President Signs Legislation Applying Countervailing Duties to NMEs

March 13, 2012

On March 13, 2012, President Obama signed H.R. 4105, which clarifies that the countervailing duty law can be applied to subsidized goods from nonmarket economy countries. The legislation also permits the Department of Commerce to adjust antidumping duties applied to goods from nonmarket economy countries when countervailing duties are applied to the same goods. The Senate and House passed the legislation on March 6^th and 7^th, 2012. This legislation follows a December 2011 ruling by the U.S. Court of Appeals for the Federal Circuit (CAFC) in GPX v. United States, which determined that the DOC could not apply U.S. CVD laws to NME countries, including China. The CAFC held that applying CVD laws to NMEs was contrary to Congressional intent. H.R. 4105 is designed to overturn the CAFC’s ruling.

H.R. 4105 amends the Tariff Act of 1930 by adding sections applying its CVD provisions to NMEs. The amended section applies to proceedings initiated after November 20, 2006. Additionally, the legislation is intended to address a 2011 adverse World Trade Organization (WTO) Appellate Body ruling which found that a “double remedy” may occur in situations where countervailing duties are applied to NME exports simultaneously with antidumping duties calculated using a “surrogate value” methodology. The CVD legislation provides authorization for the DOC to adjust antidumping duties to address such “double remedies” under certain circumstances in which the foreign exporter can demonstrate that such a double remedy has occurred and where the DOC is able to reasonably estimate the extent to which the countervailable subsidy, in combination with the use of normal value, has increased the weighted average dumping margin.

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