Re James Bovard's June 3 editorial-page article, "U.S.
Fair Trade Laws Are Anything But":

Mr. Bovard displays an alarming ignorance of our trade
laws, the purpose for which they were enacted and the
Commerce Department's role in carrying them out. The statutes
to which he refers -- those against "dumping" (selling
foreign goods in the U.S. at below cost or home market
prices) and those against foreign subsidies of U.S. imports
(which permit offsetting "countervailing duties" to be
imposed) were enacted by Congress as part of the Tariff Act
of 1930. They are consistent with the provisions of the
General Agreement on Tariffs and Trade (GATT), the prevailing
international trade mechanism subscribed to by more than 90
nations.

The purpose of these laws is to defend American companies
against loss of home market share to predatory pricing or to
foreign producers that benefit from the deep pockets of their
own governments through targeted subsidies. Without these
laws foreign countries would expand their U.S. market share
and home employment at our expense, thus reducing the sales
and employment of their U.S. competitors.

The Commerce Department and the International Trade
Commission (ITC) are responsible for administering these
laws. With rare exceptions, trade-law cases are initiated by
individual companies or by an industry that believes it has
been injured by unfair practices, not self-initiated by
government. These industrial petitioners seek the redress
they are entitled to under both our laws and those of the
GATT -- not protection from legitimate competition or an
umbrella under which to raise prices.

When a case is brought to us, the Commerce Department
assembles and verifies the facts on costs and prices, and
determines whether dumping or a countervailable subsidy
exists. The ITC determines whether the practice has in fact
injured or threatens to injure the U.S. petitioner. Our
decisions are based on facts established by our government
investigators, not on unverified data from petitioners.

Only about 25% of the cases result in duties being
imposed. Most are dismissed because the facts disclose no
offense or the practice does not cause injury to American
producers. We know that low-priced imports benefit consumers,
but the benefits must be weighed against the potential loss
of jobs caused by dumping and subsidies. Mr. Bovard points
out that selling below cost by American producers in the
American market is a common -- and legal -- practice. But
selling to Americans, by American firms competing with one
another, does not threaten to transfer wealth and
unemployment across international boundaries.

Our statutes and regulations involve specific methodology,
though we do accept changes from respondents when they lead
to a fairer result and are consistent with our laws. And
despite Mr. Bovard's criticism, we do include an allowance
for "profit" in our cost analysis. Framers of the statute
concluded, correctly I believe, that such an allowance was
necessary to reflect the cost of capital inherent in any
business. A carefully defined process of cost analysis
enables us to reach consistent conclusions that are beyond
the reach of political influence and are seldom upset if
appealed in the courts.

Finally, Mr. Bovard complains about decisions to impose
very small dumping margins, and about the proxy methods used
to calculate costs of products of nonmarket countries such as
China. We agree with his complaints, but are bound by the
laws now in effect. The administration has proposed a
different and better way of analyzing nonmarket economy
imports; we are hopeful that it will be included as a part of
the trade bill now being debated.

We will continue to implement our trade laws as
vigorously, fairly and impartially as we can, recognizing
that they are a vital and internationally accepted vehicle
for striking a fair balance of benefits among consumers,
American producers and their international competitors. The
U.S.'s economic future can tolerate neither the protection of
inefficient industries, nor the destruction of those that are
competitive. It is in the national interest that we prevent
both from happening.

Bruce Smart

Undersecretary, International Trade

U.S. Department of Commerce

Washington