A while back, I did a post about the issue of "dual remedies" in relation to anti-dumping and countervailing duties, focusing on the DS379 WTO dispute. ("Dual remedies" might not be the best term, but that's what I used last time, so I'll stick with it for now). Recently, the U.S. Court of International Trade issued a decision on the same issue, under U.S. law. I'm going to try to do a substantive post on this at some point soon, but there are a lot of tricky issues, so I'll start with a simple excerpt from the CIT decision. I'll come back to the substance once I've sorted it all out a bit more. The basic finding was that if the Department of Commerce wants to impose both AD/CV duties for the same imports in the context of a non-market economy (NME) respondent, it has to come up with a methodology that ensures that the subsidies and dumping are not being double-counted. Here is some of the key reasoning:
Prior to 2007, Commerce did not apply CVD law to any type of NME country, finding that the centrally controlled economies in NME countries made it difficult to “disaggregate government actions in such a way as to identify the exceptional action that is a subsidy.”
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Commerce effected a sea change in 2007, however, when it determined that although the PRC remained designated as an NME country, Commerce could apply the CVD law to products from the PRC.
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It is not clear, however, how the CVD and AD law may work together in the NME context, if at all, and Georgetown Steel explains that at least with respect to the old-style NME countries, the AD statute was intended to cover the ground. See 801 F.2d at 1316. Thus, no coordination was necessary.
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Accordingly, the court finds that while Commerce may have the authority to apply the CVD law to products of an NME-designated country, the CVD and NME AD statutes are unclear as to how Commerce is to account for the overlap between the statutes when imposing both CVD and AD duties on goods from an NME country.
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GPX alleges that the application of both the CVD and AD law using the NME methodology results in a double counting of duties, as it “punishes Chinese companies twice for the same allegedly ‘unfair’ trading practice.”
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The Government, on the other hand, maintains that “[t]he AD and CVD laws provide separate remedies for separate unfair trade practices” and that “the classification of China as an NME under the AD law does not have any necessary consequence under the CVD law.”
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Commerce concluded that “absent a statutory directive for an adjustment and underlying assumption similar to that regarding CVDs imposed to offset export subsidies,7 or evidence that domestic subsidies8 have lowered U.S. prices in a given case, any adjustment for an assumed or undetermined effect would be inappropriate.”
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Commerce is referring to the requirement under 19 U.S.C. § 1677a, to make an adjustment to export price in its AD margin calculations for export subsidies in an ME country by the amount of any CVD imposed. See 19 U.S.C. § 1677a(c)(1)(C). Here, Commerce found that the silence in § 1677a “about the plainly related issue of CVDs to offset domestic subsidies, is not complete silence—it implies that no adjustment is appropriate.”
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GPX argues that double counting occurs when Commerce imposes a CVD remedy to offset an alleged government subsidy, but then compares a subsidy-free constructed normal value (essentially using information from surrogate countries) with the original subsidized export price to calculate the AD margin. (Id.) GPX maintains that just as Commerce must make adjustments to avoid double counting to its AD margin calculations for export subsidies, Commerce must also adjust its methodology to account for domestic subsidies that have been remedied under the CVD law whenever an AD margin is being calculated based upon NME AD methodology.
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Commerce has previously noted in an investigation involving an ME country that “[d]omestic subsidies presumably lower the price of the subject merchandise both in the home and the U.S. markets, and therefore have no effect on the measurement of any dumping that might also occur.” Notice of Final Results of Antidumping Duty Administrative Review: Low Enriched Uranium From France, 69 Fed. Reg. 46,501, 46,506 (Dep’t Commerce Aug. 3, 2004). Here, the export price is not being compared with the price of the good in the PRC in which case both sides of the comparison would be equally affected, but rather, export price, however it is affected by the subsidy, is compared with the presumptively subsidy-free constructed normal value. Without some type of adjustment for this, the imposition of AD duties could very well result in a double remedy.
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If there is a substantial potential for double counting, and it is too difficult for Commerce to determine whether, and to what degree double counting is occurring, Commerce should refrain from imposing CVDs on NME goods until it is prepared to address this problem through improved methodologies or new statutory tools....
If Commerce now seeks to impose CVD remedies on the products of NME countries as well, Commerce must apply methodologies that make such parallel remedies reasonable, including methodologies that will make it unlikely that double counting will occur.
...the court remands the matter for Commerce to forego the imposition of CVDs on the merchandise at issue or for Commerce to adopt additional policies and procedures to adapt its NME AD and CVD methodologies to account for the imposition of CVD remedies on merchandise from the PRC.
