Economy

What Will the Trade Enforcement Measures Do?

June 28, 2015

The TAA legislation passed by the Senate and House last week contained a measure short-titled “American Trade Enforcement Effectiveness Act.” The act provides for improvements to antidumping and countervailing duty laws, including how material injury is defined. The Act is comprised of amendments are made to the Tariff Act of 1930 (19 USC 1677). SMU will attempt to highlight some of the changes that were made by the Senate.

In the Senate Congressional Record for June 15, 2015 (appended here), determination of material injury is amended in to read as “actual and potential decline in output, sales, market share, gross profits, net profits, ability to service debt, productivity; return on investment, return on assets, and utilization of capacity.”

It also adds that the Commission cannot say there is no threat or injury to a US industry “merely because the industry is profitable or performance has recently improved.” The clause will help address steel industry concerns that enforcement action is not taken until the steel mills are laying off workers and fighting closure.

In Sec. 504—Particular Market Situation—the definition of ordinary course of trade is amended to add “Situations in which the administering authority determines that the particular market situation prevents a proper comparison with the export price or constructed export price.”

The following was added to Definition of Constructed Value: “For purposes of paragraph (1), if a particular market situation exists such that the cost of materials and fabrication or other processing of any kind does not accurately reflect the cost of production in the ordinary course of trade, the administering authority may use another calculation methodology under this subtitle or any other calculation methodology. For purposes of paragraph (1), the cost of materials shall be determined without regard to any internal tax in the exporting country imposed on such materials or their disposition that is remitted or refunded upon exportation of the subject merchandise produced from such materials.”

Language was added to address exporters who do not cooperate with investigations in Sec. 502, including: [the administering authority] “is not required to determine, or make any adjustments to, a countervailable subsidy rate or weighted average dumping margin based on any assumptions about information the interested party would have provided if the interested party had complied with the request for information.” It also expands the choice of countervailing duty subsidy rates to use with uncooperative parties, including the highest rate.

Sec. 505 clarifies what the reasonable grounds are to believe or suspect that foreign products were sold below production costs and then goes on to address subsidized products in nonmarket economies.

“(5) DISCRETION TO DISREGARD CERTAIN PRICE OR COST VALUES.—In valuing the factors of production under paragraph (1) for the subject merchandise, the administering authority may disregard price or cost values without further investigation if the administering authority has determined that broadly available export subsidies existed or particular instances of subsidization occurred with respect to those price or cost values or if those price or cost values were subject to an antidumping order.”

The length of time from petition to resolution is addressed in Sec. 506 by reducing the burden on the Department of Commerce by providing more flexibility in how to administer cases for a timely completion.

The final change is to make the American Trade Enforcement Effectiveness Act applicable to goods from Canada and Mexico.