28/11/2008  - A trade remedy expert last week predicted that China would continue to remain the focus of trade remedy cases, including antidumping and countervailing duties, as the trade deficit continues to grow and the U.S. economy worsens.

Joseph Dorn, a partner at King & Spalding who represents petitioners involved in trade remedy disputes at the Department of Commerce and the International Trade Commission, offered three reasons that China would remain the focus of U.S. trade remedy law in 2009: the trade deficit, the impact of the financial crisis on Chinese policy, and the ability of U.S. industries to now prove injury. The comments came during a panel discussion on Nov. 20.

First, Dorn noted that the U.S. bilateral trade deficit with China in 2007 was $256 billion. That pattern continued in 2008’s first nine months, with the deficit growing from $188 billion during that period in 2007 to $195 billion in 2008. The September 2008 trade gap was a new record for a one-month trade deficit, hitting $29 billion.

Second, Dorn believes the “financial crisis will lead to more cases,” he said. Dorn pointed to testimony from Chinese industries at the International Trade Commission injury hearings where the Chinese producers of a range of goods predicted that exports to the U.S. would drop, because of the removal of VAT rebates and the creation of export taxes. However, China has since announced the reimposition of VAT rebates for exports and has cut export taxes on a broad range of goods. “Removing export taxes should also lead to more cases,” he said.

The financial crisis has also made ocean freight cheaper. The decreased cost of shipment should “make goods more competitive and more injurious,” he predicted.

Third, Dorn said he believes the current economic downturn will make it easier to prove injury. “It’s no secret that [the trade remedy] process is countercyclical,” he said. Legal sources involved in the ongoing CVD and AD case on circular welled carbon quality line pipe from China agreed, and predicted the line pipe case would be a “bell weather” for determining how the ITC factors the ongoing economic situation into injury determinations.