International Trade Law News

Published by Jacobson Burton Kelley PLLC

Yesterday, the Coalition for American Solar Manufacturing (CASM) filed antidumping (AD) and countervailing (CVD) duty petitions with the U.S. Department of Commerce and the International Trade Commission alleging that Chinese manufacturers of crystalline silicon photovoltaic cells and panels are selling in the U.S. market at less than fair value and are receiving illegal subsidies from the Chinese government.

CASM is a coalition of seven solar companies that manufacture solar cells and panels in the United States. The coalition is led by SolarWorld, the largest U.S. solar manufacturer. The six other companies have chosen to be anonymous, which is unusual in U.S. AD/CVD cases.

The scope of merchandise alleged by CASM to be subject to these AD/CVD petitions is as follows:

Crystalline silicon photovoltaic (PV) cells, whether or not individually or partially or fully assembled into other products, including, but not limited to, modules, laminates, panels and building integrated materials.

The scope covers crystalline silicon PV cells of thickness equal to or greater than 20 micrometers, having a heterogeneous, homogeneous or patterned p/n junction, heterojunction, metal-insulator-semiconductor junction or charge-induced junction. The junction may be formed by any means, including but not limited to dopant diffusion, ion implantation, epitaxial growth, any other deposition or growth of semiconductors, insulators or metals, or bonding of dissimilar materials. The merchandise subject to these petitions may be either partially or fully processed.

Merchandise covered by this investigation is currently classified in the Harmonized Tariff System of the United States (HTSUS) under subheadings 8541.40.60.20, 8451.40.60.30, 8501.61.00.00 and 8507.20.80. 

The petitions do not include thin-film photovoltaic products produced from amorphous silicon, cadmium telluride, copper indium gallium selenide, or dye-sensitized solar cells.

The AD petition alleges that Chinese solar cell and panel producers are dumping their products in the United States in amounts greater than 100% of their value.

The CVD petition claims that Chinese solar cell and panel producers benefit from a range of subsidies from the Chinese government, including cash grants; significantly discounted raw material inputs, such as polysilicon and aluminum; discounted or free land, power and water; preferential loans and directed credit; tax exemptions, incentives and rebates; export assistance credits; and export insurance at preferential rates. 

The statutory timeline for the AD and CVD cases indicates that preliminary antidumping duties could be imposed on these products by January 12, 2012, although such duties could be imposed 90 earlier since the petitioners have alleged “critical circumstances” and are seeking to have duties applied retroactively.

Labels: Antidumping, China, Countervailing Duties

In the first U.S. antidumping (AD) and countervailing duty (CVD) cases of 2011, U.S. companies today filed AD/CVD petitions on imports of steel wheels from China and refrigerators from South Korea and Mexico. These AD/CVD petitions are the first ones filed in the U.S. since AD/CVD petitions were filed against wood flooring from China in October 2011.

Bottom-Mount Combination Refrigerator-Freezers from South Korea and Mexico

In the first case filed today, Whirlpool Corporation filed AD and CVD petitions against bottom-mount refrigerators from South Korea and an AD petition against the same product from Mexico. According to Whirlpool two Korean manufacturers, Samsung Electronics and LG Electronics, export their products to the U.S. from manufacturing facilities in both Korea and Mexico. The Whirlpool products impacted by these imports are made in Amana, Iowa, where Whirlpool employs approximately 2,000 people.

Steel Wheels from China

In the second case filed today, Accuride Corporation, based in Evansville, Indiana, and Hayes Lemmerz International Inc., based in Northville, Michigan,filed AD and CVD petitions on steel wheels from China. Steel wheels are used on passenger cars, light trucks, sport utility and commercial utility vehicles.

Based on the statutory schedule for these trade remedy cases, the U.S. International Trade Commission (ITC) is expected to issue their preliminary injury determinations in mid-May 2011. Assuming an affirmative preliminary injury determination by the ITC, the Department of Commerce’s preliminary decision on the level of subsidies is expected in August 2011 and on dumping in October 2011. The final decisions will be issued by the Department of Commerce and ITC in the second quarter of 2012.

