U.S. International Trade Commission

Address all communications to

Secretary to the Commission

United States International Trade Commission

Washington, DC 20436

COMMISSIONERS

Irving A. Williamson

Deanna Tanner Okun

Robert A. Rogowsky

Director of Operations

Karen Laney-Cummings

Director, Office of Industries

Charlotte R. Lane

Daniel R. Pearson, Chairman

Dean A. Pinkert

Shara L. Aranoff, Vice Chairman

Project Leader

Cynthia B. Foreso

cynthia.foreso@usitc.gov

Deputy Project Leader

Falan Yinug

falan.yinug@usitc.gov

Principal Authors

Raymond Cantrell, Jack Greenblatt, Gerald Houck, John Kitzmiller,

Timothy McCarty, Karl Tsuji, and Stephen Wanser

Special Assistance From:

Diane Bennett, Sharon Greenfield, and Walker Pollard

Under the direction of:

Robert Carr, Chief

Natural Resources and Metals Division
U.S. International Trade Commission

Washington, DC 20436

April 2007

www.usitc.gov

Publication 3919

Advice Concerning Possible Modifications

to the U.S. Generalized System of

Preferences, 2006 Review

Investigation No. 332--483

CLASSIFIED BY: United States Trade Representative, Letter Dated January 9, 2007

DECLASSIFIED BY: United States Trade Representative, Letter Dated January 9, 2007

NOTICE

THIS REPORT IS A PUBLIC VERSION OF THE REPORT SUBMITTED TO THE

UNITED STATES TRADE REPRESENTATIVE ON APRIL 11, 2007. ALL

CONFIDENTIAL NATIONAL SECURITY INFORMATION AND CONFIDENTIAL

BUSINESS INFORMATION HAS BEEN REMOVED AND REPLACED WITH

ASTERISKS (***).

i

ABSTRACT

This report contains the advice of the U.S. International Trade Commission (Commission)

to the President on the probable economic effect of providing competitive need limit waivers

for eight items under the U.S. Generalized System of Preferences (GSP) on domestic

industries producing like or directly competitive articles and on U.S. consumers. The

countries and Harmonized Tariff Schedule (HTS) subheadings for which advice is provided

are: Argentina for HTS subheadings 2836.91.00 (lithium carbonates) and 7202.99.20

(calcium-silicon); Brazil for HTS subheadings 7403.11.00 (copper cathodes) and 7408.11.60

(certain unalloyed copper wire rod); India for HTS subheadings 2001.10.00 (prepared or

preserved cucumbers (i.e., pickles)), 5703.10.20 (hand-hooked carpets and floor coverings),

and 8528.12.80 (certain television reception apparatus); and Thailand for HTS subheading

4011.20.10 (radial tires). 

*****
iii

CONTENTS

Page

Abstract ............................................................. i

Chapter 1: Introduction and Summary of Findings . . 1-1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1

Product and country coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1

Analytical approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-2

Summary of findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-3

Chapter 2: Prepared or Preserved Cucumbers ........ 2-1

Probable economic effect advice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1

Profile of U.S. industry and market, 2002!06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2

GSP import situation, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2

Position of interested parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3

Chapter 3: Lithium Carbonates ............................. 3-1

Probable economic effect advice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1

Profile of U.S. industry and market, 2002&06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-2

GSP import situation, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3

Position of interested parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-4

Chapter 4: Radial Tires ........................................ 4-1

Probable economic effect advice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1

Profile of U.S. industry and market, 2002&06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-2

GSP import situation, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-3

Position of interested parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-4

Chapter 5: Hand-Hooked Carpets and Floor

Coverings ................................................... 5-1

Probable economic effect advice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-2

Profile of U.S. industry and market, 2002&06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-3

GSP import situation, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-3

Position of interested parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-4
iv

Contents–Continued

Page

Chapter 6: Calcium-Silicon ................................... 6-1

Probable economic effect advice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-2

Profile of U.S. industry and market, 2002&06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-2

GSP import situation, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-3

Position of interested parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-4

Chapter 7: Copper Cathodes and Sections Thereof... 7-1

Probable economic effect advice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1

Profile of U.S. industry and market, 2002&06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1

GSP import situation, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-3

Position of interested parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-4

Chapter 8: Certain Unalloyed Copper Wire Rod ...... 8-1

Probable economic effect advice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1

Profile of U.S. industry and market, 2002&2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-2

GSP import situation, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-3

Position of interested parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-4

Chapter 9: Television Reception Apparatus with

 Video Recording/Reproducing Capability ........ 9-1

Probable economic effect advice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1

Profile of U.S. industry and market, 2002&2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1

GSP import situation, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-2

Position of interested parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-3

Bibliography ....................................................... Biblio-1

Appendixes:

A USTR Request Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

B. Notice of Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

C. Calendar of Witnesses for the February 22, 2007 Hearing . . . . . . . . . . . . . . . . . . . . . C-1

D. Model for Evaluating the Probable Economic Effects of Changes in the GSP . . . . . . D-1
v

Contents–Continued

Page

Tables:

2-1 Prepared or preserved cucumbers: U.S. producers, employment, shipments, trade, 

consumption, and capacity utilization, 2002&06 . . . . . . . . . . . . . . . . . . . . . . . . 2-2

2-2 Prepared or preserved cucumbers: U.S. imports and share of U.S. consumption, 

2006

2-3

2-3 Prepared or preserved cucumbers: U.S. imports for consumption, by principal 

sources, 2002&06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-4

2-4 Prepared or preserved cucumbers: U.S. exports of domestic merchandise, by 

market, 2002&06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2-5

3-1 Lithium carbonates: U.S. producers, employment, shipments, trade, consumption, 

and capacity utilization, 2002&06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3

3-2 Lithium carbonates: U.S. imports and share of U.S. consumption, 2006 3-4

3-3 Lithium carbonates: U.S. imports for consumption, by principal

sources, 2002&06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-5

3-4 Lithium carbonates: U.S. exports of domestic merchandise, by market, 2002&06 . . 3-5

4-1 Radial tires: U.S. producers, employment, shipments, trade, consumption, and 

capacity utilization, 2002&06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-3

4-2 Radial tires: U.S. imports and share of U.S. consumption, 2006 . . . . . . . . . . . . . . . . 4-4

4-3 Radial tires: U.S. imports for consumption, by principal sources, 2002&06 . . . . . . . 4-5

4-4 Radial tires: U.S. exports of domestic merchandise, by market, 2002&06 . . . . . . . . . 4-5

5-1 Hand-hooked carpets and floor coverings: U.S. producers, employment, 

shipments, trade, consumption, and capacity utilization, 2002&06 . . . . . . . . . . . . . . 5-3

5-2 Hand-hooked carpets and floor coverings: U.S. imports and share of U.S.

consumption, 2006 ...............................................

 5-4

5-3 Hand-hooked carpets and floor coverings: U.S. imports for consumption, by 

principal sources, 2002&06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-5

6-1 Calcium-silicon: U.S. producers, employment, shipments, trade, consumption, and

capacity utilization, 2002&06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-3
vi

Contents–Continued

Page

6-2 Calcium-silicon: U.S. imports and share of U.S. consumption, 2006 . . . . . . . . . . . . 6-4

6-3 Calcium-silicon: U.S. imports for consumption, by principal sources, 2002&06 . . . 6-5

7-1 Copper cathodes and sections thereof: U.S. producers, employment, shipments, 

trade, consumption, and capacity utilization, 2002&06 . . . . . . . . . . . . . . . . . . . . . . . 7-3

7-2 Copper cathodes and sections thereof: U.S. imports and share of U.S. 

consumption, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-4

7-3 Copper cathodes and sections thereof: U.S. imports for consumption, by principal

sources, 2002&06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-5

7-4 Copper cathodes and sections thereof: U.S. exports of domestic merchandise, by

market, 2002&06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-5

8-1 Certain unalloyed copper wire rod U.S. producers, employment, shipments, trade,

consumption, and capacity utilization, 2002&06 . . . . . . . . . . . . . . . . . . . . . . . . 8-3

8-2 Certain unalloyed copper wire rod U.S. imports and share of U.S. consumption, 

2006 ..........................................................

8-4

8-3 Certain unalloyed copper wire rod: U.S. imports for consumption, by principal

sources, 2002&06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-6

8-4 Certain unalloyed copper wire rod: U.S. exports of domestic merchandise, by

market, 2002-2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-6

9-1 Television reception apparatus with video recording/reproducing capability: U.S.

producers, employment, shipments, trade, consumption, and capacity

utilization, 2002&06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-2

9-2 Television reception apparatus with video recording/reproducing capability: U.S.

imports and share of U.S. consumption, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . 9-2

9-3 Television reception apparatus, with video recording/reproducing capability: U.S.

imports for consumption, by principal sources, 2002&06 . . . . . . . . . . . . . . . . . 9-3

 1

 See app. A for the USTR request letters and app. B for the Commission’s Federal Register notice

instituting the investigation notice. The Commission held a public hearing on this matter on February 22,

2007, in Washington, DC. See app. C for the calendar of witnesses for the public hearing.

 2

 Competitive need limits provide a ceiling on GSP benefits for each product and beneficiary developing

country. Without a waiver, a country will automatically lose its GSP eligibility with respect to a product if

the competitive need limitations are exceeded. The competitive need limitations require the termination of

the country’s GSP eligibility on a product if, during any calendar year, U.S. imports from that country meet

one of the following criteria: (1) account for 50 percent or more of the value of total U.S. imports of that

product; or (2) exceed a certain dollar value (in accordance with the GSP statute, the dollar-value limit is

increased by $5 million annually; the limit was $125 million in 2006.). Products will be found “sufficiently

competitive” when imported from a specified beneficiary country when they exceed one of these limits. By

statute, GSP treatment for an article exceeding either competitive need limit terminates July 1 of the next

calendar year. Per the USTR request, the Commission used the competitive need limit dollar value of $125

million for this report.

A waiver may also be provided when total U.S. imports from all countries of a product are small,

or de minimis. The de minimis competitive need limit waiver is also adjusted each year, in increments of

$0.5 million. The de minimis level in 2006 was $18 million.

1-1

CHAPTER 1

Introduction and Summary of Findings

Introduction

This report provides advice requested by the United States Trade Representative (USTR)1

on whether any industry in the United States producing like or directly competitive articles

is likely to be adversely affected by a waiver of the competitive need limits as well as the

effect of the granting of the waivers on U.S. consumers.2

 As requested, the advice is

provided for each of the U.S. Harmonized Tariff Schedule (HTS) subheadings listed in the

USTR letter. 

Product and country coverage 

As requested by the USTR, advice on waiving the competitive need limits is provided for

the following: Argentina for HTS subheadings 2836.91.00 (lithium carbonates) and

7202.99.20 (calcium-silicon); Brazil for HTS subheadings 7403.11.00 (copper cathodes) and

7408.11.60 (certain unalloyed copper wire rod); India for HTS subheadings 2001.10.00

(prepared or preserved cucumbers (i.e., pickles)), 5703.10.20 (hand-hooked carpets and floor

coverings), and 8528.12.80 (certain television reception apparatus); and Thailand for HTS

subheading 4011.20.10 (radial tires). 
 3

 The probable economic effect advice, to a degree, integrates and summarizes the data provided in other

sections of each product write-up with particular emphasis on the price sensitivity (elasticity) of import

supply and demand. For example, if the price elasticity of demand for imports from the beneficiary in the

United States and the price elasticity of supply in the exporting beneficiary country are both relatively high,

then the elimination of even a moderate level tariff suggests the possibility of large increases in imports from

the beneficiary country. 

It should be noted that the probable economic effect advice with respect to changes in import levels

is presented in terms of the degree to which GSP modifications could affect the level of U.S. trade with the

world. Consequently, if GSP beneficiaries supply a very small share of the total U.S. imports of a particular

product or if imports from beneficiaries readily substitute for imports from developed countries, then the

overall effect on U.S. imports could be minimal.

 4

 See app. D for a brief textual and graphic presentation of the model used to evaluate the probable

economic effects of changes in the GSP program.

 5

 U.S. export data for certain subject products are not included as the products are part of a large basket

category and are, therefore, overstated. Estimates of U.S. exports, if any, are provided in the “Profile of U.S.

industry and market, 2002-06” section. 

 6

 The Commission developed the probable economic effect coding system to ensure consistency on its

advice and has used the coding system in a wide range of investigations.

1-2

Analytical approach

The probable economic effect advice presented in this report is based on the short- to nearterm (1 to 5 years) impact of the proposed GSP-eligibility modifications.3

 Partial

equilibrium modeling was used to estimate the probable effects of changes in the GSP

program for the selected products on total U.S. imports, competing U.S. industries, and U.S.

consumers.4

 Although the products at issue in this report currently receive duty-free GSP

treatment, for modeling purposes it is assumed that they are subject to the applicable Column

1 duty rate. The model then estimates the likely impact of removing that duty (due to the

granting of a competitive need limit waiver). The model used in this study is a nonlinear,

imperfect-substitutes model.

 

The Commission used testimony obtained during a public hearing, written submissions from

interested parties, other information published in government and industry reports, and staff

economic and industry expertise to provide qualitative analysis of actual market conditions

for the subject products. Trade data presented in this report are from official statistics of the

U.S. Department of Commerce.5

 U.S. production data were estimated by the Commission

industry analysts. Elasticities were also estimated by industry analysts based on relevant

product and market characteristics. Data, to the extent possible, cover the period 2002 to

2006.

The Commission’s probable economic effect advice as to the granting of the competitive

need limit waivers on U.S. imports, industries, and consumers uses the coding system shown

below:6
 7

 The U.S. consumer may be a firm or a person receiving an intermediate good for further processing or an

end user receiving a final good.

1-3

Level of total U.S. imports:

Code A: Little or no increase (less than 6 percent).

Code B: Moderate increase (6 to 15 percent).

Code C: Significant increase (more than 15 percent).

Code N: No impact.

U.S. industry and employment:

Code A: Little or no adverse impact - little or no decrease in production or

producers’ shipments (less than 6 percent).

Code B: Significant adverse impact - significant proportion of workers

unemployed, declines in output and profit levels, and departure of firms;

effects on some segments of the industry may be substantial even though

they are not industry wide (6-15 percent).

Code C: Substantial adverse impact - substantial unemployment, widespread

idling of productive facilities; substantial declines in profit levels; effects

felt by the entire industry (more than 15 percent).

Code N: None - there is no domestic industry producing the subject product.

U.S. consumer:7

Code A: The bulk of duty saving (greater than 75 percent) is expected to be

absorbed by the foreign suppliers. The price U.S. consumers pay is not

expected to fall significantly.

