“PROTECTIONISM BECOMES DESTRUCTIONISM; IT COSTS JOBS”
PRESIDENT RONALD REAGAN, JUNE 28, 1986
US CHINA TRADE WAR AUGUST 12, 2016
Trade continues to be at the center of the Presidential primary with a possible passage of the Trans Pacific Partnership during the Lame Duck Session. The blog post contains the fourth and fifth articles of a several part series on how weak free trade arguments have led to the sharp rise of protectionism of Donald Trump and Bernie Sanders and the now possible demise of the Trans Pacific Partnership (“TPP”).
The first article outlined the problem and why this is such a sharp attack on the TPP and some of the visceral arguments against free trade. The second article explored in depth the protectionist arguments and the reason for the rise of Donald Trump and Bernie Sanders. The third article explored the weak and strong arguments against protectionism.
In this blog post, the fourth article discusses one of the most important arguments for the TPP—National Security. The fifth article discusses why the Commerce Department’s and the US International Trade Commission’s (ITC) policy in antidumping and countervailing duty cases has led to a substantial increase in protectionism and national malaise of international trade victimhood.
Commerce finds dumping in 95% of the cases, and the ITC extends antidumping and countervailing duty orders for 20 to 30 years to protect one company US industries. Those policies dramatically increase the perception of international trade victimhood—we US companies cannot compete because all imports are unfairly traded, a perception that is simply false.
The final article in my next blog post will be about the only trade program that works and saves the companies and the jobs that go with them—The Trade Adjustment Assistance for Firms/Companies program. The Article will describe the attempts by both Congress and the Obama Administration to kill the program, which may, in fact, have resulted in the sharp rise in protectionism in the US.
Congress must again restore the trade safety net so that Congress can again vote for free trade agreements and the United States can return to its leadership in the Free Trade area. The Congress has to fix the trade situation now before the US and the World return to the Smoot Hawley protectionism of the 1930s.
In addition, set forth are articles on developments involving steel trade litigation, including the restart of the Section 337 Steel Trade Case, and antidumping and countervailing duty reviews in August against Chinese companies. Just recently on this blog, I published posts on the importance of importer of record in antidumping and countervailng duty cases and the False Claims Act hammer against transshipment
If anyone has any questions or wants additional information, please feel free to contact me at my new e-mail address firstname.lastname@example.org.
TRADE PROTECTIONISM IS STILL A VERY BIG TOPIC OF THE PRESIDENTIAL ELECTION BUT THE TPP MAY NOT DIE
Recently a reader of this blog commented that he believes electing Hilary Clinton will mean that the Trans Pacific Partnership (“TPP”) will die. In my opinion, just the opposite is the case. Although Hilary Clinton states that she is opposed to the TPP, President Obama is not and continues even recently to push passage of the TPP during the Lame Duck Session, that is the Congressional session after the President election.
I just returned from a trip to Washington DC, which included visits to various Congressional offices on Capitol Hill, and my opinion was confirmed by Congressional trade staff. Many trade staff, especially in the Democratic offices, believe that TPP will come up in the Lame Duck session to take the issue off of a President Clinton’s desk and many believe it will pass.
On August 11,2016, at a campaign rally in Warren, Michigan, Clinton stated:
“My message to every worker in Michigan and across America is this: I will stop any trade deal that kills jobs or holds down wages, including the Trans-Pacific Partnership. I oppose it now, I’ll oppose it after the election and I’ll oppose it as president. As a senator, I fought to defend New York’s manufacturers and steel-makers from unfair Chinese trading practices. And I opposed the only multilateral trade deal that came before the Senate while I was there, because it didn’t meet my high bar.”
Hilary Clinton, however, is being pushed to give her approval to the TPP. On July 27, 2016, the Wall Street Journal in an editorial entitled “Clinton’s Trade Opportunism” spoke with open dismay about the protectionist trade arguments coming out of both parties in the Presidential primary.
The cause of open trade is at a low ebb amid the rise of the Sanders-Warren progressives and the Trump tariff right, plus a lack of leadership in Washington. The latest trade liberalizer to recant is Tim Kaine, who said as recently as last Thursday that the Pacific Rim trade deal is “a significant improvement over the status quo,” only to declare his opposition after becoming Mrs. Clinton’s running mate.
