Global competitiveness: identifying our challenges: a recent U.S. ITC investigation addressed domestic and global influences on U.S. metalcasters. This article reveals U.S. ITC data detailing how foreign competition affected the U.S. metalcasting industry from 1999-2003.What is the Cost of U.S. Metalcasting? This article begins Part 3 in a three-part series. Part 1 of the series was published in the October October: see month. issue of MODERN CASTING, and Part 2 appeared in the November November: see month. issue. Part 1: Domestic Competitiveness: Investigating U.S. Casting Costs--Data revealed by the U.S. ITC ITC (Brit) n abbr (= Independent Television Commission) → Fernseh-Aufsichtsgremium ITC n abbr (BRIT) (= Independent Television Commission) → Section 332 study detailed how U.S. metalcasting operations fared from 1999-2003. Part 2: Domestic Business: What is Our Cost of Operation?--A recent metalcasting operational cost survey broke down production and business expenses for the U.S. industry. Wages, benefits and executive compensation were detailed in an article discussing two recent surveys. Part 3: Global Competitiveness: Identifying Our Challenges?--Data collected regarding the metalcasting industries of India India, officially Republic of India, republic (2005 est pop. 1,080,264,000), 1,261,810 sq mi (3,268,090 sq km), S Asia. The second most populous country in the world, it is also sometimes called Bharat, its ancient name. India's land frontier (c. , China, Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. , Taiwan Taiwan (tī`wän`), Portuguese Formosa, officially Republic of China, island nation (2005 est. pop. 22,894,000), 13,885 sq mi (35,961 sq km), in the Pacific Ocean, separated from the mainland of S China by the 100-mi-wide (161-km) Taiwan , Korea Korea (kôrē`ə, kə–), Korean Hanguk or Choson, region and historic country (85,049 sq mi/220,277 sq km), E Asia. , Japan and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of in the Section 332 study is revealed and potential remedies rem·e·dy n. pl. rem·e·dies 1. Something, such as medicine or therapy, that relieves pain, cures disease, or corrects a disorder. 2. Something that corrects an evil, fault, or error. 3. to global competition are analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. . Also, the annual world census census, periodic official count of the number of persons and their condition and of the resources of a country. In ancient times, among the Jews and Romans, such enumeration was mainly for taxation and conscription purposes. of casting production is detailed. ********** When MODERN CASTING first reported on the results of the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. International Trade Commission (U.S. ITC) Section 332 investigation in October, the financial status of the domestic metalcasting industry from 1999-2003 was detailed. The investigation, Publication 3771 "Foundry A semiconductor manufacturer that makes chips for third parties. It may be a large chip maker that sells its excess manufacturing capacity or one that makes chips exclusively for other companies. Products: Competitive Conditions in the U.S. Market," reported many impacting factors, such as labor and equipment costs, material price trends and operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. . During the surveyed period, many U.S. metalcasters also cited foreign competition as significantly affecting the domestic casting industry. The U.S. ITC report revealed that the U.S. metalcasting industry did suffer a significant loss in market share to foreign competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. , and most metalcasters identify this as the reason domestic firms are suffering losses. To understand the situation, the U.S. ITC collected information regarding the metalcasting industries of China, Brazil, India, Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. , Taiwan, Korea, Japan and Canada through interviews and plant visits with government and trade association representatives, producers and purchasers. Questionnaires involving 10 end-use industries also were sent to purchasers in these markets, and responses were obtained from 651 of the 1,591 questionnaires sent, 470 of which indicated they purchased castings specified spec·i·fy tr.v. spec·i·fied, spec·i·fy·ing, spec·i·fies 1. To state explicitly or in detail: specified the amount needed. 2. To include in a specification. 