Maui Pine gets Hawaii's last remaining pineapple cannery, Maui Pineapple Co., will be granted at least a partial exemption from steel tariffs imposed by President Bush.
partial exemption
The small victory means
the pineapple firm will avoid
tariffs on imported steel for can lidsBy Lyn Danninger
ldanninger@starbulletin.comBut the exemption will not afford the company significant financial relief since it applies only to the steel imported to make the smallest part of the pineapple can -- the lid.
Bush announced on Wednesday that tariffs of up to 30 percent would be imposed on most types of steel imported from Asia, South America and Europe. The tariffs will last three years.
Under the system, Maui Pineapple, which employs about 1,000 people, would have to pay a 30 percent tariff on the steel it buys from Japan to manufacture the cans for its pineapple.
With no relief, the new tariffs will cost the company as much as $800,000 this year, company President Doug Schenk said.
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Next year that cost would rise to about $1.2 million for the roughly 5 million cases of canned pineapple the company produces per year, Schenk said.Schenk said he's not sure why only the lids got an exemption.
"We put in a request for an exemption for all our products," he said. "For some reason the (steel) mills did not object to the lid. I guess they're saying they don't want to make the lids but will make the other plate."
Enacting broad tariffs such as the one on steel can have unintended consequences, economist Leroy Laney said.
"When they enact something like this it can hurt and be very inequitable. Maui Pineapple is an example of that," said Laney, Hawaii Pacific University professor of economics. "What happens is that it distorts the free flow of international trade and so to the extent it does that it's inefficient."
To add to Maui Pineapple's woes, the company's competitors, which include U.S. companies Dole Food Co. and Del Monte Foods Co. pay no duty because their pineapple product is canned where it is grown in the Philippines and Thailand.
Maui Pineapple, a division of Maui Land & Pineapple Co., occupies about 15 percent of the market for canned pineapple in the United States, Schenk said. About 21 million cases of pineapple comes from Asia with a total of 26 million cases of pineapple fruit products consumed in the United States each year.
Maui Pineapple had applied to the federal International Trade Commission and the U.S. Department of Commerce to be excluded from paying tariffs because of the economic hardships it would cause.
Schenk said he is not sure when he will hear if the company has been granted any further exemptions.
The federal government has received more than 1,000 requests, he said.
But Schenk said he needs to hear something before the end of June, when the company's next steel delivery is due from Japan. A second delivery would arrive in December, he said.
Schenk said Maui Pineapple has used steel imported from Japan for the past 30 years to make its cans.
The move saves a considerable amount of money because of the way the material is handled and transported. If the company were to bring in steel from the mainland, the only way to get it here would be via container and the company would have to hire someone to package and load the container prior to shipping.
Under the current system, the steel arrives from Japan in coils that are loaded directly into the hold off the ship without being containerized. When it arrives in Kahului it comes out the same way and can be loaded on to the back of a flat-bed truck with a crane, Schenk said.
Schenk believes it should not pose a problem for the company to be granted an exemption, especially since it would not be taking away business from a U.S. steel mill. "We haven't brought steel from a U.S. producer in 30 years so U.S. steel mills would not have our business anyway, because it's not economical," he said.