Labels: Antidumping, Countervailing Duties

The U.S. Department of Commerce announced today a number of proposed changes to U.S. antidumping (AD) and countervailing duty (CVD) policy and procedures intended to "strengthen trade enforcement and help keep U.S companies competitive." These measures, which are certain to be controversial and provoke criticism from China and other U.S. trading partners, will be reviewed by the Commerce Department during the next few months through a "transparent review" that will include an opportunity for public comments.

Most of the proposed changes are targeted at countries designated as non-market economies, which currently include China and Vietnam.

U.S. importers of products subject to AD/CVD investigations are likely to oppose the proposed change that would require importers to post cash deposits rather than bonds to secure entry of their products into the U.S. once a preliminary affirmative determination is made in an AD/CVD case.

A number of the proposed changes to current AD/CVD law and practice are also likely to generate a strong reaction by attorneys that handle AD and CVD cases on a regular basis. There will also be questions as to whether these changes are in compliance with the WTO Anti-dumping Agreement and the WTO Agreement on Subsidies and Countervailing Measures.

Another controversial aspect of this proposal is that the press release announcing these proposed changes claimed that these changes were being made in support of the President's National Export Initiative, which aims to double U.S. exports during the next five years. If implemented, these measures are likely to increase the AD and CVD duties paid by importers and the cost of certain imported products subject to such duties. However, it is unlikely that these measures will have any positive impact on the ability of the U.S. manufacturing sector to export their products.

If the Commerce Department chooses to go forward with these changes, revisions to the AD/CVD regulations (19 CFR Part 351) will be required in most cases.

The following is a summary of the 14 proposed changes:

1. Expanded use of random sampling to select companies as individual respondents in AD investigations and reviews rather than choosing the largest exporters;
2. Strengthening Commerce’s current practice regarding the issuance of company-specific AD rates in NME cases;
3. Clarification of Commerce’s current NME practice that when the Department uses import prices for valuing a production factor, such prices should include all applicable freight and handling costs;
4. Clarification of Commerce’s current NME practice to require companies to report production inputs for all products produced at each of their facilities – not just those facilities that produced merchandise destined for the United States – for use in the Department’s NME dumping calculations;
5. Clarification of Commerce’s current CVD practice to reiterate that Commerce considers state-owned enterprises (SOEs) as constituting a “specific” group when they are alleged to be receiving countervailable subsidies from the government;
6. Reconsidering the treatment of export taxes and value-added taxes (VAT) in Commerce’s NME AD methodology; and
7. Strengthening the treatment of resellers and other non-reviewed parties in NME cases to ensure that such parties pay the full amount of AD duties.
8. Adoption of a new methodology for valuing wage (labor) rates in NME cases by using surrogate wage rates that fully capture all labor costs (including benefits and taxes paid to workers by their employers) in the NME country;
9. Eliminating the practice of allowing individual companies to seek removal from an antidumping (AD) or countervailing duty (CVD) order based on their ability to show zero dumping margins or subsidy rates for three (AD) or five (CVD) consecutive years;
10. Tightening the rules in non-market economy (NME) cases for determining when the price of production inputs purchased from market economy countries will be substituted for the Department’s standard valuation for such inputs;
11. Considering whether importers will be required to post cash deposits rather than bonds for imports that fall within the scope of an AD/CVD investigation starting with the issuance of Commerce’s preliminary determination (rather than following the imposition of an AD/CVD order);
12. Strengthening the certification process for the submission of factual information to the Department;
13. Strengthening the accountability of attorneys and non-attorneys practicing before Commerce; and
14. Tightening the deadlines for submitting new factual information in AD/CVD cases.

Labels: Antidumping, Countervailing Duties

The U.S. Department of Commerce published a notice and request for comment in the Federal Register earlier this week announcing that Import Administration, the agency that conducts antidumping and countervailing duty investigations and administrative reviews, is creating a three-month pilot program to test an electronic document filing and access system in certain antidumping and countervailing duty proceedings.

