Originally published March 13, 2012
Keywords: anti-subsidy trade law, imports, Vietnam, China, non-market economy, NME, countervailing duties, CVD
On March 13, 2012, President Obama signed legislation that explicitly authorizes the United States to apply countervailing duties (CVD), defined as tariffs on imports that benefit from subsidies, to imports from non-market economy (NME) countries.
By way of background, in December 2011 the US Court of Appeals for the Federal Circuit (CAFC) ruled that current CVD law did not apply to NME imports (chiefly from Vietnam and China).1 The bill signed into law by the President, designated H.R. 4105 and titled "Application of Countervailing Duty Provisions to Nonmarket Economy Countries," effectively reverses the CAFC ruling, which would have invalidated more than two dozen CVD orders and investigations against goods from China and Vietnam. The law also attempts to address concerns that concurrently applying antidumping (AD) and CVD tariffs against the same imported goods unfairly double-counts subsidies.
In its decision, the CAFC rejected the US Department of Commerce (Commerce) challenge to a more narrow Court of International Trade (CIT) decision known as the GPX cases, which overturned Commerce's concurrent application of AD and CVD duties against certain Chinese exports to the United States. The CAFC affirmed the CIT, but on separate – and much broader – grounds: namely, that current US CVD law does not apply to exports from an NME country under any circumstances. The CAFC reasoned that the US Congress had implicitly ratified earlier administrative decisions declining to apply the CVD law to NME imports. Mayer...
