时间：2022-07-06 09:44:21
Despite having joined the World Trade Organization (“WTO”), the People’s Republic of China (“PRC” or “China”) continues to be the target of so-called “unfair trade investigations” by countries throughout the world, with the United States being a leading example of countries that try to slap high, punitive “tariffs” or “duties” on goods being imported from China. The vast majority of these cases involve claims of “dumping,” i.e., where the U.S.-based producers assert that goods from China are being sold in the United States at “less-than-fair-value” (“LTFV”).
Stated simply, LTFV means that the goods are sold in the United States at a price that is below the price that the goods sell for in the home country of the manufacturer.However, antidumping cases are never so simple, and a complicating factor in cases involving PRC-manufactured goods is that the U.S. government continues to treat the PRC as a “non-market economy” (“NME”), which means that home market sales prices are not used in determining whether goods are being sold at unfairly low prices in the United States.
Another trade remedy that is often used in conjunction with claims of unlawful “dumping” is to seek a “countervailing duty” based on the allegation that goods in the foreign country are being subsidized by the government of that country.
However, Chinese manufacturers have more to contend with than antidumping and countervailing duty investigations.The recent situation involving tires manufactured in China shows that the U.S. manufacturing industry has additional weapons to use in trying to diminish or completely destroy competition from China.Specifically, there is a provision in U.S. law which Congress added as a condition of the U.S. agreeing to China becoming a member of the WTO which the U.S. tire-producing industry is using to try to impose high and punitive tariffs on tires imported from China.
The Tires Investigation
On June 18, 2009 the U.S. International Trade Commission (“ITC” or “Commission”) in a 4 to 2 vote ruled that certain passenger vehicle and light truck tires from the PRC are being imported into the United States in such increased quantities or under such conditions as to cause market disruption to the U.S. based producers of competing products.The investigation was initiated after a U.S. union the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (“USW”) filed a petition with the ITC on April 20, 2009.The ITC recommended that the U.S. impose ad valorem tariffs over the next three years of 55 percent, 45 percent and 35 percent, on imports of such tires from China.The matter is now before the U.S. Trade Representative (“USTR”), which will make a recommendation shortly to the U.S. President regarding whether to follow the ITC’s recommendation.Within 15 days after receiving USTR’s recommendation, the President is required to provide import relief unless the President determines that providing such relief is not in the national economic interest of the United States or, in extraordinary cases, that taking action would cause serious harm to the national security of the United States.
The two Commissioners who voted against imposition of the tariffs are Republicans.Three Democrats and one Republican voted in favor of the tariffs.
During a hearing before the ITC in June 2009, a large contingent of U.S. Senators, Congressmen and other high level elected officials appeared before the ITC to argue on behalf of the U.S. producers.
The Authorizing Statute
The investigation against the tires from the PRC was pursuant to Section 421 of the Trade Act of 1974, 19 U.S.C. 2451, which was added to the U.S. trade laws pursuant to the U.S. government’s agreement for the entry of China into the WTO.Section 2451(a) provides that:
If a product of the People’s Republic of China is being imported into the United States in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the domestic producers of a like or directly competitive product, the President shall, in accordance with the provisions of this section, proclaim increased duties or other import restrictions with respect to such product, to the extent and for such period as the President considers necessary to prevent or remedy the market disruption.
“Market disruption” is deemed to exist “whenever imports of an article like or directly competitive with an article produced by a domestic industry are increasing rapidly, either absolutely or relatively, so as to be a significant cause of material injury, or threat of material injury, to the domestic industry.”The term “significant cause” refers to a cause which contributes significantly to the material injury of the domestic industry, but need not be equal to or greater than any other cause.
In determining whether market disruption exists, the Commission is to consider the following factors:
1.The volume of imports of the product which is the subject of the investigation;
2.The effect of imports of such product on prices in the United States for like or directly competitive articles; and
3.The effect of imports of such product on the domestic industry producing like or directly competitive articles.
The statute imposes strict deadlines on the Commission for issuing its determination typically within 60 or 90 days.Within 55 days of the Commission’s report, the USTR shall make a recommendation to the President concerning what action, if any, to take to prevent or remedy the market disruption.The President shall determine whether to provide provisional relief and proclaim such relief, if any, within 10 days after receipt of the recommendation from the USTR.Such relief may take the form of:
1.The imposition of or increase in any duty;
2.Any modification, or imposition of any quantitative restriction on the importation of an article into the United States; or
3.Any combination of actions under (1) and (2).
The President shall provide import relief if that is the recommendation of the USTR unless the President determines that provision of such relief is not in the national economic interest of the United States or, in extraordinary cases, that the taking of action would cause serious harm to the national security of the United States.The President may determine under paragraph (1) that providing import relief is not in the national economic interest of the United States only if the President finds that the taking of such action would have an adverse impact on the United States economy clearly greater than the benefits of such action.
Note that these cases do not always end in favor of the U.S. producers.For example, in Uncovered Innerspring Units from China, No. TA-421-5 (March 12, 2004), the ITC determined that uncovered innerspring units from the PRC were not being imported into the United States in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the U.S. producers of like or directly competitive products.
Antidumping Investigations
As stated above, the primary trade remedy used against Chinese imports is the antidumping laws.Recently antidumping duty investigations have been pursued against Chinese tires by a wide range of countries, including, without limitation, Brazil, Italy, Turkey, the United States and other nations.
