It started out as a bad joke, but it became one of the thorniest trade issues the Treasury has dealt with in years.
In 1974 domestic golf cart manufacturers charged that Poland was dumping golf carts in the United States, that is, selling them below fair value.
To determine whether a country is actually dumping its products, the Treasury usually finds out what the product sells for in its home market and if it sells for more there (after shipping costs are factored in) the Treasury determines that dumping has occurred.
But no golf carts sold in Poland. They don't even have a golf course. The carts are all manufactured for export.
If the Treasury cannot find a home market price, it is supposed to go to another country that exports the product and try to determine fair value using the third country as a guide.
But the only other country that sold golf carts in the United States was Canada. And the Canadian manufacturer has gone out of business.
In a "capitalist" economy, the Treasury can look at the labor, material and capital inputs for the product, add on a "fair" profit and determine whether the sales price is "full-cost." That is a difficult procedure, but one the Treasury has used - for example in determining its complicated series of minimum prices for steel imports.
But Poland is a controlled economy and prices are set by law, not by supply and demand.
The Treasury has wrestled with how to handle the case for more than four years, much to the chagrin of domestic manufacturers. The dumping charges were filed by Outboard Marine Corp. and were supported by AMF.
Yesterday the Treasury announced a new regulation designed to deal with the Polish golf cart question. The agency plans to go to Poland to determine what physical imputs of labor, materials, eletricity, capital overhead and the like are required to make the Polish golf carts (which are manufactured in an airplane factory).
Then the agency plans to go to a similarly developed capitalist economy such as Spain or Portugal, figure out what all those inputs cost in one of those countries and then construct a "fair value" price for the Polish golf cart.
"What we needed," said Peter Ehrehaft, deputy assistant secretary of the Treasury for tariff affairs, "was an appropriate surrogate" for prices of the physical imputs in Poland. "This is a consensus approach" to which the Poles have agreed. "It's not perfect."
About 50 officials - from the United States and foreign countries, including Poland - attended a conference on trading with state-controlled-economies in Virginia two weeks ago, to look at fair trade questions, such as the one spawned by Polish gold cart exports.
The new approach may be applicable to a case filed earlier this week by Westinghouse, charging that Hungary is dumping light bulbs in the United ury to look at U.S. costs in determining whether Hungarian prices are "fair."