Tuesday, October 5, 2010

GPX Tires. The end of CVD from NME's?

When this case was first decided and remanded to the agency, I thought then that it was pretty remarkable. See my blog from 2009. It was remarkable because the court decided that the when applying antidumping and countervailing trade remedies for non market economies, the margins for the additional duties could not be double counted. If they could not be double counted I did not see how they could be counted at all.

There are three types of trade remedies in US law: 1) countervailing remedies covered in 19 USC 1671, 2) antidumping remedies covered in 19 USC 1672, and 3) unfair practices cover under 19 USC 1337. Of these the first two are used most frequently. They both create the imposition of additional duties to products deemed in violation.

Countervailing duties are extra duties on the subsidies that the foreign governments give to their exporters.  For example, if a foreign government pays a company to export a product, then the amount of that payment is added on to the duty amount as a trade remedy. This balances out the government's subsidy so that companies can compete fairly despite that government's subsidy.

Antidumping duties are extra duties on products being imported, at less than fair market values, as determined by two different methods. The preferred method is the difference between the market price in the country of exports an the imported price. When there is not enough information to accurately establish a home 'market' price then a normal value may be constructed.Then the margin is the difference between the normal value and the imported price.

The second method of calculation antidumping duties is used when the economy the goods come from is considers a 'non market economy' or state controlled economies (NMEs). Then the price is constructed by using comparable surrogate prices,. In this method presumes that government meddling int he prices is so pervasive that the export market price is unreliable.

For many years the agency charged with enforcing the trade remedies refused to apply countervailing duties to antidumping cases, where the NME method of calculating  was used. Many US importers challenged this decision and the court ruled that is was a permissible interpretation of the statute, to refrain from imposing countervailing duties on products where, the NME method of calculating antidumping duties was used. (See Georgetown Steel) But he court in those years never said the agency could not apply countervailing duties only that is was within their discretion not to apply them.

In 2007 the Agency, Commerce Department, began trying to add countervailing duties to antidumping cases where NMEs were involved. Currently the major NME is China. Since then there have been quite a few cases of joint countervailing and antidumping cases being made against Chinese products. The GPX tire case is one of them.

The plaintiffs, US importers and Chinese importers, in this case challenged the Commerce Department's imposition of countervailing and antidumping duties arguing that it amounted to double counting of the countervailing duties. The court agreed in GPX I and remanded back to the agency to come up with an acceptable method to insure that the countervailing duties would not be double counted.

Well at long last the commerce depart has came back its chosen methodology and the court found that it was not able to prove that it could eliminate the double counting. In GPX II  the court found that the commerce department was not able to show it could eliminate the double counting and order the commerce department to forgo the countervailing duties.

The decision will likely be appealed and if the appellate agrees with the ITC it could mean the end of countervailing duties for all other Chinese countervailing cases as well.

