House Passes Bill to Retain CV Orders, Enactment Expected Soon
On March 6, 2012, the House of Representatives passed H.R. 4105 by a 370 to 39 margin, with 24 not voting. The bill will ensure the International Trade Administration can continue to apply countervailing duties in cases involving non-market economy nations (NMEs), like China and Vietnam, beyond upcoming court and WTO deadlines. The Senate passed its version of the bill, S. 2153 one day earlier. The Senate is now expected to pass H.R. 4105 (which is identical to S. 2153) and then send the measure to the President for his signature, enacting the measure into law.
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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. The USTR has stated that this 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 S. 2153 and H.R. 4105 state its enactment would give the ITA the legal authority the CAFC ruled was absent, and would be in line with World Trade Organization rules.)
Leaders Say Measure Will Overturn CAFC and Address WTO Ruling
A House Ways and Means summary advocating the measure states that its enactment into law will:
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 in 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 U.S.' WTO obligations.
(See ITT’s Online Archives 12030618 for summary of the Senate’s passage of S. 2153. See ITT’s Online Archives 12030129 for summary of the introduction of the companion House and Senate bills.
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.)
March 6, 2012 Congressional debate on H.R. 4105 is here.
House Ways and Means Committee press release about House passage of H.R. 4105 is here.
March 5, 2012 Congressional Record discussion on S. 2153 is here.
Text of H.R. 4105 is available here.
Text of S. 2153 is available here.