The trade issues raised by DuPont Co. of Wilmington, Del., over the location of a PET film plant by an international competitor in Covington, Ga., underscore why it would be a mistake to dismantle the Department of Commerce as some in the U.S. advocate. The competitor, SKC Ltd. of Seoul, is a subsidiary of South Korea's Sunkyong Group. It was accused several years ago of dumping by DuPont and other U.S. film producers. The U.S. manufacturers complained to Washington and won higher import duties to counter the flow of PET film from Korea and Japan.
Michael Hartnagel, a DuPont vice president and general manager of films, alluded to that charge last week when he told Plastics News that SKC had grown unprofitably during the past five years ``to establish market share and drive out competitors.''
Hartnagel was critical of the incentives Georgia is giving SKC to build what the firm says will be a $1.5 billion investment over a 10-year period, ultimately employing 1,000. When a state ``offers incentives for a company to come here and force jobs out, there is something wrong with the system,'' he said. SKC spokesman Chul Chai suggests the tariffs figured prominently in the firm's decision to build in the United States. Chai told Plastics News, ``The [U.S.] market is big enough [for SKC's plant]. Whoever makes the best quality and has the best price will be the winner.''
If free trade and a truly free market were the only issues, Chai's observation could serve as the last word. The dispute is far more complex than that, however, because both DuPont and SKC do business internationally and each relies to some extent on government help to protect or gain market share. In some countries, including South Korea, the relationship between business and government is virtually seamless. Government ministers run interference for firms, promote corporate interests and give business guidance. There are few, if any, philosophical differences.
Government influence also is used to promote U.S. firms and to establish friendly trade laws - such as ``anti-dumping'' legislation - to help protect them. But since government control is anathema to U.S. businesses, philosophical differences exist. This is why American companies so often seem to be talking out of one side of their mouth when condemning government regulations while lobbying for more legislation to protect markets from competitors.
Ironically, the agency devoted to helping American corporations, the Commerce Department, has been targeted for elimination by many business leaders and members of Congress. While they claim the agency is too costly, the real concern is a belief that the department's activities give the government too much influence on the economy. That kind of thinking is naive and counterproductive. U.S. firms that want to do business internationally, especially in developing nations, usually need backing from Washington.
Commerce Secretary Ron Brown, who died earlier this month in a plane crash in Croatia, understood the way the system works. It's a weakness of U.S. business that not more corporate executives do.