US Court of International Trade Orders US Government to Cancel Countervailing Duties on Chinese Off-the-Road Tires

Originally published August 10, 2010

Article by Duane W. Layton , Matthew McConkey and Tiffany L. Smith

Keywords: US Court of International Trade, CIT, Department of Commerce, countervailing duties, CVD, imports, China, off-the-road tires, nonmarket economy, NME, antidumping duties, AD, double counting

On August 4, 2010, the US Court of International Trade (CIT) rejected an attempt by the US Department of Commerce (Commerce) to continue applying countervailing duties (CVD) against imports from China of certain off-the-road tires as long as Commerce continues to treat China as a nonmarket economy (NME) and until such time as Commerce can demonstrate that its NME antidumping duties (AD) and CVD calculation methodologies avoid the double counting of subsidies. This decision follows the CIT's September 18, 2009, ruling (GPX 1) directing Commerce to cease simultaneous application of AD and CVD against the same imports from China "[w]ithout some type of adjustment" that avoids the potential for "double counting."1

In an August 4, 2010, opinion, Chief Judge Jane Restani ruled that because Commerce could not demonstrate that its NME AD and CVD calculation methodologies avoided the double counting of subsidies, Commerce was specifically instructed to forego the imposition of CVD duties. This latest decision — GPX International Tire Corp. v. United States, 2010 WL _________ (CIT August 4, 2010) (GPX 2) — creates a significant impediment (though not a prohibition) to US industries looking to get Commerce to apply simultaneous AD and CVD cases against Chinese products as long as China is treated as an NME country.

Background

US AD law enables the US government to remedy injuries caused to domestic producers and workers from low-priced imports by offsetting the price advantage with AD duties that are applied in addition to any normal tariffs. CVD duties operate in the same manner, except they are meant to offset the benefit conferred on foreign producers and exporters by government subsidies.

For countries that are considered "market economies," Commerce calculates a "normal" price or "value" using prices or costs in the exporter's home market. If a foreign company's export price to the United States is lower than its normal value (NV), AD duties are applied. However, in countries that are considered non-market economies, such as China and Vietnam, Commerce applies a different methodology using prices and values from other market economies to establish...