House & Senate Leadership Introduce Bills to Retain All CV Orders, Stem Court & WTO Rulings
On February 29, 2012, the trade leadership in the House and Senate introduced identical legislation to change the law so that the International Trade Administration can continue to apply countervailing duties to non-market economies (NMEs) such as China and Vietnam beyond upcoming court and WTO deadlines. The House Ways and Means Committee states that this legislation will move soon, and that it was developed with the support of the Obama Administration.
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(According to the Senate Finance Committee, the U.S. government began the practice of applying CV duties to NMEs in 2007, but the Court of Appeals for the Federal Circuit (CAFC) ruled in December 2011 that Congress never explicitly authorized the International Trade Administration (ITA) to do so, which USTR states would mean the U.S. would have to revoke 24 existing CV duty orders for China and Vietnam, as well as stop pending CV investigations for these NME countries. Proponents of this legislation state its enactment would give the ITA the explicit authorization the CAFC requires and would be in line with World Trade Organization rules.)
Leaders Say Measure Would Overturn CAFC and Address WTO Ruling
A House Ways and Means summary advocating the measure states that its enactment into law would:
Allow CV duties for NMEs. The CAFC ruled in December 2011 in GPX v. United States, that U.S. law prohibits the ITA from applying CV duties to NMEs, including China. The CAFC decision stated that in legislating in the area of trade remedies (but not addressing an earlier ITA practice of not applying CV law to certain Soviet-style NMEs), Congress had implicitly ratified the practice and stripped ITA of discretion to apply CV law to NMEs entirely. This legislation would overturn that decision.
Preserve validity of existing CV orders. If the CAFC’s decision were allowed to stand, ITA could likely be forced to terminate the 23 existing CV duty orders against products from China (plus 1 from Vietnam) and the six ongoing investigations against Chinese and Vietnamese products, which could also result in the possible refund of already-collected duties. This legislation would ensure that the 24 existing orders and six pending investigations continue to be valid.
Address adverse WTO ruling on “double remedies.” In 2011 the WTO Appellate Body found that there may be a “double remedy” in situations where CV duties are applied to NME exports at the same time that antidumping (AD) duties calculated using the so-called “surrogate value” methodology are applied to the exports. This legislation would allow the ITA to adjust AD duties to address any possible double remedy in these situations.
Specifically, if a foreign exporter in a dumping case were able to demonstrate that there was an increase to its export prices due to a countervailed domestic subsidy and the use of the surrogate value methodology, the ITA would determine whether it could make a reasonable estimate of the extent of the increase to the dumping margin, and if so, make a corresponding reduction to the dumping margin.
(ITT has previously reported that the WTO’s adverse ruling pertained to AD and CV orders on (1) new pneumatic off-the-road tires, (2) laminated woven sacks, (3) circular welded pipe, and (4) light-walled rectangular pipe and tube - all from China. See ITT’s Online Archives 12012418 for summary.)
Be consistent with U.S. WTO obligations. The summary states that WTO rules do not preclude the application of CV laws to NMEs like China, so the legislation is fully compatible with our WTO obligations.
The House bipartisan bill, H.R. 4105 (here), was introduced on February 29, 2012 by House Ways and Means Chairman Camp (R-MI), Ranking Member Levin (D-MI), Trade Subcommittee Chairman Brady (R-TX), and Trade Subcommittee Ranking Member McDermott (D-WA) and has at least 100 cosponsors.
A Senate Finance Committee press release states that the companion bipartisan Senate bill was also introduced on February 29 by Senate Finance Committee Chairman Max Baucus (D-Mont.) and Subcommittee on International Trade Ranking Member John Thune (R-SD), and has at least 10 cosponsors. The Senate companion bill is not yet numbered or available.
(See ITT’s Online Archives 11122210 for summary of CAFC ruling. See ITT’s Online Archives 12012015 for summary of USTR letter stating that all China CV orders must be revoked soon after February 2, 2012 because of the CAFC ruling, absent a new law. See ITT’s Online Archives 12012713 for summary of Ways and Means statement that the CAFC was giving the Administration more time to file for a rehearing of the 2011 decision.
See ITT’s Online Archives 11051209 for summary of U.S. stating that it would implement the WTO’s ruling (DS379) that was adverse to the ITA’s AD/CV “double counting” of China’s subsidies in AD and CV investigations for certain products from China. See ITT’s Online Archives 11071137 for summary stating that U.S. would implement the ruling by February 25, 2012, and 12012418 for summary stating that the deadline was extended to April 25.)
House Ways and Means statement (02/29/12) available here, summary available here.
Senate Finance statement (02/29/12) available here.
Commerce Secretary Bryson and U.S. Trade Representative Kirk's statement (02/29/12) is available here.