The system, known as Import Administration's Antidumping and Countervailing Duty Centralized Electronic Service System or IA ACCESS, will allow parties to electronically file documents in the antidumping and countervailing duty proceedings as well as allowing public access to public versions of such submissions. Currently, six paper copies of each submission must be filed with Import Administration and such documents are only available to the public by visiting the Central Records Unit at the Commerce Department in Washington, DC.

Import Administration has selected 14 cases (see the notice for a complete list) to serve as the test cases for the IA ACCESS e-filing system. Participants in those cases will be contacted concerning their participation in the pilot project prior to the program's commencement. Participants will also be requested to provide feedback and suggestions for the improvement of IA ACCESS after completion of the pilot program.

The implementation of an electronic filing will be extremely useful to interested parties in antidumping and countervailing duty cases as well as the members of the trade community that want to conduct research on previous cases. It will certainly reduce the volume of paper generated in such cases. However, given that antidumping and countervailing duty filings are extremely voluminous (sometimes involving hundreds of pages per filing), this program will only be successful if the system offers the ability to upload and view very large files.

Labels: Antidumping, Countervailing Duties

Professor Chad P. Bown, publisher of the Global Antidumping Database, recently issued a report confirming that the number of trade remedy cases is increasing. The report, entitled "Protectionism Continues its Climb", states that the second quarter of 2009 saw a 12.1% increase in initiated antidumping, safeguard and countervailing duty cases.

Among other things, the report notes that India continued the trend of being the most active country seeking to initiate new import restrictions, having initiated 34% of all of the new trade remedy cases during the second quarter of 2009. The U.S. was the second most active country in the second quarter of 2009, initiating 17% of the total number of new cases.

Not surprisingly, the report confirms that China is the primary target of the new trade remedy cases. China was named in 82.6% of newly initiated trade remedy investigations by WTO members and targeted in 17 out of the 17 new cases in which trade remedies were imposed.

The report also confirms a "spike" in the number of new safeguards cases and predicts that this trend "will almost certainly continue to increase throughout the remainder of 2009 and into 2010."

The Global Antidumping Database is a project of Chad P. Bown, an Associate Professor in the Department of Economics and Business at Brandeis University and a Fellow in the Global Economy and Development Program at the Brookings Institution.

Labels: Antidumping, Countervailing Duties

The number of antidumping and countervailing duty petitions being filed in the U.S. on steel products from China is on the rise.

On June 5, 2009, WP Industries, Inc., ITC Manufacturing, Inc., J&L Wire Cloth, Inc. and Nashville Wire Products Mfg. Co., Inc. filed antidumping and countervailing duty petitions with the U.S. Department of Commerce and U.S. International Trade Commission against imports of wire decking from China.

The proposed scope of the investigations on wire decking includes welded-wire rack decking for industrial and other commercial storage racks or pallet rack systems produced from carbon or alloy steel wire.

Wire decking is classified under Harmonized Tariff Schedule of the United States (HTSUS) subheadings 9403.90.8040, 9403.20.0020, 7217. 10, 7217.20, 7326.20, 7326.90.

These antidumping and countervailing duty petitions follow similar petitions filed on May 27 and 28 against prestressed concrete steel wire strand and steel grating, respectively, from China.

More antidumping and countervailing duty cases against other types of imported steel products from countries in addition to China are expected to be filed in the coming months.

Labels: Antidumping, China;, Countervailing Duties

According to data compiled by the Global Antidumping Database, the first quarter of 2009 saw an 18.8% year increase in the number of antidumping, countervailing duty, global safeguard, and China-specific safeguards brought by WTO members compared to the same period in 2008. Not surprisingly, China's exporters were the dominant target of these investigations, accounting for more than 2/3 of the new cases.

The Global Antidumping Database is a project of Chad P. Bown, an Associate Professor in the Department of Economics and International Business School at Brandeis University and a Fellow in the Global Economy and Development Program at the Brookings Institution.