Code B: Duty saving is expected to benefit both the foreign suppliers and the

domestic consumer (neither absorbing more than 75 percent).

Code C: The bulk of duty saving (greater than 75 percent) is expected to benefit

the U.S. consumer.

Code N: None.

Summary of Findings

* * * * *

 1

 HTS subheading 2001.10.00 includes pickles, other than the small gherkins, which are said to compete

with gherkins and are produced in the United States in greater amounts than gherkins. Not included in this

subheading are refrigerated pickles, which are not processed (blanched) before being placed in a jar or can,

but which are also said to compete with processed pickles and are also produced in the United States. 

2-1

CHAPTER 2

Prepared or Preserved Cucumbers

Competitive need limit waiver: India

HTS subheading Description Col. 1 rate of

duty as of

1/1/07

(percent ad

valorem)

Like or directly

competitive article

produced in the

United States on

Jan. 1, 1995?

2001.10.00a Cucumbers including gherkins, which

have been prepared or preserved in

vinegar or acetic acid

9.6 Yes

 a India has not been proclaimed by the President as noneligible for GSP treatment for the articles included

under HTS subheading 2001.10.00. However, India anticipates future export levels to the United States in excess

of the competitive need limit.

The products covered in this subheading are cucumbers, including gherkins (small

cucumbers), which have been prepared or preserved by vinegar or acetic acid and usually

are stored in cans or jars.1

 The subject products are generally referred to as “pickles” and

are often served as a garnish for other foods or as a vegetable item themselves. They are sold

in both retail- and institutional-sized containers, through such outlets as chain restaurants,

supermarkets, and club and convenience stores, and to larger-volume institutional purchasers

such as hospitals and schools and generally have a shelf life of about 2 years. 

Probable Economic Effect Advice

*****
 2

 FAO data at http://www.fao.org.

 3

 Chengappa, “Karnataka is Cashing in on Gherkins.”

 4

 Pickle Packers International, Inc. official, telephone interview by Commission staff, Jan. 23, 2007.

 5

 Pickle Packers International, Inc. official, telephone interview by Commission staff, Feb. 8 and 9, 2007. 

 6

 Data are available on the quantity and farm-gate value of raw product sold for processing, but these data

may significantly underestimate the value of actual shipments of finished product. Also, such data do not

take into account the value of imported bulk product re-packed in the United States that competes with

domestically produced product in the same marketing channels. 

 7

 FAOSTAT Database.

2-2

Profile of U.S. industry and market, 2002-06

The United States is a leading producer of pickles,2 and may account for as much as onefourth of total global pickle production.3

 There is little publicly available information about

this industry, and none has been provided by officials of the industry’s trade association.4

The number of U.S. producers is believed to be about ***, with employment varying

significantly among firms and often in individual firms throughout the season (table 2-1).5

An estimated five firms are believed to account for the bulk of processing and sales, with

smaller-volume firms accounting for the rest. A number of firms that process domesticallygrown cucumbers also import and re-pack pickles entered in bulk containers, as well as

import finished product in retail-sized containers. Data for actual shipments of pickles are

not currently available. Data are available for the value of all raw pickling cucumbers going

into processing, but these data are believed to greatly undervalue actual shipments of

processed product.6

 

Table 2-1 Prepared or preserved cucumbers: U.S. producers, employment, shipments, trade,

consumption, and capacity utilization, 2002-06

Item 2002 2003 2004 2005 2006

Producers (number)

a . . . . . . . . . . . . . . *** *** *** *** ***

Employment (1,000 employees)

a ...... *** *** *** *** ***

Shipments (1,000 dollars)

a . . . . . . . . . . *** *** *** *** ***

Exports (1,000 dollars) . . . . . . . . . . . . 6,881 5,759 6,877 8,476 10,376

Imports (1,000 dollars) . . . . . . . . . . . . 22,292 33,737 37,817 35,051 29,892

Consumption (1,000 dollars) . . . . . . . . *** *** *** *** ***

Import-to-consumption ratio (percent) *** *** *** *** ***

Capacity utilization (percent) ........ (

b

) (b) (b) (b) (b)

Source: Compiled from official statistics of the U.S. Department of Commerce, except where noted. a

 Estimated by the Commission staff based on industry sources.

b

 Not available.

GSP import situation, 2006 

India is a small- to medium-sized pickle producer, with estimated production about one-tenth

that of the United States and nearly all production intended for export market sales.7
 8

 Chengappa, “Karnataka is Cashing in on Gherkins.

 9

 Sharan, Embassy of India, “2006 Annual Review of Products and Country Practices under the GSP.”

 10 Except as noted, information provided in this section is derived from the petition filed with the USTR

as well as testimony and written submissions of interested parties to the Commission in connection with this

investigation.

 11 Sharan, Embassy of India, “2006 Annual Review of Products and Country Practices under the GSP.”

 12 Prehearing Brief for the Public Hearing at the Office of the USTR on Feb. 16, 2007, on the 2006

Annual Review of Products and Country Practices under the GSP, submitted Feb. 2, 2007, by the Embassy of

India for the Government of India.

2-3

Although global demand for pickles has been stable, competitive pricing for some pickles,

especially gherkins, has been used recently to gain global market share.8

 Growers in India

benefit from lower labor rates and an ideal climate for raising certain pickling cucumbers.

Processors in India have traditionally supplied global markets with product in bulk

containers to be re-packed in the foreign market, but have recently shifted into producing

greater volumes of pickles in retail-sized jars for export.

(U) India was the largest global supplier of the products covered under this HTS subheading

to the U.S. market in 2006, accounting for 49 percent of total U.S. imports and 89 percent

of GSP-eligible imports (tables 2-2 and 2-3). U.S. imports from India are allegedly taking

U.S. market share from other traditional foreign suppliers, based principally on slightly

lower prices for their product.9

Table 2-2 Prepared or preserved cucumbers: U.S. imports and share of U.S. consumption, 2006

Item Imports

Percent

 of total

imports

Percent 

of GSP

imports

Percent 

of U.S.

consumption

1,000 dollars

Total U.S. imports . . . . . . . . . . . . . . . . . . . 29,892 100 - ***

Total U.S. imports from GSP-eligible 

 countries . . . . . . . . . . . . . . . . . . . . . . . . . 16,582 55 100 ***

India . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,788 49 89 ***

Position of interested parties10

Petitioner.– In a written submission to the USTR, the Embassy of India stated that not

granting a waiver would greatly harm the large number of small-volume Indian farmers

currently growing gherkin cucumbers. An estimated 115,000 marginal farmers are said to

depend on the raising of small pickling cucumbers principally for export.11 Also, according

to the petitioner, granting a waiver would assist Indian canners that are already operating

well below global (efficient) scales of production to increase their productivity.12

No statements were received by the Commission in support of, or in opposition to, the

proposed modifications to the GSP considered for this HTS subheading.
2-4

Table 2-3 Prepared or preserved cucumbers: U.S. imports for consumption, by principal sources, 2002-

06

Source 2002 2003 2004 2005 2006

In Dollars

India 2,155,396 5,983,423 6,983,927 10,150,338 14,788,837

Canada 10,947,877 12,726,388 12,719,117 9,087,645 4,693,697

Poland 1,457,883 1,987,980 1,727,402 2,132,190 2,156,322

Israel 798,469 1,381,258 1,481,136 1,375,725 1,834,026

Mexico 3,006,334 6,561,260 9,593,024 7,580,239 1,543,861

Germany 1,320,268 1,342,582 1,296,721 1,292,661 1,366,840

France 624,011 878,546 1,069,004 894,560 932,612

Turkey 472,649 1,045,772 1,329,267 869,756 746,803

Bulgaria 331,314 573,257 414,456 402,820 611,179

Lebanon 195,072 215,302 205,694 225,035 217,484

All other 982,677 1,041,597 997,130 1,039,543 1,000,472

Total 22,291,950 33,737,365 37,816,878 35,050,512 29,892,133

Imports from

GSP-eligible

countries:

India 2,155,396 5,983,423 6,983,927 10,150,338 14,788,837

Turkey 472,649 1,045,772 1,329,267 869,756 746,803

Bulgaria 331,314 573,257 414,456 402,820 611,179

Lebanon 195,072 215,302 205,694 225,035 217,484

Croatia 146,786 76,874 127,923 74,758 74,033

Egypt 69,195 49,672 65,560 56,012 31,994

BosniaHercegov2,686 13,948 9,788 26,257 19,535

Macedonia 95,516 55,109 22,298 60,095 12,811

Ukraine 4,291 8,868 5,029 9,352 7,259

Pakistan 13,084 11,325 2,900 12,956 0

All other 51,530 59,191 51,699 42,150 72,521

Total 3,537,519 8,092,741 9,218,541 11,929,529 16,582,456

Source: Official statistics of the U.S. Department of Commerce.
2-5

Table 2-4 Preserved or prepared cucumbers: U.S. exports of domestic merchandise, by market, 2002-06

Country 2002 2003 2004 2005 2006

In Dollars

Canada 4,079,801 3,707,765 4,702,699 6,554,104 8,722,065

Mexico 642,934 378,404 366,066 436,829 427,458

Saudi Arabia 116,557 206,560 146,720 129,989 172,533

Venezuela 156,970 58,965 88,753 140,041 168,683

Hong Kong 106,282 99,152 69,886 174,510 108,704

Taiwan 87,732 72,351 72,816 103,298 86,964

Kuwait 82,402 53,953 34,055 103,311 76,074

Japan 573,558 496,511 619,145 165,252 17,189

Panama 22,156 34,734 36,761 159,202 7,761

South Africa 0 0 24,831 155,618 2,586

All other 1,012,955 650,278 715,266 353,514 585,902

Total 6,881,347 5,758,673 6,876,998 8,475,668 10,375,919

Source: Official statistics of the U.S. Department of Commerce.

 1

 The major lithium products not made from lithium carbonate are lithium minerals used directly as ore

concentrates in ceramics and glass applications and lithium chloride used to make lithium metal which, in

turn, is used to make non-rechargeable batteries. 

 2

 Chemical & Engineering News.

3-1

CHAPTER 3

Lithium Carbonates

Competitive need limit waiver: Argentina

HTS subheading Description Col. rate of

duty as of

1/1/07

(percent ad

valorem)

Like or directly

competitive article

produced in the

United States on

Jan. 1, 1995?

2836.91.00a Lithium carbonates 3.7 Yes

 a Argentina has not been proclaimed by the President as noneligible for GSP treatment for the articles included

under HTS subheading 2836.91.00. However, Argentina anticipates future exports levels to the United States in

excess of the competitive need limit.

Lithium carbonate, the only product covered in HTS subheading 2836.91.00, is the basic raw

material used for the production of most lithium chemicals and other lithium products.1

Lithium carbonate is also used in the manufacture of ceramics and glass, batteries,

lubricating greases, pharmaceuticals, polymers, and primary aluminum; in air conditioners;

and for various other applications. Industry observers believe that the largest growth

prospects are for lithium-ion and lithium-polymer rechargeable batteries, a market that was

valued at about $4 billion in 2005.2

 Although lithium batteries are not currently used widely

in hybrid electric vehicles (HEVs), this remains an area of active interest within the

automotive industry. Although once produced primarily from hard-rock ores, lithium

carbonate is currently produced primarily from extracting the lithium contained in subsurface

brines. 

Probable Economic Effect Advice

*****
 3

 Most of the information in this paragraph was obtained from Ober, Minerals Yearbook, various editions.

 4

 For example, FMC Corp.’s Lithium Division produces lithium metal and organic lithium compounds at

its facilities in Bessemer City, NC, and Bayport, TX. In addition to producing lithium carbonate

domestically, Chemetall Foote’s other U.S. lithium operations include a lithium hydroxide plant in Silver

Peak, NV; a butyllithium plant in New Johnsonville, TN; and facilities for producing downstream lithium

compounds in Kings Mountain, NC. SQM, in addition to being a major Chilean producer and exporter of

lithium carbonate to the United States, operates a plant near Houston for producing butyllythium. According

to trade journals, butyllithium is used primarily in the production of synthetic rubber and pharmaceuticals.

 5

 General Motors website.

 6

 The-infoshop.com by Global Information, Inc., citing Roskill, The Economics of Lithium 2006. 

3-2

Profile of U.S. industry and market, 2002-06

Chemetall Foote, the only U.S. producer of lithium carbonate, manufactures its product from

brine near Silver Peak, NV, while it also imports the product from its Chilean subsidiary,

Sociedad Chilena de Litio Ltda. (SCL) (table 3-1).3

 FMC, a major processor of lithium

chemicals both domestically and globally, shut down its relatively high-cost spodumene

mine and lithium carbonate facility in North Carolina in 1998 and now imports the material

from Chile and from its facilities in Argentina. Although dependent on imports of lithium

carbonate, the United States continues to be a leading producer of the value-added

downstream products produced from lithium carbonates.4

 According to an industry source,

increased global demand has led to the reopening of some of the more expensive foreign

production facilities that utilize hard-rock mineral mining, though none of these are located

in the United States.

During the period, covered U.S. and global consumption of lithium products was buoyed by

increased demand, particularly for battery-related applications. According to an estimate by

the U.S. Geological Survey, U.S. consumption of lithium products grew steadily from 1,100

metric tons of lithium content in 2002 to a projected 2,600 metric tons in 2006. U.S. imports

of lithium carbonate grew by 68 percent, from 9,827 metric tons in 2002 to 16,468 metric

tons in 2006. In 2006, about 9,839 metric tons of these imports came from Chile and about

6,535 metric tons came from Argentina. Relying in part on research funded by the U.S.

government, General Motors has awarded two U.S. companies contracts to design and test

lithium-ion batteries for use in a plug-in hybrid SUV.5

 The successful development of highpowered large lithium batteries for HEVs and military and stationary power applications

could substantially increase demand for lithium given the higher quantities of lithium used

in these large batteries compared with lithium batteries used in consumer products.6
 7

 According to a staff conversation with an FMC respresentative, ***

 8

 Ibid.

 9

 FMC representatives, interview by Commission staff.

 10 Ibid.

3-3

Table 3-1 Lithium carbonates: U.S. producers, employment, shipments, trade, consumption, and

capacity utilization, 2002-06

Item 2002 2003 2004 2005 2006

Producers (number) ................ 11111

Employment (employees) . . . . . . . . . . . *** (a

) (a) (a) ***

Production (1,000 dollars) ........... (a

) (a) (a) (a) ***

Exports (1,000 dollars) . . . . . . . . . . . . . 12,587 9,902 12,187 13,718 10,520

Imports (1,000 dollars) . . . . . . . . . . . . . 15,558 18,015 26,539 27,475 38,161

Consumption (1,000 dollars) ......... (a

) (a) (a) (a) ***

Import-to-consumption ratio (percent) (

a

) (a) (a) (a) ***

Capacity utilization (percent) ........ (a

) (a) (a) (a) (a)

Source: U.S. import and export data are based on official statistics of the U.S. Department of Commerce; all other

data are based on industry sources.

a

 Not available.

