Don’t Let South Korean Tech Giants Illegally Bully U.S. Company, By Stephen Beale
Anyone who has taken an honest look at the debate over free trade knows there are good arguments to be had on both sides—globalist and nationalist. But this isn’t one of those debates.
Two South Korean tech giants, Samsung Electronics and LG Electronics, are bucking U.S. trade law by slashing the prices for their washing machines far below the cost of making them—in trade lingo, “dumping”—in order to drive their U.S. competitor, the Michigan-based Whirlpool Corporation, out of the domestic market.
On October 5, the U.S. International Trade Commission ruled the two companies’ imports were “substantial cause of serious injury.” Now the commission is expected to produce a full report with recommendations for a remedy—presumably some kind of financial penalty—which it will submit to President Donald Trump in early December.
The ruling comes after years of abuse and fine-dodging by the two companies. In 2013, the ITC found Samsung and LG had illegally dumped washing machines that had been manufactured in South Korea and Mexico. Fines were levied.
The South Korean businesses responded by starting a sort of global game of hide and seek. Getting fines for shipping in low-price washers from South Korea and Mexico? No problem! Just move your plants to China. Yet another fine was met with yet another factory move, according to Cleveland.com.
Finally, Whirlpool had enough and filed a special petition asking the commission to find that Samsung and LG had caused serious injury to domestic industry.
Samsung and LG’s flagrant disregard for the rules affects much more than Whirlpool’s bottom line and the thousands of manufacturing jobs on the line. The moral authority of U.S. trade laws is at stake. A failure to enforce those laws would necessarily undermine their relevance, embolden other rogue manufacturers to join in, and reward repeat offenders like Samsung and LG.
There are many areas where conservatives can disagree these days, but enforcing the law shouldn’t be one of them. Nonetheless, some conservatives, such as David Williams of the Taxpayers Protection Alliance, are arguing that President Trump should refrain from doing just that, by mischaracterizing any action against the companies as going back on his promises to drain “the Swamp” and end “taxpayer-funded corporate bailouts.”
But Whirlpool isn’t asking for a bailout or a handout. It has asked the government to simply stop a repeat corporate abuser from making a mockery of its own laws. When Williams says Whirlpool should fight its own battles, he simply is turning a blind eye to Samsung and LG’s history of abuse.
Perhaps in an attempt to dodge the usual pitting of consumers against workers, some Samsung and LG defenders point out that Samsung was set to open a new plant in South Carolina. Any punitive move against Samsung now could upset the deal, as a Daily Caller contributor recently argued. (So did South Carolina Congressman Ralph Norman in a September 7, 2017, letter to the ITC).
But is this really how to grow jobs in this country? Should Whirlpool’s Michigan workers suffer so South Carolina gets some relief? Whirlpool has 97,000 workers, according to one recent disclosure. In all fairness, not all of them make washing machines. That number is a lot less. The main factory in Ohio reportedly has 3,500 workers. But that’s still more than three times the 1,000 jobs Samsung would have filled in the first two years, according to Norman’s own figures. Even the most heartless free-trader can’t argue with that math.
And, yes, just in case you’re wondering, the Whirlpool production lines are slowing down. As Bloomberg reported earlier this year, “The situation has hampered sales at the Benton Harbor, Michigan-based company’s washer division, which has underperformed its other businesses.”
A tariff won’t just save jobs. It could actually lead to more in two ways. First, it will reward a company that has actually moved a factory from overseas back to the United States. That would be Whirlpool, which moved its washing machine factory from Mexico to Ohio around 2014. Second, a tariff creates the opportunity for additional investment from Whirlpool into its domestic operations—something that obviously isn’t happening if its operations are declining in the face of unfair competition.
Third, rather than dissuading the South Korean companies from investing here, a tariff would encourage it. Without one, the Trade Commission doubts they will ‘follow through.’ As the commission stated in a report last month,
We recognize that the communities where LG and Samsung are planning to operate new U.S. plants could eventually benefit from a shift in market share from Whirlpool and GE to LG and Samsung. In the absence of safeguard relief, however, LG and Samsung would have less of an economic incentive to follow through fully on their planned investments, particularly in light of their substantial recent investments in LRW production for the U.S. market in Thailand and Vietnam.
President Trump ran as an economic nationalist. It will take grit and guts to decide to pursue that agenda knowing it will be resisted every step of the way by establishment economists, many heavyweights in the business world, and other DC-Swamp creatures. But this isn’t a hard decision. Samsung and LG’s brazen mockery of U.S. law requires nothing more than that Trump respond by enforcing it against them.
Stephen Beale is a freelance writer based in Providence, RI. His work has appeared in National Review, The Washington Times, First Things, The American Conservative, and Crisis Magazine. Email him at firstname.lastname@example.org or follow him @bealenews.
PHOTO: National Liberation Day of Korea. Photo provided by the Republic of Korea.