On the same day that the U.S. and Chinese officials signed the first phase of an agreement meant to begin a truce in the ongoing multibillion-dollar trade war between the two countries, a group of U.S. small gasoline engine manufacturers opened a new front in that same war.
The Coalition of American Vertical Engine Producers (CAVEP), which includes Briggs & Stratton and Kohler Co., filed anti-dumping and countervailing duty petitions with the U.S. Dept. Of Commerce (DOC) and the U.S. International Trade Commission (ITC), alleging that Chinese engine manufacturers are selling vertical shaft, spark-ignited engines between 225 and 999 cc below market cost – the very definition of dumping – and are receiving significant economic assistance from the Chinese government.
The Chinese engines in question are primarily used in the consumer lawn & garden and commercial turf industries, both of which are critical markets for the U.S. engine builders. The Chinese engines enter the domestic market as loose engines sold to manufacturers, as well as in equipment sold in the U.S. market.
It’s estimated that Chinese engines account for as many as 200,000 to 250,000 sales per year in the U.S., a figure that has grown significantly in the last three or four year, according to the petitioners.
As part of its dumping claim, the CAVEP alleges that the Chinese engines have a dumping margin – the amount by which the export price from the country in which the goods originated is less than the fair market price of the goods in that country – of 320% and more.
The countervailing duty claim suggests that Chinese engine manufacturers are receiving a range of economic subsidies from the Chinese government, such as debt restructuring and loans, capital injections, export assistance grants, export loans and credits, income tax reductions and import tariff exemptions.
Following the initial filing, early in February, the DOC and ITC will begin investigating the CAVEP allegations. By early March, the ITC will make a preliminary determination on the anti-dumping petition, while the DOC could make a preliminary ruling on the countervailing duties issue in early April.
Kohler confirmed its participation in the coalition but had no public comment at this point. A spokesperson for Briggs & Stratton said that “we’re committed to fair trade and making sure there is a level playing field.”