GSP import situation, 2006

FMC operates a facility in Argentina that produces lithium carbonate and lithium chloride

from brines. This facility is designed to produce about *** metric tons per year of lithium

carbonate.7

 The quality of the lithium carbonate produced in Argentina is considered to be

***.8

 ***9

In 2006, U.S. imports from Argentina, which are ***10 amounted to 6,535 metric tons, gross

weight, valued at $19.1 million, or about 40 percent of total U.S. lithium carbonate imports

in terms of quantity and 50 percent in terms of value (tables 3-2 and 3-3). During 2002-05,

in terms of value and quantity, Argentina was the second-largest foreign source of lithium

carbonate imports behind Chile, which accounted for the majority of imports. However, in

2006, Argentina emerged as the largest foreign supplier to the United States by value,

accounting for slightly more than one-half of lithium carbonate imports, although Argentina

continued to trail Chile in terms of quantity of imports.
 11 Except as noted, information provided in this section is derived from the petition filed with the USTR

as well as testimony and written submissions of interested parties to the Commission in connection with this

investigation.

3-4

Table 3-2 Lithium carbonates: U.S. imports and share of U.S. consumption, 2006

Item Imports

Percent

 of total

imports

Percent 

of GSP

imports

Percent 

of U.S.

consumption

1,000 dollars

Total U.S. imports . . . . . . . . . . . . . . . . . . . . . . 38,161 100 - ***

Total U.S. imports from GSP-eligible 

 countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,149 50 100 ***

Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . 19,149 50 100 ***

Position of interested parties11

Petitioner.– FMC stated in its petition to the USTR for the waiver that the loss of GSP

benefits for lithium carbonates imported from Argentina as a result of exceeding the

competitive need limits would have a disproportionate adverse impact on the company, the

*** importer of lithium carbonates from Argentina. The loss of GSP benefits would add

about *** to FMC’s cost of value-added manufacturing in the United States and would cause

the company to seriously evaluate moving its operations offshore. Moreover, the petition

stated that loss of GSP benefits would harm U.S. value-added exports, particularly of lithium

products manufactured by FMC in Bessemer City, NC (*** of production is exported), by

imparting an advantage to non-U.S. producers of value-added lithium products in China,

Germany, and Chile, and would significantly impair FMC’s Argentine investments. 

FMC stated in its filing with the Commission that without the waiver of the competitive need

limit, FMC may reduce its presence in the United States and move its North Carolina

operations offshore and ***, which is ***.
3-5

Table 3-3 Lithium carbonates: U.S. imports for consumption, by principal sources 2002-06

Source 2002 2003 2004 2005 2006

In Dollars

Argentina 2,007,881 5,790,657 11,197,223 9,595,804 19,148,761

Chile 12,843,450 12,025,363 15,177,186 17,733,963 18,719,578

China 101,887 71,632 118,840 5,000 24,736

Canada 96,349 46,100 45,530 11,430 24,170

Japan 268,068 8,635 0 69,831 0

Spain 0 0 0 51,840 0

Australia 0 0 0 7,590 0

Italy 0 0 0 0 0

France 48,537 0 0 0 0

United Kingdom 0 5,834 0 0 0

All other 192,049 66,312 0 0 244,000

Total 15,558,221 18,014,533 26,538,779 27,475,458 38,161,245

Imports from GSP-eligible 

countries:

Argentina 2,007,881 5,790,657 11,197,223 9,595,804 19,148,761

Russia 3,500 0 0 0 0

Total 2,011,381 5,790,657 11,197,223 9,595,804 19,148,761

Source: Official statistics of the U.S. Department of Commerce.

Table 3-4 Lithium carbonates: U.S. exports of domestic merchandise, by market, 2002-06

Country 2002 2003 2004 2005 2006

In Dollars

Japan 4,799,174 2,849,879 2,460,227 3,104,322 4,439,722

Germany 3,392,948 3,075,345 2,379,036 2,837,015 2,971,557

United Kingdom 628,771 531,190 846,120 686,868 1,091,239

Netherlands 333,204 231,571 378,005 429,702 542,717

China 432,264 1,561,527 3,958,785 3,244,989 271,423

Canada 1,192,962 443,205 450,626 219,124 211,986

India 172,424 134,219 168,869 182,136 113,035

Australia 733,342 93,147 61,383 217,964 98,957

Thailand 0 0 0 561,339 52,029

Brazil 6,854 10,000 0 1,477,590 22,389

All other 894,974 972,097 1,484,442 757,403 705,232

Total 12,586,917 9,902,180 12,187,493 13,718,452 10,520,286

Source: Official statistics of the U.S. Department of Commerce.

 1

 Radial tires used on heavy construction and agricultural equipment, and those for passenger cars are not

included in this HTS subheading. 

4-1

CHAPTER 4

Radial Tires

Competitive need limit waiver: Thailand

HTS subheading Short description General rate of

duty as of 1/1/07

(percent ad

valorem)

Like or directly

competitive article

produced in the

United States on

Jan. 1, 1995?

4011.20.10a New radial bus and truck tires 4.0 Yes

 a Thailand has not been proclaimed by the President as noneligible for GSP treatment for the articles included

under HTS subheading 4011.20.10. However, Thailand anticipates future export levels to the United States in

excess of the competitive need limit.

The radial bus and truck tires covered under HTS subheading 4011.20.10 are generally

interchangeable and are designed for use on paved or unpaved roads and terrain or for

multiple use.1

 The tires in this HTS subheading are predominately of the tubeless steelbelted radial variety and encompass a wide range and grade of tires, including light truck

(LT) and bus tires, medium-duty truck and bus tires, and heavy-duty truck tires. LT tires are

used on pickup trucks and other lighter-duty trucks and buses, while medium- and heavyduty truck tires are used on a wide range of vehicles, from general-purpose delivery trucks

to large, 18-wheeler tractor-trailer rigs, dump trucks, and commercial passenger buses. The

majority of the bus and truck tires sold in the United States are for use on paved roads or

highways or a combination of on-road/off-road use.

Probable Economic Effect Advice

*****
 2 Modern Tire Dealer, 34-35. 

 3

 Gary Saska (principal engineer), Goodyear Tire & Rubber Co., e-mail message to Commission staff,

January 26, 2007.

4-2

Profile of U.S. industry and market, 2002-06

In 2006, there were 10 producers of truck tires (table 4-1) at 27 locations in the United

States, with a total production capacity of about 169,000 tires per day. Goodyear, Cooper,

Michelin, and Bridgestone Firestone together account for roughly 95 percent of total U.S.

production. LT tires generally account for about 72 percent of total U.S. production

capacity, and medium- and heavy-duty truck tires, 28 percent. The major U.S. truck tire

manufacturers are multinational corporations with production facilities worldwide. In North

America, Bridgestone Firestone also has truck tire plants in Canada and Mexico, and is

building a new plant in Mexico; Michelin has plants in Canada. These companies also

operate in China, Thailand, and Brazil. 

U.S. radial truck tire production averaged 47 million to 48 million tires per year from 2002

through 2005, before declining to 42 million tires in 2006. Factors affecting U.S. truck tire

production in 2006 included high gasoline and diesel costs (which affect miles driven), high

raw materials (rubber) costs, and increased imports (table 4-3). In addition, in 2006,

Bridgestone Firestone closed its 8,000 tire-per-day LT facility in Oklahoma City, OK,2

 and

Goodyear employees went on strike during the fourth quarter.3

 Capacity utilization rates

fell to a 5-year low of 74 percent in 2006 primarily because of a decline in LT tire

production. LT radial tire production fell from 33 million tires in 2002 to 27 million tires

in 2006, while medium- and heavy-duty truck tire production cycled between 14 million and

16 million tires during the 5-year period. 

In 2006, U.S. consumption increased by about 2 percent to $6.5 billion, while the share of

consumption accounted for by imports rose by 6 percentage points. The steady increase in

U.S. imports of these products is attributable, at least in part, to the domestic industry’s

decision to build new state-of-the-art plants in countries with readily available natural rubber

sources, such as Thailand, Brazil, and China, while shutting down older, less efficient

domestic plants.
 4

 International Rubber Study Group.

 5

 Janzen, Brief submitted to USTR.

4-3

Table 4-1 Radial tires: U.S. producers, employment, shipments, trade, consumption, and capacity

utilization, 2002-06

Item 2002 2003 2004 2005 2006

Producers (number) . . . . . . . . . . . . . . . . . 9 9 9 10 10

Employment (1,000 employees) . . . . . . . . 15 *15 *15 *15 *15

Shipments (1,000 dollars) . . . . . . . . . . . . 4,322,261 4,633,830 4,358,690 4,720,930 *4,450,000

Exports (1,000 dollars) .............. 623,790 576,518 696,534 837,191 887,240

Imports (1,000 dollars) . . . . . . . . . . . . . . 1,675,951 1,808,700 2,008,687 2,504,129 2,943,203

Consumption (1,000 dollars) . . . . . . . . . . 5,374,422 5,866,012 5,670,843 6,387,868 *6,505,963

Import-to-consumption ratio (percent) . . 31 31 35 39 *45

Capacity utilization (percent) . . . . . . . . . *93 *87 *91 *85 *74

Note.–“*” refers to data based on partial information/data adequate for estimation with a moderately high degree of

confidence.

Sources: Producers (number) based on Modern Tire Dealer statistics. Employment (production workers) based on

2002 Economic Census data, U.S. Census Bureau, and Commission staff estimates. Shipments, f.o.b. plant (2002-

05), based on data from 2002 Economic Census, and 2005 Annual Survey of Manufacturers, U.S. Census Bureau;

2006 data estimated from Rubber Manufacturers Association (RMA) production data and export trade prices. 

Capacity utilization estimated based on RMA production and Modern Tire Dealer capacity data. 

GSP import situation, 2006

A total of 17 tire producers are known to be actively engaged in tire manufacturing in

Thailand, including four producers that manufacture radial truck tires in the United States

(Goodyear, Michelin, Bridgestone Firestone, and Yokohama). In 2006, Thailand was the

primary GSP-eligible supplier of U.S. imports, accounting for 63 percent of the GSP total

(table 4-2). Also, in 2006, Thailand ranked fifth in terms of total U.S. imports (table 4-3).

Thailand is one of the largest global producers of natural rubber (along with Indonesia and

Malaysia), which provides an added incentive to build radial bus and truck tires in that

country.4

 

Bridgestone, which reportedly has three tire plants in Thailand (two of which produce

passenger car, LT, and farm tires), ships about *** of its medium-duty truck and bus tire

production to the United States. In late 2004, Bridgestone Tire Manufacturing (Thailand)

Co. Ltd. (BTMT) started production at a radial truck and bus tire factory at Chonburi, which

had a capacity of *** as of September 2006. The tires produced at the plant are steel-belted

radial tires built for rims ranging from 22-25 inches in diameter, mostly for commercial

vehicle over-the-road use.5

 Bridgestone reportedly invested $80 million to build the plant

in 2004, to increase the manufacture of commodity-grade tires that were being phased out

of its Japanese operations.
 6

 Except as noted, information provided in this section is derived from the petition filed with the USTR as

well as testimony and written submissions of interested parties to the Commission in connection with this

investigation.

4-4

Table 4-2 Radial tires: U.S. imports and share of U.S. consumption, 2006

Item Imports

Percent

 of total

imports

Percent 

of GSP

imports

Percent 

of U.S.

consumption

1,000 dollars

Total U.S. imports . . . . . . . . . . . . . . . . . . . . 2,943,203 100 - *45

Total U.S. imports from GSP-eligible

 countries .......................... 270,523 9 100 *4

 Thailand . . . . . . . . . . . . . . . . . . . . . . . . . 170,856 6 63 *3

Position of interested parties6

Petitioner.– Bridgestone Firestone, in its petition to the USTR, requested the waiver of the

competitive need limit for the products covered in this section. In its submission to the

Commission, Bridgestone Firestone stated that it ships *** of its medium-duty truck and bus

radial tire production from Thailand to the United States and plans to expand production and

export shipments to the United States, assuming the competitive need limit is waived.

Otherwise, Bridgestone claimed that the additional costs associated with the imposition of

the 4 percent duty may force it to source additional product from China, where labor costs

are somewhat lower.
4-5

Table 4-3 Radial tires: U.S. imports for consumption, by principal sources, 2002-06

Source 2002 2003 2004 2005 2006

In Dollars

Canada 519,644,249 531,973,929 578,724,386 673,748,188 776,669,745

China 105,795,099 146,058,500 255,744,590 496,687,521 650,186,296

Japan 492,608,458 564,220,887 505,334,773 462,257,013 493,796,862

Korea 157,124,630 164,295,319 216,756,531 229,830,420 247,951,503

Thailand 10,555,838 4,260,629 12,651,155 90,291,328 170,856,373

United Kingdom 80,033,352 85,656,300 90,502,872 129,772,351 108,598,347

Brazil 65,044,789 70,786,310 71,340,439 74,101,498 80,620,825

Spain 33,037,041 31,510,424 38,654,235 66,003,812 70,107,905

France 34,881,938 40,183,534 49,943,066 50,304,509 63,812,678

Germany 50,712,977 48,397,409 55,886,572 56,663,566 66,059,501

All other 126,512,586 121,356,393 133,148,015 174,469,076 214,543,059

Total 1,675,950,957 1,808,699,634 2,008,686,634 2,504,129,282 2,943,203,094

Imports from GSPeligible countries:

Thailand 10,555,838 4,260,629 12,651,155 90,291,328 170,856,373

Brazil 65,044,789 70,786,310 71,340,439 74,101,498 80,620,825

India 7,996,268 13,403,650 14,896,396 12,740,927 8,878,192

Turkey 1,782,581 1,044,180 1,150,466 1,173,347 3,094,206

South Africa 3,611,219 2,696,390 1,085,251 1,391,676 2,837,398

Venezuela 3,253,632 2,495,872 3,096,332 1,241,878 2,227,104

Argentina 25,076 111,679 2,861 653,004 603,862

Philippines 0 0 0 0 440,472

Indonesia 2,698,602 1,917,333 110,167 435,786 186,984

Costa Rica 5,168,325 6,708,565 4,029,764 1,874,316 2,299

All other 880,826 205,978 324,258 327,331 775,602

Total 101,017,156 103,630,586 108,687,089 184,231,091 270,523,317

Source: Official statistics of the U.S. Department of Commerce.

