Flat-Screen Tariffs Totter

A federal court decision in a contentious trade battle over imported Japanese computer display screens represents an interim victory for major U.S. computer manufacturers.

In its ruling this week, the U.S. Court of International Trade sided with the computer makers and against U.S. makers of the thin electronic screens, which had won protective duties against Japanese producers of the flat screens.

The screens are expected to be crucial components for future laptop computers, weapons systems and high-definition television sets.

The federal appeals court for trade disputes sent the matter back to the International Trade Commission, an independent U.S. agency, saying the commission’s earlier ruling on the controversial subject was based on a misreading of the law.

The court’s decision fell short of a final victory for the computer makers because more rulings are expected both from the ITC and the Commerce Department. In the meantime, the duties will remain in place.

At issue are import tariffs as high as 62.7% on Japanese display screens that the Commerce Department imposed in September, 1991. A group of fledgling U.S. producers of the electronic screens had sought the duties, arguing that they needed them to combat unfair competition. With one exception, however, these companies have yet to produce commercially viable products.

The ITC had ruled in September, 1991, that U.S. producers of all types of flat panel displays were injured by Japanese companies selling the screens in the United States at prices sharply below what it cost to make them.

Such computer manufacturers as International Business Machines Corp., Apple Computer Inc. and Compaq Computer Corp. argued that the tariffs would drive up the price of U.S. computers and force them to move some of their production overseas.

“We’re pleased with the court’s decision,” said Joseph Tasker Jr., director of federal regulatory affairs for Compaq. “We believed that the ITC made the wrong decision, and we think the court’s decision confirms that.”

“This case is a good example of how protectionist intervention by the government can backfire,” said Steven Hix, chairman of In Focus Systems Inc., a Tualatin, Ore., producer of computer screen projectors.

Hix said U.S. duties on Japanese-made screens forced his company to move 20 manufacturing jobs to Canada, which does not have similar import duties, to keep some of its products competitively priced.