Mar 5, 2020

Report: US Cherry growers won’t appeal ITC ruling

U.S. cherry growers will not appeal a Jan. 14 International Trade Commission ruling that unfairly priced imports of dried tart cherries don’t cause harm to the domestic industry.

“We made the calculation that it’s not worth the appeal. And so that’s that,” said Nels Veliquette, a representative of the cherry growers behind the effort to place duties on dried tart cherries from Turkey. “No appeal at this point. We’ve got to move on.”

Veliquette is vice president and CFO for Cherries R Us/Cherry Ke and is on the board of directors at Shoreline Fruit LLC, one of the U.S. fruit processors behind the effort to tax unfairly priced imports from Turkey of dried tart cherries.

According to a story by the Traverse City Record-Eagle, the pit of the ITC decision revolved around numbers – specifically how many low-priced tart cherries are flowing into the U.S. from Turkey.

The U.S. trade group thought they had the numbers all wrapped up. They based their case on official bills of lading, which detail quantities of product that are shipped. Early indications from the Department of Commerce suggested the trade group’s case was a slam-dunk.

But the ITC based its final decision on questionnaires filled out by the import companies, not on the official numbers.

“They used the cheaters’ answers to make their determination instead of the publicly available U.S. Customs data,” said Veliquette.

Also, according to the Record-Eagle story:

The final ITC determination stated the importers’ questionnaires provided more reliable data than the government numbers.

“Based on importers’ certified and confirmed questionnaires and the general consistency between AUVs (average unit values) calculated based on questionnaire import data and the questionnaire pricing data, coupled with the high coverage of the questionnaire data, we find the import data as reported in the questionnaire responses to be reliable, and as elaborated below, more reliable than the customs data,” the ruling states.

“Staff took additional steps to ensure that the data were reliable and followed up with individual firms, both by telephone and written correspondence, to confirm directly with company representatives that the certified questionnaire data submitted to the Commission were accurate, and, when possible, to obtain documentation corroborating the specific responses in question,” it said.

The ITC ruling mentioned imported dried sweet cherries, which were not part of the petition seeking anti-dumping and countervailing duties on dried cherries imported from Turkey.

“There were questions about whether sweet cherries were being counted in those tart cherry numbers,” said Veliquette. “We — the legal team — did a really good job showing how those were broken out.”

An organization called the Dried Tart Cherry Trade Committee in 2019 petitioned the government with a claim that overseas competitors were unfairly pricing dried tart cherries imported into the U.S. The group includes Cherry Central Cooperative in Traverse City, Graceland Fruit, Inc. in Frankfort, Payson Fruit Growers Coop in Payson, Utah), Shoreline Fruit, LLC in Traverse City, and Smeltzer Orchard Co. in Frankfort.

The group sought anti-dumping and countervailing duties.

Michigan’s lawmakers helped herd the petition effort through the federal bureaucracy.

“I can’t say enough positive about both Sen. (Gary) Peters and Congressman (Jack) Bergman,” Veliquette said. “They get it. They’ve been working hard for us from the beginning. Sen. Peters testified for us at the International Trade Commission when we were there in December. Jack Bergman has been working with USDA and USTR to try to figure out what is the next step for us.

“It’s a rare time of bipartisanship, because they’re both working hard to defend the cherry industry.”

The January ITC ruling is the end of the road for the trade group’s effort to slow the flow of dried tart cherries into the U.S., and that’s a hard fact to swallow for domestic growers.

“I have heartburn,” Veliquette said after he had a few days to digest the implications of the ruling.

“The bottom line was, they recognized that there was dumping, they recognized that there were in-country (in Turkey) subsidies,” he said, “but that there wasn’t material harm” to the U.S. cherry industry.

U.S. cherry growers believe there is material harm. But, Veliquette said, they’re resigned to the reality that an appeal likely would lead nowhere. So they’re moving on to another trade battle.

“And now we’re into a different fight,” said Veliquette. “Now we’re fighting about them mislabeling or trans-shipping tart cherry juice concentrate to try to take advantage of duty-free access that Brazil has. That’s the next fight that we’re in. The reality is it’s the same actors. The Turks are trying to take away market share from us.”

Congressman Bergman sent a letter dated Feb. 25 to U.S. Customs and Border Protection asking it to provide fair consideration to the Cherry Marketing Institute’s case about tart cherry juice concentrate being imported from Turkey and Brazil.

“On unfair trade practices from Turkey specifically, many tart cherry growers in our state have closed or face the prospect of closing their businesses as Turkey’s government-subsidized cherry products flood the U.S. market and drive grower prices below the cost of production,” Bergman stated in the letter, which was co-signed by fellow members of Congress Fred Upton, John Moolenaar, Daniel T. Kildee, Bill Huizenga, Paul Mitchell and Tim Walberg.

The Trump Administration in 2018 — prompted at least in part by a request from Bergman – made changes that resulted in a half-cent-per-liter duty on tart cherry juice concentrate imported from Turkey.

“New data presented by the Cherry Marketing Institute … shows Turkey may be taking improper action to evade these duties,” Bergman’s letter stated last week.

Bergman said in the letter that tart cherry juice concentrate imports from Brazil “abruptly increased” after the change. There had been no imports from Brazil in the previous two years, but Brazil suddenly became the largest source of tart cherry juice concentrate imports.

“This suspicious trend suggests serious trade abuses which continue to harm the U.S. cherry industry,” Bergman’s letter stated.

Veliquette said that last year’s initial ruling on dried tart cherry imports — which resulted in the temporary collection of duties — had a definite effect.

“We saw it happen immediately,” he said. “As soon as that ruling came out, for a couple of months there, supplies were tightening up based on the duties that were initially imposed.”

The temporary shortage of under-priced imported dried tart cherries swayed buyers back toward domestic cherries.

“We started to get questions back from companies that had been buying imported products,” said Veliquette. “And as soon as the final ruling came, they’re not calling us back anymore. Because they know they can go right back to importing the Turkish product.”