Table 4-4 Radial tires: U.S. exports of domestic merchandise, by market, 2002-06

Country 2002 2003 2004 2005 2006

In Dollars

Canada 310,683,723 284,245,944 293,415,107 313,543,323 324,717,155

Mexico 193,135,838 173,965,170 230,306,540 297,399,935 281,875,045

Australia 18,023,034 17,883,987 24,803,914 37,779,974 82,268,610

France 15,363,192 21,301,677 30,220,635 30,268,195 33,006,227

Chile 3,799,041 2,999,472 11,855,733 26,877,808 28,790,338

South Africa 2,986,585 2,051,077 4,148,332 6,720,431 13,286,015

Japan 10,453,776 9,535,515 12,143,019 19,656,720 10,442,142

Singapore 122,117 273,509 3,703,316 10,526,073 9,689,533

Netherlands 5,375,681 8,429,156 8,063,289 6,531,321 6,477,543

Peru 1,411,180 1,187,245 3,807,629 6,341,312 5,207,266

All other 62,436,152 54,645,508 74,066,174 81,545,834 91,480,402

Total 623,790,319 576,518,260 696,533,688 837,190,926 887,240,276

Source: Official statistics of the U.S. Department of Commerce.

 1

 The terms “carpets” and “rugs” are used interchangeably in this chapter.

 2

 Jacobs, hearing transcript, 14.

5-1

CHAPTER 5

Hand-hooked Carpets and Floor Coverings

Competitive need limit waiver: India

HTS subheading Description Col. 1 rate of

duty as of

1/1/07

(percent ad

valorem)

Like or directly

competitive article

produced in the

United States on

Jan. 1, 1995?

5703.10.20a Hand-hooked, tufted carpets and rugs

of wool or fine animal hair, where

hand-hooked implies that the tufts

were inserted by hand or by a

handheld tool

6.0 No

 a India has not been proclaimed by the President as noneligible for GSP treatment for the articles included

under HTS subheading 5703.10.20. However, India anticipates future export levels to the United States in excess

of the competitive need limit. This HTS subheading was added to the list of eligible articles for the GSP on July

1, 2005. 

The hand-hooked, tufted carpets (or rugs)1 entered under this HTS subheading are

moderately-priced area rugs (as opposed to wall-to-wall carpet) and typically range in size

from 2 feet by 3 feet to 12 feet by 15 feet. These rugs are sold in retail outlets such as

Pottery Barn, Target, Home Depot, and most department stores, and range in price from

$199 to $999.2

 The lower-priced rugs are most likely to be produced in China. Handedhooked, tufted rugs do not compete in the retail market with more expensive, hand-knotted

or woven oriental rugs, or domestically-produced rugs. Competition in the U.S. handhooked market is solely among foreign producers. While there may be hand-hooked rugs

produced in the United States of the craft or artisan variety, these rugs do no compete in the

same retail market or at the same price points as the subject imports.

Hand-hooked, tufted carpets (or rugs) generally are produced using rudimentary tools

whereby the wool is pushed by hand through the backing material to make a carpet in one

continuous strand. It takes less than 3 weeks to produce a single tufted carpet, as opposed
 3

 Jacobs, hearing transcript, 15 and 68.

 4

 Oriental Rug Importers Association, post-hearing brief, 7 and 8.

5-2

to upwards of 1 year for hand-knotted carpets, because each thread is knotted after insertion

into the backing.3

Hand-hooked, tufted carpets are designed in the United States and contracted out to foreign

companies to be manufactured. The U.S. company creates the design along with several color

schemes. According to the Oriental Rug Importers Association (ORIA), “ORIA member

companies have found that most consumers focus on the design and color of a carpet, and the

designs and color schemes of hand-made carpets vary from those of machine-made rugs. The

designs range from traditional to transitional to contemporary and virtually all are

copyrighted. The same designs are not used for both a hand-made carpet and a machine-made

carpet.”4

The U.S. company selects a foreign manufacturer through open bidding, perhaps following

a rug trade show or by personal contact with a foreign company. The domestic company

creates the design in outline form; the foreign company stencils the design onto a base fabric

(e.g., a loomed cotton) and manually inserts the appropriately-colored tufts into the base

fabric using various tools. The defining features are the U.S. design and the foreign handhooked tufting, which in most cases is conducted in developing countries such as India and

China. There is no commercial U.S. manufacture of these carpets because of the high cost of

U.S. labor. Both the Embassy of India and the ORIA emphasize the labor-intensive nature

of the manufacturing process. 

Probable Economic Effect Advice

*****
5-3

Profile of U.S. industry and market, 2002-06

Hand-hooked rugs account for only a small portion of the aggregate U.S. rug market.

According to the Carpet and Rug Institute, 2005 sales of all rugs were $13.9 billion at the mill

level, and most carpet (about 90 percent) is tufted. There is no known commercial U.S.

production or U.S. exports of hand-hooked, tufted rugs; domestic demand is entirely satisfied

by imports (table 5-1).

Table 5-1 Hand-hooked carpets and floor coverings: U.S. producers, employment, shipments, trade,

consumption, and capacity utilization, 2002-06

Item 2002 2003 2004 2005 2006

Producers (number) .................. (a

) (a) (a) (a) (a)

Employment (1,000 employees) ......... (a

) (a) (a) (a) (a)

Shipments (1,000 dollars) ............. (a

) (a) (a) (a) (a)

Exports (1,000 dollars) ............... (a

) (a) (a) (a) (a)

Imports (1,000 dollars) ............... 160,864 160,716 167,004 186,685 210,235

Consumption (1,000 dollars) ........... 160,864 160,716 167,004 186,685 210,235

Import-to-consumption ratio (percent) . . . 100 100 100 100 100

Capacity utilization (percent) .......... (b

) (b) (b) (b) (b)

Note.– No U.S. export table is provided in this chapter as it is a basket category covering a wide variety of products 

in addition to the subject products.

Source: Data derived from official statistics of the U.S. Department of Commerce. a

 There is no known commercial U.S. production of the products covered under this HTS subheading. b

 Not applicable. 

GSP import situation, 2006

In 2006, all hand-hooked, tufted rugs known to be sold in the U.S. market were imported,

originating from some 54 countries, 15 of which were GSP eligible. India was the leading

overall U.S. import source (and GSP source) for these carpets in 2006, accounting for 51

percent ($108 million) of total U.S. imports under this HTS subheading (table 5-2). The

second largest GSP-eligible country was Thailand, supplying $7.7 million in 2006. The

second largest source of total U.S. imports in 2006 was China, supplying $81.4 million (table

5-3). China and India were the dominant suppliers to the U.S. market throughout 2002-06.

Total imports, which have increased during the period, have been influenced principally by

the growing U.S. housing market. 
 5

 Except as noted, information provided in this section is derived from the petition filed with the USTR as

well as testimony and written submissions of interested parties to the Commission in connection with this

investigation.

5-4

Table 5-2 Hand-hooked carpets and floor coverings: U.S. imports and share of U.S. consumption, 2006

Item Imports

Percent

 of total

imports

Percent 

of GSP

imports

Percent 

of U.S.

consumption

1,000 dollars

Total U.S. imports . . . . . . . . . . . . . . . . . . . 210,235 100 - 100

Total U.S. imports from GSP-eligible 

 countries ......................... 119,642 57 100 57

 India . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,709 51 90 51

Position of interested parties5

Petitioner.–In its petition to the USTR for the waiver of the competitive need limit, ORIA

stated that “the prospect that one of their most significant classifications from their most

important source of supply, India, might lose benefits altogether is especially worrisome,

shrinking further the already slim profit margins on which they operate.” The petition stated

that “moreover, the nature of hand-made rugs is that they are a fashion, and fashions change

over time. A sudden jump in price, however, would likely mean a significant decline in sales,

and compel ORIA members to seek less expensive sources for similar and more affordable

merchandise. China, which competes with India, would likely be the primary beneficiary.”

Support.– In its submission to the Commission, the Embassy of India stated that the

manufacture of hand-hooked, tufted rugs in India “is highly labor intensive and produced in

rural areas in cottages by rural artisans, which is their main source of livelihood.” About 2.5

million artisans in India are engaged in the production of handmade rugs, the majority of

which are hand-hooked, tufted rugs.
5-5

Table 5-3 Hand-hooked carpets and floor coveringsa: U.S. imports for consumption, by principal

sources, 2002-06

Source 2002 2003 2004 2005 2006

In Dollars

India 61,520,919 58,798,376 72,571,566 83,219,307 107,708,876

China 84,080,921 87,660,407 80,307,029 83,857,538 81,362,290

Thailand 6,120,230 6,080,159 5,434,627 6,893,764 7,703,021

Australia 7,465 3,088 33,119 3,266,559 3,160,359

Philippines 3,087,289 2,109,203 2,038,283 1,626,686 2,166,944

Canada 2,834,172 2,210,970 2,257,964 2,801,837 1,206,011

Belgium 398,900 705,587 1,070,073 1,401,597 1,168,273

Netherlands 625,913 449,900 325,481 253,222 786,699

Greece 88,034 265,071 622,125 663,366 707,986

Indonesia 433,131 440,049 423,593 405,551 383,080

All other 1,667,196 1,992,696 1,920,557 2,295,401 3,881,694

Total 160,864,170 160,715,506 167,004,417 186,684,828 210,235,233

Imports from

GSP-eligible

countries:

India 61,520,919 58,798,376 72,571,566 83,219,307 107,708,876

Thailand 6,120,230 6,080,159 5,434,627 6,893,764 7,703,021

Philippines 3,087,289 2,109,203 2,038,283 1,626,686 2,166,944

Pakistan 27,444 70,390 111,970 83,408 913,832

Indonesia 433,131 440,049 423,593 405,551 383,080

Turkey 1,858 14,632 52,344 103,116 134,129

Nepal 87,909 23,240 84,610 135,563 122,766

Egypt 740 50,816 0 8,637 15,527

Bosnia-Hercegov 0 0 0 9,880 9,815

Cambodia 0 0 0 6,000 0

All other 82,220 93,003 28,533 118,534 484,006

Total 71,361,740 67,679,868 80,745,526 92,610,446 119,641,996

Source: Official statistics of the U.S. Department of Commerce.

a

 Beginning in 2005, the HTS subheading covering these products was modified as the result of

legislation authorizing the President to add certain handmade carpets to the list of products eligible for

the GSP. Prior to 2005, there were cases in which 10 digit breakouts that had been created for quota

purposes were elevated to 8 digit legal lines so that the GSP could be potentially provided to those HTS

subheadings. This action was taken with the intent of helping certain traditional rug making countries,

such as Nepal, Pakistan, Afghanistan, and India, with cottage industry production rather than production

in factories. As a result of this action, data for 2005 appears to be significantly underreported; however,

the discrepancy was corrected for the 2006 data.

 1

 Subheading 2850.00.05 is free of duty. Subheading 2850.00.50 has a Column 1 duty rate of 3.7 percent

and is eligible for GSP; however, imports from Argentina are precluded from duty-free treatment under this

subheading because of issues concerning intellectual property rights in Argentina. See Presidential

Proclamation 6988 of April 11, 1997, 62 FR 19017, April 17, 1997.

6-1

CHAPTER 6

Calcium-Silicon

Competitive need limit waiver: Argentina 

HTS subheading Short description Col. 1 rate of

duty as of

1/1/07

(percent ad

valorem)

Like or directly

competitive article

produced in the

United States on

Jan. 1, 1995?

7202.99.20a Calcium-silicon 5.0 Yes

 a Argentina has not been proclaimed by the President as noneligible for GSP treatment for the articles

included under HTS subheading 7202.99.20. However, Argentina anticipates future export levels to the United

States in excess of the competitive need limit. Argentina was granted a de minimis waiver for this HTS

subheading on July 1, 2005. 

Calcium-silicon is a ferroalloy used in the production of certain high-grade steels. It is added

to molten steel to control the shape, size, and distribution of oxide and sulfide inclusions,

improving the fluidity, machinability, ductility, and/or impact properties of the steel

products.

All forms of calcium-silicon (i.e., lump, powder, and cored wire) are included in HTS

subheading 7202.99.20; however, calcium-silicon is classified in this tariff subheading only

if it contains 4 percent or more, by weight, of iron. Calcium-silicon containing less than 4

percent of iron is imported under subheadings 2850.00.05 (calcium silicides) and 2850.00.50

(other silicides).1

 The iron content of the material is inconsequential in use, and the two

forms of calcium-silicon are used interchangeably. 

Calcium-silicon is produced in a manner common to other ferroalloys by smelting basic raw

materials in an electric-arc furnace. The resulting product is then crushed and screened and

is available in lump or powder form. The most widely used method of adding calciumsilicon to molten steel is by the feeding of a hollow steel wire (cored wire) containing

powdered calcium-silicon. This allows for the accurate control of the amount of alloy added

and ensures that the alloy goes into solution rather than floats on the surface as it might if

added in bulk. Additions of other alloys are also made in this manner.

Cored wire is manufactured by forming a steel strip into a tube into which powdered alloy

is fed before the tube is fully closed. The tube is then rolled to compact the product and seal

the lock-seam. Cored wire is typically about one-half to three-quarter inch in diameter and

is provided in coils weighing one ton or more. 
 2

 Industry representatives telephone interview with Commission staff, various dates.

6-2

There is no production of calcium-silicon powder or lump in the United States. However,

there is a domestic industry that produces calcium-silicon cored wire using imported

calcium-silicon powder. 

Probable Economic Effect Advice

*****

Profile of U.S. industry and market, 2002-06

There is no production of calcium-silicon powder or lump in the United States. There is,

however, an industry comprising firms producing calcium-silicon cored wire using imported

calcium-silicon powder. These firms also produce cored wire of other ferroalloys and

chemical additives using the same equipment and labor force. Calcium-silicon cored wire

is the highest-volume cored wire product. However, U.S. producers of cored wire state that

the price spread between calcium-silicon powder and cored wire is too little for them to

profitably produce cored wire. Of the five U.S. producers of cored wire, ***. ***.2

 

The U.S. cored wire industry has experienced a loss of market share since the granting of

GSP status for calcium-silicon due to aggressive marketing of calcium-silicon cored wire

from Argentina and Brazil (tables 6-1 and 6-2). U.S. imports of calcium-silicon from Brazil

enter the United States duty-free under HTS subheadings 2850.00.05, 2850.00.50, and

7202.99.20. U.S. imports of calcium-silicon cored wire from China have also increased.

Three factors contributed to the increase in the value of imports of calcium-silicon (table 6-

3): an increase in the volume of product imported; an increase in the unit value of the

product due to price increases, and a greater proportion of value-added cored wire as a share

of all U.S. calcium-silicon imports. U.S. exports of calcium-silicon cored wire, mostly to

Canada, are reported to be insignificant. 
 3

 Post hearing brief on behalf of CAFAE, 2.

