Obama Administration Strengthens Enforcement of U.S. Trade Laws in Support of President's National Export Initiative

New proposals would help ensure a level playing field for U.S. companies 

U.S. Commerce Secretary Gary Locke today announced proposed measures – especially focused on illegal import practices from non-market economies - that will strengthen trade enforcement and help keep U.S companies competitive. These steps support President Obama’s National Export Initiative (NEI), which aims to double exports in the next five years and support the creation of several million new jobs. 

The National Export Initiative is focused on three key areas:  a robust, administration-wide trade promotion strategy, improving access to credit and continuing the rigorous enforcement of U.S. trade laws.

As part of that effort, Locke directed Commerce’s International Trade Administration (ITA) to survey the agency’s current trade remedy practices in order to determine how the Department could improve the effectiveness of its existing enforcement tools through administrative and regulatory changes.  Based on this review, Commerce has developed a list of 14 proposals that will help strengthen the administration of the nation’s antidumping (AD)* and countervailing duty (CVD)* laws.

“The Obama administration is committed to aggressively enforcing our trade laws to ensure a level playing field for U.S. companies and their workers – the engines of our economic growth,” Locke said. “Today’s announcement is another demonstration of our continuing efforts to sharpen our trade enforcement tools.”

Commerce’s ITA directly supports this NEI priority by enforcing the U.S. AD/CVD laws, which provide U.S. industries and workers with a reliable and transparent mechanism to seek relief from unfair trade practices that hinder their competitiveness in the U.S. market and abroad.    

Under the Obama administration, ITA continues to step up its enforcement of U.S. trade laws. In 2009, ITA’s Import Administration initiated 34 antidumping and countervailing duty investigations compared to 19 the previous year, an increase of 79 percent. Cases against non-market economies comprise roughly one-third of the Import Administration’s caseload.

Among the proposed changes:

• Currently, individual companies from a foreign country were excused from AD/CVD duties by demonstrating that they were not dumping or receiving subsidies for a certain period of time. The new proposal would allow for companies to be removed from the process only upon the normal country-wide expiration of those duties.
• Starting as early as when Commerce makes a preliminary determination on an AD/CVD investigation, a new proposed measure will require importers to post cash deposits rather than bonds to facilitate entry of their goods and services into the United States. Currently, once an initial affirmative determination is made in an AD/CVD case, importers are able to post a bond in the amount of the estimated duties owed. However, experience has shown that in certain circumstances, the amount of the bond proved inadequate to cover the ultimate AD/CVD liability.  Under this proposal, Commerce will ensure that importers will bear full responsibility for any future duties.
• Additionally, to address a range of methodological issues unique to antidumping (AD) proceedings involving non-market economy countries, Commerce is proposing updates to its practice that will more closely capture the realities of how entities function in a non-market economy.  In this context, Commerce is proposing to adjust its antidumping calculation to account for export taxes or value added taxes included in the U.S. price that are not rebated upon export, just as in cases involving market economy countries.  Where such taxes are present, this proposed change would result in an increase in antidumping margins. 

The other proposed changes would include: improved methodology for determining the value of labor in non market economy cases (to ensure that all benefits and other costs associated with labor are captured); tightening the certification process for the information submitted to Commerce as part of the AD/CVD case process; and strengthening specific rules to ensure that parties are paying the full amount of their anti-dumping duties.

In the coming months, Locke said the Commerce Department will conduct a transparent review of these proposals and seek public comment through a comprehensive stakeholder process.  The process for introducing these proposed changes will begin this fall.

President Obama announced the NEI during his State of the Union earlier this year. It will provide more funding, more focus and more cabinet-level coordination to grow U.S. exports, and it represents the first time the United States will have a government-wide export-promotion strategy with focused attention from the president and his cabinet.

Since the President announced the NEI, the Department of Commerce’s Advocacy Center has assisted American companies competing for export opportunities, supporting $11.7 billion in exports and an estimated 70,000 jobs. To date, the Commerce Department has coordinated 19 trade missions with over 195 companies to 25 countries. 

Exports remain an integral part of the U.S. economy. In 2008, American exports accounted for nearly 7 percent of our total employment and one in three manufacturing jobs. In the first four months of 2010, exports grew almost 17 percent compared to the same period last year.

* Antidumping duties are levied on foreign firms who, on the basis of a detailed investigation, are found to sell their products in the United States at prices that are below their home market price or their cost of production and cause injury to domestic industry. Countervailing duties are imposed after a similar investigation determines that imports into the United States have been unfairly subsidized by foreign governments and are injuring domestic producers.

More information on the NEI can be viewed at www.trade.gov/nei.

Below you’ll find descriptions of the 14 proposed measures:

• Expanded use of random sampling to select companies as individual respondents in AD investigations and reviews rather than choosing the largest exporters; 
• Strengthening  Commerce’s current practice regarding the issuance of company-specific AD rates in NME cases;
• Clarification of Commerce’s current NME practice that when  the Department uses import prices for valuing a production factor, such prices should include all applicable freight and handling costs;
• Clarification of Commerce’s current NME practice to require companies to report production inputs for all products produced at each of their facilities – not just those facilities that produced merchandise destined for the United States – for use in the Department’s NME dumping calculations;
• Clarification of Commerce’s current CVD practice to reiterate that Commerce considers state-owned enterprises (SOEs) as constituting a “specific” group when they are alleged to be receiving countervailable subsidies from the government;
• Reconsidering the treatment of export taxes and value-added taxes (VAT) in Commerce’s NME AD methodology; and
• Strengthening the treatment of resellers and other non-reviewed parties in NME cases to ensure that such parties pay the full amount of AD duties.
• Adoption of a new methodology for valuing wage (labor) rates in NME cases by using surrogate wage rates that fully capture all labor costs (including benefits and taxes paid to workers by their employers) in the NME country;
• Eliminating the practice of allowing individual companies  to seek removal from an antidumping (AD) or countervailing duty (CVD) order based on their ability to show zero dumping margins or subsidy rates for three (AD) or five (CVD) consecutive years;
• Tightening the rules in non-market economy (NME) cases for determining when the price of production inputs purchased from market economy countries will be substituted for the Department’s standard valuation for such inputs;
• Considering whether importers will be required to post cash deposits rather than bonds for imports that fall within the scope of an AD/CVD investigation starting with the issuance of Commerce’s preliminary determination (rather than following the imposition of an AD/CVD order);
• Strengthening the certification process for the submission of factual information to the Department;
• Strengthening the accountability of attorneys and non-attorneys practicing before Commerce; and
• Tightening the deadlines for submitting new factual information in AD/CVD cases.