This is a list of the current extra countervailing duties for goods from China. The list has the shipper names with duty rates. There are additional antidumping cases for these which are not listed.
  1. Circular welded stainless pressure pipe C-570-931
    1.  Countrywide rate 1.1%
    2. Winner Stainless Steel Tube 1.1%
    3. Froch Enterprises 299.16%
  2. Circular welded carbon quality steel line pipe C-570-935
  3. Citric Acid case C-570-938
    1. Countrywide 8.14%
    2. TTCA Cop., Ltd 12.68%
    3. Yixing Union Biochemical Co. 3.6%
    4. Anhui BBCA Biochemical 118.95%
  4. Prestressed Concrete Steel C570-946
    1. Countrywide 27.64%
    2. Fasten Group Import and Export 9.42%
    3. Jiangyin Hongyu Metal Products 9.42%
    4. Fasten Group Corporation 9.42%
    5. Jiangyin Walsn Steel Cable Co., Ltd. 9.42
    6. Jiangyin Hongshen Co., Ltd. 9.42%
    7. Xinhua Metal Products Co., Ltd. 45.85%
    8. Xinyu Iron and Steel Joint Stock Limited Company 45.85%
    9. Xingang Iron and Steel Joint Stock Limited Liability Corporation 45.85%
  5. Kitchen Appliance Shelving and Racks C-570-942
    1. Countrywide rate 13.3%
    2. GuangDong Wireking 13.3%
    3. Asber Enterprises 170.82%
    4. Ghangzhou Yixiong Metal Products Co., Ltd. 149.91%
    5. Foshan Winleader Metal Products 149.91%
    6. Kingsun Enterprises149.91%
    7. Yuyao Hanjun Metals Works 149.91%
    8. Zhongshan Iwatani Co. Ltd 149.91%
  6. Laminated woven sacks C-570-917 
    1. Country Wide 226.85%
    2. Shandaon shougang Jiayuan Chun Company Ltd 352.82 %
    3. Zibo Aifudi Plastic OPackaging Co. Ltd 29.54%
    4. Han Shing Chemical Co. Ltd 223.74%
    5. Ningbo Yong Feng Packaging Co., Ltd. 223.74%
    6. Shandong Qilu Plastic Fabric Group. Ltd 304.4%
  7. Lightwalled rectangular pipe and tube C-570-915
    1. Countrywide 15.28%
    2. Zhangjiagang Zhongyuan Pipe Making co Ltd 15.28%
    3. Kunshan Lets Win Steel Machinery Co., Ltd. 2.17%
    4. Qingdao Xiangxing Steel Pipe Co., 200.58%
  8. Lightweight thermal paper C570-921
    1.  Countrywide 13.63%
    2. Guangdong Guanhao High Tech 13.63 %
    3. Shanghai Hanhong Paper Co., Ltd 0%
    4. Shanzhen Yuanming Industrial Development Co., Ltd. 138.53%
    5. MDCN Technology 124.93%
    6. Xiamen Anne Paper Co., Ltd. 124.93%
  9. New Pneumatic Off Road Tires C-570-913 
    1. Countrywide 5.62%
    2. Guizhou Tyre Co., Ltd. 2.45%
    3. Tianjin United Tire and Rubber International Co., Ltd. 6.85%
    4. Hebei Starbright Tire Co., Ltd. 14% (GPX International Tire)
  10. Raw Flexible Magnets C-570-923 
    1. Countrywide 109.95%
    2. China Ningbo Cixi Import Export Corporation 109.95%
    3. Polyflex Magnets Ltd. 109.95%
    4. Jingzhou Meihou Flexible Magnet Company Ltd. 109.95%
  11. Sodium Nitrate C-570-926 
    1. Countrywide 169.01%
    2. Shanxi Jiaocheng Hongxing Chemical Co., Ltd. 169.01%
    3. Tianjin Soda Plant 169.01%
  12. Steel Grating. C-570-948
    1. Country wide 62.46%
    2. Ningbo Jiulong Machinery Manufacturing Co., Ltd. 62.46%
  13. Tow Behind Lawn Groomers C570-940 
    1. Countrywide 13.3%
    2. Princeway Furniture 0%
    3. Jiashan Superpower Tools Co., Ltd. 13.3%
    4. Maxcheif Investments Ltd 264.98%
    5. Qingdao Ea Huabang Instrument Co., Ltd. 264.98%
    6. Qingdao Hundai Tools Co., Ltd. 264.98%
    7. Qingdao Taifa Croup Co., Ltd. 264.98%
    8. World Factory Inc. 264.98%

Wednesday, April 7, 2010

Pottasium Phosphates Contervailing Duties

Commerce published their preliminary findings for countervailing duties for potassium phosphate salts imported from China.

Potassium phosphate salts are food additives and fertilizers. The order covers three types of these salts, one of which, monopotassium phosphate, is an ingredient in Gator Aid, for example.

The period of investigation is from January 1st 2008 to December 31st 2008.

Apparently both suppliers of these salts decided to stop selling potassium phosphates in the U.S. as Commerce claims both parties, and the Chinese government, did not respond to questionnaires aimed at determining whether there was dumping, and how much.