Mr. Trump is now assailing Mr. Kaine for Herbert Hoover-come-lately hypocrisy, and he has a point. As Secretary of State, Mrs. Clinton helped negotiate the yet-to-be-ratified Trans Pacific Partnership and gave some 45 public speeches for TPP. Then to fend off the Sanders challenge, she renounced the final TPP text in October 2015, and getting tough on China, outsourcing and other specters became stump staples. By opposing TPP, she’s running against the last major initiative of a President of her own party, and the Philadelphia Democrats don’t seem to mind.
More remarkable is that no one takes her statements at face value. Her left-right critics think she’s setting up a trade double cross, while corporate CEOs assure us that she is merely making a tactical TPP feint and after the election she’ll push it through Congress.
This perception of trade insincerity does match the Clinton record. In the 1990s her husband promoted the North American Free Trade Agreement and most-favored nation status for China, and she endorsed both in her 2003 memoir ”Living History.”
In the 2007-2008 Democratic primaries, Mrs. Clinton said she would renegotiate the “mistake” that was Nafta, promised to defeat a pending deal with Colombia, and told an AFL· CIO town hall that a U.S.-South Korea pact would “put American jobs at risk.” At Foggy Bottom, she then lobbied Congress to pass the Colombia and Korea agreements, and she deleted her Nafta do-over faster than the emails on her private server.
The Democrat is now bowing deeper than ever to protectionist forces. After Mr. Trump gave an America First speech in June, the Clinton campaign responded in a press release that his rhetoric was “reckless” and his “incoherent approach” would “throw our economy into a recession.” Except for those minor details, the campaign added that he was stealing “Hillary’s best ideas,” which “seem to have moved straight from Hillary Clinton’s policy fact sheets to his teleprompter.”
So is the inner Hilary now a junior -achievement Donald? Who knows? Maybe this time she really has rolled left along with the Democratic Party and she means what she says, in which case she enjoys no particular pro-trade or progrowth advantage over Mr. Trump.
But if Mrs. Clinton is merely triangulating again, then please spare us the lectures about “recklessness.” Other than pacifying the Warren-Sanders wing, Mrs. Clinton’s new posture gains her little or no 2016 advantage. She can’t outbid Mr. Trump on protectionism, one of the few policy matters that has sustained his attention since the 1980s, and his subtlety-free TPP opposition has already locked down most single-issue voters.
Meanwhile, Mrs. Clinton is damaging prospects for the 12-nation Pacific deal, if only by validating the claims of its opponents. This will make it harder for her to pass it if she is elected, especially if she lacks the will to face down the anti-trade caucus she is now indulging.
Assuming Mrs. Clinton still believes as she used to claim that TPP is critical for U.S. competitiveness and to balance China’s growing influence in the Asia-Pacific, she is undercutting its already dire chances in Congress. She is also knee-capping Japanese Prime Minister Shinzo Abe, who has made TPP central to his economic reform agenda.
Nearly seven of 10 voters tell pollsters they think Mrs. Clinton is untrustworthy, and the reason is no more mysterious than her political character. She’ll say or do anything to get elected, even if means “evolving” from protrade first lady to anti-trade presidential candidate to pro-trade Secretary of State to antitrade candidate back to allegedly pro-trade President.
Mrs. Clinton’s cheerleaders says she’s the responsible candidate who knows better, but the evidence for this is awfully thin.
Although Hilary Clinton is saying she is opposed to the TPP, President Obama is not. He continues to push for passage of the TPP during the lame duck session in Congress after the Presidential election. On August 3, 2016, the Wall Street Journal in an article about the meeting between the President and the Singapore Prime Minister entitled, “President Holds the Line on TPP”, President Obama said he is still committed to passing the TPP this year because it “levels the playing field for our workers and helps to ensure countries abide by strong labor and environmental rules.”
The President admitted that the political environment is challenging, but went on to state he has a “better argument”:
”There’s a real problem but the answer is not cutting off globalization. The answer is how do we make sure that globalization, technology, automation-those things work for us, not against us. TPP is designed to do precisely that.”