3. within the scope of the investigation. Further, casting purchasers were asked to rank factors by which they make purchasing decisions on a scale of 1 to 5 for both foreign and domestic purchases. This article (along with the "39th Census of World Casting Production--2004," p. 27) is the last of a three-part series by MODERN CASTING, and it discusses the influence foreign competition has had on U.S. metalcasting activity. Detailed are the results of the Section 332 investigation, including data comparing major foreign competitors with the U.S. and possible remedies that may be implemented by the domestic industry. Domestic Purchasers Looking Outside The data of the U.S. ITC investigation revealed that domestic casting purchasers have different expectations for components produced in the U.S. than in foreign facilities. This relates factors that affect the purchase of either domestically produced or imported castings. When buyers ranked their reasons for purchasing castings in terms of importance, it was found that pricing is the most critical factor for either type of casting business (Table 1). But U.S. and foreign castings differ on the next important reason. Quality is a more important factor for U.S. castings than for foreign ones, while the opposite is true for delivery time. Price and quality carry equal importance when a customer considers U.S. castings, but for foreign castings, quality is given considerably less weight, making it reasonable to assume that unless there is a vast difference in quality between a domestic and foreign casting, the foreign casting firms have a distinct advantage. Table 2 reveals lower price as the overwhelming reason for customers to significantly increase purchases of foreign castings. This implies (logic) implies - (=> or a thin right arrow) A binary Boolean function and logical connective. A => B is true unless A is true and B is false. The truth table is A B | A => B ----+------- F F | T F T | T T F | F T T | T It is surprising at first that A => that to remain competitive, U.S. casting producers must have competitive prices. The U.S. ITC selected several types of castings, such as ductile iron Ductile iron, also called ductile cast iron or nodular cast iron, is a type of cast iron invented in 1943 by Keith Millis[1]. While most varieties of cast iron are brittle, ductile iron is much more ductile, as the name implies. camshafts and aluminum engine components, to develop case studies and determine a basis to evenly compare domestic and foreign casting pricing. Table 3 shows that for all of the products selected by the U.S. ITC, foreign casting firms, particularly in China, India and Brazil, have much lower pricing, which provides them with a considerable competitive advantage. The U.S. ITC also compiled data to compare many statistics (such as wages and interest rates) of the U.S. metalcasting industry to the foreign competition that it faces (Table 4). Low labor cost was discovered to be the principal advantage of foreign casting. Even when the hourly rate is adjusted to compensate for the lower productivity of workers in other countries, foreign producers still have a large competitive advantage in this area. Another factor that promotes importation of castings is that no value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: or consumption taxes are assessed to imports coming into the U.S. This policy differs from all of the other countries with which U.S. casting firms compete. Table 5 shows the import taxes that are assessed in other countries and serve to protect their domestic industries. Additionally, exchange rates are critical in the pricing of goods. Most foreign casting facilities with which U.S. companies compete are located in countries that allow worldwide currency markets to set the exchange rate of their currencies. In this case, economic factors, such as gross domestic product, interest rates, political stability, supply and demand and other free market forces, determine the exchange rate. Governments sometimes intervene intervene v. to obtain the court's permission to enter into a lawsuit which has already started between other parties and to file a complaint stating the basis for a claim in the existing lawsuit. in currency markets to influence the value of their currency. In the late 1990s several countries, including Thailand Thailand (tī`lănd, –lənd), Thai Prathet Thai [land of the free], officially Kingdom of Thailand, constitutional monarchy (2005 est. pop. 65,444,000), 198,455 sq mi (514,000 sq km), Southeast Asia. , Malaysia Malaysia (məlā`zhə), independent federation (2005 est. pop. 23,953,000), 128,430 sq mi (332,633 sq km), Southeast Asia. The official capital and by far the largest city is Kuala Lumpur; Putrajaya is the adminstrative capital. and Indonesia Indonesia (ĭn'dənē`zhə), officially Republic of Indonesia, republic (2005 est. pop. 241,974,000), c.735,000 sq mi (1,903,650 sq km), SE Asia, in the Malay Archipelago. , intervened in currency markets with disastrous results. This was a clear indication that government intervention A procedure used in a lawsuit by which