In its simplest form, “dumping” occurs when products are sold in the investigating country at a price that is less than the price of the same product sold in the country where it is produced.This is the concept used in the United States, Europe and other countries throughout the world.However, the details can be very complex, because it is necessary to compare “apples to apples,” i.e., the home country and foreign prices need to be stripped of various additions in order to be able to compare true prices.This requires the investigators to make determinations regarding costs of sale, marketing expenses, transportation expenses, discounts and a whole range of factors.In addition, there may not be sufficient sales in the home market of the manufacturing entity to use those sales to determine if there has been dumping and if so, how much the dumping margin happens to be.In addition, as discussed below, if the U.S. government believes that the country of origin is a non-market economy as the U.S. government continues to believe is the case with the PRC then sales by the producer within the home market are not going to be considered by the U.S. government in making the dumping determination.
In the United States there are two primary government agencies involved in an antidumping case: the U.S. Department of Commerce (“Commerce” or “Department”) and the merce decides whether there is dumping and, if so, the margin of dumping.The ITC, on the other hand, decides whether a U.S. industry is being injured or threatened with material injury by reason of the dumping.A typical dumping case takes a little more than one year from start to finish.However, once an antidumping duty order is in place, the foreign producers or importers can request “administrative reviews” each year to determine, based on sales from the year in question, whether the duty should be reduced or terminated.In addition, every five years the ITC may consider whether the dumping order should remain in place.
Both Commerce and the ITC are based in Washington, D.C.
When an antidumping case is filed the ITC will quickly make a preliminary injury determination.Thus, if a case is filed in early July then by the end of August the ITC will decide whether there is a reasonable likelihood that the U.S. industry is being materially injured or threatened with material injury because of the subject imports.There are six commissioners, three from the Democratic party and three from the Republican party.Technically they are independent from other branches of government and are supposed to vote solely based on whether they believe the U.S. industry is injured or threatened with material injury because of the subject imports.However, the commissioners are often midway in their careers and may be looking ahead to their next political appointment.They often vote the way one would expect based on party affiliation.Thus in the tires case, two of the Republicans voted against import duties.But all three Democrats voted in favor of the U.S. industry (and its union).
Assuming the ITC makes an affirmative preliminary determination, then the case is transferred to the Commerce Department, which will take several months to determine whether the imports are being sold at less-than-fair value (or what Commerce now calls “normal value” (“NV”)), and if so, at what percentage, i.e., whether the goods imported into the U.S. are being sold at 35 percent less than what the same goods would be sold for in the home country.After Commerce makes its “preliminary” dumping determination, the Commerce officials visit the manufacturing sites of the exporters to perform a “verification” on the financial and operational data provided during the investigation by the exporters and manufacturers.There is also a process for briefing the legal arguments to the Department.Ultimately the Department will issue its final decision, which concludes whether there is dumping and if so by what margin.
The case then switches back to the ITC to make is final decision on whether the U.S. industry is materially injured or threatened with material injury because of the imports being sold at less than fair value.
During the process, the U.S. Customs and Border Protection service will require importers to post a bond for the estimated dumping duties (after the preliminary determination by Commerce), and if a final duty order is entered, those bonded amounts will be liquidated.If a dumping duty is ordered the goods can still be imported but they duty must be paid at time of entry.
Appeals from the Commerce and ITC rulings can be filed with the U.S. Court of International Trade in New York and ultimately with the U.S. Court of Appeals for the Federal Circuit in Washington.
Non-Market Economy Status
The Commerce Department has treated the PRC as a non-market economy (“NME”) in all antidumping duty investigations (and administrative reviews). Designation as an NME country will remain in effect until it is revoked by the Department.
Because China is treated as an NME, the determination of whether there is dumping (and the margin of dumping) is not based on actual sales within China.Rather, an artificial value is based on using “factors of production” in the Chinese manufacturing process, but applying them to the “costs” of production from a “surrogate” free market economy country typically India.Other surrogate countries may be Columbia, Indonesia, Peru, the Philippines and Thailand, as they are deemed comparable to the PRC in terms of economic development.
In proceedings involving NME countries, the Department has a rebuttable presumption that all companies within the country are subject to government control and, thus, should be assessed a single antidumping duty rate.It is the Department’s policy to assign all exporters of merchandise subject to review in an NME country this single rate unless an exporter can demonstrate that it is sufficiently independent so as to be entitled to a separate rate. Exporters can demonstrate this independence through the absence of both de jure and de facto government control over export activities.
i) Absence of De Jure Control
The Department considers the following de jure criteria in determining whether an individual company may be granted a separate rate: (1) an absence of restrictive stipulations associated with an individual exporter’s business and export licenses; (2) any legislative enactments decentralizing control of companies; and (3) other formal measures by the government decentralizing control of companies.
ii)Absence of De Facto Control
Typically the Department considers four factors in evaluating whether each respondent is subject to de facto government control of its export functions: (1) whether the export prices are set by or are subject to the approval of a government agency; (2) whether the respondent has authority to negotiate and sign contracts and other agreements; (3) whether the respondent has autonomy from the government in making decisions regarding the selection of management; and (4) whether the respondent retains the proceeds of its export sales and makes independent decisions regarding disposition of profits or financing of losses. The Department has determined that an analysis of de facto control is critical in determining whether respondents are, in fact, subject to a degree of government control that would preclude the Department from assigning separate rates.
To determine whether sales were made at less than NV, the Department compares export price (“EP”) to NV, where NV is based on the “factors of production” analysis discussed above.
Roy Goldberg represents foreign and U.S. companies in a wide range of international trade matters, including representing both U.S. manufacturers and foreign producers in antidumping investigations before the U.S. Department of Commerce and the U.S. International Trade Commission.