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Wednesday, June 30, 2010

Trade Remedies: A Primer

Vivian C. Jones
Specialist in International Trade and Finance

The United States and many of its trading partners use laws known as trade remedies to mitigate the adverse impact of various trade practices on domestic industries and workers. 

U.S. antidumping (AD) laws (19 U.S.C. § 1673 et seq.) authorize the imposition of duties if (1) the International Trade Administration (ITA) of the Department of Commerce determines that foreign merchandise is being, or likely to be sold in the United States at less than fair value, and (2) the U.S. International Trade Commission (ITC) determines that an industry in the United States is materially injured or threatened with material injury, or that the establishment of an industry is materially retarded, due to imports of that merchandise. A similar statute (19 U.S.C. § 1671 et seq.) authorizes the imposition of countervailing duties (CVD) if the ITA finds that the government of a country or any public entity has provided a subsidy on the manufacture, production, or export of the merchandise, and the ITC determines injury. U.S. safeguard laws (19 U.S.C. § 2251 et seq.) authorize the President to provide import relief from injurious surges of imports resulting from fairly competitive trade from all countries. Other safeguard laws authorize relief for import surges from communist countries (19 U.S.C. § 2436) and from China (19 U.S.C. § 2451). In each case, the ITC conducts an investigation, forwards recommendations to the President, and the President may act on the recommendation, modify it, or do nothing. 

On September 11, 2009, President Obama announced that he had determined to provide import relief under a China-specific safeguard provision with respect to certain tires from China. Effective September 26, 2009, the Obama administration imposed additional duty on these tires for a three-year period, beginning at 35% ad valorem the first year, declining to 30% the second year, and 25% the third year. This China-specific safeguard measure, a provision in the law that granted China permanent normal trade relations status (P.L. 106-386), gives relief to U.S. producers of like or competitive products from import surges of goods that cause, or threaten to cause, market disruption. 

In the 111th Congress, legislation has been introduced seeking to amend trade remedy statutes (H.R. 496, H.R. 3012, and S. 2821) and to address issues regarding the applicability of these laws to China and other nonmarket economy countries and/or to currency misalignment (H.R. 499, H.R. 2378, S. 1027, S. 1254). S. 3080 seeks to allow for judicial determination of injury. In addition, the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) expanded the application of Trade Adjustment Assistance (TAA), making workers found to be adversely affected by trade that results in a final AD, CVD, or safeguard determination by the ITC eligible to apply for Trade Adjustment Assistance. 

In World Trade Organization (WTO) negotiations, work continues in the Negotiating Committee on Rules on suggested revisions to the Antidumping Agreement and the Agreement on Subsidies and Countervailing Measures should an agreement be reached in the Doha Development Round (DDA). 

This report explains, first, U.S. antidumping and countervailing duty statutes and investigations. Second, it describes safeguard statutes and investigative procedures. Third, it briefly presents trade-remedy related legislation in the 110th Congress. Finally, the Appendix provides a brief chart outlining U.S. trade remedy statutes, major actors, and the effects of these laws. 

Date of Report: June 14, 2010
Number of Pages: 38
Order Number: RL32371
Price: $29.95

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