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Manufacture This

The blog of the Alliance for American Manufacturing

Domestic industries now have improved tools to take action against dumping.

Thanks to legislation recently enacted last month, domestic industries now have improved tools to take action against dumping, which – as everyone knows – is what occurs when a good is sold below the cost of production and causes injury to a U.S. producer of a like or similar product.  

For those who thought dumping was about something else, get your minds out of the gutter.  We’re talking about unfair trade practices.

Speaking of which, the new legislation also covers goods that are unfairly subsidized. U.S. trade remedy laws allow an additional tariff – known as an anti-dumping or countervailing duty – to be applied to such unfairly traded imports. 

These tariffs offset the cost of the injury, measured by the level of dumping and subsidization, and help U.S. producers compete with imported products on a level playing field. 

Remember, we’re still talking about dumping related to trade. All the laughs out?  Good. 

These new trade-law strengthening provisions, taken from the Leveling the Playing Field Act co-sponsored by Ohio Senators Sherrod Brown and Rob Portman, were included in a bill that extended trade preference programs and renewed Trade Adjustment Assistance. The bill was considered by Congress in connection with legislation to provide President Obama with Trade Promotion Authority.

What's New?

Notably, these new enforcement provisions mark the first substantive changes to U.S. trade law since 1995, when amendments were made to implement trade rules hashed out during the WTO Uruguay Round Agreement.  These newly enacted amendments also were achieved without weakening existing U.S. trade laws.

These tariffs offset the cost of the injury, measured by the level of dumping and subsidization, and help U.S. producers compete with imported products on a level playing field.   

The changes strengthen existing laws by modifying agency practices and procedures, and by clarifying how administering agencies should apply certain legal standards to facts that domestic industries establish to demonstrate they qualify for relief. 

  • When a foreign party refuses to cooperate in an investigation, the new law makes clear that the Department of Commerce (DOC), which calculates the level of dumping or subsidization, can rely on appropriate facts that are available, even if they are adverse.  Previous court cases had improperly restricted DOC’s discretion in relying on facts available. 
  • The legislation also makes several changes related to the definition material injury, which should make this element easier to prove. One such change clarifies that the International Trade Commission cannot reach a negative determination just because the domestic industry is profitable, or because its performance has recently improved. This recognizes that an industry can operate in the black and still be injured. 
  • In instances where a “particular market situation” exists that distorts pricing or cost in a foreign producer’s home market, the new legislation gives DOC additional flexibility to calculate the level of dumping with data that is not distorted – which is just common sense. 
  • In addition, the legislation allows DOC to automatically initiate a “cost investigation,” which analyzes whether foreign producers are selling a covered product in their home market at prices below the cost of production – such sales can be excluded from a dumping analysis.  This will help ensure that DOC collects relevant data at the outset of a proceeding, and allow domestic industries to conserve resources because they no longer must petition, or “ask” DOC to review such sales.
  • Finally, the new law will reduce a foreign producer’s ability to manipulate outcomes by clarifying DOC’s ability to decline to analyze voluntary respondents, who often request to participate when a mandatory respondent withdraws.  

In sum, these changes will make it easier to combat unfair trade practices – and make foreign competitors think twice before dumping products in the United States.

Dumping. Fine. You can laugh now.

Jennifer McCadney is a Special Counsel in Kelley Drye & Warren’s Government Relations and Public Policy practice group in Washington, D.C.  Ms. McCadney was a former trade counsel to the House of Representatives’ Ways & Means Trade Subcommittee.