An analysis of the data prepared by Professor Bown shows that:

Compared to the same time period in 2008, the first quarter of 2009 also saw a 15.4% increase in the imposition of new import-restricting tariffs and quotas upon completion of earlier investigations initiated under these trade remedy laws, a trend that will almost certainly continue to increase throughout the remainder of 2009 and into 2010. While India imposed the most new import barriers under these laws during this time period, other G-20 members that did so include Argentina, Australia, Brazil, Canada, the EU and its member states, South Korea, Turkey and the United States. China's exporters are the dominant target for these newly imposed import restrictions facing new barriers in over 70% of the cases.

The complete and detailed data on antidumping investigations will be made available in early summer 2009 as version 5.0 of the Global Antidumping Database.

Labels: Antidumping, Countervailing Duties, WTO

Today's Wall Street Journal Asia contains an opinion piece on the recently filed U.S. antidumping and countervailing duty petitions file on polyethylene retail carry bags from Vietnam. The article discusses whether the U.S. Commerce Department will apply the U.S. countervailing law to Vietnam, which is treated as a non-market economy for antidumping purposes, and discusses the cost of such a decision to U.S. consumers.

Labels: Antidumping, Countervailing Duties, Vietnam

Late last week House Ways and Means Committee Chairman Charles B. Rangel (D-NY) and Ways and Means Trade Subcommittee Chairman Sander L. Levin (D-MI) introduced H.R. 6530, the Trade Enforcement Act of 2008. The bill contains a number of provisions that would modify existing laws on counterfeiting and piracy, import safety, market access for U.S. goods and services and trade remedies.

For example, the bill would codify the application of countervailing duty (CVD) law to non-market economies, such as China, and would require a stronger congressional oversight over a number of proposed changes to the methodology used by the U.S. in antidumping and CVD cases.

The full text of the bill can be found here.

Given the short time remaining in the current session of Congress, prospects for passage of this legislation remain low this year.

Labels: Antidumping, Congress, Countervailing Duties

At the request of the Senate Appropriations and Finance Committees, the Government Accountability Office (GAO) was asked us to review the reasons why the duties are uncollected and what the U.S. government has done to address this problem. In addition, the Senate Committees asked GAO to identify options for improving the U.S. antidumping and countervailing duty system.

During its investigation GAO examined (1) the extent and nature of uncollected antidumping and countervailing duties, (2) the key factors contributing to risks for uncollected antidumping and countervailing duties and the steps taken to improve the collection of antidumping and countervailing duties, (3) interagency communications that affect the processing of antidumping and countervailing duties, and (4) potential options for improving antidumping and countervailing collections.

The GAO recently issued a report of its finding entitled "Antidumping and Countervailing Duties: Congress and Agencies Should Take Additional Steps to Reduce Substantial Shortfalls in Duty Collection". The report notes that U.S. Customs and Border Protection (CBP) has been unable to collect over $613 million in antidumping duties since 2001. These uncollected duties are concentrated among a few products, countries of origin, and importers. For example, GAO found that four products account for about 84% of the total amount of uncollected AD/CV duties. These four products, all from China, are crawfish tail meat ($354 million), garlic ($75 million), honey ($43 million), and mushrooms ($41 million).

The GAO also found U.S. importers purchasing products from China are associated with 90% of the total amount of uncollected duties and that a relatively small number of importers owe the majority of uncollected antidumping and countervailing duties. In fact, the GAO found that four companies accounted for more than one-third of the total amount of uncollected antidumping duties and 20 companies account for 63 percent of the total.

The report states that four key factors contribute to uncollected antidumping and countervailing duties, a few of which the U.S. government has partially addressed:

1. Because the U.S. antidumping and countervailing duty system involves the retrospective assessment of duties, the final amount of antidumping and countervailing duties an importer owes can significantly exceed the initial amount paid when the goods entered the country.

2. Companies that did not previously export products subject to antidumping and countervailing duties, i.e., "new shippers," pose two types of risks for collections. For example, new shippers can be assigned an antidumping and countervailing duty rate based on as few as one shipment, which can significantly underestimate the final duty rate. Also, importers purchasing from new shippers were able to provide a bond in lieu of a cash payment to cover the initial AD/CV duties assessed. Congress addressed this risk by temporarily requiring all importers to pay initial antidumping and countervailing duties in cash.