6-3

Table 6-1 Calcium-silicon: U.S. producers, employment, shipments, trade, consumption, and capacity

utilization, 2002-06

Item 2002 2003 2004 2005 2006

Producers (number) ................. 44455

Employment (number) .............. *100 *100 *100 *100 *100

Shipments (1,000 dollars) ............ **11,000 **12,000 **10,500 **11,000 **12,000

Exports (1,000 dollars) .............. **500 **500 **500 **500 **500

Imports (1,000 dollars) . . . . . . . . . . . . . . *9,000 *9,000 10,736 13,009 17,217

Consumption (1,000 dollars) .......... **19,500 **25,300 **20,736 **34,009 **28,717

Import-to-consumption ratio (percent) . . **46 **36 **52 **38 **60

Capacity utilization (percent) .......... *85 *85 *85 *80 *80

Note.–“*” refers to data based on partial information/data adequate for estimation with a moderately high degree of

confidence, and “**” refers to data based on limited information/data adequate for estimation with a moderate degree

of confidence.

Note.– No U.S. export table is attached to this chapter as it is a basket category covering products in addition to the

subject products.

Source: Data are derived from Commission estimates based on industry sources.

GSP import situation, 2006

U.S. imports from GSP-eligible countries dominated overall U.S. imports of calcium-silicon

from 2002 through 2006, accounting for between 65 percent and 85 percent of total U.S.

imports. During the period, Argentina remained the largest U.S. import source for these

products (table 6-2). The industry producing calcium-silicon in Argentina comprises two

firms: Stein, the petitioner, and Electrometalurgica Andina (Andina). Stein has two

production facilities in Argentina: a plant with electric-arc furnaces producing calciumsilicon and other ferroalloys, and a second plant to produce cored wire. In 2002, Stein set

up a marketing office in the United States. In 2004, Stein expanded its Argentinean

production capability by investing in a new, state-of-the-art electric-arc furnace, adding

20,000 metric tons per year of capacity for special ferroalloys. In 2006, Stein set up a

processing plant in Poland to produce cored wire for the European market using calciumsilicon produced in its Argentina plant. In December 2006, Stein was acquired by Globe

Specialty Metals, a U.S. firm and the parent company of Globe Metallurgical, the largest

U.S. producer of silicon alloys. Stein’s U.S. marketing office has been closed,and the

marketing of Stein’s cored wire products in the United States will be through Globe.3

Andina produces calcium-silicon as well as calcium carbide and other ferroalloy products

at its plant in Argentina. Andina exports calcium-silicon powder and lump but does not

produce cored wire. There have been no quality issues raised with respect to the product of

either Stein or Andina.
 4

 Except as noted, information provided in this section is derived from the petition filed with the USTR as

well as testimony and written submissions of interested parties to the Commission in connection with this

investigation.

 5

 Maluff, hearing transcript, 20. 

 6

 CAFAE, posthearing brief, 1.

 7

 Ibid., 2.

 8

 Maluff, hearing transcript, 20.

 9

 Ibid., 21

 10 CAFAE, posthearing brief, –3.

6-4

 

Table 6-2 Calcium-silicon: U.S. imports and share of U.S. consumption, 2006

Item Imports

Percent

 of total

imports

Percent 

of GSP

imports

Percent 

of U.S.

consumption

1,000 dollars

Total U.S. imports . . . . . . . . . . . . . . . . . . . 17,217 100 - 60

Total U.S. imports from GSP-eligible 

 countries . . . . . . . . . . . . . . . . . . . . . . . . . 14,507 84 100 52

 Argentina . . . . . . . . . . . . . . . . . . . . . . . . 11,620 67 80 40

Position of interested parties4

Petitioner.– In its petition to the USTR and submission to the Commission, the Argentinean

Chamber of Ferroalloys and Specialty Alloys (CAFAE), a trade association representing the

two Argentinean producers of calcium-silicon, stated that Argentina produced 17,000 tons

of calcium-silicon in 2006, of which 6,500 tons were exported to the United States,5

including 1,300 tons exported in the form of cored wire.6 CAFAE asserted that whereas it

has increased its exports of powder ***, it has not increased its exports of cored wire due to

“logistics reason***.”7

 CAFAE stated that the premium quality of calcium-silicon from

Argentina is one of the reasons for sustained purchases by U.S. iron and steel producers.8

According to CAFAE, there are no U.S. domestic producers of calcium-silicon; therefore,

no domestic producers will be affected by granting of the waiver,and U.S. consumers and

final users will benefit.9

According to CAFAE, Argentina’s main competition for the sale of calcium-silicon, not only

in the United States but also globally, is Brazil. Different duty treatment between these two

countries would affect the balance established in all markets and would not benefit either the

U.S. cored wire industry or the ultimate U.S. consumers.10

Support.– In its submission to the Commission, Traxys North America, an international

trading firm headquartered in New York, testified that it imports calcium-silicon from

Argentina and resells it in the United States. Traxys’s customers include steel companies,

cored wire producers, and iron foundries that manufacture large-diameter, cast iron pipe.

Traxys testified that, worldwide, there are very few producers of calcium-silicon and none

in the United States. As a result, U.S. customers must use imported material,and there will
 11 Golzman, hearing transcript, 22.

 12 Ibid., 77.

 13 Golzman prehearing letter.

 14 Ibid.

6-5

be no negative impact on U.S. employment if the waiver is granted.11 Traxys stated that the

U.S. industry producing calcium-silicon cored wire has gained U.S. market share since the

granting of GSP status for calcium-silicon.12 Traxys stated that it is the pricing of the

calcium-silicon from Argentina that provides the edge over other countries and allows

Traxys to market the product as aggressively as possible.13 If the waiver is not granted,

Argentina will lose U.S. market share to producers in Europe and China, according to

Traxys.14

Table 6-3 Calcium-silicon: U.S. imports for consumption, by principal sources. 2002-06

Source 2002 2003 2004 2005 2006

In Dollars

Argentina 4,000,000 3,000,000 3,174,294 7,972,714 11,620,460

Brazil 3,000,000 4,000,000 3,789,320 3,090,657 2,886,935

China 1,000,000 1,000,000 1,672,851 727,485 1,407,305

France 1,000,000 1,000,000 1,714,308 1,213,269 1,302,526

United Kingdom 0 0 0 4,384 0

Korea 0 0 0 0 0

Netherlands 0 0 199,200 0 0

Mexico 0 0 0 0 0

Germany 0 0 186,335 0 0

Total 9,000,000 9,000,000 10,736,308 13,008,509 17,217,226

Imports from GSPeligible countries:

Argentina 4,000,000 3,000,000 3,174,294 7,972,714 11,620,460

Brazil 3,000,000 4,000,000 3,789,320 3,090,657 2,886,935

Total 7,000,000 7,000,000 6,963,614 11,063,371 14,507,395

Source: Official statistics of the U.S. Department of Commerce.

Note: The HTS subheading for calcium-silicon was effective on July 1, 2003. Prior to that date imports of calciumsilicon were classified under a basket subheading.

 1

 There are essentially no differences in either metal purity or other characteristics, regardless of the

processes for producing copper cathodes. “Electrolytic” cathodes are produced by electrolysis from firerefined copper (anodes), the end products of either primary smelting of copper concentrates or secondary

recovery from copper-bearing scrap. “Electrowon” cathodes are produced by electrowinning of copper-rich

aqueous solution from the solvent extraction of copper ores. ICSG, “Descriptions of Copper-Based

Products.”

 2

 World Bureau of Metal Statistics, World Metal Statistics, various pages.

 3

 Asarco LLC, Kennecott Utah Copper Corp., and Phelps Dodge Corp. (acquired by Freeport McMoRan

Copper & Gold Inc. on March 19, 2007).

7-1

CHAPTER 7

Copper Cathodes and Sections Thereof

Competitive need limit waiver: Brazil

HTS subheading Description Col. 1 rate of

duty as of

1/1/07

(percent ad

valorem)

Like or directly

competitive article

produced in the

United States on

Jan. 1, 1995?

7403.11.00a

 Refined copper cathodes and sections

thereof

1.0 Yes

 a Brazil has not been proclaimed by the President as noneligible for GSP treatment for the articles included

under HTS subheading 7403.11.00. However, Brazil anticipates future export levels to the United States in

excess of the competitive need limit. Peru was proclaimed by President as noneligible for GSP treatment for

articles included under HTS 7403.11.00 as of July 1, 1997.

Refined copper cathodes are the unwrought form of high-purity (99.9 percent or more),

unalloyed copper metal.1

 Refined cathodes and sections thereof are melted down, with or

without addition of alloying metals, and cast into suitable forms for subsequent rolling,

extruding, drawing, or forging into various semi-fabricated shapes. 

Probable Economic Effect Advice

*****

Profile of U.S. industry and market, 2002-06

The United States is the world’s second-largest producer of mined copper and the fourthlargest producer of refined copper.2

 The United States also has the world’s third-largest

annual production capacity for copper cathodes, estimated at nearly 2.0 million metric tons

in 2006. Approximately one-half of the refined copper produced in the United States is by

direct electrowinning of copper-bearing solutions from in-situ leaching of copper ores. Three

major mining companies,3

 with significant domestic mining operations, account for the bulk
 4

 D. Edelstein, Copper Commodity Specialist, U.S. Geological Survey, Reston VA, telephone interview

by Commission staff, January 29, 2006.

 5

 Edelstein, “Copper,” various years.

 6

 D. Edelstein, Copper Commodity Specialist, U.S. Geological Survey, Reston VA, telephone interview

with Commission staff, January 29, 2006.

 7

 “World Copper Refineries Capacities 2004 to 2009,” Table 1, 100-01. 

 8

 Copper prices were driven up by rising global demand, especially from China and India, that mine and

refinery production could not meet, as reflected by the sharp reductions of copper cathodes held in

commodity exchange warehouse inventories during 2003-04. World Bureau of Metal Statistics, World Metal

Statistics, various pages.

 9

 Edelstein, “Copper,” various pages.

 10 D. Edelstein, Copper Commodity Specialist, U.S. Geological Survey, Reston ,VA, telephone interview

with Commission staff, January 29, 2006. Copper cathodes refined by the three major U.S. mining

companies are considered “acceptable brands” for trading on both the COMEX and the London Metal

Exchange (LME). NYMEX, COMEX Division, “Brands,” and LME, “LME-Approved Brands.”

7-2

of U.S. copper refining.4

 U.S. output of copper cathodes has declined by 150,000 metric

tons (10 percent) since 2002 to 1.3 million metric tons in 2006,5

 attributable to announced

mine production cutbacks from October 2001 that continued into early 2004, and the decline

of anode output with the idling of two smelters in 2002-03 and their final closures in 2005.6

Domestic refining capacity for copper cathodes is projected to reach almost 2.2 million

metric tons by 2009, due to expansions of existing facilities and new facilities currently

under development in anticipation of continued robust prices and demand for copper.7

Rising values for domestic shipments of refined copper reflect the near-continuous rise of

prices for copper cathodes that escalated from second-quarter 2005 through third-quarter

2006, quadrupling over the 5-year period (table 7-1).8

 Prices for copper cathodes are set

worldwide by trading on organized commodity exchanges. U.S. producers’ prices for

delivery of copper cathodes are set at a premium, generally ranging from 4 to 5 cents per

pound, over the First-Position (current-month) price on the New York Commodity

Mercantile Exchange (COMEX).9

 Product quality is maintained by refiners whose copper

cathodes are certified as meeting the physical and chemical specifications to be traded on the

major commodity exchanges.10
 11 World Bureau of Metal Statistics, World Metal Statistics, various pages.

 12 Caraiba Metais S.A., post hearing brief of Caraiba Metais S.A., 4.

 13 Caraiba Metais S.A., “Petition of Caraiba Metais S.A. for a Competitive Need Limit Waiver for Copper

Cathodes Under the Generalized System of Preferences,” 3 and ICSG, “World Copper Refineries Capacities

2004 to 2009,” Directory of Copper Mines and Plants 2004 to 2009, Table 1, 81.

7-3

Table 7-1 Copper cathodes and sections thereof: U.S. producers, employment, shipments, trade,

consumption, and capacity utilization, 2002-06

Item 2002 2003 2004 2005 2006

Producers (number) . . . . . . . . . . . . . . . 16 16 16 17 17

Employment (1,000 employees) ...... (a

) (a) (a) (a) (a)

Shipments (1,000 dollars)

b . . . . . . . . . . 2,406,551 2,342,733 3,720,563 4,628,088 8,951,398

Exports (1,000 dollars) . . . . . . . . . . . . 40,917 169,918 218,695 59,934 171,440

Imports (1,000 dollars) . . . . . . . . . . . . 1,373,883 1,464,438 1,991,120 3,238,489 6,164,848

Consumption (1,000 dollars) . . . . . . . . 3,739,518 3,637,253 5,492,987 7,806,643 14,944,806

Import-to-consumption ratio (percent) 37 40 36 41 41

Capacity utilization (percent) . . . . . . . 68 56 64 66 (a

)

Source: Official statistics of the U.S. Geological Survey and the U.S. Department of Commerce, except where

noted.

a

 Not available.

b

 Shipment values calculated from primary refinery production tonnages and the producers’ delivered price for

refined copper cathodes based on a premium to the annual average of the First-Position price of the New York

Commodity Mercantile Exchange.

GSP import situation, 2006

From 2002 through 2006, U.S. imports from Brazil accounted for about 1 percent of U.S.

consumption and Brazil was the second-largest GSP-eligible U.S. import source of copper

cathodes after Peru (tables 7-2 and 7-3). U.S. imports of copper cathodes from Brazil

doubled in value from 2002 through 2006, but fluctuated between 5 percent and 16 percent

of imports from all GSP-eligible countries, and dropped from 5 percent to 2 percent of

imports from all worldwide sources.

