There’s not much that the U.S. Congress and President Obama agree on these days, but when it comes to unfair imports from China, bipartisanship is alive and well.
Overturning a recent appellate court decision, Obama on March 13 signed legislation that clarifies that countervailing duties can be applied to goods from non-market economies like China and Vietnam.
In 2007, the U.S. government began applying countervailing duties to Chinese imports. According to Sen. Max Baucus (D-Mont.), who co-sponsored the new law, these countervailing duties have protected an estimated 80,000 jobs across the country “by holding non-market economies responsible for unfairly subsidizing billions of dollars of imports.”
But in December 2011, the U.S. Court of Appeals for the Federal Circuit in GPX International Tire Corp. v. United States found that Congress never explicitly authorized the practice. The court ruled that Congress, when it amended and reenacted countervailing duty laws in 1988 and 1994, had “legislatively ratified…that government payments cannot be characterized as ‘subsidies’ in a non-market economy context, and thus that countervailing duty law does not apply.”
Under the Tariff Act of 1930, antidumping duties may be placed on goods sold in the U.S. at less than fair value, while countervailing duties are imposed to offset subsidies on goods from a foreign government.
The new law makes it clear that the Commerce Department can continue to apply countervailing duties. It also addresses a 2011 finding by the World Trade Organization that the United States may be unfairly imposing both countervailing and antidumping duties on imports from non-market economies – in effect, a double remedy.
The legislation zoomed through Congress. It was introduced in the Senate on Feb. 29 in by Baucus and John Thune (R-S.D.) and passed unanimously on March 5. On March 6, it passed the House by a 370 to 39 vote.
“China distorts the free market by giving enormous subsidies to its producers and exporters, and our companies and workers should not be expected to compete against the deep pockets of the Chinese government,” said bill sponsor Rep. Dave Camp (R-Mich.) in remarks on the House floor.
According to Voice of America, Chinese Commerce Minister Chen Deming said Beijing is not obligated to follow policies dictated by other countries, and that the higher U.S. tariffs are not in line with international rules.
The law is retroactive, covering all proceedings initiated by the Commerce Department since Nov. 20, 2006.
An analysis by Bingham McCutchen in January found there were 22 countervailing duty orders in place against products from China, including coated paper, steel grating, sodium nitrite and aluminum extrusions. Three cases were pending as of Dec. 20, 2011.
To address WTO concerns, the new law provides that the Commerce Department can reduce antidumping duties in non-market economy cases where countervailing duties are simultaneously being imposed, according to a news release from Baucus’s office. However, it must be demonstrated that domestic subsidies have inflated the dumping margin, and the Commerce Department is able to estimate a reasonable adjustment.
Contact Jenna Greene at firstname.lastname@example.org.