New York - Whirlpool is renewing allegations that its South Korean rivals illegally undercut prices on washing machines, setting up a trade fight that could be settled by the Trump administration.
The American appliance giant on Wednesday filed a petition with the US International Trade Commission against Samsung Electronics and LG Electronics. The so-called safeguard petition is meant to provide help to domestic manufacturers hurt by importers selling products at excessively low prices.
“This filing addresses unprecedented behaviour by two serial violators of US trade laws,” Whirlpool Chief Executive Officer Jeff Fettig said in a statement.
In the filing, Whirlpool alleges Samsung and LG pursued a strategy of selling washing machines in the US at artificially low prices, then doing an “end run” around US anti-dumping laws intended to prevent such behaviour. For example, the South Korean companies moved production to Vietnam and Thailand to avoid duties being imposed by the US on machines they made in China, Whirlpool alleges.
The long-simmering conflict has the potential to become a high-profile test for President Donald Trump. Trade and domestic manufacturing were signature issues in his campaign, and Fettig serves as a member of the president’s manufacturing council. If the trade commission decides in Whirlpool’s favour, it could recommend that Trump’s administration step in and slap tariffs on the competitors’ products.
Whirlpool’s filing would be the latest in a series of complaints companies have filed with the ITC, a federal tribunal that rules on trade disputes. Last month, Boeing accused Bombardier of selling passenger jets in the US at “absurdly low prices,” asking the US to impose duties on the Canadian jet builder.
‘One-Way Street’
Trump has threatened to pull the US out of its free-trade agreement with South Korea, calling the 2012 deal a “one-way street” that has only benefited the Asian country. The US trade deficit with South Korea last year, at about $28bn, was the eighth-largest shortfall among US trading partners, according to Census Bureau data.
Whirlpool’s dispute follows cases in which the US government has determined that the South Korean companies injured US manufacturers by selling washing machines in the country at illegal prices, Whirlpool said.
“In light of their apparent inability to compete with leading global brands like LG in the US market, Whirlpool has decided to seek government restrictions to limit consumer choices,” LG said in an emailed statement. The company said that in order for Whirlpool to succeed in its petition, it would have to prove that the imported goods are found to be a significant cause of serious injury to US producers - “a high legal standard that Whirlpool cannot meet,” LG said.
Representatives for Samsung didn’t have an immediate response to the filing.
The disagreement with the South Korean companies dates back years, with victories on both sides. In 2011, Whirlpool alleged that its overseas rivals were receiving unfair government subsidies and selling products in the US at below-market values. In 2013, South Korea filed a World Trade Organisation dispute challenging the US Commerce Department’s calculations. It won a ruling from the WTO last year.
Lagging behind
The situation has hampered sales at the Benton Harbor, Michigan-based company’s washer division, which has underperformed its other businesses, Fettig said.
“If not for this unlawful behaviour, we believe our washer category would have thrived like the rest of our North American business,” he said.
Whirlpool previously scored a win at the ITC in January, when it granted the company’s request to place dumping duties on imports of large residential washing machines from China. The 6-0 decision paved the way for final duties on the products of as much as 52.5%.
The company posted earnings last quarter that fell short of analysts’ estimates, though in that case it blamed efforts to integrate Italy’s Indesit with its European operations.
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