Chinese Law Prof Blog

Editor: Donald C. Clarke
George Washington University Law School

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Monday, October 29, 2007

Department of Commerce seeks comments on granting market-economy treatment to certain Chinese respondents in antidumping suits

On October 25, the US Department of Commerce issued a notice requesting public comment on

whether it should consider granting market-economy treatment to individual respondents in antidumping proceedings involving the People's Republic of China ("China"), the conditions under which individual firms should be granted market-economy treatment, and how such treatment might affect our antidumping calculation for such qualifying respondents.

This is a very interesting development. As trade buffs know, Commerce has long declined as a matter of policy to apply countervailing duties to non-market economies on the grounds that the amount of a countervailable subsidy in such an economy is impossible to determine. (Trade buffs may also think I'm oversimplifying here; sorry!) Recently, however, Commerce did find that Chinese exports had received a countervailable subsidy. (See Countervailing Duty Investigation of Coated Free Sheet ("CFS") Paper from the People's Republic of China - Whether the Analytical Elements of the Georgetown Steel Opinion are Applicable to China's Present-day Economy (March 29, 2007) (on file in the CRU on the record of case number C-570-907); Coated Free Sheet Paper from the People's Republic of China: Amended Preliminary
Affirmative Countervailing Duty Determination, 72 FR 17484 (April 9, 2007).) This position is less a reversal of previous policy than a recognition that China's economy is sufficiently market-governed in at least some areas to warrant revisiting the policy's application to China.

This new thinking has now gone the logical next step, toward consideration of the possibility that some elements of China's economy are sufficiently market-governed that they should not be subject to NME treatment in antidumping proceedings. Since NME treatment is, for respondents, essentially the equivalent of losing before the contest has begun, that Commerce will consider this possibility is good news for Chinese exporters and American importers.

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Comments

You say that "Since NME treatment is, for respondents, essentially the equivalent of losing before the contest has begun, that Commerce will consider this possibility is good news for Chinese exporters and American importers." But in fact, according to the Commerce Department, there has been a "23-year old bipartisan policy of not applying the countervailing duty (CVD) law to non-market economy countries." (see http://www.commerce.gov/opa/press/Secretary_Gutierrez/2007_Releases/March/30_Gutierrez_China_Anti-subsidy_law_application_rls.html.) In fact, between 1991 and 2006, there have been no countervailing duties actions filed against an NME -- so it is hard to see how NME status is a kiss-of-death in DOC anti-dumping actions.

Of course, many have argued that NME status is a kiss of death against China in WTO anti-dumping procedeings. But that seems like a different issue. Is it?

Interestingly, the first NME to be complained against in some 18 years happened to be CHINA. That complaint was filed only 4 months ago, and I wonder if there is any relationship between that complain that the DOC's now-stated interest in re-classifying China. All this leads me to wonder whether the proposed DOC re-classification may in fact not be such a good thing for Chinese exporters after all.

Posted by: Mike Dowdle | Nov 2, 2007 11:02:13 AM

Just to clarify: (1) As I point out in the post, the DOC for many years did not seek CVDs against NMEs. It's not entirely clear whether the action against China represents a change in policy or a change in the DOC's view of whether China is a NME. (2) My comment about NME treatment being the equivalent of losing applies to antidumping proceedings, not to CVD (antisubsidy) proceedings. Therefore, if it becomes possible to convince the DOC that market-economy treatment should apply in your particular sector, you have more of a chance than you did before. I take your comment to mean that exporters' better chance of winning in antidumping proceedings might be offset by their now greater vulnerability in CVD proceedings. I agree this is in principle possible; more knowledgeable experts than I might have a view on which way the balance is likely to tip, given the different standards applicable to each type of proceeding.

Posted by: Don Clarke | Nov 5, 2007 11:30:50 AM

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