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House Bill Would Preserve Tariffs to Offset China Subsidies

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Feb. 29 (Bloomberg) -- The U.S. Commerce Department would be allowed to apply duties to offset government subsidies in nations such as China and Vietnam under bipartisan legislation introduced today in the House of Representatives.

The measure is a response to a Dec. 19 decision by a U.S. appeals court in Washington that said existing law doesn’t authorize the agency to set tariffs on goods from countries lacking a domestic market to set prices.

The ruling challenged a Commerce Department policy in place since the administration of President George W. Bush that led to duties on undervalued imports of about two dozen Chinese products. Companies that have benefited from the duties include U.S. steel and paper manufacturers.

The bill was introduced by Representative Dave Camp of Michigan, Republican chairman of the House Ways and Means Committee, and Kevin Brady, a Texas Republican on the panel, as well as Sander Levin of Michigan, the ranking Democrat on the committee, and Jim McDermott, a Washington Democrat, according to a joint statement sent by the committee in an e-mail.

Senators Max Baucus, a Montana Democrat, and John Thune, a South Dakota Republican, will introduce a similar bill in that chamber, the House lawmakers said.

Countervailing Duty

The bill would “make sure that we have the tools we need to address unfair Chinese subsidies through our countervailing duty law” in a manner consistent with the World Trade Organization, Camp said today at a meeting of the Ways and Means committee. “We expect to move this legislation shortly.”

In December, the U.S. Court of Appeals for the Federal Circuit ruled unanimously that congressional action would be needed to grant Commerce the power to set tariffs on subsidized goods from nations that lack a domestic market. The three-judge panel upheld a U.S. Court of International Trade decision that found a Commerce Department action on Chinese tires was illegal.

Under laws passed in 1988 and 1994, “Congress adopted the position that countervailing duty law,” which applies to subsidized products, “does not apply to non-market economy countries,” Judge Timothy Dyk wrote in the decision in the case, GPX International Tire Corp. v. U.S.

‘Legislative Change’

“If Commerce believes that the law should be changed, the appropriate approach is to seek legislative change,” Dyk wrote. The appeals court rejected arguments by Titan International Inc., the top U.S. maker of off-road tires, Bridgestone Americas Inc., a unit of Tokyo-based Bridgestone Corp., and the AFL-CIO labor federation.

The bill that the lawmakers introduced today would accomplish that change, the House lawmakers said.

U.S. Trade Representative Ron Kirk said today that his office worked with the lawmakers to craft the legislation.

“It is critical to leveling the playing field for American employers and workers who face unfairly subsidized imports from countries like China.” Kirk said in an e-mailed statement.

Anti-dumping duties apply to goods sold overseas at or below the price in the home country. Countervailing duties aim to offset the benefits of government subsidies to industries.

The U.S. uses more than 300 anti-dumping and countervailing duty orders to shield American-made goods, from honey to bedroom furniture, against global competition it deems unfair and damaging to U.S. companies. About half the orders target iron and steel products.

China accounts for a third of all U.S. unfair trade cases, the most of any country, including about 100 anti-dumping and two dozen countervailing duty orders, according to the U.S. International Trade Commission.

To contact the reporters on this story: Eric Martin in Washington at emartin21@bloomberg.net;

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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