When parties shipping to the U.S. are charged with dumping the Commerce Department, or more specifically the Import Trade Administration (ITA), sends them questionnaires about pricing, costs, etc. They use the data collected from the questionnaires, other pricing data, and the dumping petition, to make determinations of countervailing margins and/or antidumping margins. The margins are percentages which translate into additional duties above the tariff schedule added to products already imported and imported in the future.When parties do not send back their questionnaires, partially fill them out, or send them back late, the ITA will then use the "adverse facts available" to find dumping or countervailing duties margins based on the assumption when in doubt the margin is higher.

When using "adverse facts available" the result should be a "reasonably accurate estimate of the respondent’s actual rate, albeit with some built-in increase intended as a deterrent to non-compliance. " F. Lii de Cecco Di Filippo Fara S. Martino S.p.a. vs. United States (App. Ct. Fed Cir. 2000) The ITA should make an accurate estimate of what the countervailing and anti-dumping margins should be and then add a little to punish the companies for not complying with the questionnaires.

So the rate should be "reasonably accurate." But in this case, for the potassium phosphate salts, the preliminary findings for only countervailing are a rate of 119% in additional duty. That means for every good that is exported, the Agency found that a reasonably accurate subsidy of 55% is being paid to the exporting companies by the Chinese Government. This seems quite improbable. For every dollar in exports the Chinese government is paying the exporting companies $0.55 of it.

Some of their methods used seem arbitrary. The findings showed China has a 33% income tax rate. But instead of figuring out the effect the income tax on the profit would be on the price of the exported product, they simply added 33% to the other subsidies. Income taxes are based on income which is revenue less expenses. The manner the ITA chose to make its calculations there would be no cost of production. I would like to run a business in whatever world the ITA is living in.

In addition to the absurdly high countervailing duty the ITA also has a concurrent non market economy (NME) antidumping duty case. Non market methods of calculation are done with countries such as China because government run companies have internal price controls making the domestic value unreliable. 

Because it is hard to tell where the company begins and the government ends the antidumping duty uses a method that catches that and all the government subsidies. But if the NME methodology catches the subsidies and the countervailing duty counts the subsidies then there will be double counting or doubling of countervailing margins by using both methods concurrently.  

Fortunately, for principle of fairness, if nothing else, the Court of International Trade (CIT) recognized this double counting was not correct. GPX Tires v. United States. CIT 09-103. The Court found it is permissible for the ITA to use both NME methodology for antidumping duties and make a finding of countervailing duties if they can come up with a methodology to insure that there is no double counting. I personally do not see how they will be able to do that. I think the only solution would be to apply countervailing duties only on the parts of the antidumping margin that do not use the NME methodology, or what has been termed the 'bubbles' of market economy within the the NME.

But the ITA does not co-ordinate the antidumping and countervailing investigations, other than trying to synchronize the schedule. They have the same data but they do not try to co-ordinate the determinations in a way that will avoid double counting as of yet. In this case especially they seem to be operating as if the above court decisions do no exist. Maybe they will fix it by the final determinations but it seems like they will keep doing whatever they want until challenged in court.

The importers of potassium phosphate salts for 2008 are the ones that might pay the penalty for this quagmire. If the Chinese government and companies who manufactured these potassium phosphate salts and exported them to the United States decided, like it seems, to just abandon the U.S. market at the hint of a injury investigation, then the importers are left holding the bag with little recourse.

The importers can and should make the challenges I mentioned above, but real amelioration of these margins in the help of real cost data from the suppliers would be much better. Finally results are due out over the summer and then we could be looking at litigation after that.

Friday, March 26, 2010

Zeroing Classic Conflict of Law and Rational.

After explaining what zeroing is here. Then explaining the legal background here. I now conclude with my personal critic of practice.

The idea that a dumping margin should be calculated by subtracting one average price by another not so average price is a little perverse. It breaks the rules of math. The amount the normal price exceeds the export price should equate to the amount the normal average price exceeds the export average price. Adding, subtracting or multiplying the same number or effect to each side of the calculation is the basis of algebra. The export price can not equate to the average export price, where not all prices are averaged but are altered to make some equal to the normal values, and the rest averaged. It breaks the rules of math, it makes apples oranges and grapes peaches. If the these rules were applied to everyday purposes planes would fall out of the sky and building would collapse.

