Garlic bill stalls in House committee

Gilroy
– A federal bill that could aid domestic garlic producers
struggling against cheap Chinese imports continues to languish in
the House Ways and Means Committee even though that committee’s
powerful chairman has a major garlic grower in his Bakersfield
district.
Gilroy – A federal bill that could aid domestic garlic producers struggling against cheap Chinese imports continues to languish in the House Ways and Means Committee even though that committee’s powerful chairman has a major garlic grower in his Bakersfield district.

Last year, the U.S. Senate unanimously passed a bill that would have forced Chinese importers to post a cash bond until they could prove they were not dumping garlic or other agriculture commodities. A similar bill died in the committee chaired by Bill Thomas, R-Bakersfield.

“It’s frustrating because we thought we were going to get something last year,” Joe Lane, co-owner of Bakersfield’s Garlic Co., said Wednesday. “It’s hard not to support (Thomas) because he’s helped us in the past, and we think he’ll help us in the future, but we’re disappointed. We thought he’d go along with this.”

Several calls to Thomas’s offices in Washington D.C. and Bakersfield this week have not been returned. Lane said that the congressman told him recently that the bill, HR-1039, would reach the floor quickly.

“He indicated in February that it would be within a couple of weeks,” Lane said. “It’s certainly past that.”

Known as the New Shipper Review Amendment Act, the bill would suspend for three years a provision in the Tariff Act that allows new shippers not implicated in an anti-dumping order to post surety bonds rather than cash to meet tariff requirements.

Michael Coursey, a Washington D.C. lawyer representing garlic growers has said that those new shippers are typically the same companies found guilty of dumping operating under different names, working in concert with the importers who must post the bonds.

By the time the U.S. Department of Commerce attempts to collect on a bond, both the shipper and importer are ostensibly out of business, but likely operating as new entities. In 2004, the federal government received $175,000 in garlic import duties. At the end of the year it had nearly $25 million outstanding.

Chinese garlic was first imported in vast quantities in the early 1990s. U.S trade officials determined that the Chinese were “dumping” the garlic, or selling it at prices below production costs (Because China does not have a market economy, U.S. officials figure its production costs based on those in India.).

In 1994, U.S. Customs officials issued an anti-dumping order and socked Chinese importers with a 377-percent tariff. Shippers were allowed to pay lower tariffs if they proved they weren’t selling below costs, but they had to put up cash deposits equal to the difference between the declared value of the imports and the highest tariff rate. If, as long as two years later, commerce officials determined that the shipper was not dumping the garlic, the government would issue a refund.

The rules worked. After peaking at 55 million pounds in 1993, Chinese garlic imports dipped as low as 205,000 pounds in 1996. But imports started climbing again as shippers took advantage of a loophole in the anti-dumping ordinance. Existing shippers must pay cash deposits on their products, but new shippers need only post bonds. In 2002, imports leapt to 42 million pounds and more than doubled that last year.

Last year’s Senate bill would have permanently closed the loophole. The House version, reintroduced this year by representatives Chip Pickering, R-Miss., and Marion Berry, D-Ark., would close the loophole for three years and calls for a study to assess the law’s effectiveness.

A Pickering spokesman, Brian Perry, said Wednesday that he expects the bill to move forward sometime during the 109th Congress, which runs through next year.

For the first time last year, California growers produced less garlic, about 81 million pounds, than the 86 million pounds imported from China. Since 2001, when Chinese imports started denting the U.S. market, Christopher Ranch has taken 40 percent of its garlic fields out of production. The farm is now growing about 60 million pounds annually, down from a peak of 90 million.

Like all farmers, fresh garlic growers are finding it increasingly difficult to compete with imports that are almost always substantially cheaper than domestic products. A box of garlic that costs Christopher Ranch $18 to $20 to grow and pack is sold off a Chinese steamer for about $13.

Ninety percent of the nation’s fresh garlic is grown in California. Gilroy still boasts the country’s biggest grower in Christopher Ranch, but Bill Christopher said recently that recent cuts to his farm’s garlic crop will continue if laws governing garlic imports aren’t changed soon.

And Christopher Ranch has not just slashed production. It now buys Chinese garlic, though Christopher said the imports account for only a tenth of what it produces for the retail market.

“We’re buying a little because we have customers who are asking for it because it’s so inexpensive,” Christopher said. According to the California Department of Food and Agriculture, California growers are now farming 26,000 acres of garlic, down from 40,000 in 1999.

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