The U.S. Commerce Department announced Friday that it had made a preliminary determination that imports of rubber bands from China and Thailand amounted to dumping.
The determination came in a petition filed earlier this year by Alliance Rubber Co. of Hot Springs, the largest rubber-band manufacturer in the United States. It is the second unfair-competition case this year in which Alliance has prevailed against its Far East and Southeast Asian competitors.
The success already is translating into more business for the company, which employs about 175 people and produces between 18 million and 20 million pounds of rubber bands annually.
"You don't think of rubber bands really as something affected by the world economy but it absolutely is," Jason Risner, business strategy director for Alliance, said Friday. "We sell bands for produce, we sell bands for banding lobsters. We sell to newspapers, we sell to stationery, we sell retail.
"What we're seeing is that a lot of these companies that have exclusively imported rubber bands -- they've never done business with us -- are coming around. We've won some of that business already and we're bidding on other business as well."
The anti-dumping regulations allow U.S. businesses to seek relief from what the Commerce Department calls the "market distorting effects caused by injurious dumping of imports into the United States." Dumping happens when a foreign company sells its exported products in the United States "at less than fair value."
In the case of China, Commerce assigned a preliminary dumping rate of 27.27 percent to the "China-wide entity, based entirely on adverse facts available," the agency said. "No companies demonstrated that they were eligible for a separate rate."
The department assigned a preliminary dumping rate of 5.86 percent on the affected companies based in Thailand.
Based on the preliminary determination, U.S. Customs and Border Protection will require cash deposits on all rubber-band imports based on those rates, the department said.
Friday's announcement came almost two months after the department announced a preliminary determination to impose duties of nearly 126 percent on Chinese rubber bands. The Customs and Border Protection agency also is required to collect cash deposits on affected rubber-band imports based on those rates.
In 2017, imports of rubber bands from Thailand totaled an estimated $12.1 million. From China, the total was estimated to be $4.9 million.
The deposits are "kind of like a bond," Risner said. "Companies that are importing will have to put up that 126 percent bond. Some companies are going to see a 6 percent dumping margin. They'll have to put that money up and it will be held in a bond until the margins are finalized."
The margins won't be finalized until Commerce Department personnel go to the affected countries and conduct audits of their rubber-band manufacturers, Risner said.
Alliance has seen a slow but steady decline in market share since what Risner termed the company's "heyday." Employment and production levels are down from what Alliance enjoyed in the early part of the last decade when it had 250 workers and produced 25 million pounds of rubber bands a year.
"What we've seen over the last several years is that rubber-band manufacturers in China and Thailand seem to receive some unfair competitive advantage over us due to subsidies and dumping, basically selling at less than fair value to the U.S. market," Risner said. "It cost us our ability to grow."
Alliance filed its petition in January after the company lost a major office supply customer.
"That was kind of the straw that broke the camel's back," Risner said. "We not only lost them, we had a good idea of the price we lost them at.
"It was very, very apparent to us at that time that something fishy was going on. There was no way you could create a pound of rubber bands and sell them at the price that this big customer was able to get them at."
