We had a good discussion here about the proper approach to determining export contingency in relation to Chinese currency issues.
In the comments on the linked post, anon99 said this:
Exporters don't have to export to get the "extra RMB". They could, for example, make overseas investments that generate profits, and then repatriate those profits to earn the "extra RMB". Or they could attract inbound investment from foreign investors and get the "extra RMB". The alleged subsidy is not, in fact, "contingent" upon exportation.
Thus, under this view, if there are ways to get the subsidy that don't involve export, there is no export contingency.
John Magnus then responded with the following:
Even if you don't always choose to collect the subsidy for which exporting has made you eligible, you get an export-contingent subsidy when you do collect it. It doesn't matter who else can get a similar subsidy, or what other non-trade-related actions in a different sphere would allow you to get additional amounts of subsidy.
For John, then, the existence of other ways to get the subsidy does not preclude a finding of export contingency.
The House Ways and Means Committee is getting ready to mark up its China currency bill. Here's an excerpt from the text of the Chairman’s Amendment in the Nature of a Substitute:
10 (b) EXPORT SUBSIDY.—Section 771(5A)(B) of the
11 Tariff Act of 1930 (19 U.S.C. 1677(5A)(B)) is amended
12 by adding at the end the following new sentence: ‘‘In the
13 case of a subsidy relating to a fundamentally undervalued
14 currency, the fact that the subsidy may also be provided
15 in circumstances not involving export shall not, for that
16 reason alone, mean that the subsidy cannot be considered
17 contingent upon export performance.’’.
This seems to reflect John's view. I don't know much about the markup process; it will be interesting to see what the final language looks like.
ADDED:
For additional context, let me refer to the recent DOC decision on this issue, where DOC said:
Regarding Petitioners’ allegation that China’s currency regime confers a de jure specific export subsidy, the cited foreign exchange rules provide an indication of the extent of the GOC’s control over foreign exchange transactions, but they do not show that any possible subsidy that results from the regime is contingent on exportation or anticipated exportation. On the contrary, there does not appear to be a basis for the claim that the currency regime of China is de jure specific to exporters. For example, the scope of the governing legislation clearly includes all businesses and individuals within the territory of the People’s Republic of China.4 Similarly, Petitioners’ allegation that China’s currency regime confers a de facto specific export subsidy is insufficiently supported because assistance to an industry as evidenced, for example, by Five-Year Plans, is not necessarily indicative of a subsidy contingent on exportation or anticipated exportation. Any firm or individual exchanging foreign currency for RMB would receive the subsidy allegedly conferred by China’s foreign currency regime, not just those industries included in the State’s industrial plans.
The statutory language appears to be an attempt to change the DOC approach set out here. Let me also note that what I said in the post linked to above about the DOC's approach possibly being due to how the petitioners argued the case may not have been correct. Rather, this may be more about DOC's long-standing view of the issue.
