By Scott Lincicome
Congress will soon consider legislation to fix a pillar of the president’s China trade policy that has been ruled illegal by federal courts and the World Trade Organization. The bill’s passage will please the White House and the domestic industries and unions that have used the policy to deter foreign competition, but it will do little to solve the underlying flaws in the administration’s approach to China trade. Fortunately, there is a better way forward, and it simply requires Congress to do what it does best: nothing.
In December the U.S. Court of Appeals for the Federal Circuit (CAFC) ruled that the Department of Commerce has no authority under existing law to impose anti-subsidy or “countervailing” duties (CVDs) on imports from China, Vietnam and other countries deemed “non-market economies” (NMEs) under the U.S. anti-dumping law. Commerce’s longstanding policy was not to apply CVDs to such imports and instead remedy unfair subsidization by state-directed economies through anti-dumping measures. Commerce reversed course in 2007, but after years of litigation the court ruled that Congress had ratified the agency’s previous policy, and thus that countervailing duties cannot apply to NME imports until the law is amended.
The court’s ruling rocked the White House because it invalidated the president’s primary approach to countering allegedly “unfair” Chinese subsidies. In a January letter, U.S. Trade Representative Ron Kirk and Commerce Secretary John Bryson pleaded with Congress to quickly pass legislation applying the CVD law to NME imports and salvaging the 24 final CVD orders and seven pending investigations that had been unlawfully instituted since 2007. Unless Congress does so before the court’s ruling becomes final, they argued, the existing duties and pending investigations will have to be terminated, and myriad American companies and workers will suffer an onslaught of unfairly subsidized imports.
Congress will soon consider legislation to fix a pillar of the president’s China trade policy that has been ruled illegal by federal courts and the World Trade Organization. The bill’s passage will please the White House and the domestic industries and unions that have used the policy to deter foreign competition, but it will do little to solve the underlying flaws in the administration’s approach to China trade. Fortunately, there is a better way forward, and it simply requires Congress to do what it does best: nothing.
In December the U.S. Court of Appeals for the Federal Circuit (CAFC) ruled that the Department of Commerce has no authority under existing law to impose anti-subsidy or “countervailing” duties (CVDs) on imports from China, Vietnam and other countries deemed “non-market economies” (NMEs) under the U.S. anti-dumping law. Commerce’s longstanding policy was not to apply CVDs to such imports and instead remedy unfair subsidization by state-directed economies through anti-dumping measures. Commerce reversed course in 2007, but after years of litigation the court ruled that Congress had ratified the agency’s previous policy, and thus that countervailing duties cannot apply to NME imports until the law is amended.
The court’s ruling rocked the White House because it invalidated the president’s primary approach to countering allegedly “unfair” Chinese subsidies. In a January letter, U.S. Trade Representative Ron Kirk and Commerce Secretary John Bryson pleaded with Congress to quickly pass legislation applying the CVD law to NME imports and salvaging the 24 final CVD orders and seven pending investigations that had been unlawfully instituted since 2007. Unless Congress does so before the court’s ruling becomes final, they argued, the existing duties and pending investigations will have to be terminated, and myriad American companies and workers will suffer an onslaught of unfairly subsidized imports.
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