the court allows a third person who was not originally a party to the suit to become a party, by joining with either the plaintiff or the defendant. is tricky Adrian Thaws (born January 27, 1968), better known as Tricky, is an English rapper and musician important in the trip hop and British music scene (despite loathing the "trip hop" tag). He is noted for a whispering lyrical style that is half-rapped, half-sung. when the currency is freely traded in international markets. China, which has become the world's largest producer of castings, contrarily does not have a freely traded currency. The Chinese government Ever since Republic of China founded in January 1st, 1912, China has had several regional and national governments. List
A stock or other security that is trading below its true value. Notes: The difficulty is knowing what the "true" value actually is. Analysts will usually recommend an undervalued stock with a strong buy rating. . This allows Chinese Chinese, subfamily of the Sino-Tibetan family of languages (see Sino-Tibetan languages), which is also sometimes grouped with the Tai, or Thai, languages in a Sinitic subfamily of the Sino-Tibetan language stock. metalcasting firms to sell their products in the U.S. at low prices. One major drawback DRAWBACK, com. law. An allowance made by the government to merchants on the reexportation of certain imported goods liable to duties, which, in some cases, consists of the whole; in others, of a part of the duties which had been paid upon the importation. to the undervaluing of currencies is that it makes raw materials, which must be imported, more expensive and reduces the profit margin to a level that would be unacceptably low for business in the U.S. Many argue that this undervaluation un·der·val·ue tr.v. un·der·val·ued, un·der·val·u·ing, un·der·val·ues 1. To assign too low a value to; underestimate. 2. To have too little regard or esteem for. of Chinese currency Currency has been used in China since the New Stone Age, in which Chinese also invented paper money in the 9th century. Today Renminbi (Chinese: 人民幣), literally People's currency, abbreviated to RMB, is the currency in mainland of the People's is a de facto [Latin, In fact.] In fact, in deed, actually. This phrase is used to characterize an officer, a government, a past action, or a state of affairs that must be accepted for all practical purposes, but is illegal or illegitimate. government subsidy subsidy, financial assistance granted by a government or philanthropic foundation to a person or association for the purpose of promoting an enterprise considered beneficial to the public welfare. , which is given to Chinese businesses engaged in exporting products to the U.S. Calling to Government As stated in the October 2005 MODERN CASTING article, remedies to the situation include increasing productivity and altering business practices to increase competitiveness. Also, the domestic metalcasting industry seeks forms of government action to offset the effects of foreign competition. Tariffs This is a list of tariffs and trade legislation:
adj. Tending to hinder rather than serve one's purpose: "Violation of the court order would be counterproductive" Philip H. Lee. in that they artificially inflate inflate - deflate prices, create shortages and in the long run are thought to lower overall competitiveness. However, because all of the countries exporting castings to the U.S. also have tax barriers to U.S. exports, general trade strategies have suggested that imposing a Value-Added Tax value-added tax (VAT), levy imposed on business at all levels of the manufacture and production of a good or service and based on the increase in price, or value, provided by each level. (VAT VAT See: Value-added tax VAT See value-added tax (VAT). ) similar to that employed by China would be reasonable. The VAT would have two levels: * a 0% tax will be charged for imported goods used for export; * for imported goods to be consumed con·sume v. con·sumed, con·sum·ing, con·sumes v.tr. 1. To take in as food; eat or drink up. See Synonyms at eat. 2. a. in the U.S., a VAT or Consumption Tax will be imposed, which exactly matches that rate imposed by the country manufacturing the goods. For instance, because U.S. exports to China are taxed at 17%, Chinese imports to the U.S. would be taxed at 17%. If China lowered its import tax to 12%, the U.S. automatically would lower the import tax on Chinese goods to 12%. The Chinese firms could not reasonably object because they would effectively control their tax barrier to the U.S. market. This scheme would not cause shortages or artificially inflate prices for exporters because the raw materials or assemblies pass through the system untaxed Adj. 1. untaxed - (of goods or funds) not taxed; "tax-exempt bonds"; "an untaxed expense account" tax-exempt, tax-free nontaxable, exempt - (of goods or funds) not subject to taxation; "the funds of nonprofit organizations are nontaxable"; "income exempt . Uncompetitive companies in the U.S., however, would not be protected, because as seen from Tables 4 and 5, the highest tax rates still would not compensate completely for the advantage that foreign producers have in lower labor costs. The implementation of such taxes could encourage the lowering of import tax barriers for all countries involved as high import tax barriers would be self-destructive self-de·struc·tive adj. 1. Tending to do harm to oneself. 