Singapore Prime Minister Lew Hsien-Loong stated at the conference that he hopes the TPP will pass this year during the lame duck session, stating that not only was the economic impact of the trade agreement at stake, but also America’s leadership:
In terms of economic benefits, the TPP is a big deal. I think in terms of America’s engagement of the region, you have put [your] reputation on the line. It is the big thing that America is doing in the Asia Pacific [region] in the Obama administration.”
Your partners, your friends who have come to the table, who have negotiated, each one of them has overcome some domestic political objection, some sensitivity, some political cost to come to the table and make this deal. If at the end, waiting at the altar, the bride doesn’t arrive, I think that people are going to be very hurt.”
Although her campaign rhetoric is anti-TPP, in the past Hilary Clinton has stated that she is not clearly opposed to the TPP. She is opposed to it as written. But with President Obama pushing for its passage before the inauguration, if Clinton wins, with a wink and a nod from Clinton, Obama will try to push it through in the lame duck session to take the TPP issue off of Clinton’s desk. Since passage in Congress requires only a majority vote, many Congressional Trade staff in Democratic offices believe the TPP would pass in a lame duck session.
But if Donald Trump wins, all bets are off. If he wins, no Republican will buck him to pass the TPP. During the primary when Paul Ryan, Republican Speaker of the House, faced a challenger against the TPP, he recently stated that the TPP will not pass Congress during Obama’s term, and that Ryan has “problems” with the TPP as it is currently drafted. Ryan stated:
“Obviously I’m for trade agreements. I wrote [the fast-track trade bill] and I got it passed. But I think they made some pretty big mistakes in how they negotiated it and they gotta fix those. And I don’t know when that’s going to happen. . . We don’t have the votes for it now, and I believe they have to fix some of these things. And I don’t know if and when they’re going to be able to fix those things.”
But Donald Trump too is being pushed on the trade issue. On August 9, 2016 the Wall Street Journal in an Editorial “Trump on the Economy” gave Trumps’s August 8th economic speech at the Detroit Economic Club high marks, but then pointed out “the poison pill of trade protectionism.” The Journal went on to state:
Mr. Trump believes that a trade deficit equals lost American jobs, when there is no such connection. The U.S. tends to run bigger trade deficits when the economy is strong, and vice versa. By that logic the fastest way to cut the trade deficit is to have a recession, but that would only cost more jobs.
Raising taxes at the border -aka tariffs—wouldn’t keep jobs in the U.S. but would reduce the standard of living for U.S. consumers. His promise to punish U.S. companies for investing overseas could end up costing more jobs if it caused companies to relocate more of their operations overseas to avoid the punishment. Global supply chains are crucial to preserving U.S. manufacturing jobs.
The question with Mr. Trump is how much his trade agenda would interfere with his pro-growth domestic policies. If Republicans in Congress blocked his worst trade instincts, the damage could be small. If he used executive powers to wage a trade war, look out. With the mercurial New Yorker, you never know.
On August 3, 2016, the same day of the Obama/Lee Meeting, six Republican representatives came out against taking up the TPP during the lame duck session. In a letter written by Republican Candice Miller of Michigan along with five other Republican representatives, the lawmakers state:
“TPP will set the template for trade for the next generation. It will not only impact the current 12 member nations but also countries like South Korea and China that could join in the future. A ‘lame duck’ Congress should not vote on an agreement of this consequence — it would be an end-run around the American people immediately following an election.”
The key concern of the members is currency manipulation, further stating:
“The TPP does not include enforceable rules to stop currency manipulators. Once America has given up the leverage of gaining full access to its consumer markets, the possibility of prohibiting currency manipulation — or reaching equitable agreements in many other areas — will be lost forever.”
The letter states that “a great deal more work” has to be done to bring the TPP up to standard.
