Maximum Maxim-X: ITC Tariffs1983


1983 ITC TARIFF DETAILS on Imported Motorcycles Exceeding 700cc I've often been asked why people in the U.S.A. have a 700cc version of the Maxim-X while Canadians and others in international locations have 750cc versions of the Maxim-X. My answer has always been that it is the result of U.S. import tariffs put in place during the years that the Maxim-X was being produced but I've never been able to provide more details because I simply didn't know anymore about the subject. To solve that problem, I started researching the tariffs in question but was only able to find brief references like my own. That's when I decided to go straight to the U.S. International Trade Commission (U.S. ITC) for complete details. I sent an e-mail to the U.S. ITC entitled "Mid-80s ITC tariff on imported motorbikes bigger than 700cc" and asked for complete details, links, actual wording and a historical account of what led to the imposition of the tariffs and their later removal. To my surprise, within only a day or two I received a reply from someone at the U.S. ITC with a full account of the history surrounding the tariffs in question. What follows is the U.S. ITC e-mail reply in it's entirety. Historical Tariff Details as Provided April 14, 2008 from U.S. ITC Subject: Mid-80s ITC tariff on imported motorbikes bigger than 700cc Date: Mon, 14 Apr 2008 12:54:26 -0400 From: John.Kitzmiller To: Harald Pfeiffer Harald, Thanks for your inquiry. To summarize things, U.S. imports of motorcycles increased by 30 percent from 1977 to 1981, and the value of imports doubled. Honda and Yamaha were fighting for supremacy among Japanese producers. In 1981, Yamaha produced almost as many motorcycles as Honda, and both were exporting to a U.S. market that couldn't handle them all. U.S. retailers of Japanese motorcycles were discounting prices steeply and Harley-Davidson was in desperate straits. In September 1982, Harley filed a petition with the U.S. International Trade Commission (the Commission) for import relief in September 1982, pursuant to section 201(b)(1) of the Trade Act of 1974. An investigation was instituted in order to determine whether motorcycles having engines with total piston displacement over 700cc, engines and power train subassemblies therefor, and parts of such engines and subassemblies were being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or the threat there of, to the domestic industry producing articles like or directly competitive with the imported articles. In February 1983, as a result of the investigation, the Commission determined by a 2-to-1 vote that subject motorcycles were being imported in such increased quantities as to be a substantial cause of the threat of serious injury to the domestic industry, while engines, power train assemblies, and parts thereof were not being imported in such quantities as to be a cause of the threat. (See USITC Publication 1342, February 1983). The Commission recommended the imposition of additional duties on imports of such motorcycles of 45 percent in the first year, 35 percent in the second year, 20 percent in the third year, 15 percent in the fourth year, and 10 percent in the fifth year. (The rate of duty applied to all motorcycles imported into the U.S. at the time of the case, regardless of piston displacement, was 3.7 percent). Presidential Proclamation 5050 actually imposed the tariffs, effective April 16, 1983, and scheduled to run through April 15, 1988. See http://www.presidency.ucsb.edu/ws/index.php?pid=41194 Everything else being equal, a 750 imported into the U.S. market would cost 45 percent more than a 700. So, what did the Japanese producers do? Sleeve 750's to make them 700's. That explains why you and your friends up north had 750's and we poor souls south of the border only had 700's. President Reagan modified the USITC remedy to enable small volume foreign producers that were not a cause of threat of injury to the U.S. industry (e.g., Triumph, BMW, Ducati) to have continued access to U.S. markets. He proclaimed tariff-rate quotas (TRQs) for imports of heavyweight motorcycles of 5,000 units (increasing yearly to 6,000, 7,000, 8,500, and 10,000) for imports from the Federal Republic of Germany, and a total of 4,000 units (increasing by 1,000 yearly) for imports from all other countries except Japan, and a tariff-rate quota of 6,000 units (increasing by 1,000 yearly) for imports from Japan. The TRQs meant that the protective tariffs did not apply to the number of motorcycles imported under the quota limit. For example, the first 5,000 heavyweight motorcycles imported from Germany would have paid only the 3.7 percent tariff, anything above that number would have paid 3.7 percent plus 45 percent. The actual text of the message can be found at http://www.reagan.utexas.edu/archives/speeches/1983/40183a.htm Harley was so successful with the relief afforded by the tariffs and the introduction of the Evolution engine in 1984 that it petitioned to have the protective tariffs removed sooner than scheduled. The Commission investigated and determined that the protective tariffs could be terminated with no significant economic effect on the domestic industry (USITC Publication 1988, June 1987). As a result of the Commission's findings, President Reagan removed the protective tariffs on or about Oct. 12, 1987. See http://www.presidency.ucsb.edu/ws/index.php?pid=33532. Effective with the adoption of the Harmonized Tariff Schedule in 1989, the tariff on motorcycles with engines not exceeding 700cc was eliminated and the tariff on motorcycles with engines over 700cc was reduced to 2.4 percent. I hope you find this helpful. If you have any other questions, please feel free to contact me. John Kitzmiller U.S. International Trade Commission 500 E St. SW Washington, DC 20436 www.usitc.gov John Kitzmiller, U.S. International Trade Commission, April 2008

I've often been asked why people in the U.S.A. have a 700cc version of the Maxim-X while Canadians and others in international locations have 750cc versions of the Maxim-X. My answer has always been that it is the result of U.S. import tariffs put in place during the years that the Maxim-X was being produced but I've never been able to provide more details because I simply didn't know anymore about the subject. To solve that problem, I started researching the tariffs in question but was only able to find brief references like my own. That's when I decided to go straight to the U.S. International Trade Commission (U.S. ITC) for complete details.

