Tougher trade enforcement would incentivize Samsung and LG to invest in US workers

The late Sen. Daniel Patrick Moynihan (D-N.Y.) once said, “You are entitled to your own opinion, but you are not entitled to your own facts.” That adage is increasingly relevant in some of the debates about international trade. One case, in particular, pending before the administration deserves the application of the Moynihan rule.

The case involves the recent unanimous ruling by the International Trade Commission (ITC) that two Korean companies — Samsung and LG — have engaged in illegal and predatory trade tactics that have resulted in injury to American workers, in particular more than 3,000 workers at Whirlpool’s Clyde, Ohio plant that produces nearly all the household washing machines that Whirlpool sells in the United States. Many of those workers have spent decades at the plant.

{mosads}Some are second, third or even fourth-generation employees. Many started work a few days after their high school graduation and never left. Their jobs in Clyde have enabled them to pay their mortgages, put food on their tables, and send their kids to school.

Fortunately, international rules in the World Trade Organization (WTO) and U.S. laws exist to fight illegal market manipulation, such as selling products at artificially low prices or with government subsidies. U.S. administrations — both Republican and Democrat — consistently have used those rules to defend American workers from bad behavior. Whirlpool is engaged in just such a case, alongside GE Appliances, to prevent further cheating by South Korean conglomerates LG and Samsung.

With the president expected to announce his decision on the appropriate remedy any day now, it’s worth sorting the facts from the misinformation being peddled in some quarters about this case, starting with the misguided claim that this case represents an abuse of existing trade law.

The safeguard petition Whirlpool filed back in May represents the third trade case the company has filed since 2011 to prevent Samsung and LG from cheating. All three times, the ITC — the bipartisan independent agency charged with investigating such petitions — voted unanimously against Samsung and LG.

Why has Whirlpool filed three trade cases against these companies? Because both Samsung and LG have been playing a variation of the game “Where’s Waldo” over the past several years.

Each time the ITC has ruled against them for unfair trade practices, they have moved production to another country to circumvent our laws: First from Mexico and Korea to China after the first ITC ruling, and then from China to Vietnam and Thailand after the second ITC ruling. Whirlpool executives testified that this cheating by Samsung and LG prevented them from adding 1,500 full-time equivalent positions at Clyde.

The two Korean conglomerates have claimed that they have grown market share, not by cheating but by selling washing machines in different colors. Actually, Whirlpool introduced color into its laundry products back in the 1950s and reintroduced color in the early 2000s.

But the most off-base, counter-factual claim is that Whirlpool, a company that has been manufacturing in the U.S. for 106 years, is somehow imperiling American jobs by filing this safeguard petition. Samsung and LG are threatening to withhold promised investments in appliance factories here in the U.S. if the administration is too tough on them. That makes no economic sense.

If the Trump administration applies tariffs to washing machines made outside the U.S., Samsung and LG would have more incentive to make those products here. In fact, they would have incentive to make more products here, sooner.

The ITC said as much in its recommendations to the president. In fact, the commissioners warned the administration that Samsung and LG might not follow through on their promises to open appliance factories in the U.S., if the president doesn’t implement a strong remedy.

In its official recommendation, the commissioners wrote that Samsung and LG “…would have less of an economic incentive to follow through fully on their planned investments, particularly in light of their substantial recent investments in (large residential washing machine production) for the U.S. market in Thailand and Vietnam.”

Therefore, it is up to President Trump to implement a remedy that will prevent the two Korean companies from doing what they have done repeatedly in the past — relocate production to avoid duties and continue dumping washing machines into the U.S.

In so doing, he would be helping workers (and prospective workers) in Whirlpool’s Ohio factory and in the Samsung and LG promised manufacturing sites in Tennessee and South Carolina. In other words, making the decision on the facts.

Peter Allgeier was the U.S. Ambassador to the World Trade Organization (2005-2009) and Deputy U.S. Trade Representative (2001-2009).