One Congressman Dave Trott of Michigan issued his own statement with the letter saying that he believes the TPP can work for the U.S. economy, but Obama has run out of time to fix the agreement and the issue should be passed to the next President:
“The President should respect the voters’ choice of a new chief executive and allow his successor to work with Congress to negotiate a stronger agreement that puts Michigan workers and businesses first,”
THE KEY ISSUE MISSED IN THE TPP DEBATE IS NATIONAL SECURITY—TRADE WARS CAN LEAD TO REAL WARS
But the key issue missed in the TPP debate is illustrated by Prime Minister Lee’s statement above. America’s reputation is on the line. The TPP is a “big thing” that America is doing in the Asia-Pacific.
On July 10, 2014, General David Petraeus stated regarding the ongoing TPP negotiations:
“The consequences for Washington getting the TPP right are huge, opening some of the world’s fastest-growing markets to more U.S. exports, improving American competitiveness, growing the global middle class, and fostering the prosperous, open and rules-based Asia that is in everyone’s interest.
But the fate of the trade pact is also tied closely to America’s national security.
Indeed, a paralyzed or collapsed TPP process would be seen by our allies, partners and adversaries across Asia as a body blow not only to the credibility of America’s economic leadership, but to our geopolitical position more broadly, deepening doubts about Washington’s staying power and strength. And this, in turn, would carry spillover effects in the security realm, exacerbating military tensions and territorial rivalries and ultimately raising the threat of conflict.”
On May 16, 2016 in a Wall Street Journal Article entitled “Abandoning the Pacific pact will tell America’s Asian allies that the U.S. is yielding to China. They will accommodate accordingly” Robert Zoellick, the former United States Trade Representative under President Bush, stated:
“In an uncertain world, America’s future security depends on both upgrading military capabilities and expanding economic opportunities. The Trans-Pacific Partnership, a trade accord among 12 countries accounting for almost 40% of the global economy, draws together these two strands of strategy. . . .
Strategists have long recognized the interrelationship between economics and security. . . .
The TPP supplies the economic foundation for this new Asia-Pacific security network. In this region, economics, trade and investment are the coins of the diplomatic realm. TPP recognizes both America’s concrete economic interests in Asia and demonstrates U.S. steadfastness. If the U.S. abandons TPP, our Asian allies and partners will perceive America as yielding to China, and they will accommodate accordingly. . . .
The U.S. strategy is designed to shape decisions in Beijing, not contain China. The U.S. and its partners have benefited from China’s amazing growth. Over the past three decades, China’s economic reformers have imported rules of the international trading system to transform internal markets. China now needs to make more complex supply-side reforms to increase consumption and growth led by the private sector. The U.S.-led network in the Asia Pacific, of which TPP is a vital part, welcomes China’s peaceful integration while discouraging aggression.
America’s Founding Fathers, and every generation since, recognized that economic strength at home is vital for U.S. security. In the 19th century, the U.S. became a Pacific power. The 20th century demonstrated that conflicts in East Asia can threaten the U.S., but also that U.S. security can underpin Asia’s prosperity. The U.S. now needs to create an economic and security network in the Asia-Pacific for the 21st century. Historians will look back on America’s embrace of TPP—or its failure to do so—as a turning point in U.S. global strategy.”
As we look at history, including the reasons for World War 2, one cause was trade conflict. If trade conflict is not controlled and handled correctly, it can lead to military conflict and that is a very big reason for the TPP.
When I was at the US International Trade Commission as a young attorney, Catherine Bedell a former ITC Chairman, who had been a Congresswoman from Oregon, came by to give a speech, clearly stating that we were not just involved in economic conflicts. Our job was really dealing with war and peace.
The sharp rise of US protectionism threatens the foundation of peace that has been in place since World War 2. If every country goes nationalistic, that is when real wars can start.
ANOTHER REASON FOR THE SHARP RISE IN TRADE PROTECTIONISM—THE COMMERCE DEPARTMENT AND THE INTERNATIONAL TRADE COMMISSION
In addition to the weak free trade arguments, described in my blog post, another reason for the sharp rise in protectionism are the Commerce Department’s (“Commerce”) and the US International Trade Commission’s (“ITC”) determinations in antidumping and countervailing duty cases. By its own regulation, Commerce finds dumping and subsidization in almost every case, and the ITC in Sunset Review Investigation leaves antidumping and countervailing duty orders in place for as long as 20 to 30 years, often to protect single company US industries, resulting in permanent barriers to imports and the creation of monopolies.