The fact that this is somehow fine is linked the the permissible statutory interpretation doctrine from Chevron. Basically, there are words here, and they say something, but it is possible to read them differently. The two step process is, ask first if the words of the statute are ambiguous, then ask if the interpretation is permissible? Well the statute is almost always ambiguous. Otherwise why would it be challenged in court?  Then the interpretation is almost always permissible. It is much easier to find an interpretation permissive, than  not permissive. This is the deference given by the courts to the executive branch in interpreting statutes. Theory behind the deference to the executive branch in interpretation the statute is that if the executive branch interprets that differs from Congresses intent, Congress is in a much better place to correct them than the court politically and the executive is also more accountable as a political branch to the people than the court.

But in this case law of dumping duties is derived from a non-self executing treaty. Which means a treaty was negotiated, and instead of being adopted as law, Congress passes it into law as a US domestic law. Then the executive branch interprets the law. But usually, the executive and Congress, would prefer to interpret a treaty that benefits their domestic political base. If the executive chooses to interpret in a way the that penalizes unfairly foreign companies on behalf of U.S, domestic parties Congress is not about to pass a law to rectify it. So both the executive branch and the Congress have no, or limited interest, in trying to interpret a trade treaty fairly. The only branch left to interpret a statute based on a treaty fairly is the judicial branch. But if the judicial branch decides it best to leave the question to the political branches, as it does with other domestic law, then the only recourse left is external.

So faced with the inability to get a fair hearing in the United States system, the foreign companies must challenge the practice zeroing in the WTO dispute settlement body (DSB). But,  WTO rulings are not binding on the US courts, nor are they binding on the executive branch. The court defers again the the executive to uphold, or squirm around, WTO rulings, whichever it prefers. If the executive does nothing, or not enough, then the recourse, of the foreign interests is trade barrier retaliation. That sets off a trade barrier retaliation that is calibrated to cause enough damage to domestic industries, to get the domestic industries to pressure the executive the change the offensive policy. Is this anyway to run a railroad?

Obviously its no way to run a railroad. The zeroing interpretation should not have been held permissible in the first place. But like a kid who can not back down from a fight, when the WTO ruling against the practice came down, the US courts could not back down. There are plenty of reasons why a WTO DSB ruling should not be binding on a US court. Maybe using the Charming Betsy doctrine in conjunction with WTO ruling to change the executive interpretation of a treaty, also would set a bad precedent. But if all three branches of government have no interest in upholding trade treaty obligations then the only course will always be the WTO DSB and trade retaliation. Even in clear cut poorly interpreted statutes like this one.

The Court of International Trade prides itself, and rightly so, as one of the few courts in the world where foreign and domestic companies can come and challenge the enforcement of trade policy. It is better than most nations offer their trading parties. Many rulings are a testament to fairness. But it still would be better for the court to decide cases such zeroing in light that it is the last chance of fairness before the convoluted remedies WTO DSB are used.

Wednesday, March 3, 2010

History of Zeroing

Last blog entry I explained what "zeroing" was. I also knew, "zeroing" had been contested for a long time, but I was surprised to see how far back it went.

The earliest case I could find contesting the method of zeroing was, Serampore Indust. v. Dep't of Commerce. 11CIT 866 (1987). After that there was Bowe Passat Reinigungs-und Waschereitechnik Gmbh v. United States 20 CIT 558 (1996). In both these cases the use of "Zeroing" (explained in my previous blog entry) was considered a permissible interpretation of the statute. Both of these cases are too old for me to find online for free, so I would have to run down to my alma mater's law library, or pay to read them.

