Trade Remedy Legislation: Applying Countervailing Action to Nonmarket Economy Countries


 

Publication Date: June 2005

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Trade

Type:

Abstract:

Unlike antidumping (AD) legislation, which contains specific provisions for its applicability to imports from nonmarket economy (NME) countries, the countervailing duty (CVD) law — although its procedure generally parallels that of the AD law — contains no such provisions. While AD law provides for assessment of AD duties on imports sold in the United States at less than their fair value (as defined in the law), CVD is assessed on imports whose production and/or exportation is publicly subsidized in their country of origin.

Initial administrative attempts in 1983 to apply countervailing remedies to allegedly subsidized imports from several NME countries led to determinations by the International Trade Administration of the Department of Commerce, the U.S. agency charged with determining whether such subsidization in fact exists, that subsidization (“bounties” or “grants”) within the meaning of the countervailing law, cannot be found in nonmarket economies.

These determinations were challenged in the U.S. Court of International Trade (CIT), which held that they were “not in accordance with the law,” reversed them, and remanded the cases to the ITA. On appeal, the U.S. Court of Appeals for the Federal Circuit reversed, and reinstated the ITA’s original determinations. Since this decision, the ITA has not initiated any countervailing investigations of allegedly subsidized imports as such from NME countries.

To prevent further exemption of NME economies from countervailing action (aimed particularly at China and Vietnam), legislation specifically making such action applicable to NME countries was introduced in several previous Congresses (without further action) and has been reintroduced in the 109th Congress.