2. Marked by an impulse or tendency to harm or kill oneself. self . Further, the tax collected on imports in this manner likely would increase tax revenue for the U.S. government. Imports from China alone have grown in the last 20 years (Fig. 1), but if the 17% import tax had been applied in 2002, the tax collected on Chinese imports alone would have reduced the U.S. budget deficit by 13.5% (Table 6). In 2002, the U.S. budget deficit could have been 6.9% lower. Had the tax been applied since 1985 when the trade imbalance imbalance /im·bal·ance/ (im-bal´ans) 1. lack of balance, such as between two opposing muscles or between electrolytes in the body. 2. dysequilibrium (2). with China began to widen wid·en tr. & intr.v. wid·ened, wid·en·ing, wid·ens To make or become wide or wider. wid  en·er n. , 3% of the
entire U.S. national debt could have been eliminated.One drawback to the tax idea is that it would lower U.S. consumer purchasing power Purchasing Power 1. The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you'd be able to purchase. 2. because of the increased price of imported goods, but it could possibly slow unemployment and help improve the economy. If a tax scheme went into effect, the U.S. could face retaliation RETALIATION. The act by which a nation or individual treats another in the same manner that the latter has treated them. For example, if a nation should lay a very heavy tariff on American goods, the United States would be justified in return in laying heavy duties on the manufactures and by foreign countries in the form of cancelled can·cel v. can·celed also can·celled, can·cel·ing also can·cel·ling, can·cels also can·cels v.tr. 1. To cross out with lines or other markings. See Synonyms at erase. 2. orders or boycotts It may never be fully completed or, depending on its its nature, it may be that it can never be completed. However, new and revised entries in the list are always welcome. This is a list of boycotts. of U.S. goods. However, the amount of imports from China alone has increased so significantly in the last 20 years that even these measures probably would slow it little. Further, the revenue collected from the VAT could be used to offset some of the effects of any retaliation. MC For More Information "Domestic Competitiveness: Investigating U.S. Casting Costs," J.B J.B . Job’s trials in modern setting and idiom. [Am. Lit.: J.B.] See : Suffering J.B . testing of contemporary Job. [Am. Lit.: J.B.] See : Test . Ferguson Ferguson, city (1990 pop. 22,286), St. Louis co., E Mo., a suburb of St. Louis; inc. 1894. It is primarily residential. , B. Schultz Schultz may refer to People:
"Domestic Business: What Are Our Operational Costs," A MODERN CASTING Staff Report, MODERN CASTING, November 2005, p. 37-40. J.B. Ferguson and Ben Schultz are both completing their Ph.D. in Materials Engineering at the Univ. of Wisconsin Wisconsin, state, United States Wisconsin (wĭskŏn`sən, –sĭn), upper midwestern state of the United States. It is bounded by Lake Superior and the Upper Peninsula of Michigan, from which it is divided by the Menominee , Milwaukee Milwaukee (mĭlwŏk`ē), city (1990 pop. 628,088), seat of Milwaukee co., SE Wis., at the point where the Milwaukee, Menominee, and Kinnickinnic rivers enter Lake Michigan; inc. 1846. . Pradeep Kavi Pradeep (1915-1998) was a popular Indian poet and lyricist. Early life Born Ramchandra Barayanji Dwivedi in 1915 into a middle-class Brahmin family in the small central Indian town of Badnagar, in Madhya Pradesh state. Rohatgi is a professor at the Univ. of Wisconsin, Milwaukee. Shortly after the release of Publication 3771, AFS A distributed file system for large, widely dispersed Unix and Windows networks from Transarc Corporation, now part of IBM. It is noted for its ease of administration and expandability and stems from Carnegie-Mellon's Andrew File System. AFS - Andrew File System contacted the university and the authors requesting an in-depth in-depth adj. Detailed; thorough: an in-depth study. in-depth Adjective detailed or thorough: an in-depth analysis analysis of the publication from a fresh perspective.
