The U.S. Department of Commerce will impose tariffs on some imported appliances - this after it ruled on Monday that some appliances are being dumped on the U.S. market.

The DoC made a preliminary determination in an anti-dumping investigation of large residential washing machines being imported from South Korea and Mexico. The investigation came in response to a petition filed by Whirlpool Corp. in December 2011. "Dumping" happens when a foreign company sells a product in the United States at less than fair value.

The DoC estimated 2011 imports of large residential washers from Mexico were valued at $434 million and imports of washers from Korea were valued at $569 million.

As a result of the ruling, producers who make the appliances in Mexico and South Korea - such as Electrolux, LG, Samsung, and Daewoo - will be required to pay cash deposits to U.S. Customs and Border Protection (CBP) on washers imported to the U.S. starting in August 2012 at the rates found in the preliminary determination.

The DoC announced cash deposit rates for three Korean appliance makers:

• LG: 12.15%
• Samsung: 9.62%
• Daewoo: 82.41%
• all other Korean producers/exporters: 11.36%
  

The DoC said the margin for Daewoo was based on adverse facts available (AFA) because of its failure to cooperate in the investigation.

Cash deposit rates for Mexican producers are:

• Electrolux: 33.30%
• Samsung: 72.41%
• all other Mexican producers/exporters: 33.30%
  

The DoC also announced a 72.41% cash deposit rate for Whirlpool Corp.'s Mexican operations - but Whirlpool no longer ships washers from Mexico for sale in the U.S. For that reason Whirlpool will not pay cash deposits related to this ruling.

The DoC said the margins for Samsung and Whirlpool were based on AFA because of the companies' failure to cooperate in the investigation.

The anti-dumping investigation is ongoing, and the DoC will undertake an in-depth audit of the information provided by the appliance makers before issuing the final determinations in December 2012.

The final step will come in February 2013 when the Doc and U.S. International Trade Commission issue final orders based on the determinations.

It is at this point in the process where an earlier anti-dumping complaint from Whirlpool fell apart. Whirlpool filed anti-dumping and anti-subsidy petitions in March 2011 bottom-mount refrigerators imported from South Korea and Mexico. While early reports did find dumping occurring, the ITC rules in April 2012 that the imports did not cause material injury to the U.S. industry.

Whirlpool Comments

Whirlpool has invested in U.S. appliance manufacturing to supply the U.S. market. By 2013 Whirlpool plans to have nearly 100% of its washers sold in the United States to be manufactured in the United States as well.

"The Commerce Department's preliminary finding shows that dumping is occurring, which supports the legal action we took on behalf of our employees and the U.S. appliance industry," said Whirlpool spokesperson Kristine Vernier. "Whirlpool is committed to building products in the regions where they are sold and investing in our U.S. manufacturing presence. Our investments will continue as long as we can compete on a level playing field, with all of our foreign competitors playing by the established rules."

Electrolux Responds

ApplianceMagazine.com spoke to Electrolux's Caryn Klebba, Director, Corporate Communications NA. "The Department of Commerce uses an arcane methodology for determining dumping," she said. She added that Electrolux strongly disagrees with the Department findings.

"U.S. anti-dumping rules were developed in 1911 and they don't take into account the global economy of today," Klebba told APPLIANCE.

Klebba also pointed out that Electrolux has just one-tenth the laundry appliances market share as Whirlpool, and therefore its washer imports from Mexico aren't harming Whirlpool. Citing statistics from the Association of Home Appliance Manufacturers, Klebba said Electrolux has 5.6% laundry appliances market share the United States, compared to Whirlpool's 56%.

Klebba said she expects that the final ITC ruling in February 2012 will find - as in the April bottom-mount refrigerator case - the imports from Mexico are causing no harm to the U.S. industry.

LG Responds

LG Electronics said in a press release that it disputes the DoC preliminary determination of dumping margins.

LG said that, in its early analysis of the DoC notice, "the government's calculations appear to be significantly overstated."

LG pledged t continue to cooperate with the DoC but also to "aggressively contest the calculations before the final determination is issued in this investigation."

"Regardless of the Commerce Department's final determinations, LG Electronics is confident that the U.S. International Trade Commission (ITC) will find that imports of LG washing machines from Korea have not injured the domestic industry, principally Whirlpool Corporation, which launched this investigation," LG said.

Samsung Responds

Samsung in a statement said it is affected by the Department of Commerce antidumping margins South Korea but not for Mexico, as it no longer manufactures washing machines in Mexico.

An unnamed Samsung spokesperson said the company strongly disagrees with the DoC's finding, and is confident that, in the final investigation phase, the department will find that Samsung has not engaged in dumping and is in compliance with U.S. trade laws.

"The preliminary margin is based on the Department's use of two flawed calculation methodologies known as 'targeted dumping' and 'zeroing," the Samsung spokesperson said. "Zeroing has been found in several instances to violate the World Trade Organization rules upon which U.S. laws are based. The use of this methodology created an antidumping margin where dumping did not, in fact, occur. Targeted dumping employs zeroing and is equally prohibited under the WTO's rules. Therefore, we are disappointed that the Commerce Department continues to use zeroing, which it has eliminated in several other contexts as a result of the WTO's decisions. Other aspects of the targeted dumping finding are also arbitrary and unlawful."