Feds To Continue Chinese Small Engine Probe

The United States International Trade Commission (USITC) determined Friday that there is a reasonable indication that a U.S. industry is being materially injured by reason of imports of vertical shaft engines from China that are allegedly subsidized and sold in the United States at less than fair value.

Six members of the USITC – Chairman David S. Johanson and Commissioners Rhonda K. Schmidtlein, Jason E. Kearns, Randolph J. Stayin, and Amy A. Karpel – voted in the affirmative, meaning that the U.S. Dept. of Commerce will continue with its antidumping and countervailing duty investigations concerning imports of vertical shaft, spark-ignited engines between 225 and 999 cc from China. A preliminary countervailing duty determination is due on or about April 9 and a preliminary antidumping duty determination is due on or about June 23, the USITC said.

In mid-January, the Coalition of American Vertical Engine Producers (CAVEP), which includes Briggs & Stratton and Kohler Co., filed anti-dumping and countervailing duty petitions with the federal government, alleging that Chinese engine manufacturers are engines in the U.S. below market cost – the very definition of dumping – and are receiving significant economic assistance from the Chinese government.

The Chinese engines in question are primarily used in the consumer lawn & garden and commercial turf industries, both of which are critical markets for the U.S. engine builders. The Chinese engines enter the domestic market as loose engines sold to manufacturers, as well as in equipment sold in the U.S. market.

It’s estimated that Chinese engines account for as many as 200,000 to 250,000 sales per year in the U.S., a figure that has grown significantly in the last three or four years, according to the petitioners.

As part of its dumping claim, the CAVEP alleges that the Chinese engines have a dumping margin – the amount by which the export price from the country in which the goods originated is less than the fair market price of the goods in that country – of 320% and more.

The countervailing duty claim suggests that Chinese engine manufacturers are receiving a range of economic subsidies from the Chinese government, such as debt restructuring and loans, capital injections, export assistance grants, export loans and credits, income tax reductions and import tariff exemptions.

The USITC’s public report Vertical Shaft Engines from China (Inv. Nos. 701-TA-637 and 731-TA-1471 (Preliminary), USITC Publication 5034, March 2020) will contain the views of the Commission and information developed during the investigations. The report will be available after March 30.