Table 1. Ranking of Factors in Terms of Importance for U.S.
Purchasers to Buy Metal Castings *
U.S. Castings
1 2 3
Price (delivered) 113 175 94
Quality of Castings 241 117 31
Delivery Time 26 66 200
Technical Services 11 11 24
Historic Supplier Relationship 15 16 19
Transportation Cost 4 6 13
Standards Certification 25 13 22
Financing Terms 3 1 5
Warranty Terms 4 2 7
4 5
Price (delivered) 17 3 402
Quality of Castings 9 3 401
Delivery Time 74 15 381
Technical Services 89 86 221
Historic Supplier Relationship 53 92 195
Transportation Cost 75 84 182
Standards Certification 32 55 147
Financing Terms 24 35 68
Warranty Terms 10 27 50
Foreign Casting
1 2 3
Price (delivered) 102 151 67
Delivery Time 13 51 153
Quality of Castings 97 93 30
Transportation Cost 5 13 25
Technical Services 9 9 16
Standards Certification 23 12 17
Historic Supplier Relationship 12 10 14
Financing Terms 1 1 6
Warranty Terms 2 5 5
4 5
Price (delivered) 9 3 332
Delivery Time 75 24 316
Quality of Castings 10 2 232
Transportation Cost 86 61 190
Technical Services 47 75 156
Standards Certification 33 45 130
Historic Supplier Relationship 28 55 119
Financing Terms 24 37 69
Warranty Terms 10 21 43
Adapted from Publication 3771:Figure 4-2. * Rankings based on
scale of 1 to 5, with 1 as "most important"
Table 2. Reasons for U.S. Purchasers of
Castings to Source to Foreign Markets
Reason Responses
Lower Price 142
Closure of Domestic Metalcasters 29
Better Quality 27
Smaller Minimum Orders 17
Shorter Leadtimes 15
More Flexible Delivery Times 11
Shorter Contract Period 5
Flexibility in Product Specification 4
Adapted from Publication 3771:Figure 4-6
Table 3. Comparison of U.S. Pricing to Foreign Pricing of
Selected Castings
Product Foreign Competitors
China Japan
Ductile Iron Crank/ Rough -35% -5%
Camshafts Machined -30% 0 to +20%
Ductile Iron Bearing Rough -32 to -36% -
Housing Machined -30 to -35% -10%
Gray Iron Motor Rough -26 to -30% -
Vehicle Gear Box Machined -28 to -38% +10%
Gray Iron Non-Motor Rough -30 to -36% -
Vehicle Gear Box Machined -38 to -39% -
Gray Iron Compressor Rough +10 to -35% -
Housing Machined -35 to -38% -
Gray Iron Pump Rough -26 to -33% 20%
Castings Machined -39 to -42% -10%
Steel Valve Rough -33 to -57% -
Castings Machined -39 to -66% -
Aluminum Engine Rough -18 to -26% +5%
Components Machined -18 to -33% -5 to +18%
Aluminum Suspension/ Rough -5 to -28% -15 to +20%
Steering Parts Machined -20 to -26% 0 to -10%
Copper Valve Rough -10 to -36% -
Castings Machined -33 to -37% 0
Product Foreign Competitors
India Brazil Mexico
Ductile Iron Crank/ -15% -15 to -30% -10%
Camshafts -30% - -11%
Ductile Iron Bearing -20 to -31% -34 to -35% -50%
Housing -40% 0 to -28% -20 to -27%
Gray Iron Motor -18% -14 to +8% -15%
Vehicle Gear Box -30 to -40% -8 to -18% -8 to -23%
Gray Iron Non-Motor -20% -10 to -17% -15 to -30%
Vehicle Gear Box 0 to -50% -10 to -33% -20%
Gray Iron Compressor -25% -25 to -26% -13 to -20%
Housing -31 to -32% -20 to -29% -19 to -25%
