Companies from steel to paper makers may lose a tool they’ve used to fight undervalued Chinese imports after a US appeals court rejected the imposition of duties to offset some foreign government subsidies.
US law doesn’t let the US Department of Commerce levy duties on goods from nations, such as China, that lack a market to set prices, a US Court of Appeals in Washington said yesterday in a unanimous ruling. Congressional action is needed to give the agency that power, the judges ruled.
The decision rejected arguments by Titan International Inc, the top US maker of off-road tires, Bridgestone Americas Inc, a unit of Tokyo-based -Bridgestone Corp, and the AFL-CIO labor federation. It may take years for the companies to appeal or press for legislation, said George Thompson, a lawyer at Neville Peterson LLP in Washington.
“Usually something of this magnitude is going to be part of an overall trade bill, and I don’t see any of those coming down the road anytime soon,” Thompson, who has represented both US and foreign companies, said in an interview. “You’d be foolish to start a case, based on the likelihood that this is going to be the final decision.”
The US uses more than 300 anti-dumping and countervailing duty orders to shield US-made goods, from honey to bedroom furniture, against global competition it deems unfair and damaging to US companies. About half the orders target iron and steel products.
China accounts for a third of all US cases, the most of any country, including about 100 anti-dumping and more than two dozen countervailing duty orders, according to the US International Trade Commission.
Anti-dumping duties apply to goods sold overseas at or below the price in the home country. Countervailing duties aim to offset the benefits of government subsidies to industries.
In laws passed in 1988 and 1994, “Congress adopted the position that countervailing duty law does not apply to non-market economy countries,” Judge Timothy Dyk wrote in the decision posted on the court’s Web site yesterday. “If Commerce believes that the law should be changed, the appropriate approach is to seek legislative change.”
The three-judge panel upheld a US Court of International Trade decision that found the US Department of Commerce action on Chinese tires was illegal.
Charles Miller, a spokesman for the US Department of Justice, which presented the US case, declined to comment on the ruling. A phone message for Joe Dorn, an attorney with King & Spalding LLP representing Bridgestone Americas, wasn’t returned. A spokeswoman for Representative Kevin Brady, who heads the House Ways and Means Committee’s trade panel, said the Texas Republican was reviewing the decision.
“We always felt that if the courts were to ultimately declare that the administration cannot apply the anti-subsidy law to China, Congress will act within about a week to make it clear that the administration can,” David Spooner, a former Commerce official now at the law firm Squire Sanders & Dempsey LLP in Washington, said in an interview.