The standard of review on this is based on the reasonable interpretation statute know by many as the Chevron Doctrine. If the use of "zeroing" was a "finding" then the standard of review would have upheld Commerce's finding unless "unsupported by substantial evidence."   However, the us of zeroing was considered an "interpretation" of the statute. Under the Chevron Doctrine the courts will up hold the agency "interpretation" of an ambiguous statute if it is a "reasonable" interpretation.

The statute everyone is arguing about reads as follows: the "dumping margin is ... the amount by which the normal value exceeds the export price..." 19 U.S.C 1677. (emphasis added)  So the Commerce Department read that to mean that there weren't supposed to use any negative margins, i.e. only margins where the normal value "exceeds" the export price are written into the statute. See Timken Slip Op. 02-106. Now that might be fine if they weren't calculating margins using average prices over periods of a year. Because it just disregards the rules of math. The difference of one average between another average is the difference between the whole. The difference between one average and a construct is not the difference of the whole. It is apples and oranges being added together.

The first time the practice of zeroing was found inconsistent with WTO obligations, it was the European Union not the Untied States who was doing it. In 1998 India charged European Union was improperly calculating dumping margins by using zeroing in their calculations of bed linens from India. WT/DS141/AB/R. The WTO dispute settlement body, of course, has a different standard of review. It can look at the treaty and decide whether or not a practice is consistent or inconsistent with the treaty.It does not have to provide any deference to one side or the other.

But when applying the treaty to domestic law, the WTO treaty is not what they call "self executing." This means that after the executive branch negotiates the treaty, then they have to bring it back for United States for the Congress to write it into law domestic law. Some treaties negotiated and ratified by the Senate become US Law automatically and are on par with every other Federal law. U.S Const. art. II sect. 2 and U.S. Const. art.IV. But for the purposes of law, the much unjustly maligned WTO treaty, is actually more aspirational then it is binding on the United States.

Immediately after the WTO decision against the European Union, United States plaintiffs began trying to use it in U.S. Courts. See Timken (2002). Corus Staal (2003). The argument being the old "Charming Betsy Doctrine" that when interpreting U.S. law, courts will find that Congress intended the law to comport with accepted international law. See Murray v. Schooner Charming Betsy. 6 U.S. 64 (1804) (citing a U.S. Supreme Court case from 1804 is also pretty impressive.) Therefore an interpretation that is consistent with international law is reasonable and one that does not is not reasonable. If the WTO ruled that the interpretation of the statue is inconsistent with our treaty obligations then Congress must not have intended that and zeroing would not be a reasonable interpretation of the statute.

But the CIT for in both cases 1) the treaty doesn't specifically prohibit zeroing, 2) the Bed Linen case was not a reason enough to strike Commerce's interpretation, 3) WTO DSB decision are not binding on U.S. Courts and 4) WTO DSB decisions are not "self executing," they require Congress to change the law for them to have effect. Corus Staal Slip Op 03-25

So then the United States was challenged directly on it's use of zeroing this time by the European Union. WT/DS294/R. (2003) The EU hot off being called out on it's questionable antidumping practices immediately points its fingers elsewhere. The WTO DSB found U.S. zeroing practices specifically inconstant. End of the story right? Not quite. The DSB decision for all their worth only suggest other member to change their ways or face possible sanctions. They ndo not have the power to reach in and change any countries domestic law.

Plaintiffs again challenged zeroing  in court after the panel report in 2005 to no avail. See NSK Bearings v. Untied States Slip Op 05-1 . and then Corus Staal BV v. United States. Slip Op. 05-85. The same result that the court backed up Commerce's interpretation. The court was uhelp in both cases on appeal.

The U.S. appealed the WTO decision, and finally lost in the WTO appellate body, on April 18th 2006. So on March 6th 2006 commerce announced it would stop using the method of zeroing on new investigations. See 71 FR 11189. and then the final decision 73 FR 74932, Dec. 10, 2008. Commerce would start using average to average price comparison when calculating dumping margins in investigations. But it maintained it would continue to use zeroing on closed investigations under administrative review or sunset review.

Then not using Zeroing was challenged. In Searing Industries the court ruling that Commerce could refrain from using zeroing. Zeroing in initial investigations is no longer used and the Court has ruled that not using zeroing in initial investigations is also a reasonable interpretation if the statute. CIT. Slip Op -09-129.