3. All importers must provide a general bond to secure the payment of all types of duties, but CBP's standard practice for setting the amount of this bond inadequately protects antidumping and countervailing duty revenue. CBP addressed this by revising its bonding formula for products subject to antidumping and countervailing duties, but the revision has been tested on only one product and faces domestic and international legal challenges.

4. CBP collects minimal information regarding importers and does not conduct background or financial checks, which creates challenges to locating importers and collecting antidumping and countervailing duties.

The report indicates that there are two sets of options for improving the collection of antidumping and countervailing duties, each of which involves potential advantages and disadvantages:

The first option involves revising U.S. law to eliminate the retrospective component of the U.S. antidumping and countervailing duty system by assessing final duties when the product arrives in the U.S. (i.e., a prospective system as in the European Union and Canada).

The second option involves making adjustments within the existing system. For example, Congress could revise the standards for new shipper reviews and CBP could examine the option of revising bonding requirements to protect additional antidumping and countervailing duty revenue.

A copy of the complete report can be found here: www.gao.gov/new.items/d08391.pdf.

Labels: Antidumping, Congress, Countervailing Duties

The Automotive Trade Policy Council (ATPC), whose members include Chrysler, Ford and General Motors, recently endorsed H.R. 1127, the "American Manufacturing Competitiveness Act".

H.R. 1127, which was introduced in Congress by Representative Joe Knollenberg (R-MI), would allow U.S. manufacturers to participate in antidumping and countervailing duty cases.

Under current U.S. law, industrial users do not have standing in antidumping and countervailing duty cases even though a decision to place antidumping or countervailing duties on raw materials and other production inputs can impact their production costs. H.R. 1127 would give industrial users legal standing in trade remedy cases involving the products that they import. H.R. 1127 also requires the U.S. International Trade Commission to weigh the harm to industrial users in making material injury determinations in antidumping and countervailing duty determinations.

The Automotive Trade Policy Council joins the Consuming Industries Trade Action Coalition (CITAC) in supporting H.R. 1127. CITAC voice its support for H.R. 1127 in testimony before the House Ways and Means Trade Subcommittee on August 2, 2007.

Labels: Antidumping, Countervailing Duties, ITC

The U.S. International Trade Commission (ITC) today made affirmative preliminary injury determinations in the antidumping and countervailing duty cases on circular welded carbon-quality steel pipe from China.

Vice Chairman Shara L. Aranoff and Commissioners Charlotte R. Lane and Irving A. Williamson voted in the affirmative. Chairman Daniel R. Pearson and Commissioner Deanna Tanner Okun made affirmative threat determinations. Commissioner Dean A. Pinkert did not participate in these investigations.

As a result of the ITC's affirmative determinations, the U.S. Department of Commerce will continue to conduct its antidumping and countervailing duty investigations, with its preliminary countervailing duty determination due on or about August 31, 2007, and its preliminary antidumping determination due on or about November 14, 2007.

Labels: Antidumping, China, Countervailing Duties

Another pair of countervailing and antidumping duty petitions have been filed against products from China. This time the target is laminated woven sacks, which are used in the packaging industry.

The petitions, which were filed with the Department of Commerce and the U.S. International Trade Commission (ITC), were filed on behalf of the Laminated Woven Sacks Committee, which consists of Bancroft Bag, Inc., Coating Excellence International, LLC, Hood Packaging Corporation, Mid-America Packaging, LLC and Polytex Fibers Corporation.

In the meantime, the Commerce Department yesterday announced its decision to initiate antidumping and countervailing duty investigations on imports of circular welded carbon quality steel pipe from China that were recently filed by several U.S. pipe companies. The ITC, which held its preliminary conference in this case yesterday, is scheduled to make its preliminary injury determination by July 23, 2007.

If the ITC determines that there is a reasonable indication that imports from China are materially injuring, or threatening material injury to, the domestic industry, the investigations will continue, and Commerce will be scheduled to make its preliminary countervailing duty determination in August 2007, and its preliminary antidumping duty determination in November 2007 (although these dates can be extended).

