FUNDAMENTALS OF INTERNATIONAL BUSINESS TRANSACTIONS. Remedies Against Unfair International Trade Practices

Transcription

1 FUNDAMENTALS OF INTERNATIONAL BUSINESS TRANSACTIONS Remedies Against Unfair International Trade Practices Peter D. Ehrenhaft Miller & Chevalier Chartered September 29 - October 1, 2005

2 TABLE OF CONTENTS Page 1. Introduction and General Concepts (a) General Concepts (b) Traditional Statutory Remedies (c) Non-Traditional Import Remedies U.S. Antidumping Law (a) Statutory Determinations of Dumping and Injury (b) Standing to Petition on Behalf of a Domestic Industry (c) Sales at Less Than Fair Value (LTFV) (c)(1) Normal Value (c)(1)(A) General (c)(1)(B) Sales Below Cost of Production (c)(2) Export price (c)(3) Margin Calculation (d) Injury to the Domestic Industry Producing the Like Product (e) Procedures (e)(1) The LTFV Investigation (e)(2) The Final Injury Determination and Antidumping Duty Order (e)(3) Administrative Protective Orders (e)(4) Administrative Reviews (e)(5) Scope and Circumvention Inquiries (e)(6) Revocation and Modification (f) Judicial Review The CVD Law (a) Legislative History (b) The Concept of Subsidy (c) The Injury Test (d) Procedures Track II Procedures Under the GATT Subsidies Code The North American Free Trade Agreement (a) General (b) Dispute Resolution Mechanisms (b)(1) General (b)(2) Binational Panel Dispute Settlement Section 301 Proceedings Under the Trade Agreements Act (a) General (b) Petition i -

3 6.(c) Self-Initiation (d) Consultation with the Foreign Government (e) Retaliation Against the Foreign Government Other Remedies (a) China-specific Safeguards, Under 421 of the TA (b) The Escape Clause as a Safeguard Mechanism : Section 201 of the TA (c) Wilson Tariff Act Section 337 of the Tariff Act of (a) General (a)(1) Domestic Industry (a)(2) Unfair Method of Competition (b) Procedure (c) Remedies (c)(1) Temporary Exclusion Orders (c)(2) Permanent Exclusion Orders (c)(3) Cease-and-Desist Orders; Civil Penalties (c)(4) Consent Settlements (d) Recent Trends in Section 337 Litigation ii -

4 Remedies Against Unfair International Trade Practices by Peter D. Ehrenhaft * 1. Introduction and General Concepts 1.(a) General Concepts The concept of unfair practice in international trade is not necessarily the same as that in domestic commerce. In domestic commerce, the rules, particularly in the United States, are built upon a commitment to competition, and unfair practices are those that impermissibly restrict competition. On the other hand, in international trade, the rules are principally built upon a mercantilist model, and seek to protect domestic industries against foreign dependence and exploitation by restraining competition. Unfair practice in international trade, therefore, generally includes the sale of imported goods at prices so low that they injure domestic producers of like products. When U.S. import prices charged by a foreign exporter are less than the price for the like merchandise in the producer s or exporter s home market ( HM ), or less than the cost of production of the exported goods, they are considered to be impermissibly low, and the imports are regarded as dumped. When the foreign producer or exporter has received a competitive advantage in the form of a payment from a foreign government to finance production or export of the goods, the U.S. import prices are also considered to be impermissibly lowered, and are regarded as subsidized. The central thesis of these unfair trade laws is that it is unfair to require domestic producers to compete with the artificially low prices of a foreign competitor s imports. The antidumping and countervailing duty laws are aimed at such imports. Findings of dumping or subsidies if supported by findings that such imports cause or threaten natural injury to U.S. producers of like products, allow the government to collect an added customs duty on the imports to restore the price of imports to their fair value. Most often, unfair trade laws are enforced through a proceeding initiated by a petition from domestic producers. This chapter briefly discusses the remedies available to an American producer when faced with alleged artificially-low-priced imports, and the defenses available to a foreign exporter or U.S. importer of goods when faced with claims that goods they are offering in the U.S. market are dumped or subsidized. Although the public discussion of unfairly priced imports is often couched in terms suggesting that dumped or subsidized imports are illegal, U.S. law does not treat the imports themselves as illegal. Rather, the law only provides for the imposition of equalizing customs duties, although these added duties may be so high as to effectively prevent further imports. Until recently, the remedy consisted not of damages paid to an injured party * Copyright 2005 by Peter D. Ehrenhaft. All rights reserved. Peter D. Ehrenhaft is Of Counsel to Miller & Chevalier Chartered in Washington, D.C. Sincere thanks are extended to Enye Yang of Miller and Chevalier for his valuable assistance on revising this chapter for current publication.