Many readers may ask why should people care if prices go up a few dollars at WalMart for US consumers? Jobs remain. As mentioned in past newsletters, however, out of the 130 plus antidumping and countervailing duty orders against China, more than 80 of the orders are against raw materials, chemicals, metals and steel, that go directly into downstream US production.
The Magnesium Antidumping order has led to the demise of the US Magnesium Dye Casting Industry and the movement of the light weight auto parts industry to Canada. An antidumping order against Sulfanilic Acid, which has been in place for more than 30 years to protect a one company US industry, resulted in injury to the US optical brightener industry. An antidumping order against electrolytic manganese dioxide, in part, resulted in the closure of Panasonic’s US battery factory.
AD and CVD orders do not save the US industries. They can save one company US industries, but only by substantially injuring, if not destroying, their customers, the downstream industries. Antidumping and countervailing duty orders against raw material inputs provide substantial incentive for production and manufacturing companies in the downstream industries to leave the United States taking their jobs with them to find cheaper raw material inputs. What nontariff trade barriers did to Japan, the US is now doing to itself through its AD and CVD law.
Another problem with the Commerce Department’s methodology of finding dumping in almost 100% of the cases is that it fuels the myth advocated by the Steel industry, the Union, Donald Trump himself and Hilary Clinton herself that all imports are dumped and all imports are subsidized and the general feeling of global trade victimhood. We US companies and workers simply cannot compete because all imports are unfairly traded, dumped and subsidized, so the answer is put up the protectionist walls.
Both Hilary Clinton and Donald Trump believe that they have to crack down on all unfair trade, which has been the catch word for dumping and subsidization. In their acceptance speeches at their respective conventions, both candidates emphasized the need to get tough on unfair trade. During the Primary, Clinton stated:
As President, I’ll aggressively pursue trade cases and impose consequences when China breaks the rules by dumping its cheap products in our markets. And I’ll oppose efforts to grant China so-called “market economy” status, which would weaken our tools for dealing with this behavior. I’ve gone toe-to-toe with China’s top leaders on some of the toughest issues we face. I know how they operate – and they know that if I’m President, the games are going to end.
Donald Trump has been more explicit stating in his acceptance speech at the Republican convention:
We are going to enforce all trade violations, including through the use of taxes and tariffs, against any country that cheats.
This includes stopping China’s outrageous theft of intellectual property, along with their illegal product dumping, and their devastating currency manipulation.
But the problem is that the Commerce Department has defined dumping so that 95% of the products imported into the United States are dumped. How does Commerce do it?
19 U.S.C § 1673d(c)(5)(B) of the Antidumping Law provides:
“If the estimated weighted average dumping margins established for all exporters and producers individually investigated are zero or de minimis margins, or are [based on AFA], the administering authority may use any reasonable method to establish the estimated all-others rate for exporters and producers not individually investigated . . . .”
Thus only mandatory companies, those companies individually investigated in an antidumping case, have the right to get zero, no dumping margins. Only those mandatory respondent companies have the right to show that they are not dumping. If a company gets a 0 percent, no dumping determination, in the initial investigation, the antidumping order does not apply to that company.
For all other foreign exporters, the Commerce Department may use any other reasonable method to calculate antidumping rates. As the Department states in numerous cases, to non-mandatory companies not individually investigated, the Department assigns “a weighted-average of the rates individually calculated for the mandatory respondents, excluding any rates that were zero, de minimis, or based entirely on facts available . . . .”
What does this dense statutory language mean in practice?
It means if a foreign company, including a Chinese company, is not selected as a mandatory company to be individually investigated in an antidumping case, it will get a positive dumping rate, which is the average of dumping rates of those few companies selected as mandatory respondents, not including 0% dumping rates.
How many companies does Commerce generally select in antidumping cases against China and other countries to individually investigate? Recently, it has been two or three companies out of 10s and 100s of respondent companies involved in the case.
So if there are more than two or three respondent companies in an antidumping case, which is the reality in most cases, by its own law and practice, Commerce will reach an affirmative dumping determination. All three mandatory companies may get 0% dumping rates, but all other companies get a positive dumping rate. Thus almost all imports are by the Commerce Department’s definition dumped.