Gray Iron Pump -21 to -50% -25% -17 to +5%
Castings -34 to -37% -26 to -50% 0 to -23%
Steel Valve -35 to -54% -39% -15% to -34%
Castings -42 to -57% -65% -40%
Aluminum Engine -30 to +30% -15 to -18% -2 to -30%
Components -30 to +30% -11 to -17% 0 to -27%
Aluminum Suspension/ -22% -15% -16 to +40%
Steering Parts -20% -13 to -18% 0 to -12%
Copper Valve -16 to -28% -30% -17 to -35%
Castings -20 to +40% -75, -28 to +10% -10 to +20%
Product Foreign Competitors
Korea Taiwan
Ductile Iron Crank/ -20% -
Camshafts -10% -20%
Ductile Iron Bearing -20% -
Housing -20% -19%
Gray Iron Motor - -
Vehicle Gear Box -7 to -20% 0
Gray Iron Non-Motor -4 to -23% -
Vehicle Gear Box -15 to -25% -23 to -50%
Gray Iron Compressor -25% -32
Housing -23 to -40% 0 to -25%
Gray Iron Pump -20% -34%
Castings 0 to -28% -28 to +12%
Steel Valve -25% -23%
Castings -18 to -60% -29%
Aluminum Engine -5% -20 to +25%
Components -15 to -23% -4 to +25%
Aluminum Suspension/ -4% -
Steering Parts -20 to -25% -18%
Copper Valve - -10%
Castings - -24 to -30%
Product Foreign Competitors
Canada ITC Report Table(s)
Ductile Iron Crank/ - 5-35, 5-36
Camshafts 0 5-36
Ductile Iron Bearing - 5-59, 5-60
Housing -43% 5-59, 5-60
Gray Iron Motor -10 to -18% 5-47, 5-48
Vehicle Gear Box -3% 5-48
Gray Iron Non-Motor 8% 5-95, 5-96
Vehicle Gear Box -3% 5-95, 5-96
Gray Iron Compressor - 5-71, 5-72
Housing - 5-71, 5-72
Gray Iron Pump -25 to +10% 5-83, 5-84
Castings 0 5-83, 5-84
Steel Valve - 6-27, 6-28
Castings 0 6-27, 6-28
Aluminum Engine - 7-27, 7-28
Components 0 to -5% 7-27, 7-28
Aluminum Suspension/ -10% 7-39, 7-40
Steering Parts 0 to -10% 7-39, 7-40
Copper Valve -13 to +20% 8-25, 8-26
Castings 0 to -5% 8-25, 8-26
Arranged by 2003 production: Publication 3771:Figure 9-1
Table 4. A Numbers Comparison of the U.S. Metalcasting Industry
to Foreign Competitors
2003 Statistics (Chapter 9) Foreign Competitors
U.S. China
1 Production (million metric tons) 12 18
2 Employment (workers) 89,230 120,000
3 Firms 2,000 > 20,000
4 Percentage of Small and Medium Firms 50 80
5 Change in Production/
Revenue between 1999 and 2003 -13% 50%
6 Raw Material Source Local Local/Recycled
7 Energy Source Local Coal/Nat. Gas
8 Transportation System Adequate Improving
9 Interest Rate 4.12% 5.3-5.8%
10 Productivity (hours/metric ton) 19 -
11 Productivity/U.S. Productivity 100% 20%
12 Wages
a Hourly $17.57 $1.75 *
b Other $6.00 $1.20 *
13 Hourly Wages Adjusted for
Productivity $23.57 $14.73 *
14 Energy Cost/kWh $0.054 * $0.05-$0.08
Foreign Competitors
India Brazil
1 Production (million metric tons) 4 2.2
2 Employment (workers) 500,000 47,198
3 Firms 5,000 1,231
4 Percentage of Small and Medium Firms 90 95
5 Change in Production/
Revenue between 1999 and 2003 14% 26%
6 Raw Material Source U.S. Scrap Local
7 Energy Source Chinese Coke Hydro/Nat. Gas
8 Transportation System Lacking Overburdened
9 Interest Rate 11.5% 67.08%
10 Productivity (hours/metric ton) - 40.8
11 Productivity/U.S. Productivity 9% 47%
12 Wages