5 Remedies Against Unfair International Trade Practices but of a requirement that the importer pay added duties ultimately deposited with the U.S. Treasury. This changed in 2000, with the enactment of the Byrd Amendment, permitting duties assessed pursuant to countervailing or antidumping orders to be distributed on an annual basis to certain affected domestic producers through a dumping subsidy offset. 1 The Byrd Amendment is reportedly the only law of its kind in the world. 2 Thus it is not surprising that several other countries successfully challenged its legality in the WTO and have begun to institute sanctions against the United States pending repeal of the law by Congress 3 This case also highlights the fact that WTO decisions regarding U.S. practices are not self-implementing. U.S. practices are only altered by the agency involved or the Congress. 1.(b) Traditional Statutory Remedies The Trade Act of 1974 ( TA 74 ) 4 and the Trade Agreements Act of 1979 ( TAA 79 ) 5 are the major American laws providing import relief through government intervention. The Trade and Tariff Act of 1984 ( TA 84 ) 6, the Omnibus Trade and Competitiveness Act of 1988 ( OTCA ), 7 and most recently, the Uruguay Round Agreements Act ( URAA ) added details. 8 Most, but not all, of these laws are amendments to the Tariff Act of 1930, and are consolidated at 19 U.S.C et seq. 1 Continued Dumping and Subsidy Offset Act of 2000, Pub. L. No , 1003, 114 Stat. 1549A-73 (2000) (replacing the previous 734 of the Tariff Act of 1936 (codified at 19 U.S.C. 1654, 1677c (2001 and Supp. 2001)). Through 2004 the U.S. government has dispersed more than $1 billion dollars in antidumping and countervailing duties to domestic producers injured by foreign dumping and subsidies. Unless repealed, an estimated $3.85 billion will be distributed from 2005 through See CBO Says Byrd Amendment Spurs Cases, Subsidizes Some, Damages Economy Overall, BNA Daily Rept. for Executives, Mar. 4, 2004, at A Joseph W. Dorn & Stephen J. Orava, Prosecuting and Defending Anti-Dumping Actions: A Guide for Domestic Producers, Importers and Exporters, 5 BUS. L. INT L 67 (2004). 3 Two complaints concerning the Continued Dumping and Subsidy Offset Act of 2000 have been filed with the WTO Dispute Settlement Body, one brought by Australia, Brazil, Chile, the EC, India, Indonesia, Japan, Korea and Thailand (W/DS 217, Jan. 9, 2001) and another by Canada and Mexico (W/DS 234, June 1, 2001). See The Appellate Body consolidated both cases and issued a decision recommending that the Dispute Settlement Body of the WTO (DSB) request that the United States to amend the Act to conform to the WTO agreements, including Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement. See AB Decision, WT/DS217/AB/R & WT/DS234/AB/R, Jan. 16, To date, the United States has not amended the Act. In July 2005, Japan initiated procedures to impose additional duties of 15% on imports of U.S. steel products in retaliation for the failure of the United States to repeal the Byrd Amendment. See Japan Poised to Retaliate Against U.S. For Failure to Repeal Byrd Amendment, BNA Daily Rep t Exec. July. 29, 2005, at A-7. 4 Pub. L. No , 88 Stat (Jan. 3, 1975) (codified at 19 U.S.C ). Note, all references hereinafter to the U.S.C. are from its 2005 version unless otherwise specified. 5 Pub. L. No , 93 Stat. 144 (July 26, 1979) (codified throughout 19 U.S.C.). 6 Pub. L. No , 98 Stat (Oct. 30, 1984) (codified throughout 19 U.S.C.). 7 Pub. L. No , 102 Stat (Aug. 23, 1988) (codified throughout 19 U.S.C.). 8 Pub. L. No , 108 Stat (1994) (codified in relevant part in 19 U.S.C., especially 19 U.S.C et seq.)