Brazil is a relatively small copper producer, with mine production accounting for less than

1 percent (125,000 metric tons) and refined copper (primary and secondary) production more

than 1 percent (199,000 metric tons) of world production in January-November 2006.11

Caraiba Metais S.A. (Caraiba), the petitioner, does not mine copper ores, but is rather a

smelter and refiner that must purchase copper concentrates based on copper cathode prices

determined on international commodity exchanges.12 Currently, the petitioner operates the

only copper cathode refinery in Brazil.13 The petitioner’s electrolytic refinery is expected

to increase capacity to 240,000 metric tons for full-year 2006, up from 220,000 metric tons

in 2004, with further expansions under consideration to 320,000 metric tons per year for

2007. Two more cathode refineries are currently under development by another Brazilian

copper mining firm. These refineries are anticipated to commence operations in 2008 with

combined annual production capacities of 25,000 metric tons, with possible further
 14 ICG, “World Copper Refineries Capacities 2004 to 2009,” Table 1, 81.

 15 LME, “LME-Approved Brands.”

 16 Except as noted, information provided in this section is derived from the petition filed with the USTR

as well as testimony and written submissions of interested parties to the Commission in connection with this

investigation.

 17 Caraiba Metais S.A., prehearing brief 6-8; and Caraiba Metais, S.A. petition, 3.

 18 Caraiba Metais S.A., posthearing brief, 15.

7-4

expansion to 37,000 metric tons by 2009. A third new refinery is being considered by this

same firm for some future date. Hence, total annual production capacity for copper cathodes

in Brazil could reach an anticipated 305,000 metric tons by 2008 and 317,000 metric tons

by 2009.14 The petitioner’s copper cathodes meet the necessary physical and chemical

specifications and are an “approved brand” for trading on the London Metal Exchange.15

Table 7-2 Copper cathodes and sections thereof: U.S. imports and share of U.S. consumption, 2006

Item Imports

Percent

 of total

imports

Percent 

of GSP

imports

Percent 

of U.S.

consumption

1,000 dollars

Total U.S. imports . . . . . . . . . . . . . . . . . . . . . 6,164,848 100 - 41

Total U.S. imports from GSP-eligible 

 countries . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,441,441 23 100 10

Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123,522291

Position of interested parties16

Petitioner.– In its petition to the USTR and submission to the Commission, Caraiba is

currently the sole Brazilian producer and exporter of copper cathodes and sections thereof.

Caraiba stated that unusual global market conditions, rather than enhanced competitiveness

of Brazilian copper exporters, will result in Brazil exceeding the competitive need limit for

this product. Specifically, the recent escalation of global copper prices increased import

values disproportionately over import volumes. Also, according Caraiba, granting a waiver

is anticipated to enhance Brazil’s competitiveness with more developed foreign suppliers

(e.g., Canada) in the U.S. market and help meet growing demand for copper cathodes and

sections thereof to the benefit of U.S. copper-consuming industries.17 Given the high degree

of U.S. import dependence on foreign sources of cathodes, reimposition of the 1 percent duty

through loss of this GSP benefit for Brazil would result in higher prices paid for Brazilian

cathodes by U.S. consuming industries.18
7-5

Table 7-3 Copper cathodes and sections thereof: U.S. imports for consumption by principal sources,

2002-06

Source 2002 2003 2004 2005 2006

In Dollars

Chile 331,864,302 543,773,870 796,268,311 1,473,893,714 3,217,487,159

Canada 370,451,968 391,369,648 661,845,054 878,405,154 1,315,155,757

Peru 446,911,676 447,664,925 422,391,860 556,350,352 992,968,260

Kazakhstan 4,479,153 0 0 22,846,412 312,585,285

Mexico 89,706,150 36,716,806 55,594,092 93,775,542 164,604,664

Brazil 67,268,594 24,286,062 46,833,299 107,809,048 123,522,244

Poland 0 0 0 24,794,462 23,025,098

Sweden 5,842 0 0 32,542,553 0

Belgium 59,746 0 0 32,210,859 0

Finland 15,739 0 0 12,207,998 0

All other 63,119,925 20,626,494 8,187,032 3,653,193 15,499,444

 Total 1,373,883,095 1,464,437,805 1,991,119,648 3,238,489,287 6,164,847,911

Imports from GSPeligible countries:

Peru 446,911,676 447,664,925 422,391,860 556,350,352 992,968,260

Kazakhstan 4,479,153 0 0 22,846,412 312,585,285

Brazil 67,268,594 24,286,062 46,833,299 107,809,048 123,522,244

Russia 45,156,493 0 7,440,250 110,768 9,461,695

Congo (DROC) 0 0 0 320,218 1,804,480

India 0 0 0 0 464,506

Uruguay 0 0 0 1,803,506 0

Zambia 0 0 0 0 0

Ecuador 0 0 0 0 0

South Africa 1,484,538 0 0 0 0

All other 9,959,255 428,315 0 0 634,046

Total 575,259,709 472,379,302 476,665,409 689,240,304 1,441,440,516

Source: Official statistics of the U.S. Department of Commerce.

Table 7-4 Copper cathodes and sections thereof: U.S. exports of domestic merchandise, by market, 2002-06

Country 2002 2003 2004 2005 2006

In Dollars

Canada 1,189,426 1,995,204 1,517,219 551,448 160,606,139

Mexico 84,789 1,876,404 53,292,160 33,122,702 9,085,034

India 866,261 929,796 1,322,367 203,542 502,235

Korea 1,696,579 418,831 14,197,039 127,840 494,905

United Kingdom 288,353 40,396 412,885 115,796 442,952

Switzerland 57,375 15,300 21,450 27,300 51,060

China 26,783,133 154,107,595 60,475,372 24,098,416 0

Chile 0 0 0 1,547,000 0

Singapore 3,300 0 41,439 75,404 0

Philippines 4,892 0 0 22,048 0

All other 9,942,507 10,534,044 87,415,191 42,993 258,117

Total 40,916,615 169,917,570 218,695,122 59,934,489 171,440,442

Source: Official statistics of the U.S. Department of Commerce.

 1

 The petition identifies this product as “refined copper wire.” Caraiba Metais S.A., petition, 4.

Although subheading HTS 7408.11 is labeled as “Copper wire, of refined copper...,” HTS

subheadings 7408.11.30 and 7408.11.60 include unalloyed copper wire rod in coils. Wire rod of refined

copper in coils would not be classified among “bars and rods” under HTS subheadings 7407.10.50, because

“rods” are defined in Note 1d to Chapter 74 as “not in coils.” G. Stingone, National Import Specialist, U.S.

Bureau of Customs and Border Protection, New York, NY, telephone interview with Commission staff,

February 1, 2006; and Southwire Co., 2 and 3.

Unalloyed copper wire rod is produced to standards of American Society for Testing and Materials

(ASTM), e.g., B49-98 (2004), which specify a minimum diameter of 1/4 inch (6.4 mm). By contrast, the

largest single-strand, unalloyed copper wire produced in the United States is 4.1 mm (-5/32 inch) in

diameter. R.D. Weed, Vice President for Building Construction Products, Copper Development Association,

New York NY, telephone interview with Commission staff, February 7, 2007.

8-1

CHAPTER 8

Certain Unalloyed Copper Wire Rod

Competitive need limit waiver: Brazil

HTS subheading Short description Col.-1 rate of

duty as of

1/1/07

(percent ad

valorem)

Like or directly

competitive article

produced in the

United States on

Jan. 1, 1995?

7408.11.60a

 Refined, unalloyed copper wire rod,

with maximum cross-sectional

dimension over 6.0 mm but not over

9.5 mm

3.0 Yes

 a Brazil has not been proclaimed by the President as noneligible for GSP treatment for the articles included

under HTS subheading 7408.11.60. However, Brazil anticipates future export levels to the United States in

excess of the competitive need limit. Russia was proclaimed by the President as noneligible for GSP treatment

for articles included under HTS subheading 7408.11.60 on July 1, 2005.

Unalloyed copper wire rod is produced by continuous casting from melted-down copper

cathodes and sections thereof, and is coiled for ease of handling and shipment. As an

intermediate semi-fabricated product, this wire rod is produced exclusively for drawing

down into unalloyed copper wire of desired cross-sectional dimension(s).1

Probable Economic Effect Advice

*****
 2

 ICSG, “Regional Aggregation of Identified First Use Capacities of Copper Alloys in 2005,” Table 2, 2-

13 and 2-14.

 3

 The four producers that dominate the domestic industry are: Phelps Dodge Corp. (acquired by Freeport

McMoRan Copper & Gold Inc. on March 19, 2007), Asarco LLC, Essex Group Inc., and Southwire Co. 

 4

 D. Edelstein, Copper Commodity Specialist, U.S. Geological Survey, Reston, VA, telephone interview

with Commission staff, January 29, 2006.

 5

 D. Edelstein, Copper Commodity Specialist, U.S. Geological Survey, Reston, VA, telephone interview

with Commission staff, January 29, 2006.

 6

 See e.g., Southwire Co., “Over Fifty Years of Quality and Service”, and Superior Essex Inc., “History,

Superior Essex Inc. History,” at http://www.superioressex.com/about-us/history.htm; and “Directory of Wire

Rod Plants,” 3-2 to 3-3-21.

 7

 R. Weed, Vice President for Building Construction Products, Copper Development Association, New

York, NY, telephone interview with Commission staff, February 7, 2007.

 8

 D. Edelstein, Copper Commodity Specialist, U.S. Geological Survey, Reston ,VA, telephone interview

with Commission staff, January 31, 2006.

 9

 World Bureau of Metal Statistics, World Metal Statistics, various pages.

8-2

Profile of U.S. industry and market, 2002-06

The United States has the world’s second-largest production capacity for unalloyed copper

wire rod, estimated at 2.1 million metric tons in 2005, or 11 percent of the world total

capacity.2

 Four large firms3 account for the bulk of the U.S. unalloyed copper wire rod

production, and one of them (Phelps Dodge Corp.) is fully integrated from the mine through

downstream wire and cable products. All other domestic producers are smaller-scale

manufacturers of such wire rod. Many wire rod firms also produce wire and cable products

of unalloyed copper. All but three domestic firms (one scrap-based and two smelter-based

operations) rely on purchased cathodes and sections thereof as their sources of refined

unalloyed copper for production of unalloyed copper wire rod. Because the purity of

unalloyed copper wire rod is derived from the purity of the melted-down copper cathodes,

wire rod producers rely on domestic and foreign refiners whose cathodes are certified as

meeting the physical and chemical specifications to be traded on major commodity

exchanges.4

Seven of the U.S. plants operating in 2005 exceeded 120,000 metric tons per year of

production capacity, and four of these exceeded 240,000 metric tons per year. An additional

domestic production facility reopened in 2006 after being closed since 2000.5

 U.S.

producers rely on both their own and foreign-origin advanced technologies to continuously

cast unalloyed copper wire rod.6

Domestic consumption of unalloyed copper wire rod is driven by derived demand for

unalloyed copper wire and cable products in electrical transmission and telecommunication

applications.7

 U.S. producers that sell unalloyed copper wire rod set their prices as a

conversion charge (of 5 to 7 cents per pound) over the producers’ delivered price of copper

cathodes (set at a premium of 4 to 5 cents per pound over the First-Position (current-month)

price on the New York Commodity Mercantile Exchange (COMEX)), with the total wire rod

premium generally ranging from 9 to 12 cents per pound over the COMEX cathode 

price.8

 Hence, rising values for domestic shipments (table 8-1) of unalloyed wire rod reflect

the near-continuous rise of prices for copper cathodes that escalated from second-quarter

2005 through third-quarter 2006, quadrupling during the 2002-06 time frame.9
 10 ICSG,“Regional Aggregation of Identified First Use Capacities of Copper Alloys in 2005,” Table 5, 2-

13 and 2-14.

 11 ICGS, “Directory of Wire Rod Plants,” 3-2 and 3-3.

8-3

Table 8-1 Certain unalloyed copper wire rods: U.S. producers, employment, shipments, trade,

consumption, and capacity utilization, 2002-06

Item 2002 2003 2004 2005 2006

Producers (number) . . . . . . . . . . . . . . . . . 14 14 14 14 15

Employment (1,000 employees) ........ (a

) (a) (a) (a) (a)

Shipments (1,000 dollars)

b . . . . . . . . . . . . 3,087,858 3,278,232 5,440,824 6,624,201 10,283,157

Exports (1,000 dollars) . . . . . . . . . . . . . . 59,767 86,405 254,151 410,610 920,022

Imports (1,000 dollars) .............. 397,573 390,610 704,008 1,369,513 2,353,566

Consumption (1,000 dollars) . . . . . . . . . . 3,425,664 3,582,437 5,890,681 7,583,104 11,716,701

Import-to-consumption ratio (percent) . . 12 11 12 18 20

Capacity utilization (percent) . . . . . . . . . 79 77 78 80 (a

)

Source: Compiled from official statistics of the U.S. Geological Survey and the U.S. Department of Commerce, 

except where noted.

a

 Not available.

b

 Shipment values are calculated from wire-rod mill output tonnages and the annual average of the First-Position

price on the New York Commodity Mercantile Exchange plus an industry-wide conversion charge.

GSP import situation, 2006 

Brazil was the second-largest GSP-eligible U.S. import source of unalloyed copper wire rod

and the fourth-largest U.S. import source overall, but accounted for an average of only 1

percent of total U.S. consumption of this product from 2002 through 2006 (tables 8-2 and

8-3). Although U.S. imports of unalloyed copper wire rod from Brazil increased

significantly in value, such imports as a share of imports from all GSP-eligible countries

declined from 50 percent to 20 percent as shares of imports from Russia rose from 49 percent

to 79 percent. As a share of imports from all worldwide sources, imports from Brazil

declined from 11 percent to 7 percent over this 5-year period. 

Brazil had the largest annual production capacity for unalloyed copper wire rod, estimated

at 353,000 metric tons, of any Latin American producer in 2005 (57 percent of the regional

total). Nevertheless, Brazil’s production capacity was only 17 percent of U.S. capacity,

estimated at 2.1 million metric tons in that same year.10 The petitioner owns two of the four

unalloyed copper wire rod plants currently in operation in Brazil. Another Brazilian facility

is currently idled, but another is under development. Most Brazilian plants utilize similar

production technologies as their U.S. counterparts, but the two oldest Brazilian facilities

utilize the older hot-rolling, rather than continuous casting, production technologies.11
 12 Except as noted, information provided in this section is derived from the petition filed with the USTR

as well as testimony and written submissions of interested parties to the Commission in connection with this

investigation.

 13 Caraiba Metais S.A., prehearing brief, 6-8; and Caraiba Metais S.A., petition, 4.

 14 Caraiba Metais S.A., Brief of Caraiba Metais S.A. in Support of Its Petition for Competitive Need Limit

Waivers for Copper Wire and Copper Cathodes from Brazil Under the Generalized System of Preferences,

February 26, 2007, pp. 4-5.

