The Supreme Court said Monday it will rule on a case that could make it harder for U.S. companies to obtain protective tariffs on low-priced foreign goods.
The dispute centers on whether uranium that U.S. utilities send to France for enrichment and then import for use in nuclear power plants qualifies as a 'good' or 'service.'
In the case accepted by the court, a French uranium enrichment company, Eurodif SA, and a group of U.S. utilities argue that only the service of uranium enrichment is being imported, because the raw uranium was provided by the utilities. As a result, the enriched uranium shouldn't be subject to antidumping duties, they say.
The Commerce Department, however, decided in 2002 that enriching uranium is a 'manufacturing process' and not a service, and imposed a 20 percent antidumping duty on imports from Eurodif.
But the U.S. Court of Appeals for the Federal Circuit overruled Commerce in September 2007. That prompted the Bush administration and USEC Inc. (NYSE:USU) , a Bethesda, Md.-based company that is the sole U.S. uranium enricher, to appeal to the Supreme Court.
The Justice Department's Solicitor General, the administration's lawyer, said the appeals court's ruling 'has opened a potentially gaping loophole in the nation's trade laws' by encouraging U.S. importers and foreign companies 'to structure their transactions as contracts for 'services'' rather than for goods in order to avoid punitive duties.
Oral argument will be scheduled for the court's next term, which begins in October. The dispute consists of two cases, U.S. v. Eurodif, 07-1059, and USEC v. Eurodif and the Ad Hoc Utilities Group, 07-1078.
I heard about this case a number of years ago, but never really thought through the issues. My gut reaction is that WTO rules would permit anti-dumping duties to be imposed in this situation. While there is a service involved here, ultimately there is a good being imported, and thus anti-dumping duties are pemissible. However, I'm not sure what U.S. law says about it or what the Supreme Court will think of it. I'll try to follow the case as it develops next year.
ADDED: Here's the cert petition, with many related documents attached. I may have to re-think my views on how WTO rules would apply. I'm not sure I understand the facts completely at this point.
MORE: That was the government's cert petition linked to above. More documents are at the bottom of this page: http://www.scotusblog.com/wp/petitions-to-watch-conference-of-41808/
Here's my question: Was the uranium in question subject to normal tariff duties when it was entered into the United States after enrichment? I skimmed through some of the documents related to the case, but did not see the answer at first glance. (That's not to say it's not in there; there was a lot to read through, and I could have missed it).
AND YET MORE: Here's a summary of the appeal from Sidley Austin.