(JNS) The U.S. International Trade Commission decided on Monday that the Israeli company Finkelstein Metals “materially injured” a U.S. industry by importing brass rod subsidized by the Israeli government and undercutting American competitors by selling it at “less than fair value.”
Following the commission’s 3-1 decision—with the chair voting in the affirmative and the lone Republican in the negative—the U.S. Commerce Department “will issue antidumping and countervailing duty orders on imports of this product from Israel,” the commission stated.
Eitan Finkelstein, the CEO of Finkelstein Metals, told JNS that nothing like the commission’s “terrible decision” has ever been leveraged against an Israeli company.
“The three Democratic people over there fought against our company,” he said. “It’s against Israel. I think it was a political decision, and not because they brought evidence that showed that we are doing something wrong for the market. Because we are so small.” (JNS sought comment from the commission.)
“I don’t know what we’re going to do,” Finkelstein told JNS. “It could be that we will close in the future because we have to build a new market.”
But the company would face an uphill battle exploring markets outside the United States, according to Finkelstein. “At the moment, with the situation in Israel, to find a new market, it’s not easy,” he said.
Down to brass tacks
Finkelstein Metals is a small Afula-based alloy producer, which employs some 80 people. The sole Israeli producer of brass, bronze and copper alloy products, its U.S. exports represent less than 3% of the total U.S. market but account for 75% of the company’s total sales, with American customers buying brass by the ton.
The company does business in Israel with the defense industry, where it is reportedly a key cog, and with mom-and-pop businesses, which buy by the kilogram. (The company declined to comment on its role within the Israeli defense industry. JNS sought comment from the Israeli embassy in Washington.)
Finkelstein has imported metals into the United States since 1989. It opened a warehouse in Chicago in 2017, according to the company’s CEO, who told JNS that it will no longer be able to afford to export its brass products to the United States.
The federal commission that voted against the company is supposed to be split evenly along party lines, but U.S. President Joe Biden, a Democrat, had yet to nominate candidates to fill two vacancies at the obscure but powerful agency, which enforces trade laws, until recently.
On Jan. 7, 2021, then-President Donald Trump nominated William Patrick Joseph Kimmitt, of Virginia, to be a member of the commission—for a term expiring on June 16, 2029—to fill the expired term of Scott Kieff. On July 11, 2024, Biden nominated Kimmitt for the role.
Per a White House release, the president “announced his intent to nominate” Kimmitt and others “to serve as Republican members of boards and commissions that are required, by statute or longstanding practice, to include bipartisan membership.”
The nomination was referred to the Senate Finance Committee, and no official action has been taken on the nomination, per congressional records.
The commission’s determination, which upholds its prior decision, represents the first time that the United States has decided that an Israeli company is injuring the U.S. market.
The Tariff Act of 1930, which governs the commission’s decisions, states that several countries can be accused collectively of harming a U.S. market by adding together—or “cumulating”—the effects of their imports.
In the case of brass rods, Israeli imports were lumped together with those from Brazil, India, Mexico, South Africa and South Korea.
But an exception found in section 771(G)(ii)(iv) of the Tariff Act states that the commission cannot lump a country, which is a party to an agreement with the United States establishing a free trade area, with other nations unless the country in question—Israel, in this instance—is determined to be harming the domestic market on its own first.
The U.S.-Israel Free Trade Agreement has been in place since 1985.
Given his company’s limited U.S. market share, Finkelstein’s company would appear to have limited exposure under the Tariff Act. However, the commission still determined that the Jewish state was damaging the U.S. market, subjecting the company to countervailing duties, which are import taxes that counteract the benefits that an exporter gains due to government subsidies.
In 2018, U.S. Magnesium brought a trade petition against the Israel Chemicals Group, now the ICL Group—which held a significant share of the U.S. market—but the commission denied the petition. No small Israeli company has been pursued in this way before, according to Finkelstein and a search of public records.
Who is losing?
Finkelstein told JNS that the case against his company was brought by the two dominant U.S. players in the sector, Mueller Industries and Wieland Copper Products, which account for about 85% of the market.
Finkelstein said the duopoly is driving up prices for the U.S. consumer, with the same copper pipe that costs $5 in Europe or Israel going for $12 in the United States.
“So who is losing? The guy there making a building or buying in Home Depot,” Finkelstein said. “They want to pull 80% to 85% of the market, and they do whatever they want. That’s why we went to the United States.” (JNS sought comment from Mueller and Wieland.)
Finkelstein told JNS that the CEOs of the two companies earn salaries that are larger than the entire revenue that the Israeli company generates in the United States. A Finkelstein Metals official previously told JNS that the company has a turnover of $35 to $40 million globally.
Jennifer Andberg, a spokeswoman for the federal agency, told JNS that there is no appeals process in place following its final determination.
Finkelstein Metals could opt to pursue action in international courts, she said.
The commission will publish its final report, which will include the views of commissioners and information gathered during the investigation, on Oct. 17.