 15 Caraiba Metais S.A., Prehearing brief of Caraiba Metais S.A. in Support of Its Petition for a

Competitive Need Limit Waiver for Copper Wire Under the GSP, February 2, 2007, pp. 6-8; and Petition of

Caraiba Metais S.A. for a Competitive Need Limit Waiver for Copper Wire Under the GSP, November 16,

2006, p. 4.

8-4

Table 8-2 Certain unalloyed copper wire rods: U.S. imports and share of U.S. consumption, 2006

Item Imports

Percent

 of total

imports

Percent 

of GSP

imports

Percent 

of U.S.

consumption

1,000

dollars

Total U.S. imports . . . . . . . . . . . . . . . . . . . . . . . . . . 2,353,566 100 - 20

Total U.S. imports from GSP-eligible

 countries ............................... 906,382 39 100 8

Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185,947 8 20 2

Position of interested parties12

Petitioner.–In its petition to USTR and submission to the Commission, Caraiba Metais S.A.

(Caraiba) states that it is a Brazilian producer and exporter of certain unalloyed copper wire

rod. Caraiba stated that unusual global market conditions, rather than enhanced

competitiveness of Brazilian copper exporters, could lead to Brazil exceeding the

competitive need limit for this product. Specifically, recent escalation of global copper

prices artificially inflated import values disproportionately over import volumes.13 In fact,

U.S. import quantities of this product from Brazil declined by 8 percent between 2005 and

2006.14 Also, according to Caraiba, granting a waiver is anticipated to enhance Brazil’s

competitiveness with more developed foreign suppliers (e.g., Canada and Russia) in the U.S.

market and help meet growing demand for unalloyed copper wire rod to the benefit of U.S.

copper-consuming industries.15

Opposition.– In a submission to the Commission, AmRod Corp., a Port Newark, NJ-based

producer of certain unalloyed copper wire rod, expressed opposition to granting a waiver for

this product from Brazil. AmRod asserted that there is essentially no shortage of certain

unalloyed copper wire rod in the U.S. and Canadian markets because its production facility

is currently operating at 60-70 percent capacity. AmRod further alleges that the product is

being “dumped” into the U.S. and Canadian markets by both Brazil and Russia at prices

below U.S. manufacturing costs to AmRod’s competitive detriment. In support, AmRod also

cited the Canada Border Services Agency’s November 28, 2006, preliminary dumping

determination regarding this product from Brazil and Russia and preliminary subsidization
 16 AmRod Corp., posthearing comments, 1-2.

 17 Southwire Co., written comments, 1-2.

 18 Southwire Co., written comments, 2.

8-5

determination regarding this product from Brazil. AmRod contended that its production

capacity is languishing despite the record-high prices for input copper cathode, and cited

industry publications that show apparent U.S. consumption of this product is at 10-year lows

through November 2006.16

In a submission to the Commission, Southwire Co., a Carrollton, GA-based producer of

certain unalloyed copper wire, also stated that it is opposed to granting a waiver for this

product from Brazil. Southwire asserted that the product from Brazil is priced lower in the

U.S. market than either the domestic or imported product from major foreign sources, and

noted that the petition fails to describe the petitioner as a world-class manufacturer of copper

and copper products. Further, Southwire countered the petitioner’s assertion that the

competitive need limit would be exceeded because of increased copper prices, noting that

the petitioner failed to mention the doubling of U.S. import quantities from Brazil since

2004.17 According to Southwire, granting a waiver would encourage “a world-class

manufacturer to continue competing in the U.S. market for a commodity-type product by

undercutting domestic producer prices.” Finally, Southwire stated that should Canada’s

ongoing antidumping and countervailing duty investigations of certain unalloyed copper

wire rod from Brazil result in affirmative final determinations, then Brazilian exports will

be diverted from Canada to the United States.18
8-6

Table 8-3 Certain unalloyed copper wire rod: U.S. imports for consumption, by principal sources, 2002-

06

Source 2002 2003 2004 2005 2006

In Dollars

Canada 229,203,781 212,547,745 416,217,005 594,033,623 1,158,126,032

Russia 41,182,077 95,217,855 131,841,505 385,879,812 719,045,035

Mexico 83,898,461 41,687,153 110,999,981 278,819,600 284,901,161

Brazil 42,272,456 37,917,817 41,595,224 106,773,140 185,946,756

Germany 14,211 68,610 57,934 319,151 1,392,921

Peru 373,631 844,847 1,886,568 2,317,500 1,389,780

Chile 0 0 0 0 88,008

France 0 0 0 70,860 4,754

Turkey 0 1,701,233 1,214,594 1,295,922 0

Spain 0 0 0 3,090 0

All other 628,294 624,557 195,129 0 2,671,706

Total 397,572,911 390,609,817 704,007,940 1,369,512,698 2,353,566,153

Imports from GSPeligible countries

Russia 41,182,077 95,217,855 131,841,505 385,879,812 719,045,035

Brazil 42,272,456 37,917,817 41,595,224 106,773,140 185,946,756

Peru 373,631 844,847 1,886,568 2,317,500 1,389,780

Turkey 0 1,701,233 1,214,594 1,295,922 0

India 0 0 0 0 0

Colombia 41,953 0 0 0 0

Indonesia 0 40,009000

Costa Rica 0 0 0 0 0

Kazakhstan 0 0 0 0 0

Total 83,870,117 135,721,761 176,537,891 496,266,374 906,381,571

Source: Official statistics of the U.S. Department of Commerce.

Table 8-4 Certain unalloyed copper wire rod: U.S. exports of domestic merchandise, by market, 2002-06

Country 2002 2003 2004 2005 2006

In Dollars

Mexico 58,293,604 84,986,989 250,449,118 406,791,065 915,676,983

Dominican Rep 939,429 489,615 1,387,761 1,683,141 1,836,110

Hong Kong 4,874 213,060 154,847 291,889 640,319

United Kingdom 2,596 12,152 64,008 386,558 514,251

China 0 0 159,413 865,398 450,443

Sweden 0 40,758 94,183 76,582 210,603

Denmark 0 0 0 146,852 58,675

Poland 0 0 0 87,732 12,060

Germany 0 70,908 56,465 61,755 3,999

Bolivia 0 0 19,409 39,157 0

All other 526,875 591,491 1,765,444 179,589 618,561

Total 59,767,378 86,404,973 254,150,648 410,609,718 920,022,004

Source: Official statistics of the U.S. Department of Commerce.
9-1

CHAPTER 9

Television Reception Apparatus with Video

Recording/Reproducing Capability

Competitive need limit waiver: India

HTS subheading Description Col. 1 rate of

duty as of

1/1/07

(percent ad

valorem)

Like or directly

competitive article

produced in the

United States on

Jan. 1, 1995?

8528.12.80a Set-top boxes with video

recording/reproducing capability

3.9 No

 a India has not been proclaimed by the President as noneligible for GSP treatment for the articles included

under HTS subheading 8528.12.80. However, India anticipates future export levels to the United States in excess

of the competitive need limit. India was granted a de minimis waiver for this HTS subheading on July 1, 2005

but did not qualify as de minimis in 2006.

 Effective January 1, 2007, HTS subheading 8528.12.80 no longer exists. It has been replaced with two new

HTS subheadings - 8528.71.10 and 8528.72.80; the product under consideration for this competitive need limit

waiver falls within HTS subheading 8528.72.80.

These goods are believed to be set-top boxes with the ability to record and reproduce

television programs delivered by cable or satellite distribution. They also may be capable of

reproducing pre-recorded video. According to the U.S. Customs Bureau, National Import

Specialist, these goods are Tivo®-type set-top boxes with hard drives capable of recording

television programs distributed by terrestrial broadcast, satellite, or cable television and with

software facilitating such recording. 

Probable Economic Effect Advice

*****

Profile of U.S. industry and market, 2002-06

There are no U.S. producers of these goods (table 9-1). U.S. consumption is completely

satisfied by imports. There are no known U.S. exports or re-exports of these products as

there is no domestic industry. 
9-2

Table 9-1 Television reception apparatus with video recording/reproducing capability: U.S. producers,

employment, shipments, trade, consumption, and capacity utilization, 2002-06

Item 2002 2003 2004 2005 2006

Producers (number) ............... (a

) (a) (a) (a) (a)

Employment (1,000 employees) ...... (a

) (a) (a) (a) (a)

Shipments (1,000 dollars) .......... (a

) (a) (a) (a) (a)

Exports (1,000 dollars) ............ (a

) (a) (a) (a) (a)

Imports (1,000 dollars) . . . . . . . . . . . . 14,264 6,352 1,762 4,442 35,833

Consumption (1,000 dollars) . . . . . . . . 14,264 6,352 1,762 4,442 35,833

Import-to-consumption ratio (percent) 100 100 100 100 100

Capacity utilization (percent) ....... (a

) (a) (a) (a) (a)

Note.– No U.S. export table is attached to this chapter as it is a basket category covering a wide variety of products

in addition to the subject products.

Source: U.S. import data are based on official statistics of the U.S. Department of Commerce. a Not applicable.

GSP import situation, 2006

India began supplying these products to the United States in 2005, and in 2006 accounted

for 73 percent of total U.S. imports and 100 percent of U.S. imports from GSP-eligible

countries (table 9-2 and table 9-3). India is a major world supplier of these products with

markets in numerous countries. The quality of the Indian product is considered to be

equivalent to that of other suppliers to the U.S. market and the price reportedly is generally

lower. 

Table 9-2 Television reception apparatus with video recording/reproducing capability: U.S. imports and

share of U.S. consumption, 2006

Item Imports

Percent

 of total

imports

Percent 

of GSP

imports

Percent 

of U.S.

consumption

1,000 dollars

Total U.S. imports . . . . . . . . . . . . . . . . . . . . . 35,833 100 - 100

Total U.S. imports from GSP-eligible 

 countries . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,280 73 100 73

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,280 73 100 73
 1

 Except as noted, information provided in this section is derived from the petition filed with the USTR as

well as testimony and written submissions of interested parties to the Commission in connection with this

investigation.

 2

 ***

9-3

Position of interested parties1

Petitioner. – In its petition to the USTR, India described these goods as “CTV reception

apparatus.” The government of India claims that its industry is in its early stages, with

production of 10 million (presumably) units per year, with very low capacity utilization.2

 

No statements were received by the Commission in support of, or in opposition to, the

proposed modifications to the GSP considered for this HTS subheading.

Table 9-3 Color television reception apparatus with video recording/reproducing capability: U.S. imports

for consumption, by principal sources, 2002-06

Source 2002 2003 2004 2005 2006

In Dollars

India 0 0 0 4,161,733 26,280,057

China 5,204 26,842 30,008 9,419 9,163,803

Japan 26,835 126,888 177,888 40,000 200,260

Mexico 13,620,340 6,848 0 95,240 55,343

United Kingdom 9,095 115,754 35,964 11,809 15,888

Israel 0 0 15,951 30,828 4,578

Korea 3,000 1,056,537 550,771 65,030 2,400

Canada 0 0 2,030 9,325 0

France 0 0 0 9,001 0

Taiwan 15,780 13,181 64,873 4,890 0

All Other 583,479 5,005,878 883,732 4,579 111,006

Total 14,263,733 6,351,928 1,761,217 4,441,854 35,833,335

Imports from GSPeligible countries

India 0 0 0 4,161,733 26,280,057

Thailand 570,020 0 6,255 0 0

Total 570,020 0 6,255 4,161,733 26,280,057

Source: Official statistics of the U.S. Department of Commerce.

Biblio-1

BIBLIOGRAPHY

Chengappa, Sangeetha. “Karnataka is Cashing in on Gherkins.” Deccan Herald, December 12, 2005. 

http://www.deccanherald.com/deccanherald/dec122005/eb16311720051211.asp (accessed January

23, 2007).

Edelstein, D. “Copper.” Mineral Commodity Summaries. Reston, VA: U.S. Geological Survey, various

years.

Food and Agriculture Organization of the United Nations (FAO). FAOSTAT database. 

http://www.fao.org (accessed February 23, 2007).

General Motors Web site. http://www.gm.com (accessed January 24, 2007).

Glick, Leslie Alan. Porter, Wright, Morris & Arthur on behalf of Caraiba Metais S.A. “Brief of Caraiba

Metais S.A. in Support of its Petition for Competitive Need Limit Waivers for Copper Wire and

Copper Cathodes From Brazil Under the Generalized System of Preferences.” Submitted to the U. S.

International Trade Commission, February 26, 2007.

Glick, Leslie Alan. Porter, Wright, Morris & Arthur on behalf of Caraiba Metais S.A. “Petition of Caraiba

Metais S.A.for a Competitive Need Limit Waiver from Brazil for Copper Cathodes Under the

Generalized System of Preferences.” Submitted to the Office of the U. S. Trade Representative,

November 16, 2006.

Glick, Leslie Alan. Porter, Wright, Morris & Arthur on behalf of Caraiba Metais S.A. “Petition of Caraiba

Metais S.A.for a Competitive Need Limit Waiver from Brazil for Copper Wire Under the Generalized

System of Preferences.” Submitted to the Office of the U. S. Trade Representative, November 16,

2006.

Glick, Leslie Alan. Porter, Wright, Morris & Arthur on behalf of Caraiba Metais S.A. “Pre-Hearing Brief

of Caraiba Metais S.A. in Support of its Petition for a Competitive Need Limit Waiver for Copper

Cathode Under the Generalized System of Preferences.” Submitted to the Office of the U. S. Trade

Representative, February 2, 2007.

Glick, Leslie Alan. Porter, Wright, Morris & Arthur on behalf of Caraiba Metais S.A. “Pre-Hearing Brief

of Caraiba Metais S.A. in Support of its Petition for a Competitive Need Limit Waiver for Copper

Wire Under the Generalized System of Preferences.” Submitted to the Office of the U. S. Trade

Representative, February 2, 2007. 

Golzman, Larry. Traxys North America LLC. “GSP - 7202.99.20 - Calcium Silicon Pre Hearing Brief.”

Submitted to the U. S. International Trade Commission, February 15, 2007.

Golzman, Larry. Traxys North America LLC. Testimony before the USITC in connection with inv. No.

332-483, Advice Concerning Possible Modifications to the U.S. Generalized System of Preferences,

2006 Review, February 22, 2007. Hearing transcript. 

International Copper Study Group (ICSG). “Description of Copper-Based Products.” 

http://www.icsg.org/Factbook/products_trade/definitions.htm (accessed January 16, 2007).
Biblio-2

“Directory of Wire Rod Plants.” Directory of Copper & Copper Alloy Fabricators, First Use. Lisbon:

ICSG, 2006.