Labels: Antidumping, China, Countervailing Duties

The recent preliminary decision by the Commerce Department to permit the filing of countervailing duty petitions on products from China has resulted in the filing of the second anti-subsidy case on Chinese products this month.

Yesterday, Des Moines, Iowa-based Titan Tire Corporation, a subsidiary of Titan International, Inc., and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union jointly filed countervailing duty and antidumping duty petitions on Off-the-Road Tires from China.

Labels: Antidumping, Countervailing Duties

Six domestic producers of welded standard steel pipe and a trade union last week filed antidumping and countervailing duty petitions with the U.S. Department of Commerce and the U.S. International Trade Commission on imports of welded standard pipe from China. The petitioners in this case are Allied Tube & Conduit, IPSCO Tubulars Inc., Northwest Pipe Company, Sharon Tube Company, Western Tube & Conduit Corporation and Wheatland Tube Company, as well as the United Steelworkers Union.

The petitioners alleged that U.S. imports of circular standard and structural pipe from China have increased from 10,000 tons in 2002 to 690,000 tons in 2006, a 6,800% increase.

This is the second recent countervailing duty case brought against imports from China. In October 2006, a U.S. manufacturer of coated paper requested the Department of Commerce to reconsider its longstanding policy of not applying the countervailing duty laws to China. In March, the Commerce Department announced its preliminary decision to apply the U.S. countervailing duty laws for the first time on imports from a non-market economy.

Labels: Antidumping, Countervailing Duties

The U.S. Department of Commerce yesterday announced its affirmative preliminary determinations in the antidumping duty investigations on coated free sheet paper from China, Indonesia, and Korea. The preliminary dumping margins ranged from 23.19% to 99.65% for the Chinese respondents, 10.85% on the Indonesian respondents and zero to 30.86% for the Korean respondents.

The antidumping petition that led to the initiation of this investigation was filed by NewPage Corporation of Dayton, Ohio. NewPage also filed countervailing duty petitions on imports of coated free sheet paper from China, Indonesia and Korea. The preliminary affirmative countervailing duty determinations were published in the Federal Register on April 9, 2007.

Coated free sheet paper is used by the commercial printing industry to produce high-quality books, gift wrap and advertising materials.

The fact sheet issued by Commerce in this case can be found at the following link: ia.ita.doc.gov/download/factsheets/factsheet-cfsp-ad-prelim-053007.pdf.

Labels: Antidumping, Countervailing Duties

The Commerce Department published in Monday's Federal Register the preliminary countervailing duty determinations on coated free sheet paper from China, South Korea and Indonesia. While the decision to impose countervailing duties on China received a great deal of press, overlooked in the reporting is the fact that three of the four Korean respondents received a de minimis CVD rate and the "all others rate" for Korea was only 1.76%. This is significant, since imports of coated free sheet paper from South Korea exceeded those from China and Indonesia combined. According to information issued by the Commerce Department, in 2006 the U.S. imported $362 million worth of coated free sheet paper from South Korea. Imports of coated free sheet paper from China and Indonesia in 2006 were valued at $224 million and $40 million, respectively. The lone Indonesian respondent received a preliminary CVD rate of 21.24%.

The preliminary determination applied a 20.35% CVD to Gold East Paper (Jiangsu) Co., Ltd and a 10.90% CVD rate to Shandong Chenming Paper Holdings Ltd. These CVD rates were comprised of a number of Chinese Government programs that were deemed to provide countervailable subsidies. The largest subsidy program found for each company was a government program that provided loans at a discount to the forestry and paper industry in China (3.15% for Shandong Chenming and 14.02% percent for Gold East). Other programs that were deemed to provide countervailable benefits included a grant program, income tax savings and credits programs and VAT and duty exemptions. Commerce found one program not be be countervailable and several other programs that were not used by the respondents.

