Advisory opinion letter to Mr. Hull: integrated or independent, were acquiring wire rod at prices…

March 7, 1977 Dear Mr. Hull:

I refer to your letter of February 4, 1977, in which you requested * Not reproduced herein.

additional pertinent information in support of Jack Wasserman’s . request for confidential treatment of his January 3, 1977 request for an advisory opinion.

Specifically, the “retaliatory action” which Mr. Wasserman mentioned referred to the “dual distribution” nature of the wire producing industry discussed in our Request for an. Advisory Opinion. As explained therein, an independent wire producer must purchase its raw material (carbon steel wire rod) from an integrated steel company which produces both wire rod and wire. Thus, the integrated steel companies are suppliers as well as competitors of those companies which purchase the raw material from them. Since there are relatively few suppliers of wire rod, the independent wire producers are greatly dependent on these few sources.

Industry sources indicate that in recent years integrated steel ' producers located in the European Community, in other European countries and Japan significantly increased the price of wire rod for export to purchasers in the United States. The export prices quoted by these steel producers have been fairly uniform if not identical. At various times, wire and wire products manufactured in Europe and Japan were imported into the United States at prices substantially below prices which should have prevailed if any reasonable costs of conversion were added to the export price of the rod. Thus, it appears that foreign wire drawers, whether integrated or independent, were acquiring wire rod at prices substantially below the export price of identical wire rod.

Accordingly, American independent wire producers have been required to purchase wire rod at high, virtually uniform prices in order to produce wire and wire products in the United States, but must compete with imported wire and wire products drawn from much lower prices — but identical — wire rod. This, “squeeze” is potentially ruinous to many independent American wire producers. The Independent Wire Producers Association desires to implement the reporting system on which an advisory opinion was sought. This reporting system would contemplate the dissemination of information among member companies concerning offers received for imported carbon steel wire rod from foreign suppliers. Such an exchange of data would permit documentation of any anti-competitive pricing policies by foreign suppliers, which could then be used in support of one or more actions against such unfair or restrictive trade practices (such as proceedings pursuant to the Antidumping Act of 1921,1 the Counter' 19 U.S.C. §160 et seg.

ADVISORY OPINIONS 1185 vailing Duty Law of 1922? or the unfair import practice provision).3 Pursuant to the mandate in Section 337(b)(2) of this latter provision that the United States International Trade Commission should seek advice from the Department of Justice in Section 337 investigations, the Justice Department has recently taken the position that charges filed with the International Trade Commission must be documented with specific evidence: ;

“* * * the vagueness and non-specificity in the [Welded Stainless Steel Pipe and Tube] complaint does not appear to comply with the Commission’s rules requiring ‘a statement of the facts constituting the alleged unfair methods of competition and unfair acts,’ 19 CFR §210.20(a)(2) and a description of ‘specific instances _ of alleged unlawful importations and sales,’ 19 CFR §210.20(A)(8). The broad charges in the complaint * * * unsupported by specific allegations * * * is [sic] not sufficient to meet the tests for a properly specific §337 complaint found in the Commission’s rules.“4 The Association has requested confidential treatment for the FTC’s consideration of the proposed reporting system in order to prevent any possible retaliatory action by the foreign suppliers of wire rod in the form of exacerbation of the price squeeze or direct or indirect threats to cut off sources of their raw material (wire rod). Further, since Japanese steel producers each deal through one trading house, they would be very concerned to learn that the American independent producers were discovering the difference or identity between the prices they were quoting to the Americans. I hope that this information is helpful to you, and if you have any further questions, do not hesitate to call me at you convenience.

Sincerely,
/s/ Beth C. Ring
Staff Letter Relative to Request