“Regional Aggregation of Identified First Use Capacities of Copper Alloys in 2005.”

Table 5. Directory of Copper & Copper Alloy Fabricators, First Use. Lisbon: ICSG, 2006.

“World Copper Refineries Capacities 2004 to 2009.” Table 1. Directory of Copper Mines and Plants

2004 to 2009. Lisbon: ICSG, Third-quarter 2006.

International Rubber Study Group (IRSG). Rubber Statistical Bulletin 61, nos. 4 and 5. Wembley, United

Kingdom: IRSG, 2007.

Jacobs, Brenda A. Sidley Austin LLP on behalf of the Oriental Rug Importers Association, Inc. “Before

the U.S. International Trade Commission, Investigation 332-483, Post-Hearing Brief,” February 27,

2007.

Jacobs, Brenda A. Sidley Austin LLP on behalf of the Oriental Rug Importers Association, Inc.

Testimony before the USITC in connection with inv. No. 332-483, Advice Concerning Possible

Modifications to the U.S. Generalized System of Preferences, 2006 Review, February 22, 2007.

Hearing transcript. 

Janzen, Bernd. Akin Gump Strauss Hauer & Feld, Inc. on behalf of Bridgestone Americas Holding, Inc.

“Petition to Grant Waiver of Competitive Need Limit on Imports from Thailand of Pneumatic Radial

Tires, of Rubber, of a Kind Used on Buses or Trucks, Classified Under HTSUS Subheading

4011.2010.” Submitted to the Office of the U. S. Trade Representative, November 17, 2006.

London Metal Exchange (LME). “LME-Approved Brands.”

 http://www.lme.co.uk/downloads/LME_Brands160207.xls (accessed March 7, 2007).

Maluff, Emilio. Stein Ferroaleaciones. Testimony before the USITC in connection with inv. No. 332-483,

Advice Concerning Possible Modifications to the U.S. Generalized System of Preferences, 2006

Review, February 22, 2007. Hearing transcript. 

Maluff, Emilio and Marcela Troncoso. Argentinean Chamber of Ferroalloys and Specialty Alloys. PostHearing Brief: “Advice Concerning Possible Modifications to the U.S. Generalized System of

Preferences, 2006 Review.” Submitted to the U. S. International Trade Commission, February 26,

2007.

Modern Tire Dealer. “41st Annual Facts Issue.” 88, no. 1. January 2007.

New York Mercantile Exchange. New York Commodity Exchange Division. “Brands.” 

http://www.nymex.com/cop_fut_brands.aspx (accessed March 7, 2007).

Ober, Joyce. Minerals Yearbook (various editions). Reston, VA: U.S. Geological Survey, various years.

Official Statistics of the U.S. Department of Commerce.

Sharan, Anil K. Embassy of India. “Pre-Hearing Brief for the Public Hearing at the Office of the USTR

on February 16, on the 2006 Annual Review of Products and Country Practices Under the GSP,”

February 2, 2007.
Biblio-3

Sharan, Anil K. Embassy of India. “Statement by Anil K. Sharan, Counsellor (Commerce), Embassy of

India, Washington, D.C. at the Public Hearing on the 2006 Annual Review of Products and Country

Practices Under the GSP - February 16, 2007 at the Office of USTR,” February 16, 2007.

Southwire Co. Web site. http://www.southwire.com (accessed February 13, 2007).

Southwire Co. “Over Fifty Years of Quality and Service.” 

http://www.southwire.com/processChannel.do?channelId=83e81dc51235df00VgnVCM1000004c026

564RCRD (accessed February 13, 2007).

Superior Essex Inc. “History, Superior Essex Inc. History.”

http://www.superioressex.com/about-us/history.htm (accessed February 13, 2007).

The-infoshop.com. Global Information, Inc. Roskill. The Economics of Lithium 2006.

http://www.the-infoshop.com (accessed January 24, 2007).

Woehnker, Mark P. AmRod Corp. “2006 GSP Annual Review; 2006-07 7408-11.60; Written comments.”

Submitted to the U. S. International Trade Commission, February 27, 2007. 

World Bureau of Metal Statistics. World Metal Statistics. Ware, UK: World Bureau of Metal Statistics.

January 2007.

APPENDIX A

USTR Request Letters

A-3
A-4
A-5
A-6
APPENDIX B

Notice of Investigation

B-3
B-4
APPENDIX C

Calendar of Witnesses for the February 22, 2007

Hearing

C-3

TENTATIVE CALENDAR OF PUBLIC HEARING

Those listed below are scheduled to appear as witnesses at the United States International

Trade Commission’s hearing:

Subject: Advice Concerning Possible Modifications to the U.S.

Generalized System of Preferences, 2006 Review 

Inv. No.: 332-483

Date and Time: February 22, 2007 - 9:30 a.m.

Sessions will be held in connection with this investigation in the Main Hearing Room (room

101), 500 E Street, S.W., Washington, D.C.

ORGANIZATION AND WITNESS: PRODUCT:

Radial Tires

Akin Gump Strauss Hauer & Feld LLP

Washington, D.C.

on behalf of

Bridgestone Americas Holding, Inc.

Bridgestone Firestone North American Tire, LLC

Steven J. Akey, Vice President, Government Affairs,

Bridgestone Americas Holding, Inc.

Jim Keating, Coordinator, Duty Drawback and NAFTA

Customs Compliance, Bridgestone Americas Holding, Inc.

Valerie A. Slater )

) – OF COUNSEL

Bernd G. Janzen )
C-4

ORGANIZATION AND WITNESS: PRODUCT:

Hand-Hooked Carpets and Floor Coverings

Sidley Austin LLP

Washington, D.C.

on behalf of

Oriental Rug Importers Association, Inc.

Secaucus, NJ

Brenda A. Jacobs ) – OF COUNSEL

Calcium-Silicon Ferroalloys

Camara Argentina de Ferroaleaciones y Aleaciones Especiales (“CAFAE”)

Asociacion de Industriales Metalurgicos de la Republica Argentina

Buenos Aires, Republic of Argentina

Emilio Maluff, Member, CAFAE

Larry Goldzman, Traxys North America LLC

-END-
APPENDIX D

Model for Evaluating Probable Economic Effects of

Changes in GSP Status

 1

 For derivations, see Paul S. Armington, “A Theory of Demand for Products Distinguished by Place of

Production,” IMF Staff Papers, vol. 16 (1969), pp. 159-176, and J. Francois and K. Hall, “Partial Equilibrium

Modeling,” in J. Francois and K. Reinert, eds., Applied Methods for Trade Policy Analysis, A Handbook

(Cambridge: Cambridge University Press, 1997). 

D-3

MODEL FOR EVALUATING THE

PROBABLE ECONOMIC EFFECT OF CHANGES IN GSP STATUS

This appendix presents the method used to analyze the effects of immediate tariff elimination for

selected products on total U.S. imports of affected products, competing U.S. industries, and U.S.

consumers. First, the method is introduced. Then the derivation of the model for estimating changes in

imports, U.S. domestic production, and consumer effects is presented.

Introduction

Commission staff used partial equilibrium modeling to estimate probable economic effects (PE)

of immediate tariff elimination on total U.S. imports, competing U.S. industries, and U.S. consumers. 

The model used in this study is a nonlinear, imperfect substitutes model.1

 Trade data were taken from

official statistics of the U.S. Department of Commerce. U.S. production data were estimated by USITC

industry analysts. Elasticities were estimated by industry analysts in consultation with the assigned

economist based on relevant product and market characteristics. Trade and production data used were for

2004, and tariff rates used were for 2005.

The following model illustrates the case of granting a product GSP duty-free status. The

illustration is for a product for which domestic production, GSP imports, and non-GSP imports are

imperfect substitutes, and shows the basic results of a tariff removal on a portion of imports. 
D-4

Sb

S′

b

Q

P

Qb Q′

b

A

B

Sn

Dn

Q

P

Q′

n Qn

Pn

B A

D′

n

Sd

Dd

Q

P

Q′

d Qd

B A

D′

d

Pd P′

b

P′′ b

Pb

Figure D-1

U.S. markets for GSP beneficiary imports (panel a), domestic production (panel b), and nonbeneficiary

imports (panel c)

Consider the market for imports from GSP beneficiary countries illustrated in fig. D-1, panel (a). 

The line labeled is the U.S. demand for imports D from GSP beneficiary countries, the line labeled b

S is the supply of imports from GSP beneficiary countries with the tariff in place, and the line labeled b

S′ is the supply of imports from GSP beneficiary countries without the tariff (i.e., the product is b

receiving duty-free treatment under GSP). Point A is the equilibrium with the tariff in place, and point 

is the equilibrium without the tariff. and are equilibrium quantities at and , respectively. Qb Q′

b

P and are equilibrium prices at and , and is the price received by GSP-beneficiary b P′b P′′ b

producers when the tariff is in place. The difference between and denotes the tariff, . Pb P′′ b t

In the model, a tariff reduction leads to a decrease in the price of the imported good and an

increase in sales of the good in the United States. The lower price paid for the import in the United States

leads to a reduction in the demand for U.S. production of the good, as well as for imports from non-GSP
 2

 The product grouping consists of similar goods from different sources. For example, goods i, j, and k would

indicate three similar goods from three different sources. See Armington (1969) for further discussion of the

concept.

 3

 Armington (1969), p. 167.

 4

 Ibid., p. 168.

D-5

q bq p

p

i i

i = ⎛

⎝

⎜ ⎞

⎠

⎟

−

σ

σ

(1)

countries. These demand shifts, along with supply responses to the lower demand, determine the

reduction in U.S. output and non-GSP imports. 

The changes that take place in panel (a) lead to the changes seen in panels (b) and (c), where the

demand curves shift from and to and , respectively. Equilibrium quantity in the Dd Dn D′

d D′n

market for domestic production moves from to , and in a similar manner for the market for Qd Q′

d

nonbeneficiary imports, equilibrium quantity falls from to . Qn Q′

n

Derivation of Import, U.S. Production, and Consumer Effects

The basic building blocks of the model are shown below. Armington shows that if consumers

have well-behaved constant elasticity of substitution (CES) utility functions, demand for a good in a

product grouping can be expressed as follows:

where denotes quantity demanded for good in the U.S. market;2

 is the price of good in the U.S.

market; is the elasticity of substitution for the product grouping; is the demand for the aggregate

product (that is, all goods in the product grouping); is a price index for the aggregate product (defined

below); and is a constant.3 As Armington states, the above equation “... can be written in a variety of

useful ways.”4 One of these useful ways can be derived as follows. The aggregate price index is p

defined as
D-6

p bp i i

i

= ⎛

⎝

⎜ ⎞

⎠

⎟ − −

∑ σ σ σ 1

1

1

. (2)

q kpA A = η (3)

Kp bk p

p

si i i A si

A

ε σ

σ η

σ − =

+

0. (4)

In addition the aggregate quantity index can be defined as q

where is a constant and is the aggregate dema k nd elasticity for the product grouping (natural sign). A η A

Substituting equation (3) into equation (1) yields

q bkp p

p

i iA A i = ⎛

⎝

⎜ ⎞

⎠

⎟

−

σ η

σ

.

Further manipulation and simplification yields

q bk p

p

i iA

i

A

=

+ σ σ η

σ

( )

,

which establishes the demand for in terms of prices, elasticities, and constants. qi

The supply of each good in the product grouping is represented in constant supply elasticity form:

q Kp i si i si = ε ,

where is a constant and is the price elasticity of supply for good . Ksi ε si

Excess supply functions are set up for each good in the product grouping with the following

general form:

The model is calibrated using initial trade and production data and setting all internal prices to unity in the

benchmark calibration. It can be shown that calibration yields for the good so that K bk si i A = σ i

th
D-7

p

p

p

i

i

si

A

ε

σ η

σ − =

+

0 . (4N)

equation (4) can be rendered as

If there are goods, the model consists of equations like (4 n n N) plus an equation for the price

aggregator , which are solved simultaneously in prices by an iterative technique. p

For the case of adding a product to the list of products eligible for GSP duty-free treatment, the

equations are as follows:

[ ] p t for imports from GSP beneficiary countries, p

p

b

b

sb

A

( ) 1 0 +− =

+ ε σ η

σ

p for imports from nonbeneficiary countries, p

p n

n

sn

A

ε

σ η

σ − =

+

0

p for U.S. domestic production, and p

p d

d

sd

A

ε

σ η

− = σ

+

0

for the price aggregator. p bp i i

i bnd

= ⎛

⎝

⎜ ⎞

⎠

⎟ −

=

−

∑ σ σ σ 1

1

1

, ,

The prices obtained in the solution to these equations are used to calculate trade and production values,

and resulting percentage changes in total imports and domestic production are computed relative to the

original (benchmark) import and production values. 

Consumer effects

Consumer effects are estimated in terms of the portion of the duty reduction that is passed on to

U.S. consumers on the basis of the import demand and supply elasticity estimates. The formula for

determining the division of the duty savings between U.S. consumers and foreign exporters is

approximated by , where is the percenta SV ge of duty savings retained by exporters ii

ii si

= −

η

( ) η ε
 5

 At any given vector of prices, such as at the benchmark equilibrium, is the own price ηη σ ii i A i = −− S S ( ) 1

elasticity of demand from imports from source , where is the share of total expenditures on the product

grouping spent on good at that vector of prices. See Armington, p. 175. 

D-8

from source , is the own price elasticity of demand,5 ηii and is the price elasticity of supply from ε si

source . An “A” code indicates that more than 75 percent of the duty savings are retained by foreign

exporters , and less than 25 percent passed through to U.S. consumers. A “B” code η

η ε

ii

ii si − >

⎛

⎝

⎜ ⎞

⎠ 0 75 . ⎟

covers the range between 75 percent and 25 percent . A “C” code covers the 0 75 0 25 . . > − >

⎛

⎝

⎜ ⎞

⎠

⎟ η

η ε

ii

ii si

case where less than 25 percent of the duty savings are retained by foreign exporters and more than 75

percent of the savings are passed through to U.S. consumers . η

η ε

ii

ii si − <

⎛

⎝

⎜ ⎞

⎠ 0 25 . ⎟

The default assumption for the probable effect on consumers is a “B” code. This assumption

reflects the possibility that short-run supply elasticities may be less than perfectly elastic and the world

supply price may rise in the short run in the face of increased demand when U.S. duties are reduced. In

the long run, unless there are extraordinary market structure circumstances, supply elasticities are likely to

be perfectly elastic for any one product considered in isolation, implying that a “C” code for the consumer

effects is probably more appropriate in the long run in most cases. “A” and “C” codes for consumer

effects are assigned when analysts have information indicating that they are appropriate.