Countervailing Duties (Tariffs) Explained...
and how they can be used to bring the work back home!
What are Countervailing Duties (Tariffs)?
Countervailing Duties are a special category of Tariffs designed to protect US industry from foreign merchandise sold at below market value (dumping) and against unfair foreign subsidies. Countervailing Duties are designed to neutralize the effect of another country's unfair trade practices by assessing a penalty in the form of a tariff before such products may be imported into the United States. In the case of the film and television industry, studios and networks who collect foreign production subsidies would be required to pay a tariff in the amount of subsidy received before they are permitted to distribute their product in the United States. Countervailing Duties were established by the Tariff Act of 1930 and are supported by the Trade Agreements Act of 1979; Trade and Tariff Act of 1984; Trade Act of 1988, Uruguay Round Agreements Act, 19 U.S.C. 1339, 1516a, 1673-1673h, 1675-1677n.
What's the procedure for securing them?
A formal petition for relief must be filed with the International Trade Administration of the Department of Commerce and the US International Trade Commission. The petitioners must be able to show that they represent 50% or more of the effected industry's workforce and that they have incurred substantial harm from the subsidies.
How long does it take to get them?
The Tariff Act sets up a specific timeline for the tariff application. The procedure requires a preliminary determination within 45 days of filing the formal petition. After the preliminary determination Commerce has a maximum of 190 days to publish it's final decision. If a tariff is imposed, it will be retroactive to the date of filing thus causing an immediate chilling effect on runaway production from the moment we file the petition. We file our petition as soon as we have united enough support from unions and small business to account for 25% or more of our industry.
Are there other countervailing Duties in place?
Yes. For steel alone there are 120 countervailing Duties currently in place with 40 more in the application process. The timber industry is asking for a 74% tariff against the import of subsidized Canadian softwoods. Countless other Duties exist for agricultural products, computer chips, and other manufactured goods.
The US steel industry has lost half its jobs, so what good are Duties?
The steel industry is suffering from effects of a global recession and production overcapacity. What steel industry remains owes its existence to the 120 steel Duties now in place. On June 6, President Bush took the first steps to enact broad new Duties for steel.
But isn't this protectionism?
If protectionism means protecting our jobs, our families, and our communities from the unfair trade practices of other nations -- yes, this is protectionism -- and what's wrong with that? If we don't protect a great industry that took a hundred years of sweat and toil to build, who will?
The studios give millions to the politicians and the Republicans are no friends of labor. How can we get a tariff on the studios through our political system?
Countervailing Duties enjoy strong bipartisan support in Congress. Just last month 61 US Senators put their names to a letter to President Bush that reiterated their support for the use of countervailing Duties. Also last month the Bush administration approved new Duties of up to 115% on some categories of imported steel. Most significantly, on June 6 Bush announced his commitment to protecting American industry from unfair trade practices and took the first steps to enact broad new Duties on all imported steel.Prodding Bush to take this action were Democratic leaders who warned they would use their power in the Senate to force Bush to support steel Duties if Bush didn't take the initiative himself.The Democratic takeover of the Senate improves our prospects further by placing Max Baucus (D-Mont.) as head of the Finance Committee. Baucus is a strong supporter of countervailing Duties. As for the Republicans being no friends of labor, remember this issue also impacts the ten thousand small mom and pop businesses that serve our industry, which makes them our allies. Small business brings with it hundreds of Chambers of Commerce, film development commissions, and regional economic interests -- these are political interest groups the Republicans cannot easily ignore.
I'm a member of IATSE, which has Canadian members as well. Isn't a campaign to win countervailing Duties an attack on our own members and the concept of international solidarity? Shouldn't the IA stay out of this by remaining neutral?
We have no quarrel with our fellow workers in Canada and we wish them well, but the job-raiding subsidies their federal and provincial governments have put in place have created an artificial division of economic interest between the film workers of our two countries.Countervailing Duties will erase this division in one stroke. And why shouldn't IATSE take up this cause? Aren't labor unions supposed to represent the economic interests of their members and don't we constitute 90% of our membership? Isn't this the biggest and most serious challenge to our jobs base in our 100-year history? Do the Steelworkers and the Teamsters sit still while their member's jobs come under attack by unfair trade practices?
But aren't runaway jobs caused by other factors that Duties don't address?
Sure, like a low Canadian dollar, lower pay rates, weaker environmental controls, no actor residuals, and looser child labor laws, but the single biggest factor, and most easily addressed in this equation are the subsidies.
What about subsidies of our own to counter the Canadian subsidies?
Subsidies are based on the concept of rewarding corporations to get them to do something positive, while Duties are based on the concept of disciplining corporations when they do something negative. Subsidies are a transfer of public money to corporate pockets, Duties don't cost the taxpayer one dime.
During FTAC's initial "Bring Hollywood Home" campaign of 1998, we found that getting subsidies from the California government was next to impossible. No one wanted to spend a little money to bring a lot of money home. Nevertheless, we accomplished much by informing the public of our plight and not giving up. We helped Governor Davis realize there was a problem and with that realization, he founded the California First Fund. Though the fund is not the answer, it was a first step.
After careful analysis we, the members of FTAC decided that our best course of action, at this point, was to petition the U.S. International Trade Commission for Countervailing Duties. We feel that Duties are the fairest way to deal with the runaway production problem because they penalize the Studios and Networks who are now reaping all the benefits from the foreign subsidies. We also feel that Countervailing Duties have the best likelihood of being enacted.
Some people are still working on government subsidies. We hope they have good luck because no matter how it happens getting our jobs back is what we all want and each campaign will help give visibility and viability to the other.
What can I do to help?
Take a petition, sign it, find nine other films workers to sign and mail it to the address at the bottom of the petition. Take a second petition and Xerox it, hand copies out to other industry friends, take it to your set, get it signed. Fax copies to film workers around the country and ask them to join us in solidarity. Click here for more information about the different ways you can help.