Transcript CHAPTER I INTRODUCTION Classical Theories of International

CHAPTER XXII
Antidumping, Countervailing &
Safeguard Measures
 Dumpings by a Foreign Manufacturer
 Subsidies by a Foreign Government
 Antidumping Duties (ADs) &
Countervailing Duties (CVDs)
 Procedures for ADs and CVDs
 Safeguard Measures
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Dumpings by a Foreign Manufacturer

When products are sold in the U.S. at a
price less than the fair market value
Sold to purchasers in the U.S. at a price lower
than a domestic price of exporter
(2) Sold to purchasers in the U.S. at a price less
than the manufacturing cost plus overhead
expenses & normal profit margin
(3) Sold to purchasers in the U.S at a price lower
than price sold to purchasers in another
country
 Market Economy: Comparison FOB export
price and FOB domestic price
 Non-market Economy (NME): Surrogate
pricing-India, Pakistan, Thailand, Bangladesh or
Indonesia
(1)
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Market Economic Status of China
 On 11/15/2005, Korea gave Market Economic
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Status (MES) to China as the 43rd country.
As of 5/2009: 97 countries
China’s major trading partners-the U.S., the EU,
Japan & India-have yet to acknowledge China’s
MES.
WTO members are allowed to treat China as a
non-market economy in dumping and subsidy
cases for 15 years after its entry on December 11,
2001 (2016)
Prices of products exported from a non-market
economy can be disregarded and the costs in a
third country are used to measure the normal
value of the products
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Subsidies by a Foreign Government
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Financial contributions to a country’s
exporters by a government or any public
body.
Grants, loans, equity infusions, loan
guarantees, tax credits, provision of
goods or services, or purchase of goods.
Dumpings and subsidies allow foreign
manufacturers to sell their products to the
United States below a fair market value
Subsidy is subject to the Subsidies and
Countervailing Measure (SCM) Agreement
of the WTO
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Subsidies by a Foreign Government

Export-related Subsidies Classified by the WTO
(1) Prohibited Subsidies:
a. Export subsidies:
• Contingent on export performance
• Tax remission or deferral on export
earnings, favorable export credit below
government’s cost, a bonus on export,
etc.
b. Import substitution subsidies:
• Contingent on the use of domestic
goods
• Also called local content subsidies
 No need for the complaining WTO member to
show adverse trade effect.
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Subsidies by a Foreign Government
(2) Actionable Subsidies:
 Given to specific industries or enterprises.
 Production subsidies
 Not prohibited, but subject to challenge
 Adverse effect
 Rebuttable presumption of serious adverse
effect
• Subsidies of greater than 5% ad valorem
• Covering operating losses
• Direct forgiveness of debt
 Complaining country must show the
adverse effect on its industry, i.e., injury to
a domestic industry caused by subsidized
imports
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Subsidies by a Foreign Government
(3) Non-actionable Subsidies:
 Cannot be challenged multilaterally
 Cannot be subject to countervailing action
• Basic research & pre-competitive
development subsidies
• Assistance to disadvantaged regions
• Assistance to adapt existing facilities to
new environmental requirements
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Agricultural Subsidies
:
Special rules regarding agricultural
subsidies are contained in the
Agreement on Agriculture
 Export subsides & domestic supports
that are consistent with reduction
commitments are not prohibited, but
subject to countervailing duties
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Antidumping Duties (ADs) &
Countervailing Duties (CVDs)
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Antidumping duties: Extra duties for
dumping margin collected to offset the
effect of dumping
Countervailing duties: Extra duties to
counter the effect of foreign government's
subsidies
Must injure a U.S. industry except
prohibited subsidies
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Procedures for ADs and CVDs
(1) A domestic industry or an interested
party files a petition with
(a) USDC alleging unfair competition by
foreign manufacturers
(b) ITC claiming serious and material injury
to a domestic industry or hamper in its
startup
(2) ITC investigates whether there is
reasonable indication that the U.S.
industry has been or is likely to be,
harmed, or hampered in its startup by
the alleged dumping or subsidies
(Preliminary determination).
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Procedures for ADs and CVDs
(3) USDC investigates the merits of the
allegations to determine whether dumping
or unfair subsidization has indeed
occurred
(4) USDC calculates the dumping or
countervailing margin, the difference
between prices at which the merchandise
is being sold in the U.S. and its fair market
value (Preliminary determination)
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Procedures for ADs and CVDs
(5) USDC directs U.S. Customs to
(a) Assess cash deposits or require bonds for
possible AD or CVD liabilities
(b) Suspend liquidation of entries until final
determination on AD or CVD
(6) USDC sends its fact-finding team to
foreign manufacturers against which
dumping or subsidies are alleged and
makes a final determination on dumping
or countervailing margins (Final
determination).
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Procedures for ADs and CVDs
(7) If ITC decides that U.S. industry has been
materially injured or hampered in its
startup (Final determination)
(a) USDC publishes an Antidumping or
Countervailing Duty Order in the Federal
Register.
(b) USDC directs Customs to collect only cash
deposits. Bonding is no longer permitted for
AD or CVD deposits.
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Procedures for ADs and CVDs
(8) USDC conducts an annual review and
publishes result in the Federal Register
(9) A party disagreeing with AD or CVD
decisions can file a law suit with the U.S.
Court of International Trade.
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Safeguard Measures
A WTO member has a right to restrict
imports of a product temporarily as a
safeguard measure to protect a specific
domestic industry, when a surge in
imports is causing or is threatening to
cause, a serious injury to the industry.
 Emergency action
 Quantitative import restriction or Duty
increases to higher than bound rates
 In principle, cannot be targeted at
imports from a particular country alone
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Safeguard Measures
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However, quotas can be allocated among
supplying countries
Member imposing them must give
something in return to affected members.
Affected exporting countries can seek
compensation through consultation.
If no agreement within 30 days, exporting
countries can retaliate by taking
equivalent action, but not during the first 3
years.
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Safeguard Measures
 Exemption:
– Imports from a developing country less than
3% of total imports or from several developing
countries less than 9% of total import
 Must be serious injury-Significant
impairment
 WTO Dispute Settlement Understanding
applies
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Safeguard Measures
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WTO Safeguard Agreement prohibits
“gray area” measures: voluntary export
restraint arrangements or orderly
marketing arrangements in cars, steel,
semiconductors
Can be a real increase in imports (an
absolute increase) or an increase in
imports’ share of a shrinking market (a
relative increase)
Have time limits (sunset clause)
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Maximum duration 4 years unless extended.
Cannot be more than 8 years with extensions
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