But Commerce still uses zeroing in administrative reviews. These are dumping cases that have already had a final investigation and once a year they receive an annual administrative review if any of the parties request it. The use of zeroing in the administrative reviews was upheld by the court as well. See SKF v. United States. Slip-Op. 09-121

So the state of zeroing is that it is no longer used in the U.S. for investigations, but is still used in sunset reviews, new shipper reviews, and annual administrative reviews. 19 CFR 351.218, 19 CFR 351.214 , 19 CFR 351.213 and read with 19 CFR 351.414 (c) 1 and 2.

And that is were it stands. Zeroing may continue for much longer in the future. The last DSB ruling is a mixed bag and complicated the matter. It found certain measures the US took complied with the WTO finding and certain did not. Further, the appellate body previously allowed zeroing in context of reviews, while zeroing in investigations where "inconsistent." WTO DS294.

Wednesday, February 17, 2010

Latest Zeroing Cases

The latest two Zeroing cases added to a long history of Zeroing cases:

Dongbu Steel Co. Ltd. v. United States 2/4/2010 Slip Op. 10-13.
Corrosion-resistant carbon flat steel products from the Republic of Korea.
Use of zeroing in context of administrative review sustained. 
Andaman Seafood v. United States 2/4/2010 Slip Op.10-12
Frozen warm water shrimp from Thailand.
Sustained zeroing as commerce could apply the decision to stop using zeroing prospectively and not on already decided cases

"Zeroing" is a method used by the International Trade Administration in calculating "Antidumping Duties."

"Antidumping Duties" are extra duties levied on products being sent tot he US at less than fair market value. The two requirements are that a 1) US Industry is being injured by import and 2) the reason is that the injuring imports are being sold less than fair market value.

It is often explained as analogous to predatory price protection under Antitrust laws. However, the key distinction is that under anti trust laws the complainant must show that the offender has the intention of driving competitors out of business to recoup monopoly profits in the future. Antidumping is much easier to prove.

The remedy for dumping is additional duties calculated by figuring out what the fair market price should be and taxing the subject imports until they are that fair market price. So the difference between the higher 'fair market' price and the lower actually imported price is the dumping margin and the dumping duties. The higher the fair market price is when compared to the prices the foreign companies sell in the US the higher the duties.

"Zeroing" is a method of calculating the average price the foreign company sells the products in the United States. Over a period of time, the International Trade Administration the "Agency" averages the price in the home market, or fair market price, for a period of time usually a year. Then the Agency calculates the average sales price over time. Except, ever time that average sales price is over the fair market price the agency "zeros" it out to make it equal but not over the fair market price.

A brief example would be if month one the "home" market price is $3.00, then in month two it is $5.00, and in month three the price it $4.00. The average home market price for the three month period would then be $4.00. ((3+5+4)/3=4). Now lets say the same three month period the company sells the products to the US for the same price as the home market. Normally, there would be no dumping because the prices int he home market match the sales price to the US. But with the introduction of "zeroing" we have a different result. The $5.00 price would be "zeroed" out to the average home market price of $4.00. So the average sales price to the US becomes $3.66. ((3+4+4)/3=3.66) So where there should be no dumping the Agency finds a 9.2% dumping margin.

So when price of a product varies frequently, there is almost a guarantee there will be a dumping margin. The fair market price is arrived at by taking all the numbers and averaging them. The imported price is arrived at by taking all the numbers that are less than the fair market price and changing all the numbers that are high to the fair market price and then averaging them. You are always guaranteed to get a number less than the fair market price and hence always guaranteed to find a dumping margin.

More on the history of zeroing. Looks like this might be a three part blog series.

Friday, January 29, 2010

UPS Customs Brokerage Skates Free

In a brief 54 page opinion Judge Carmen doles out the what is hopefully the end of the on going saga which could be titled "UPS, Tricky Cathode Ray Classification and the Revenge of the Ten Factors."