Compared to the typical antidumping rates applied to Chinese respondents resulting from the application of the non-market economy methodology, these CVD rates are relatively low. It will be interesting to see the antidumping rates found on the Chinese respondents once those results are released later this year. In 2006, the Government Accountability Office issued a report finding that the Commerce Department's application of the nonmarket methodology to China has produced antidumping duties on Chinese products that are substantially higher than those applied to the same products from market economy countries.

It will also be interesting to see if the Chinese Government will permit the Commerce Department to conduct a verification. In CVD cases the Commerce Department not only conducts a verification at the respondent's offices in the foreign country, but also conducts a verification at the government ministries that oversee and implement the subsidy programs. If the Chinese Government does not cooperate or otherwise permit the U.S. Government to conduct a verification, U.S. law authorizes the Commerce Department to apply the "facts available" to the final determination which is often based on adverse information supplied by the petitioners.

Labels: Antidumping, Countervailing Duties

In a major change in U.S. trade policy, on Friday the U.S. Department of Commerce (DOC) announced that it would apply the U.S. countervailing duty (CVD) law to imports from China. The decision, made in the CVD investigation on coated groundwood paper from China, marks the first time CVDs will be imposed on imports from a non-market economy. The decision alters a 23-year old policy of not applying the CVD law to non-market economy countries (NMEs).

Since 1984 it has been the policy and practice of the Commerce Department not to impose countervailing duties on NMEs, such as Vietnam and China, because government intervention in a NME is so pervasive that one cannot make meaningful comparisons between market-determined prices and those that have been distorted by government intervention. This decision was sustained by the the U.S. Court of Appeals for the Federal Circuit in Georgetown Steel Corp. v. United States, 801 F.2d 1308 (Fed. Cir. 1986).

In response to a request by the Government of the People’s Republic of China, Gold East Paper (Jiangsu) Company, Ltd., and Global Paper Solutions, Inc., for a preliminary injunction to enjoin DOC from conducting a CVD investigation on coated free sheet paper from China, on March 29, 2007, the U.S. Court of International Trade denied the motion for injunction on grounds that it is premature for the court to render a decision. The CIT stated that DOC's authority to initiate the countervailing duty investigation can be challenged once DOC's decision is finalized.

In its preliminary determination, DOC held that the rationale in Georgetown Steel "no longer applies to products from China because of the vast differences between the characteristics of the non-market economies of the 1980s Soviet-bloc countries and China’s economy today."

In announcing its decision, DOC noted that it "that the basis of our conclusion to apply the CVD law to China may require a review of U.S. anti-dumping methodology for China, particularly at the enterprise-specific level, and is currently considering this issue. Since the possibility of double counting resulting from simultaneous anti-dumping and countervailing duty investigations is dependent on the specific facts arising in such investigations, to the extent that the parties to these proceedings provide evidence on the record of these investigations, Commerce will have to respond to these concerns in the course of our investigations."

DOC is currently scheduled to make its final CVD determination in the coated groundwood case in mid-June 2007, although this deadline can be extended to mid-October 2007.

Separately, the U.S. Congress is considering legislation (H.R. 1229) that would permit the provisions relating to countervailing duties to apply to nonmarket economy countries (see related article below).

DOC's decision to apply the CVD laws to imports from China will certainly embolden petitioners to file countervailing duty petitions on many other products imported from China. However, DOC's determination in the coated groundwood paper case will certainly be appealed by the Chinese respondents to the CIT on grounds that it conflicts with the long-standing decision in Georgetown Steel. Any decision by the U.S. to apply the CVD laws to imports from China will also be appealed by China to the World Trade Organization's Dispute Settlement Body.

Labels: Countervailing Duties

By Matthew Apfel*

On March 15, 2007, the U.S. House Ways and Means Committee's Subcommittee on Trade held a hearing on the application of countervailing duties to imports from nonmarket economy countries, with a focus on H.R. 1229, the “Nonmarket Economy Trade Remedy Act of 2007.” H.R. 1229 would authorize the application of the U.S. countervailing duty laws on imports that are state subsidized and originate from countries that are designated as "non-market economies", such as China and Vietnam. Although authorized to do so if necessary, the Department of Commerce has had a long-standing policy of not imposing countervailing duties on non-market economies in the past.

