,” he said. “All that we’re asking is that the existing trade laws be enforced.”