[Weekly Compilation of Presidential Documents Volume 40, Number 10 (Monday, March 8, 2004)]
[Pages 331-332]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Memorandum on Imports of Certain Ductile Iron Waterworks Fittings From 
the People's Republic of China

March 3, 2004

Memorandum for the United States Trade Representative

Subject: Presidential Determination on Imports of Certain Ductile Iron 
Waterworks Fittings from the People's Republic of China

    Consistent with section 421 of the Trade Act of 1974, as amended (19 
U.S.C. 2451), I have determined the action I will take with respect to 
the affirmative determination of the United States International Trade 
Commission (USITC Investigation TA-421-4) regarding imports of certain 
ductile iron waterworks fittings (pipe fittings) from China. After 
considering all relevant aspects of the investigation, I have determined 
that providing import relief for the U.S. pipe fittings industry is not 
in the national economic interest of the United States. In particular, I 
find that the import relief would have an adverse impact on the United 
States economy clearly greater than the benefits of such action.
    The facts of this case indicate that imposing the USITC's 
recommended tariff-rate quota remedy or any other import relief 
available under section 421 would be ineffective because imports from 
third countries would likely replace curtailed Chinese imports. The 
switch to third country imports could occur quickly because the major 
U.S. importers already import substantial quantities from countries such 
as India, Brazil, Korea, and Mexico. Because importers' existing 
inventories of imports will likely cover demand for approximately 6 to 
12 months from the imposition of import relief, a switch from China to 
alternative import sources would not likely lead to significant 
additional demand for domestically produced pipe fittings, even 
accounting for a time lag in making that switch. Under these 
circumstances, import relief would provide no meaningful benefit to 
domestic producers.
    In addition, import relief would cost U.S. consumers substantially 
more than the increased income that could be realized by domestic 
producers. Indeed, the USITC estimated that its recommended remedy would

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generate a negative net domestic welfare effect of between $2.3 million 
and $3.7 million in the first year alone.
    While not necessary in reaching my determination that imposing 
import relief would have an adverse impact on the United States economy 
clearly greater than the benefits, it is also worth noting two 
additional points:
 <bullet>   First, evidence suggests that domestic producers enjoy a 
            strong competitive position in the U.S. market, and in fact 
            the largest domestic producer recently announced price 
            increases nationwide ranging from 8 to 35 percent. The two 
            smaller domestic producers and the major U.S. importers have 
            publicly indicated that they would follow these price 
            increases.
 <bullet>   Second, in 2002 and 2003, imports of this product have been 
            relatively stable in volume terms and have shown a slight 
            decline in value terms.
    The circumstances of this case make clear that the U.S. national 
economic interest would not be served by the imposition of import relief 
under section 421. I remain fully committed to exercising the important 
authority granted to me under section 421 when the circumstances of a 
particular case warrant it.
    You are authorized and directed to publish this memorandum in the 
Federal Register.
                                                George W. Bush

 [Filed with the Office of the Federal Register, 8:45 a.m., March 5, 
2004]

Note: This memorandum was published in the Federal Register on March 8.