Under the Commerce Department’s methodology all foreign companies are guilty of dumping and subsidization until they prove their innocence, and almost all foreign companies never have the chance to prove their innocence.
So the issue is not whether the foreign company is dumping, the real issue is what is the dumping rate going to be? Commerce has many methodologies to jack up antidumping rates. In antidumping cases against China, Commerce treats China as a nonmarket economy country and, therefore, refuses to use actual prices and costs in China to determine dumping, which makes it very easy for Commerce to find very high dumping rates.
In market economy cases, Commerce has used zeroing to create antidumping rates. What is zeroing? In simple terms, dumping is first defined as selling products at prices in the United States below prices in the foreign home market. Let’s assume a foreign producer sells the same products but at different times during the investigation. Early in the investigation, the foreign company makes two sales at the same price in the home market and the US market of $2 per widget. Later in the investigation period, it sells two widgets one in the home market at $4 and one in the US at $4. No dumping right? Wrong answer.
By zeroing, Commerce averages the prices in the foreign market and gives no credit for negative margins. So the quote Normal Value, which is the average of the two prices, is $3 a widget. When that Normal Value is compared to the $4 US price that is no dumping, which should result in a -1 dumping margin. But Commerce does not give companies credit for not dumping. Through zeroing no dumping margins just become 0s. But when the normal value is compared to the $2 price, that is dumping and no credit is given for the negative dumping margin. Because of zeroing, even though at the time the specific sales in question were made there was no dumping, Commerce creates a dumping margin.
The World Trade Organization has determined that zeroing is contrary to WTO Antidumping Agreement, but that has not stopped Commerce. It still uses zeroing in many cases, and recently came up with a new methodology “targeted dumping” to allow it to continue to use zeroing. The WTO recently ruled that the “targeted dumping” methodology is contrary to the WTO Antidumping Agreement, but that will not stop Commerce. Its duty is to find dumping margins even when they do not exist.
The impact of the Commerce Department’s artificial methodology is further exaggerated by the US International Trade Commission (“ITC”). Although in the initial investigation, the ITC will go negative, no injury, in 30 to 40% of the cases, once the antidumping order is in place it is almost impossible to persuade the ITC to lift the antidumping order in Sunset Review investigations.
So antidumping orders, such as Pressure Sensitive Tape from Italy (1977), Prestressed Concrete Steel Wire Strand from Japan (1978), Potassium Permanganate from China (1984), Cholopicrin from China (1984), and Porcelain on Steel Cookware from China (1986), have been in place for more than 30 years. In 1987 when I was at the Commerce Department, an antidumping case was filed against Urea from the entire Soviet Union. Antidumping orders from that case against Russia and Ukraine are still in place today.
In addition, many of these antidumping orders, such as Potassium Permanganate, Magnesium, Porcelain on Steel Cookware, and Sulfanilic Acid, are in place to protect one company US industries, creating little monopolies in the United States.
Under the Sunset Review methodology, the ITC never sunsets antidumping and countervailing duty orders in many Reviews unless the US industry no longer exists.
By defining dumping the way it does, both Commerce and the ITC perpetuate the myth of Globalization victimhood. We US companies and workers simply cannot compete against imports because all imports are dumped or subsidized. But is strangling downstream industries to protect one company US industries truly good trade policy? Does keeping Antidumping orders in place for 20 to 30 years really save the US industry and make the US companies more competitive? The answer simply is no.
Protectionism does not work but it does destroy downstream industries and jobs. Protectionism is destructionism. It costs jobs.
The problem with protected industries was best stated by President Ronald Reagan himself in his June 1986 speechBETTER COPY REAGAN IT SPEECH:
“the protected industry is so listless and its competitive instincts so atrophied that it can’t stand up to the competition. And that, my friends, is when the factories shut down and the unemployment lines start.”
Meeting all competition is the only thing that keeps companies strong. Protection, such as that given to the US Steel industry, simply makes the companies weaker until the companies die on their own.