For those who indulge in dry reading the novel chapters are as follows:
Chapter I  The Saga Begins: The Disputed Amount Will be a Mere Pittance.
Chapter II Plead to a Higher Power For Guidance on Hard Questions
Chapter III Hard Questions Are Best Left Unanswered
Chapter IV Cathode Ray Tubes Might be Everywhere: Let the Trial Begin.
Chapter V The Verdict is in Guilty: But the Hope Lives On.
Chapter VI The Tale of Ten Factors: Hard Questions Remain Unanswered.
Chapter VII The Fatal Gang of Ten Factors Let the Prisoner Go Free.

Will there be another Chapter? I certainly hope not.

I can't believe the end of this case. After Customs wins the ability to penalize a broker with a $75,000 fine, UPS appealed that decision, but also argued that that customs did not consider ALL of the ten factors listed in 19 CFR 111.1. when issuing the penalty.

Many, myself anyways, thought this would just then be sent back to the agency to reconsider all ten factors. (My blog from August 11th. Lawrence Friedman's Blog From August 13th.) Then after considering all ten factors it would go back to court with the same conclusion. So that finally the question of whether the maximum penalty issued to a broker can exceed $30,000.00 would be answered. I suppose we will never know that answer.

But now the Court concludes that if Customs failed to look at all ten factors at the time the penalty was issued then the penalty ab initio was faulty. The Court didn't say exactly that but the Court ruled the "failure was tantamount to a failure ... to meet its burden of proof." US CIT Slip-OP 10-11 at 53. This indicates that Customs must present at trial that it considered all ten factors before it can perfect a broker penalty.

UPS is off the penalty Scott free. My jaw dropped I was so stunned. I guess I need a life.

Why it took Judge Carmen 54 pages to come to the conclusion is another story. I suppose he likes to be thorough. 

Must congratulate the lawyers arguing for UPS. Picking up on the ten factors listed in 19 CFR 111.1 was a thorough job and a creative argument. Broker penalties will have to change. They are few and far between in the first place.

Will UPS try to claw back the penalties it already paid... Maybe the Saga is not over yet.

Thursday, January 21, 2010

WTO Panel formed for challenging the emergency tire restrictions

Back on September 11th 2009 there was a well publicized presidential proclamation adding additional duties to tires imported from China. When China joined the WTO back int 1997 they made an "accession agreement" which allowed countries to add additional duties to safeguard industries in the occurrence of a market disruption due to steep rises in imports.

The duties were for a small market of tires. The duties are graduated from year to year the highest being the first year as follows:
  1. 35% for the first year September 2009 to September 2010.
  2. 30% for the second year September 2010 to September 2011.
  3. 25% for the third year September 2011 to September 2012.
  4. No additional duties after September of 2012.
Its a relatively small number of tires.  It somehow raise allot of anger with Chinese. They immediately challenges the duties with the WTO DSB (DS399). They claim:
  1. The Chinese imports did not increase rapidly enough to warrant a market disruption.
  2. The imports were not in suffciant quantities to damage U.S. industries.
  3. The U.S. industries  are not materially injured
  4. Even if they are injured the rates are excessive to remedy the problem
  5. The measures are lasting too long to prevent what ever injury there might be.
The U.S. on the other hand says tire imports from China tripled in four years, the, production in the U.S. dropped 25%, and 14% of the workers in the industry has lost their job.  Seems like a pretty goods cause for a safeguard.

On September 26th China requested consultations, December 9th a panel, and today the panel was chosen.

Within another year they might have preliminary decision, which could be appealed, and maybe after three years we might actual a decision where they can retaliate. The decision will probably not be reached by the time the tariffs expire so this whole exercise seems moot to most observers.

This is probably the smallest but most publicized part of the trade war that is growing between China ind its trading partners.  The largest unreported part of the trade war is the explosion of antidumping and counervailing cases being filed in the U.S. and Europe. Another large isue coming to light is the allegations of Chinese government hacking into private companies and foreign government computers.

Could be difficult times for relations ahead.