During the hearing, David M. Spooner, Assistant Secretary of Commerce for Import testified that the reasons underlying this policy have rested on methodology grounds. Specifically, he said that “Firms [in non market economies] were not independent, profit-driven allocators of resources and, therefore, could not take into account the impact of government subsidies when making pricing decisions.” Assistant Secretary Spooner further noted that “applying U.S. countervailing duty law to countries like China that are classified as non-market economies for antidumping purposes raises complex issues of policy and methodology, which could have implications for other aspects of Commerce’s trade remedies practice.”

China's growing exports to the U.S. quickly became the focus of the testimony before the committee. For example, one of the witnesses was Representative Pete Visclosky (D-IN), who currently serves as Chairman of the Congressional Steel Caucus. Representative Visclosky accused China of “economic warfare” and “attacks” on the U.S. steel industry. He opined that China’s massive growth, particularly in regards to increases in steel production, “have come during periods of immense (Chinese) government subsidization.” He noted that such subsidies have taken shape in the form of “preferential loans, debt forgiveness, raw material market subsidies, energy subsidies, and direct government ownership.”

In the view of many of the panelists during their collective testimony, it appears that although China maintains a quasi-market economy, in the sense that there is rampant government regulation and intervention in key sectors. However, China’s economy has also developed to such an extent that it would now be easier to determine a clear countervailing duty methodology. For example, James C. Hecht, a partner at the law firm of Skadden, Arps, Slate, Meagher and Flom spoke to this point when he noted that there are already clear grounds under existing law to apply U.S. countervailing duty provisions to non-market economies.” He noted that China’s accession to the WTO and privatization of key state owned enterprises demonstrates that the situation today is quite different from the time when the U.S. Court of Appeals for the Federal Circuit in Georgetown Steel held that the U.S. Government was not under an obligation to impose countervailing duties on non-market economies. As Mr. Hecht stated, “notwithstanding the possibility of a change in regulatory practice, there are good reasons for legislative action to clarify the issue. Legislation such as H.R. 1229 would remove legal uncertainty in this area, would obviate the possibility of future regulatory changes of policy, and would allow Congress to address the manner in which CVD law will be applied to non-market economies.”

The subcommittee also heard testimony from opposing viewpoints. David Phelps, President of the American Institute for International Steel and a board member of the Consuming Industries Trade Action Coalition (CITAC) stated that the application of countervailing duty laws to non-market economies is probably WTO illegal and that H.R. 1229 is "fundamentally unfair to U.S. consuming industries" since it would make industries in other countries more competitive.

It remains to be seen if such legislation will be implemented by Congress and what China’s reaction would be to this so-called “leveling of the playing field” by Congress.

*Mr. Apfel is currently a law student at George Washington University Law School.

Labels: Countervailing Duties

The United States International Trade Commission (ITC) today issued affirmative preliminary injury determinations in the antidumping and countervailing duty investigations on coated free sheet paper from China, Indonesia and Korea.

Vice Chairman Shara L. Aranoff and Commissioners Stephen Koplan, Deanna Tanner Okun, and Charlotte R. Lane voted in the affirmative. Chairman Daniel R. Pearson voted in the negative. Commissioner Jennifer A. Hillman did not participate in these investigations.

As a result of the ITC's affirmative determinations, the Commerce Department will continue to conduct its investigations of imports of coated free sheet paper from China, Indonesia, and Korea, with its preliminary countervailing duty determinations due on or about January 24, 2007, and its preliminary antidumping determinations due on or about April 9, 2007.

As previously reported, this case is unique since the petitioner is requesting the U.S. to impose countervailing duties on China, a country designated as a non-market economy (NME). This is the first countervailing duty investigation involving the PRC since 1991, when the Commerce Department initiated investigations on lugnuts and ceiling fans, which were subsequently terminated.

The Commerce Department recently published a notice seeking public comments on the applicability of the countervailing duty law to imports from the People's Republic of China.

Labels: Antidumping, Countervailing Duties