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%

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.