a Hourly $0.25 $4.6
b Other $0.13 $1.96
13 Hourly Wages Adjusted for
Productivity $4.17 * $14.09
14 Energy Cost/kWh - $0.04
Foreign Competitors
Mexico Korea
1 Production (million metric tons) 1.8 1.8
2 Employment (workers) - -
3 Firms 1,787 769
4 Percentage of Small and Medium Firms 90 -
5 Change in Production/
Revenue between 1999 and 2003 24% 10%
6 Raw Material Source U.S. Scrap Import/Scrap
7 Energy Source Mixed Imported
8 Transportation System Ineffective Adequate
9 Interest Rate 6.91% 6.2%
10 Productivity (hours/metric ton) - -
11 Productivity/U.S. Productivity - -
12 Wages
a Hourly $1.70 $7.35 *
b Other $0.79 * -
13 Hourly Wages Adjusted for - -
Productivity
14 Energy Cost/kWh - -
Foreign Competitors
Taiwan Canada
1 Production (million metric tons) 1.4 0.9
2 Employment (workers) - 14,900
3 Firms 894 260
4 Percentage of Small and Medium Firms 84 80
5 Change in Production/
Revenue between 1999 and 2003 -4% 0
6 Raw Material Source Imported Recycled
7 Energy Source Imported Natural Gas
8 Transportation System Adequate Adequate
9 Interest Rate - 4.69%
10 Productivity (hours/metric ton) - 19
11 Productivity/U.S. Productivity - 100%
12 Wages
a Hourly - $14.63 *
b Other - -
13 Hourly Wages Adjusted for
Productivity - $14.63 *
14 Energy Cost/kWh - -
Arranged by 2003 production: Publication 3771:Figure 9-1. * Estimates
Table 5. Import Taxes Implemented By Country
Country Rate Assessed on
U.S. 0
India 20% CIF + Duty
China 17%
Brazil 0-20% *
France 19.6% CIF + Duty
U.K. 17.5% CIF + Duty
Germany 16% CIF + Duty
Indonesia 10% CIF + Duty
Mexico 10%
South Korea 10% CIF + Duty
Thailand 7% CIF + Duty
Canada 7% FOB
Japan 5% CIF + Duty
Taiwan 5% CIF + Port
Hong Kong 0
Country Notes
U.S. Visit http://www.usitc.gov/tata/hts/bychapter/index.htm.
India There are several taxes that generally total 20-25%.
They are applied on CIF + duty.
China There is a value-added tax of 17% for most items-
necessities, such as agricultural products and utilities.
Brazil There is an Industrial Product Tax (IPI) (federal sales
tax) that ranges between 5-15% and a Merchandise
Circulation Tax (ICMS) (state sales tax) that is
generally around 18%. There is also a 1% miscellaneous
tax. In addition, there is a social security tax that
varies by product but is approximately 10%
France There is a value-added tax of 19.6% for most products.
Some products, such as basic necessities and foodstuffs,
qualify for a reduced rate of 2.1-5.5%. The tax is
applied on CIF + duty.
U.K. There is a value-added tax of 17.5% for most products.
Some products, such as basic necessities and foodstuffs,
qualify for a reduced rate of 0-5%. The tax is applied
on CIF + duty.
Germany There is a value-added tax of 16% for most products.
Some products, such as basic necessities and foodstuffs,
qualify for a reduced rate of 7%. The tax is applied
on CIF + duty.
Indonesia There is a value-added tax of 10% applied on the CIF
+ duty. There is an additional sales tax on some luxury
items.
