|Sponsor||Rep. Camp, Dave|
|Date||March 6, 2012 (112th Congress, 2nd Session)|
|Staff Contact||Jon Hiler|
On Tuesday, March 6, 2012, the House is scheduled to consider H.R. 4105, a bill to apply the countervailing duty provisions of the Tariff Act of 1930 to nonmarket economy countries, under a suspension of the rules, requiring a two-thirds majority vote for passage. The bill was introduced on February 29, 2012, by Rep. Dave Camp (R-MI) and was referred to the House Committee on Ways and Means.
H.R. 4105 would amend the Tariff Act of 1930 to authorize the Department of Commerce to apply countervailing duty (CVD) provisions to nonmarket economy (NME) countries.
The bill would also provide for an adjustment (reduction) of antidumping duties if a countervailable subsidy has been identified in a nonmarket economy country and can be demonstrated to have reduced the average price of an imported class or kind of merchandise.
The following summary is from a recent report by the Congressional Research Service:
Two major U.S. trade remedies are antidumping (AD) law, which combats the sale of imported products at less than their fair market value, and countervailing duty (CVD) law, which aims to offset foreign government subsidization of imported goods. If dumped or subsidized imports are found to cause or threaten material injury to a domestic industry, antidumping or countervailing duties will be imposed. Both remedies are available when goods are imported from competitor countries with free market policies. As of 1984, however, only AD law had been applied to goods from nonmarket or "transitional" economies. With the continued economic growth of some of these economies, such as China and Vietnam, pressure increased on the U.S. government to use both trade remedies more aggressively against unfair imports from these countries.
AD law has been amended several times since its inception in 1921. With Congress's continued statutory guidance, the Department of Commerce (DOC) has implemented several different methodologies for applying AD law, including using surrogate country data when the fair market value of a product in the originating country is not readily ascertainable. CVD law had not been used against NMEs, however, since DOC concluded in 1984 that it could not determine subsidization in such situations. In 1986, the U.S. Court of Appeals for the Federal Circuit (CAFC), in Georgetown Steel Corp. v. United States, upheld DOC's interpretation of the CVD statute as reasonable. While DOC had generally refused to review CVD petitions against NME countries following this determination, it accepted a petition seeking a CVD on imports of coated free-sheet paper from China in 2006. DOC distinguished the current Chinese economy from the Soviet-style economies at issue in Georgetown Steel and found that the imported Chinese paper was subsidized. Because the U.S. International Trade Commission did not make the requisite final affirmative material injury determination, CVDs were not imposed. Other CVD petitions were successful, however, resulting in the imposition of 24 CVD orders on NME country merchandise.
World Trade Organization (WTO) agreements, together with the WTO Accession Protocols of China and Vietnam, acknowledge that AD and CV duties may be imposed on these countries' goods, and that surrogate country data may be used to calculate dumping margins or subsidization. In a WTO case brought by China, however, the WTO Appellate Body found in April 2011 that the simultaneous imposition by the United States of AD and CV duties on the same Chinese merchandise, where surrogate country data was used to establish the fair market value of the goods in the AD case, remedied the same subsidization twice or "double counted" in violation of U.S. WTO obligations. The United States is expected to comply with this decision by April 25, 2012. More broadly, the U.S. Court of Appeals for the Federal Circuit, on December 19, 2011, held that CVDs may not be imposed on NME goods under any circumstance, finding in GPX Intl Tire Corp. v. United States that Congress had legislatively ratified DOC's 1984 statutory interpretation and thus DOC may no longer interpret the statute to permit such duties and must seek a statutory amendment if it wishes to impose CVDs on NME products in the future. The CAFC affirmed a lower court decision that also prohibited DOC from imposing CVDs on NME goods, but did so on the ground that DOC had failed to eliminate double counting, the same practice at issue in the WTO case. DOC is preparing a new WTO-compliant determination in the investigations challenged by China in the WTO. The executive branch is reviewing the CAFC decision, having until March 5, 2012, to request a rehearing en banc, and has also asked Congress to enact legislation to remedy the court's ruling.
According to the Committee on Ways and Means, this legislation is aimed at overturning the recent decision by the Court of Appeals for the Federal Circuit in GPX v. United States, which held that U.S. law prohibits the Department of Commerce from applying CVDs to NMEs, including China. The CAFC decision stated that, in legislating in the area of trade remedies but not addressing an earlier Commerce practice of not applying CVD law to certain Soviet-style NMEs, Congress had implicitly ratified the practice and stripped Commerce of discretion to apply CVD law to NMEs entirely.
Additional background on the legislation is available here from the Committee on Ways and Means. The Committee has also provided the following facts about current CVD cases:
China CVD Orders as of March 5, 2012
Circular Welded Austenitic Stainless Pressure Pipe
Circular Welded Carbon Quality Steel Line Pipe
Circular Welded Carbon Quality Steel Pipe
Citric Acid and Citrate Salt
Coated Paper Suitable for High-Quality Print Graphics Using Sheet-Fed Presses
Kitchen Appliance Shelving and Racks
Laminated Woven Sacks
Light-Walled Rectangular Pipe and Tube
Lightweight Thermal Paper
Magnesia Carbon Bricks
Multilayered Wood flooring
Narrow Woven Ribbons with Woven Selvedge
New Pneumatic Off-The-Road Tires
Oil Country Tubular Goods
Potassium Phosphate Salts
Prestressed Concrete Steel Wire Strand
Raw Flexible Magnets
Seamless Carbon and Alloy Steel Standard, Line, and Pressure Pipe
Tow-Behind Lawn Groomers and Parts Thereof
China CVD Investigations as of March 5, 2012
Certain Steel Wheels
Galvanized Steel Wire
High Pressure Steel Cylinders
Crystalline Silicon Photovoltaic Cells
Utility Scale Wind Towers
Vietnam CVD Orders as of March 5, 2012
Polyethylene Retail Carrier Bags
Vietnam CVD Investigations as of March 5, 2012
Circular Welded Carbon-Quality Steel Pipe
Steel Wire Garment Hangers
2. Product Coverage for current CVD orders/investigations from China and Vietnam are as follows:
China: - consumer goods, steel products, agricultural products, chemicals, and energy products.
Vietnam: – consumer goods and steel products
Non-Market Economy Countervailing Duty Petitioner Locations by State
There is no CBO cost estimate available for this bill.