At the request of the U.S. Trade Representative, the U.S. International Trade Commission (ITC) has initiated an investigation to determine whether increased imports of fresh, chilled, or frozen blueberries are causing or threatening to cause serious injury to domestic blueberry producers. If the ITC determines that they are, the President is authorized to take action to facilitate efforts by the domestic industry to adjust to the import competition, including increasing tariffs and imposing quantitative limitations.
As we explain below, this will be a complicated investigation, with potentially differential impacts on the various types of blueberries imported and produced in the U.S.
The investigation is being conducted under the so-called Safeguard provisions of Section 201 of the Trade Act of 1974, a rarely used trade remedy provision that differs from the more commonly used Antidumping and Countervailing Duty statues in that it does not require a finding that an unfair trade practice has been used to benefit the imports. It is also global in nature – that is, not limited to imports from a specific country or countries, as is the case with antidumping and countervailing duty cases.
As noted, Section 201 is a seldom used provision – in fact, the last agricultural product investigated (one in which we were involved) was lamb meat in 1999 – but, when used, cases are usually instituted at the request of a domestic industry that feels it is being injured by imports. However, in this case the Trade Representative has invoked an even more seldom used provision that allows USTR to request an investigation.
In terms of timing, the ITC has 120 days to complete its initial investigation. If it finds injury, then the ITC conducts a remedy investigation to reach a recommendation to the President on what, if any, actions to take to address the injury. The final ITC report must be delivered to the President no later than 180 days after commencing its investigation. The President then has 60 days to decide what action to take.
USTR has cited two principal factors supporting its request, namely that:
1. U.S. blueberry imports have increased significantly over the last 15 years, from roughly 50 million pounds in 2005 to almost 400 million pounds in 2018.
2. U.S. blueberry imports are sourced in major quantities from multiple countries Unlike other trade remedy investigations that focus on imports from one particular country. U.S. Census Bureau data shows that the value of blueberry imports into the United States has more than doubled since 2014, with five countries – Peru, Chile, Mexico, Canada and Argentina – accounting for more than 98 percent of total U.S. imports over that time period.
In conducting its investigation the statue directs the ITC to consider a number of factors, including:
· the significant idling of productive facilities in the domestic industry;
· the inability of a significant number of firms to carry out domestic production operations at a reasonable level of profit;
· significant unemployment or underemployment within the domestic industry;
· a decline in sales or market share, a higher and growing inventory (whether maintained by domestic producers, importers, wholesalers, or retailers), and a downward trend in production, profits, wages, productivity, or employment (or increasing underemployment) in the domestic industry;
· the extent to which firms in the domestic industry are unable to generate adequate capital to finance the modernization of their domestic plants and equipment, or are unable to maintain existing levels of expenditures for research and development;
· the extent to which the United States market is the focal point for the diversion of exports of the article concerned by reason of restraints on exports of such article to, or on imports of such article into, third country markets;
· an increase in imports (either actual or relative to domestic production), and a decline in the proportion of the domestic market supplied by domestic producers
Once these factors, and any others the ITC deems relevant, are considered, an affirmative finding by the ITC must be supported by a determination that the investigated article is being imported in such increased quantities that it is a substantial cause of serious injury, or threat thereof, to the U.S. industry producing an article like or directly competitive with the imported article.
Given the broad product scope of USTR’s request, the ITC will have its hands full. The product scope includes six arguably distinct products, namely the fresh and frozen forms of wild, cultivated, and organic blueberries. We anticipate much discussion about which forms are “like or directly competitive with” which others, which have increased to be a “substantial cause” of serious injury, and potentially individual market dynamics affecting imports from particular countries and/or into particular U.S facilities.
The ITC will accept submissions and announce a hearing when they formally notice the investigation in the Federal Register.
Contact Ed Farrell for more information. efarrell@ofwlaw.com.
