Variety of trade remedies

08/12/2022 10:35 - 70 Views

In subsequent chapters the various trade remedies are discussed in some detail. This section simply sketches the laws and provides a general overview.


1. Anti-dumping duties


Anti-dumping duties address allegedly unfair pricing by a foreign company. There is no allegation of government involvement — only that the foreign company itself is selling at prices that are so low as to be deemed 'unfair'. Although the rules are complex, the basic idea is that companies should not be allowed to sell in the United States market at prices lower than they sell in their home market or in other export markets. If a company is found to be 'dumping', the United States Government can impose offsetting anti-dumping duties. These laws are discussed in greater detail in chapters 3, 4 and 5.


2. Countervailing duties


Countervailing duties address allegedly unfair pricing that has resulted from improper government subsidies to a company. Unlike anti-dumping cases, the focus here is on the foreign government and the subsidies being provided. The basic idea is that companies should not be allowed to charge unfairly low prices because of special government benefits that allow them to do so. If the company is found to have received improper subsidies, the United States Government can impose offsetting countervailing duties. These laws are discussed in more detail in chapter 7.


3. Section 201: Safeguard measures


Safeguard remedies address surging imports, regardless of whether they are `fairly' or 'unfairly' traded. Unlike anti-dumping and countervailing duty cases, which target specific companies of countries accused of unfair practices, safeguard actions include all sources of imports. If it finds that increasing imports are causing serious injury to the domestic industry, the United States Government can impose a wide variety of restrictions, including tariffs, quotas, or a combination of remedies. These laws are discussed in more detail in chapter 8.


4. Section 337: Intellectual property


Section 337 addresses imports that infringe intellectual property rights held by a United States company. Such actions target the specific countries and companies allegedly infringing the intellectual property. If it finds a violation, the United States Government can prohibit the importation of the product at issue. This restriction is much more severe than anti-dumping and countervailing cases which allow remedial duties but not prohibitions on imports. These laws are discussed in more detail in chapter 9.


5. Section 301: Market access


Section 301 does not directly address imports, but rather focuses on market barriers that may limit United States exports to another country or other violations of United States rights under international treaties. If the United States finds that a country's actions violate international treaty provisions, the United States Government can impose trade sanctions — such as punitive tariffs — to create leverage on that country to open its market or change its practices.


Although the law itself does not focus on imports, the remedy available under this law often involves imports. These laws are discussed in greater detail in chapter 10.


6. Other trade remedies


These five trade remedies are the most important for foreign companies to be aware of, particularly for companies in developing countries. These five remedies are also the most commonly used trade remedies in the United States. Moreover, several of these remedies involve either limited or no governmental discretion. If, the legal requirements for the remedies are met, the trade restriction must be imposed. Since broader policy judgements do not come into play for anti-dumping or countervailing duty cases, these remedies are particularly popular with United States companies. The probability of actually obtaining the trade restriction is much higher than it would be under other trade remedies.


However, there are other trade remedies available in the United States. These remedies are less frequently used, and less frequently lead to restrictions. In some cases, the discretion afforded the United States Government before it is required to impose a remedy often means that cases never reach the remedy stage.


7. Section 232


For example, Section 232 allows the imposition of trade restrictions when imports threaten United States national security. Since this standard is very difficult to meet, this law is rarely invoked, and even more rarely applied.


There are also special laws, such as Section 406, that allow trade restrictions on communist countries. These laws are a legal relic of the cold war, but even during that period they were rarely used. Since the anti-dumping law has special provisions to address 'non-market economies' (see chapter 6), most domestic United States companies have found the anti-dumping law to be a more effective tool against imports from communist and former communist countries.


There are also various trade remedies that can be applied to agricultural products, to address environmental concerns, or to reflect political concerns. These laws are also rarely used, because anti-dumping and countervailing duty cases provide more effective trade remedies.


These specialized and rarely used laws are beyond the scope of this book. From a practical perspective, there is little a foreign company can do to avoid the invocation of these laws; if it happens, the company simply copes as best it can.


8. Special China textile safeguard actions


Another country-specific provision that has been used recently is the special China textile safeguard agreement to which China agreed as part of its WTO accession agreements. WTO Members pursued these limits to stem the free flow of China's textiles that would have otherwise resulted from the expiration of all WTO Members' textile quotas on 31 December 2004. Under the terms of the China textile safeguard agreement, WTO Members may impose quotas of up to 7.5% above recent import levels for Chinese textiles.


The Committee for the Implementation of Textile Agreements (CITA) enforces the special United States safeguard actions on Chinese textiles. CITA is a United States interagency committee with representatives from the Departments of Commerce, State, Labor, Treasury and the Office of the United States Trade Representative's Office. The Commerce Department's Office of Textiles and Apparel (OTEXA) chairs the group and is responsible for supervising China textile safeguard cases.


CITA is not bound by any specific regulations or statutes in administering China textile safeguards and does not officially issue decision memoranda in these safeguard cases. CITA can either self-initiate a textile safeguard petition or base the initiation on a public request. After a 30-day period in which the public may submit comments, CITA will determine within 60 days whether to request consultations with China about a particular textile. The date on which CITA officially requests consultations with China is when such quantitative limits become effective. Such quotas will apply to imports of the specific textile through December of the year in which consultations were requested and may be renewed the following year. However, if CITA officially requests consultations with China about imports of a specific textile from 1 October through 3I December, such safeguard quotas for the imported textile will be effective for a one-year period from the date on which consultations were requested.


The main trade remedy laws addressed here, however, are laws for which advance knowledge can help. Knowing about these laws allows a company to reduce its risk of being targeted by such actions. Moreover, knowing about these laws allows the company to better prepare itself to cope with the effects of a remedy that could be imposed under the law. That is the focus of this book.


Source: Business Guide to Trade Remedies in the United States: Anti-dumping, countervailing and safeguards legislation practices and procedures

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