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Friday, March 23, 2012

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 of the Department of Commerce (ITA) 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 (USITC) 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. 
         U.S. countervailing duty laws (19 U.S.C. §1671 et seq.) authorize 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 USITC determines injury or threat thereof. 
         U.S. safeguard laws (19 U.S.C. §2251 et seq.) authorize the President to provide temporary 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 USITC conducts an investigation, forwards recommendations to the President, and the President may act on the USITC’s recommendation, modify it, or take no action. 
These laws are deemed consistent with U.S. international obligations provided that they conform to the World Trade Organization (WTO) Agreement on Subsidies and Countervailing Measures (ASCM) and the WTO Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade, 1994 (ADA, Antidumping Agreement) agreed to as part of the Uruguay Round of multilateral trade negotiations that established the World Trade Organization (WTO), as well as other trade agreements to which the United States is a party.

In the first session of the 112th Congress, legislation was introduced seeking to amend trade remedy statutes, including addressing currency misalignment (S. 1619, S. 328, and H.R. 639) in trade remedy investigations. S. 1130 and related bill S. 1267, the Strengthening America’s Trade Laws Act, seek, in part, to provide more specific methodology for trade remedy actions in nonmarket economy countries. In the second session, H.R. 4105 seeks to specifically apply countervailing action to nonmarket economy countries in light of a December 19, 2011 decision by the U.S. Court of Appeals for the Federal Circuit that CVD action may not be applied to the imports of such countries. S. 2153, an identical measure, passed in the Senate by unanimous consent on March 5, 2012.

This report discusses, first, congressional interest in trade remedy laws, and describes legislation seeking to amend the laws in the first session of the 112th Congress. Second, it describes antidumping and countervailing duty laws, procedures, and investigations. Third, U.S. safeguard statutes and investigative procedures are presented. Finally, an Appendix provides a chart outlining briefly all U.S. trade remedy statutes, major actors, and effects of these laws.

Date of Report: March 6, 2012
Number of Pages: 39
Order Number: RL32371
Price: $29.95

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