I sent an e-mail to the U.S. ITC entitled "Mid-80s ITC tariff on imported motorbikes bigger than 700cc" and asked for complete details, links, actual wording and a historical account of what led to the imposition of the tariffs and their later removal. To my surprise, within only a day or two I received a reply from someone at the U.S. ITC with a full account of the history surrounding the tariffs in question.

What follows is the U.S. ITC e-mail reply in it's entirety.

Subject: Mid-80s ITC tariff on imported motorbikes bigger than 700cc
Date: Mon, 14 Apr 2008 12:54:26 -0400
From: John.Kitzmiller
To: Harald Pfeiffer

Thanks for your inquiry.

To summarize things, U.S. imports of motorcycles increased by 30 percent from 1977 to 1981, and the value of imports doubled. Honda and Yamaha were fighting for supremacy among Japanese producers. In 1981, Yamaha produced almost as many motorcycles as Honda, and both were exporting to a U.S. market that couldn't handle them all. U.S. retailers of Japanese motorcycles were discounting prices steeply and Harley-Davidson was in desperate straits.

In September 1982, Harley filed a petition with the U.S. International Trade Commission (the Commission) for import relief in September 1982, pursuant to section 201(b)(1) of the Trade Act of 1974. An investigation was instituted in order to determine whether motorcycles having engines with total piston displacement over 700cc, engines and power train subassemblies therefor, and parts of such engines and subassemblies were being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or the threat there of, to the domestic industry producing articles like or directly competitive with the imported articles.

In February 1983, as a result of the investigation, the Commission determined by a 2-to-1 vote that subject motorcycles were being imported in such increased quantities as to be a substantial cause of the threat of serious injury to the domestic industry, while engines, power train assemblies, and parts thereof were not being imported in such quantities as to be a cause of the threat. (See USITC Publication 1342, February 1983).

The Commission recommended the imposition of additional duties on imports of such motorcycles of 45 percent in the first year, 35 percent in the second year, 20 percent in the third year, 15 percent in the fourth year, and 10 percent in the fifth year. (The rate of duty applied to all motorcycles imported into the U.S. at the time of the case, regardless of piston displacement, was 3.7 percent).

Presidential Proclamation 5050 actually imposed the tariffs, effective April 16, 1983, and scheduled to run through April 15, 1988. See http://www.presidency.ucsb.edu/ws/index.php?pid=41194

Everything else being equal, a 750 imported into the U.S. market would cost 45 percent more than a 700. So, what did the Japanese producers do? Sleeve 750's to make them 700's. That explains why you and your friends up north had 750's and we poor souls south of the border only had 700's.

President Reagan modified the USITC remedy to enable small volume foreign producers that were not a cause of threat of injury to the U.S. industry (e.g., Triumph, BMW, Ducati) to have continued access to U.S. markets. He proclaimed tariff-rate quotas (TRQs) for imports of heavyweight motorcycles of 5,000 units (increasing yearly to 6,000, 7,000, 8,500, and 10,000) for imports from the Federal Republic of Germany, and a total of 4,000 units (increasing by 1,000 yearly) for imports from all other countries except Japan, and a tariff-rate quota of 6,000 units (increasing by 1,000 yearly) for imports from Japan. The TRQs meant that the protective tariffs did not apply to the number of motorcycles imported under the quota limit. For example, the first 5,000 heavyweight motorcycles imported from Germany would have paid only the 3.7 percent tariff, anything above that number would have paid 3.7 percent plus 45 percent.

The actual text of the message can be found at http://www.reagan.utexas.edu/archives/speeches/1983/40183a.htm

Harley was so successful with the relief afforded by the tariffs and the introduction of the Evolution engine in 1984 that it petitioned to have the protective tariffs removed sooner than scheduled. The Commission investigated and determined that the protective tariffs could be terminated with no significant economic effect on the domestic industry (USITC Publication 1988, June 1987).

As a result of the Commission's findings, President Reagan removed the protective tariffs on or about Oct. 12, 1987. See http://www.presidency.ucsb.edu/ws/index.php?pid=33532.

Effective with the adoption of the Harmonized Tariff Schedule in 1989, the tariff on motorcycles with engines not exceeding 700cc was eliminated and the tariff on motorcycles with engines over 700cc was reduced to 2.4 percent.

I hope you find this helpful. If you have any other questions, please feel free to contact me.

John Kitzmiller
U.S. International Trade Commission
500 E St. SW
Washington, DC 20436
www.usitc.gov