August, 2003: Players Who’s Up To What

By Greg Rushford

Published in the Rushford Report

There are certain crosses to bear associated with covering trade politics: the steel lobby, textile lobby, sugar lobby, and other protectionist mischief makers who always complicate life for everyone else. All that — and Joe Spetrini.

            Spetrini — the hard-working official who is deputy assistant secretary of commerce for import administration — is famous in the international trade bar for his bureaucratic power and the fear it engenders as he goes about the business of punishing foreigners. I have been reporting on Spetrini for years, most recently on how he crunched the numbers to come up with antidumping margins ranging from 37 to 64 percent on Vietnamese catfish. And now, thanks to Washington Post reporter Paul Blustein, Spetrini’s questionable catfish methodology has been brought to the attention of a wider readership.

            As Blustein reported on July 13, the non-market economy methodology that Spetrini’s team used to assign Vietnam such high margins was a game of “let’s pretend.” While this was no news to those who watch trade closely, it is rare — and welcome — when a major newspaper brings the details of trade cases to the attention of the wider public.

            Spetrini “has become the object of great controversy in the trade community,” Blustein noted in an accompanying article. “Lawyers who defend foreign companies in dumping cases complain that Spetrini stands out for his tendency to use his discretion in ways that hurt their clients, the result often being higher ‘dumping margins’ set by the department on imported goods, with concomitantly higher duties,” the Post reporter accurately observed.

            The first of two quotes in Blustein’s article that I’m sure resonated around town the most came from Washington trade lawyer Robert Lighthizer, who represents the domestic steel lobby and defended Spetrini. “They are scrupulously fair,” Lighthizer said of Spetrini and his colleagues. “The easiest thing to do when you lose a case is blame the umpire.” Considering that Lighthizer and his steel clients are well-known in the trade bar for their personal attacks against WTO jurists and ITC commissioners who dare to rule against his steel clients, that was a wonderful quote.

            The second notable quote came from Mesbah Motamed, who used to work under Spetrini in the import administration’s Group III. Blustein tracked Motamed down in Peru , where he is is finding a more intellectually satisfying life working in agriculture development. “There was definitely a policy in Group III to find the argument that justifies the highest margin possible without egregiously violating the spirit of the regulations,” Motamed told Blustein. “In almost every case I was involved in, there was definitely the pressure, beginning with the deputy-assistant-secretary level and transmitted through lower management, to aggressively interpret the data for the purpose of obtaining the highest margin possible.”

            Spetrini defended his discretionary powers to Blustein. “Sometimes I ask what are the implications of making this decision versus another decision, because I’m trying to weigh the impact” [upon the case], the Commerce official asserted. “It isn’t a matter of saying, ‘Tell me what gives me the biggest margin.’”

How Commerce bureaucrats

get free passes from Congress

            Former Commerce official Motamed’s charge that his former bosses cook the books to help US antidumping petitioners win cases against foreigners is a serious one. You’d think that such a charge — combined with other instances of the import administration’s abuses of discretion that have been documented by federal judges over the years — would spark a congressional inquiry. Far from it.

            The bureaucrats get away with their acts because they have powerful allies on Capitol Hill. Few lawmakers know — or care to know — the details of the Commerce Department’s dirty work in antidumping cases. And even the few who are disturbed by reports of antidumping abuses at Commerce, still can’t really do much about them.

            Take Sen. John McCain, the chairman of the Senate Commerce, Science & Transportation Committee who was rightly angered by the antidumping case targeting Vietnamese catfish. Both on the Senate floor and to reporters, the former POW spoke out loud and clear. The Arizona Republican also is aware of other well-documented reports of cases where Commerce officials abused their discretion to come up with outrageous antidumping tariffs. But the truth is, the chairman of the committee that authorizes the import administration’s funds would find himself without much support if he tried to hold oversight hearings. Yes, it could be done. But if not done deftly, McCain might even make a bad situation worse.

            Would Chairman McCain be able to refer the matter to the Republican from Oregon who chairs the subcommittee with jurisdiction over foreign commerce, Sen. Gordon Smith? That’s hardly likely. Smith’s interest in international trade mainly turns on defending Commerce in its (dubious) antidumping calculations against lumber from Canada . If Smith started poking around, he would soon learn that the Canadian lumber case marks the days in the mid-1980s when Commerce first got into the unsavory business of distorting antidumping margins for political purposes. This is also information that the top Democrat on the panel, Bryon Dorgan of North Dakota , would not be interested to hear. 

            And after Smith, the next senior Republican on the subcommittee is Conrad Burns, a dedicated protectionist from Montana . Next after Dorgan on the Democratic side comes California ’s Barbara Boxer — who isn’t a player in trade.

            McCain presumably could grill Commerce Secretary Donald Evans in full committee hearings on the antidumping abuses that go on under his nose. Maybe he will, some day. But the top Democrat on the full committee is Fritz Hollings. The venerable South Carolina Democrat is one of the biggest protectionists in Congress, and would raise a ruckus if Chairman McCain started turning over too many protectionist rocks. Pretty soon, McCain would find himself fighting the textile and steel lobbies.

            Basically, the Commerce Department is institutionally inoculated against serious congressional oversight.

Rep. Pete Visclosky:

The WTO is “biased”

against America

            Rep. Pete Visclosky (D-IN), the vice-chairman of the congressional steel caucus, is outraged that a WTO dispute panel has determined that the Bush steel plan — imposed pursuant to section 201 of US trade law after the International Trade Commission recommended so-called “safeguard” tariffs — is WTO-inconsistent.

            “There is absolutely no justification for this,” Visclosky fumed in testimony before the ITC on July 22. “The tariffs are essential to our domestic steel industry, and I simply cannot fathom the circumstances under which the WTO found the Commission’s findings to be incorrect.”

            Continuing, the congressman added: “We cannot allow our trade laws that protect hard-working Americans to be invalidated by biased and unselected bureaucrats on the other side of the globe.”

            The problem is, the congressman hasn’t taken the time to read the decision that he criticizes. When I called the congressman’s office to ask precisely where was the evidence of bias against America in the 300-some pages of findings where the WTO jurists explained their ruling, nobody knew. “I can’t identify a particular passage,” a spokesman acknowledged. “The congressman has objected to the panel’s finding because it didn’t support US trade laws that protect American jobs.”

            I’ve read the 300 pages in question. There isn’t any bias against America in there. The US lost this case because the president and the ITC didn’t get the law and the facts right.

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