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CITAC Supports a Constructive and Balanced Trade Agenda
Industrial Users and, in Appropriate Cases, Consumers, Should Have Standing to Participate in Antidumping and Countervailing Duty Cases Antidumping and countervailing duty cases disrupt the supply lines of many U.S. manufacturers. Under current U.S. law, however, consumers and industrial users are not permitted to participate in these cases as full parties, and their interests are not considered in determining whether to impose duties or, of equal importance, at what level. CITAC has supported legislation in the last two Congresses to give industrial users full standing in these cases. The legislation would also require that the interests of U.S. industrial users be considered before potentially crippling duties are imposed. We urge the Obama Administration to look carefully at the economic cost of imposing substantial barriers for U.S. industrial users as a matter of priority. There is simply no excuse for ignoring the interests of thousands of U.S. manufacturers – and millions of workers – before imposing burdensome tariffs that can eliminate needed imports completely.
“Zeroing” Must Be Ended in Antidumping Cases CITAC has fought to eliminate the use of zeroing by USTR and the U.S. Department of Commerce as an unfair and arbitrary measure that artificially increases margins of dumping by ignoring the actual results of sales comparisons in these cases. Ignoring sales that do not qualify as dumping penalizes consuming industries by forcing them to pay higher prices than warranted. Even consuming industries that purchase domestically produced inputs pay more than their foreign competitors in many instances and must compete on unequal terms with foreign producers of downstream products. The United States has consistently lost cases on this issue before the World Trade Organization. But USTR and the Commerce Department have refused to implement the WTO decisions. Now, U.S. consuming industries and U.S. exporters will pay for this refusal, consuming industries through incurring costs that are too high, and exporters through potential retaliation from the European Union, Japan, Mexico and possibly others in 2009.
Distribution of Antidumping and Countervailing Duties to Domestic Producers Should not be Reinstated In 2000, Congress enacted, through an amendment concealed in an appropriations bill, a provision that called for the distribution of antidumping and countervailing duties to domestic companies that supported petitions to impose these duties. The Continued Dumping and Subsidy Offset Act, known as the “Byrd Amendment,” disbursed more than $2 billion in payments, with five companies receiving almost half of these payments. Three industries received 57% of all payments: candles, bearings and steel. The CDSOA was held to violate the WTO agreements in 2003. Congress repealed CDSOA in 2006 after our trading partners imposed retaliation against U.S. exports and following an extensive effort by CITAC and other American manufacturers to secure its repeal. However, the interest groups that sought this law in the first place have initiated efforts to reinstate the law, despite its WTO illegality. We urge the Obama Administration to oppose reinstatement because it is corporate welfare that encourages protectionism, and undermines fair competition among U.S. companies. It will also endanger U.S. exports through retaliation from WTO members, while encouraging new antidumping and countervailing duty cases that lack merit.
The Retrospective Collection System Deters Fairly Traded Imports and Should Be Ended The United States is virtually alone among all countries that use antidumping and countervailing duty laws in employing a “retrospective” system of assessment and collection of dumping and countervailing duties. This system is in reality no more accurate than the more widely used and more balanced prospective system. Retrospective assessment also has the effect of inhibiting imports that are fairly traded because it is inherently unpredictable. This system should be ended and replaced with a form of prospective assessment. While this change would require legislation, it would strengthen the welfare of most American manufacturers and workers and improve the efficiency of U.S. government efforts to assess and collect antidumping and countervailing duties. The retrospective system of assessment means that when a product potentially subject to antidumping or countervailing duties is entered into the United States, the duties are not assessed at the time of entry. Indeed, the final duties are often determined only months or years later. The importer of record is liable for these duties, whatever they may be. The prospective systems employed by virtually all other countries set a definitive antidumping and countervailing duty that the importer considers and pays at the time of entry. If the duty is too high, the importer will choose to source from elsewhere. If it is at a level that the importer believes is commercially acceptable, it will pay the duty and import the product. Because only the United States has a retrospective system, U.S. importers alone are subject to this unnecessary uncertainty, even when the same product is subject to antidumping or countervailing duties in another country. Uncertainty leads to less import competition, even if those goods are fairly traded. The U.S. professes that its retrospective system is more accurate than a prospective system, but the facts do not bear this out. The retrospective system over-protects domestic petitioners at the expense of downstream users.
Trade Remedies Should Be Suspended in “Short Supply” Situations CITAC supports amending the trade laws to provide for suspension of antidumping and countervailing duties in cases where a domestic shortage of raw materials or other production inputs threatens U.S. industry. Other countries, including China, India and the EU, can, and often do, suspend or eliminate duties when there is a shortage of a product that can only be made up through increased imports.
The Department of Commerce Should Reconsider Applying Countervailing Duty Law to Non-Market Economies CITAC supports a balanced and fair approach to the imposition of antidumping and countervailing duties. The Department of Commerce has decided to impose countervailing duties on Chinese products while also using the non-market methodology in parallel antidumping cases. The Department is also currently considering whether to do the same on imports from Vietnam. CITAC sees two fundamental flaws in this policy.First, antidumping rules in non-market economy cases are arbitrary and cannot avoid double-counting of subsidies and dumping. Accordingly, we believe that the Department of Commerce should discontinue its practice of combining antidumping and countervailing duty calculations in non-market economy cases unless the antidumping methodology is changed in non-market economy cases to ensure that there is no double-counting. A second problem with applying countervailing duties in non-market economy cases is that subsidies are quantified based on arbitrary assumptions, leading to excessive duties and the loss of competitiveness by U.S. downstream users of products. The U.S. is being challenged by China on both these points in the WTO and the outcome of these cases is uncertain. The Obama Administration should consider this practice in light of the impact on American industries that rely on competitive imports to keep costs in line with foreign competition.
Antidumping and Countervailing Duty Orders Should Not Last Longer than Necessary Antidumping and countervailing duty orders are subject to “sunset” review every five years. The current procedures have two basic flaws: (1) the sunset reviews by the Commerce Department and the International Trade Commission are based on statutory standards that are unfair and unreliable; and (2) neither agency considers whether revocation would actually benefit the U.S. economy. CITAC supports a change in the statute to accomplish these goals. These orders should not remain in effect any longer than absolutely necessary to restore competitive conditions.
Climate Change Legislation in the 111th Congress The fundamental principle of CITAC is to consider the interests of all American manufacturers and retailers when developing trade policies. The new Congress and the Administration bring many new issues to the forefront, and several have trade implications. Climate change is one such issue. As climate change legislation is considered, it must address the competitiveness of American industry. If imports of vital manufacturing inputs are burdened with additional border measures, it will undermine the competitiveness of U.S. manufacturers. Therefore, CITAC is advocating that border taxes or other measures to address climate change be carefully structured and implemented to take account of the manufacturing competitiveness of U.S. companies and to avoid violation of U.S. international obligations under trade agreements. CITAC looks forward to working with Congress and the Obama Administration to affect these goals.
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