US China Trade Disputes:
How to Respond to US Antidumping
and Countervailing Cases
William Perry, Partner
Dorsey & Whitney
Formerly Office of General Counsel, U.S. International
Trade Commission and Office of Chief Counsel and Office
of Antidumping Investigations, U.S. Commerce Department
See blog, www.uschinatradewar.com and
www.importallianceforamerica.com
Trade Cases Increase in US and China
• US 121 Outstanding antidumping / countervailing orders
against Chinese products
• 75 Metals, Chemicals and Steel—Injuring and in some cases
destroying US downstream industries
• New US AD and CVD cases—Solar Cells/Solar Products, Tires
and now Office Paper—billions of dollars in imports
• In China, Antidumping and Countervailing Duty cases against
US Chicken, Polysilicon, and automobiles billions of dollars in
exports
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Overview of US AD and CVD Law
To win an antidumping or countervailing duty case, the
Petitioner(s), usually the US Industry:
• Must prove dumping or subsidization at the Commerce
Department
• Injury or Threat of Material Injury at the U.S. International Trade
Commission (“ITC”)—Entire Domestic Industry
• Year long Proceeding and Jurisdiction—In Rem
• Because of its methodology, Commerce must find dumping and
subsidization in cases against China
• Recently 20 years of practice overturned and more difficult for
Chinese state-owned companies to get their own antidumping
rates
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What is Dumping?
• Market economy—US Sales below Normal Value—home
market prices or Fully Allocated Cost of Production
• China—Nonmarket Economy Country—Do not Use Actual
Prices and Costs in China
• Construct Cost—Factors of Production
• Surrogate Values from Surrogate Country—Used to be India
now 5 to 10 surrogate countries, such as Thailand, Indonesia,
Philippines, Ukraine, Bulgaria and Columbia
• Hardwood Plywood—Philippines 0 Bulgaria 57%
• CVD Duties to Countervail a subsidy, a benefit, money, given
by the government to a Chinese company for exporting
products OR to a specific industry
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China WTO Agreement – NME
• Dec 11, 2016—15 Years after WTO Agreement
• Section 15 of China WTO Accession Agreement provides:
15. Price Comparability in Determining Subsidies and Dumping…
(a)(ii) The importing WTO Member may use a methodology that
is not based on a strict comparison with domestic prices or costs in
China…
(d) In any event, the provisions of subparagraph (a)(ii) shall
expire 15 years after the date of accession.
• Section 15 of the China WTO Agreement came from the US
China WTO Agreement and a US demand
• But US Government’s position in a treaty and not the law so no
change
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Retroactive Liability for US Importers
• US Importers pay AD/CVD duties, not Chinese companies
• Retroactive liability—Cash Deposits versus Duties
• Actual liability determined during annual review investigations
• Total missing retroactive AD duties well over $1billion
• $800 million in AD Duties on Just Four Products—mushrooms,
garlic, crawfish and honey.
• Intense Political Pressure by Congress on Customs to Enforce
AD and CVD orders
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Action Versus Inaction – Chinese
Exporters Need to Participate
• Must participate in Initial Investigation and Review Submit
Separate Rates Applications
• AD and CVD Orders 5 to 30 years
• If Chinese companies shut out, should do the review
investigation—Solar cells vs PVA, Saccharin, Indigo
• If the Chinese company keeps fighting eventually the rates
come down
• Have driven AD rates from over 200 to 300% to 0% and made
Chinese companies exclusive exporters
• But Importers must make sure Chinese companies participate
because importer liable
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Importers Must Act
•
Do not say this is the foreign exporter’s problem. Importer is liable, not
the foreign exporter, and can face millions, if not 10s of millions in
retroactive liability.
•
AD and CVD Orders 5 to 30 years Cover Chinese imports
•
Have Chinese accountants running US Legal Cases with significant
legal issues
•
Importers Must be active at the Commerce Department and the ITC
and Must Have Some Control over the situation in China because the
importer is liable, not the Chinese company
•
Court appeals are important. AFA rate of 157% cut in half at Court
•
Political Problem—Many importers have abandoned the political field
in Washington DC in AD and CVD cases
•
But not only US importers being smashed but also downstream US
industries—US Magnesium Dye Casting Industry
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