FOR IMMEDIATE RELEASE Friday, March 30, 2007

Contact Office of Public Affairs (202) 482-4883

 

COMMERCE APPLIES ANTI-SUBSIDY LAW TO CHINA

Washington - The U.S. Department of Commerce today announced its preliminary decision to apply U.S. anti-subsidy law to imports from China.  This is the first time countervailing duties will be imposed on imports from a non-market economy.  The decision alters a 23-year old bipartisan policy of not applying the countervailing duty (CVD) law to non-market economy countries, and reflects China’s economic development. 

Today’s preliminary decision determined that Chinese producers and exporters of coated free sheet paper received countervailable subsidies ranging from 10.90 to 20.35 percent.   

"This Administration has aggressively enforced our anti-dumping laws to combat unfair Chinese trade." said Commerce Secretary Carlos M. Gutierrez.  "China’s economy has developed to the point that we can add another trade remedy tool, such as the countervailing duty law. The China of today is not the China of years ago.  Just as China has evolved, so has the range of our tools to make sure Americans are treated fairly. By acting on the petition filed last October, the United States today is demonstrating its continued commitment to leveling the playing field for American manufacturers, workers and farmers."  

From 2005 to 2006, imports of coated free sheet paper products from China increased approximately by 177 percent in volume, and were valued at an estimated at $224 million in 2006.   

The Department of Commerce has the legal authority to apply the CVD law to non-market economies.  In 1984, the Department of Commerce adopted a policy of not applying the U.S. countervailing duty law to non-market economy countries.  Commerce reasoned that subsidies had no measurable economic impact in the 1980’s Soviet-style economies that were then under consideration.  This policy was upheld by the Court of Appeals for the Federal Circuit in the 1986 Georgetown Steel case.  Since then, the antidumping law has been a commonly used instrument to address unfair trade practices.   

"The Bush Administration will continue to vigorously enforce U.S. trade law with respect to China.  Since 2001, we have issued 31 antidumping orders against China, compared to the 24 orders put into place between 1993 and 2000,” said Gutierrez. In addition:

• Chinese dumping cases now represent 25 percent of all dumping orders.The United States was the first country to file a WTO case against China.
• In February 2007, a second WTO case was filed, challenging several Chinese prohibited subsidy programs at the WTO.

In October 2006, a U.S. manufacturer of glossy paper, the NewPage Corporation of Dayton, Ohio, asked the Department of Commerce to reconsider its longstanding policy of not applying the anti-subsidy law to China.  NewPage’s petition marks the first time since 1991 that a U.S. company formally requested the Commerce Department to countervail a non-market economy, such as China.  In the petition, NewPage alleged that several Chinese companies were recipients of subsidies such as tax breaks, debt forgiveness, and low-cost loans.May 4, 2007 4:57 PMn publication of today’s decision in the Federal Register, U.S. Customs and Border Protection will collect a cash deposit or bond from importers of coated free sheet paper subject to the investigations.  Also, Commerce announced its preliminary results of the countervailing duty investigations covering imports of paper from Indonesia and South Korea.  Commerce is currently scheduled to announce its final determinations in all three countervailing duty investigations by mid-June, although the law allows postponement until mid-October.   

Commerce recognizes that the basis of our conclusion to apply the CVD law to China may require a review of U.S. anti-dumping methodology for China, particularly at the enterprise-specific level, and is currently considering this issue.  Since the possibility of double counting resulting from simultaneous anti-dumping and countervailing duty investigations is dependent on the specific facts arising in such investigations, to the extent that the parties to these proceedings provide evidence on the record of these investigations, Commerce will have to respond to these concerns in the course of our investigations.     

More information can be found at www.trade.gov regarding the International Trade Administration and Import Administration.  


Background

The Department of Commerce is charged with the enforcement of U.S. trade remedy laws including enforcing our domestic anti-subsidy law, the CVD law.  Anti-dumping trade rules and countervailing duty trade rules are both tools that are sanctioned by the WTO to deal with unfair pricing and subsidization of imports. Government subsides distort the free flow of goods and adversely affect American business in the global marketplace.  Foreign governments subsidize industries when they provide financial assistance to benefit the production, manufacture or exportation of goods.  Subsidies can take many forms, such as direct cash payments, credits against taxes, and loans at terms that do not reflect market considerations.  The statute and regulations establish standards for determining when an unfair subsidy has been conferred. The amount of subsidies the foreign producer receives from the government is the basis for the subsidy rate by which the subsidy is offset or "countervailed."  

Commerce commonly applies anti-dumping and countervailing duty law at the same time, 30 out of Commerce’s 35 current countervailing orders are paired with a dumping order.  

Antidumping and countervailing duties offset distinct and different unfair trade practices.  For example, as happens frequently, concurrent antidumping and countervailing duty petitions have been filed against coated free sheet paper from Indonesia and the Republic of Korea and may result in both antidumping and countervailing duties against those countries. To the extent that parties may demonstrate that any calculation of a margin in one proceeding double-counts some element of the margin calculated in the other proceeding, we will address those issues in the course of our investigations.

On March 29, 2007, The Court for International Trade reaffirmed the Commerce Department's position that the Georgetown Steel decision was not a bar to applying the countervailing duty law to NMEs, but instead, was a recognition of Commerce's broad discretion in this area.  

Fact Sheet (PDF)