Lewis Leibowitz: Section 337 Case both “Interesting and Contentious”

We asked trade attorney (and Steel Summit speaker) Lewis Leibowitz to comment on the filing by US Steel and the temporary suspension by the ITC.

Leibowitz told SMU that the “…notification of the Department of Commerce will require considerable effort on the part of both Commerce and the ITC.”

“There are provisions that separate AD/CVD cases from 337 cases.  The AD/CVD cases take precedence.  Commerce, not the ITC, determines whether dumping or subsidies take place and sets the remedies.  If a Section 337 action implicates those laws, Commerce must be notified.  The Administrative Law Judge’s order suspends the investigation, including all discovery,  until Commerce has been consulted.” Leibowitz then noted that, “The October 2017 date is the ‘target date’ for continuation of the investigation.  It does not mean that the action will be stayed until that date. The full Commission may review this initial determination and change it.“

Leibowitz told SMU this Section 337 case is unusual because the action came after a series of antidumping and countervailing duties actions had already been filed with Commerce. China was the only country selected for the Section 337 filing, but several other countries are involved in the AD/CVD actions. In previous cases, complaints were filed at the ITC that should have been filed under the AD/CVD laws.

He said, “Looking at the 337 statute, the text clearly gives the Department of Commerce primary authority to determine whether dumping or subsidization of steel products took place.  The ITC is not allowed independently to adjudicate that issue.  Commerce and only Commerce is the decision-making authority on those questions. What they say regarding dumping (less than fair value sales) or subsidies is conclusive on the Commission.  But the Commission can initiate a Section 337 investigation unless the unfair practices alleged are solely related to dumping (pricing below “fair value”) or subsidies (government assistance).  In this case US Steel raised other issues, including theft of trade secrets.”

Because the issues raised were not soley within Commerce’s purview, it was not mandatory that the ITC suspend the 337 investigation. However, if the ITC decides to consult the Commerce Department, the Commission may suspend its 337 investigation during the time it takes for the Commerce Department to make its final determinations. This is what Judge Lord decided to do.

There are two flat rolled AD/CVD cases where China is one of the countries involved. This includes the just completed CORE case (corrosion resistant) as well as the cold rolled case where Commerce announced final determinations against China and Japan. There is also a prior antidumping order against hot rolled steel from China. The margins in that case are high enough to prevent shipments from China.

Mr. Leibowitz feels these AD/CVD cases will be a key component when it comes to the ITC decision in the Section 337 case.  He told us, “There are complications from my point of view:  some of the steel products covered by the 337 case may not be subject to AD or CVD cases yet.  Commerce may be asked to determine whether other products may have been dumped or subsidized; but Commerce will initiate new AD and CVD cases on new products.  The ITC may not investigate whether dumping or subsidies occurred on those new products in the context of a 337 case.  And, if no new AD/CVD cases are initiated, Commerce will tell the Commission the products that are covered by  the antidumping and countervailing duty cases (scope).

“Another complication is that, for AD/CVD cases, international agreements limit the remedy for selling at low prices (dumping) or subsidies (countervailing duties).  AD and CVD duties are the sole remedy.  An exclusion order by the ITC in response to those practices would violate international agreements.  No exclusion order can apply to products on the basis that they are dumped or subsidized.  Thus, the scope of the AD/CVD orders will be a key component of the ITC determination in the 337 case.”

He went on to say, “This kind of interplay is unprecedented in my experience.  There have been cases where a 337 case investigation was pre-empted by antidumping and countervailing duty law.  But here, there are allegations of unfair practices (e.g., theft of trade secrets) other than dumping or subsidies.  Whether the ITC finds those allegations true and the remedies chosen will be interesting and contentious.”

On Monday, August 29th at 3:30 in the afternoon, Lewis Leibowitz will begin our 6th Steel Summit Conference with a program on trade. Lewis will discuss the status of each of the flat rolled AD/CVD cases as well as the USS Section 337 filing and the possibility of a Section 201 being used by the President of the United States. He will also talk about what companies can do to mitigate their risk from trade actions against their suppliers. You can find more information about our Steel Summit Conference on our website. You can also register for the conference on our website: www.SteelMarketUpdate.com or through our office: 706-216-2140 or info@SteelMarketUpdate.com.