But Globalization victimhood could well lead to the demise of the Trans Pacific Partnership (“TPP”) and the loss of benefits to 100s, if not, thousands of US companies and industries, including agriculture, high tech and certain manufacturing companies. Perception is reality in the United States, and the perception created by Commerce and the ITC is that every import is dumped and subsidized, and, therefore, the US simply cannot afford to sign another trade agreement.
In my next blog post, the final article in this series is the real answer to trade problems—Trade Adjustment Assistance for Firms/Companies, and how this program can be used to save trade injured US companies and the jobs that go with them without any impact on downstream industries whatsoever. TAA for Firms/Companies creates jobs, not destroy them.
The first step to getting into the program, however, is to reject Globalization victimhood. Those companies that take that step succeed and they succeed very well keeping the jobs in the United States where they belong, while those companies that fail to reject the mindset will die.
STEEL TRADE CASES
ITC RESTARTS STEEL 337 CASE
On August 5, 2016, in the attached notice, ITC STEEL 337 NOTICE, the ITC reversed the Order of the Administrative Law Judge suspending the 337 Steel investigation and started the investigation moving again. In the notice, the ITC stated it would give its reasons in a forthcoming opinion.
On May 26, 2016, the US International Trade Commission (“ITC”) initiated the section 337 case against all Chinese steel imports on the basis of three primary counts:
“(1) a conspiracy to fix prices and control output and export volumes, in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1; (2) the misappropriation and use of U.S. Steel’s trade secrets; and (3) the false designation of origin or manufacturer, in violation of the Lanham Act, 15 U.S.C. § 1125(a).”
AUGUST ANTIDUMPING ADMINISTRATIVE REVIEWS
On August 5, 2016, Commerce published the attached Federal Register notice, FED REG AS PUBLISHED, regarding antidumping and countervailing duty cases for which reviews can be requested in the month of August. The specific antidumping cases against China are: Ironing Tables, Laminated Woven Sacks, Light-Walled Rectangular Pipe and Tube, Passenger Vehicle and Light Truck Tires, Petroleum Wax Candles, Polyethylene Retail Carrier Bags, Sodium Nitrite, Steel Nails, Sulfanilic Acid, Tetrahydrofurfuryl Alcohol, and Tow Behind Lawn Groomers. The specific countervailing duty cases are: Laminated Woven Sacks, Light-Walled Rectangular Pipe and Tube, Passenger Vehicle and Light Truck Tires and Sodium Nitrite,
For those US import companies that imported : Ironing Tables, Laminated Woven Sacks, Light-Walled Rectangular Pipe and Tube, Passenger Vehicle and Light Truck Tires, Petroleum Wax Candles, Polyethylene Retail Carrier Bags, Sodium Nitrite, Steel Nails, Sulfanilic Acid, Tetrahydrofurfuryl Alcohol, and Tow Behind Lawn Groomers during the antidumping period August 1, 2015-July 31, 2016 or the countervailing duty period of review, calendar year 2015, the end of this month is a very important deadline. Requests have to be filed at the Commerce Department by the Chinese suppliers, the US importers and US industry by the end of this month to participate in the administrative review.
This is a very important month for US importers because administrative reviews determine how much US importers actually owe in AD and CVD cases. Generally, the US industry will request a review of all Chinese companies. If a Chinese company does not respond in the Commerce Department’s Administrative Review, its antidumping and countervailing duty rate could well go to the highest level and for certain imports the US importer will be retroactively liable for the difference plus interest.
In my experience, many US importers do not realize the significance of the administrative review investigations. They think the AD and CVD case is over because the initial investigation is over. Many importers are blindsided because their Chinese supplier did not respond in the administrative review, and the US importers find themselves liable for millions of dollars in retroactive liability.
While in China recently, I found so many examples of Chinese solar companies or US importers, which did not file requests for a review investigation. In one instance, although the Chinese companies obtained separate rates during the initial investigation, the Petitioner appealed to the Court. Several Chinese companies and US importers did not know the case was appealed, and the importers now owe millions in antidumping duties because they failed to file a request for a review investigation in December 2015.
If you have any questions about these cases or about the antidumping or countervailing duty law, US trade policy, trade adjustment assistance, customs, or 337 IP/patent law in general, please feel free to contact me.