Mexico There is a 10% value-added tax assessed to products going
to the northern Mexico border region, and a 15% value-
added tax assessed on products going elsewhere in the
country. In addition, there is a 0.8% customs processing
fee for products that do not qualify for NAFTA
preferential tariff treatment.
South Korea There is a value-added tax of 10% applied on the CIF
+ duty value.
Thailand There is a 7% value-added tax that is applied on CIF
+ duty.
Canada There is a 7% goods and services tax assessed on the
FOB value. Commercial shipments to the provinces of New
Brunswick, Newfoundland and Nova Scotia are also subject
to an additional 8% provincial tax.
Japan There is a 5% consumption tax applied on CIF + duty.
Taiwan There is a value-added tax of 5% applied on the CIF
value. There is also a port charge of 0.5% applied on
the CIF value for shipments by sea.
Hong Kong There is no duty for products shipped to Hong Kong.
Taxes are assessed only on automobiles, gasoline,
tobacco and alcohol.
* ITC Report footnote 8 page 9-3
FOB=Free on Board
CIF=Cost + Insurance + Freight
Table 6. The U.S. Trade Balance with China Compared to the U.S. Budget
Deficit for the Last 20 Years
U.S. Trade Balance with China
(http://www.census.gov/foreign-trade/balance/c5700.html)
Year Export Import
1985 $3,855.7 $3,861.7
1986 $3,106.3 $4,771.0
1987 $3,497.3 $6,293.6
1988 $5,021.6 $8,510.9
1989 $5,755.4 $11,989.7
1990 $4,806.4 $15,237.4
1991 $6,278.2 $18,969.2
1992 $7,418.5 $25,727.5
1993 $8,762.9 $31,539.9
1994 $9,281.7 $38,786.8
1995 $11,753.7 $45,543.2
1996 $11,992.6 $51,512.8
1997 $12,862.2 $62,557.7
1998 $14,241.2 $71,168.6
1999 $13,111.1 $81,788.2
2000 $16,185.2 $100,018.2
2001 $19,182.3 $102,278.4
2002 $22,127.7 $125,192.6
2003 $28,367.9 $152,436.1
2004 $34,744.1 $196,682
Total -- --
U.S. Trade Balance with China
Year Import/Export Ratio U.S. Matching VAT *
1985 1 $656.5
1986 1.5 $811.1
1987 1.8 $1,069.9
1988 1.7 $1,446.9
1989 2.1 $2,038.2
1990 3.2 $2,590.4
1991 3 $3,224.8
1992 3.5 $4,373.7
1993 3.6 $5,361.8
1994 4.2 $6,593.8
1995 3.9 $7,742.3
1996 4.3 $8,757.2
1997 4.9 $10,634.8
1998 5 $12,098.7
1999 6.2 $13,904
2000 6.2 $17,003.1
2001 5.3 $17,387.3
2002 5.7 $21,282.7
2003 5.4 $25,914.1
2004 5.7 $33,435.9
Total -- $196,327.1
U.S. Budget Deficit
(http://www.econstats.com/rt-treas.htm)
Year Budget Deficit VAT/Deficit
1985 $211,963 0.3%
1986 $221,141 0.4%
1987 $149,662 0.7%
1988 $155,151 0.9%
1989 $153,320 1.3%
1990 $220,470 1.2%
1991 $269,492 1.2%
1992 $290,339 1.5%
1993 $255,305 2.1%
1994 $203,101 3.2%
1995 $163,916 4.7%
1996 $107,625 8.1%
1997 $2,1961 48.4%
1998 ($70,217) -17.2%
1999 ($124,365) -11.2%
2000 ($236,897) -7.2%
2001 ($127,043) -13.7%
2002 $157,791 13.5%
2003 $374,271) 6.9%
2004 - -
Total $7,836,496 ** 3%
* 17% VAT on Chinese goods that stay in U.S. 0% on Chinese goods
for export The import VAT matches the Chinese VAT on U.S. Goods.
** http://www.publicdebt.treas.gov/opd/opdpenny.htm
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