On October 24, 1985, the Commerce Department issued its final anti-dumping ruling against 8 Japanese manufacturers of cellular mobile telephones (CMTs). This decision supports the year old petition filed with the International Trade Commission (ITC) by Motorola along with two other U.S. manufacturers of cellular mobile telephones (CMTs), General Electric and E.F. Johnson. These firms claimed their Japanese counterparts were selling or would likely be selling the new phone products at 'less than fair value' (LTFV) on the U.S. market. And the imports were materially injuring or threatening materially injury to the U.S. industry. As a result, the U.S. manufacturers were seeking the imposition of hefty dumping duties on the Japanese CMTs. The U.S. manufacturers reasoned that since duties are usually passed onto the consumer in the form of price increases, the Japanese merchandise would become relatively less competitive on the U.S. market. The dumping margins reported in the final decision by Commerce are as follows: Matsushita (Panasonic) 106.6%, NEC 95.57%, Mitsubishi 87.83%, OKI 9.72%, Hitachi (the OEM to AT&T) 2.99%, All Others 57.81% (the composite of the weighted average dumping margins computed individually for Fujitsu, Japan Radio and Kokusai Electric).¹ Only Toshiba (the OEM to Audiovox} emerged unscathed from the investigation. Thus, Toshiba is now exempted from any dumping duties to be imposed by U.S. Customs against other Japanese manufacturers. According to the Commerce brief, the final decision was based upon confidential financial data secured from each of the Japanese manufacturers under investigation for the period April to November, 1984. 2 Commerce reviewed each firm's financial statements showing research and development, production and general, sales and administrative costs. By aggregating the costs and computing a standard 8% profit margin on top, Commerce was able to construct a 'fair value' price for the CMTs sold by each Japanese manufacturer. Thus, if this 'appropriate' price was found to be above the particular exporter's sales price (ESP), Commerce determined the exporter to be guilty of dumping on the U.S. market. The dumping margin is simply the difference between the 'fair value' price and the ESP for the specified time period. U.S. Customs officials have already been directed to continue to require cash deposits or bonds from the importers of CMT's equal to the amount 'by which the foreign market value of the merchandise subject to this investigation exceeds the U.S. price' as represented by the final dumping margins. Customs began this practice under the preliminary Commerce decision issued last June. In addition, the ITC must issue its own final ruling on the existence of material damage to the U.S. industry within 45 days of the Commerce decision. If the ITC determines material injury exists, Commerce will issue an anti-dumping duty order and the bonds placed with Customs currently will be converted into duties. Since the preliminary rulings by the ITC and Commerce as well as Commerce's final decision have gone against the Japanese, it is highly unlikely the ITC will rule otherwise. Except for Matsushita and NEC, the final dumping margins differ significantly from the dumping margins determined by Commerce in its preliminary decision made June 5, 1985 as well as from the original petition filed with the International Trade Commission (ITC) by the U.S. manufacturers.³ For example, in the preliminary Commerce ruling, Hitachi was found to be dumping CMTs at a 20.9% margin. In the final decision, Hitachi CMTs were later found to 3 be 'underpriced' by a relatively miniscule 2.99%. And Toshiba, originally determined by Commerce to be dumping on a 4.77% margin, proved in the final determination not to be selling at less than fair value at all. At the other extreme, Mitsubishi was originally found to be dumping at a 21.94% margin; in the final determination the margin widened to 87.83%. The investigative period covered by the final Commerce decisions and the computed dumping margins are strictly confined to the 1984 timeframe of the original petition (during which the 'market' was struggling to emerge). Yet the duties are to be imposed on today's imports --under vastly different market conditions from those existing in 1984. And as stated by the ITC in their preliminary decision: There is no information relating to the nature and extent of the alleged sales at less than fair value other than allegations of the petitioner, and the alleged LTFV margins calculated by the petitioner.... On the basis of home-market prices, and selected large volume sales or offers in the United States, Motorola calculated dumping margins for all nine Japanese manufacturers known to be selling the subject product In the United States. The alleged dumping margins range from 45 to 111 percent.⁴ Why such vast differences over the same set of data between rulings? The numerous discrepancies in the actual data used in the analysis warrant a much more critical examination of the original petition. Yet, the final Commerce decision supposedly closes the debate over the existence of unfair trade practices by Japanese manufacturers of CMTs with an affirmative nod to U.S. manufacturers. At the very least, both the dumping allegations and 'fair value' methodology used by Commerce, ITC and the original petitioners to determine the existence of Japanese predation should be tested from an economic (as opposed to simply political) basis. In addition, the repercussions of the final Commerce decision on overall competition, innovation and trade should be examined. / M.A.