Recent Experience of the United States International Trade Commission: Caseload trends and the effects of the economic downturn

Shara L. AranoffChairmanU.S. International Trade Commission

2009 Seoul International Forum on Trade Remedies

Korea Trade CommissionJuly 3, 2009

Disclaimer

• The comments I’m making today are my own.

• They should not be construed as representing the views of the USITC or the United States Government.

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Investigative functions of the ITC• Conduct import injury investigations in

antidumping, countervailing duty and safeguards cases (Dept. of Commerce determines dumping margin)

• Oversee the Section 337 process regarding intellectual property rights

• Conduct studies on trade issues

3

Largest U.S. trading partners, 2008 (value of two-

way trade in goods)Canada $ 596 billion

China $ 409

Mexico $ 368

Japan $ 206

Germany $ 151

United Kingdom$ 112

Korea $ 81

4

Countries against which the United States has the most AD/CVD ordersChina 90

India 22

Japan 20

Korea 20

Taiwan 16

Italy/Brazil 14

5

0.0

0.5

1.0

1.5

2.0

1980

1984

1988

1992

1996

2000

2004

2008

Sha

re o

f U

.S.

impo

rts

unde

r A

D/C

VD

ord

er (

perc

ent)

0

500

1,000

1,500

2,000

2,500

mill

ions

of

dolla

rs

Value of total U.S. imports (millions)

Share of trade under AD/CVD order

(percent)

Source: USITC

A small share of U.S. imports is under AD/CVD orders

6

A small share of Chinese imports is under AD/CVD orders

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1980

1984

1988

1992

1996

2000

2004

2008

Sha

re o

f U

.S.

impo

rts

from

Chi

na u

nder

AD

/CV

D o

rder

(p

erce

nt)

0

50

100

150

200

250

300

350

400

mill

ions

of

dolla

rs

Share of trade under AD/CVD order (percent)

Value of U.S. imports from China (millions)

Source: USITC

7

Countries imposing the most AD/CVD orders against U.S. exports

China 16

Mexico 13

India 12

Brazil 7

Canada 5

EU/So. Africa 4

8

Worldwide AD Orders (as of 12/31/08)

Antidumping Petitioner Antidumping SubjectUSA 249 China 329

India 178 Korea 85

European Union 128 Taiwan 74

Turkey 107 Japan 64

China 98 USA 68

Korea (11th) 33 India 54

9

Worldwide CVD Orders (as of 12/31/08)

CVD Petitioner CVD SubjectUSA 37 India

20European Union 16 China 11Canada 10 Brazil 4South Africa 3 Indonesia

4Mexico 2 Korea 4Korea 0 Italy 3

10

U.S. sectors with the most AD/CVD orders in place (as of 6/15/09)

Iron and steel 141

Chemicals 51

Miscellaneous manufactures 45

Agricultural products 29

Non-ferrous minerals and metals 27

11

AD/CVD case filings, 1980 - 2008

12

0

20

40

60

80

100

120

140

160

180

200

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Cases filed Affirmative Negative Terminated

Title VII case filings at USITC, 1980-2008N

um

be

r o

f ca

ses

Recession of 2001

Recession of 2008

Recession of 1990-91

Recession of 1981-82

Current AD/CVD caseload (as of June 15, 2009)

Preliminary phase investigations 6

Final phase investigations 6

Full sunset reviews 11

Safeguard investigations 1

Total active investigations 24

13

U.S. AD/CVD investigations and orders involving Korean firms

Final phase investigations 1

Full sunset reviews 1

Orders involving steel products 15

Total orders (on 16 products) 20

14

U.S. AD/CVD comparison: Korea vs. China

Korea: 2 active investigations; 20 orders in place

China: 12 active investigations; 90 orders in place

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Appeals and dispute settlements of USITC AD/CVD determinations

• First appeal is to the Court of International Trade in New York (roughly 40 percent of decisions get appealed to the USCIT)

• Second level of appeal is to the Court of Appeals for the Federal Circuit in WDC

• WTO or NAFTA dispute settlement also may be options in some cases16

Appeals and dispute settlements of USITC AD/CVD determinations

• 13 appeals pending at the USCIT

• 5 appeals pending at the Federal Circuit

• 2 disputes pending before a NAFTA panel

• No dispute pending before the WTO

17

Intellectual property investigations (section 337)

• Used to address imports that infringe U.S. patents, copyrights or trademarks

• Cases are tried by administrative law judges (ALJs); the Commission reviews their determinations

• About 40-50 percent of the cases settle prior to the conclusion of litigation 18

About section 337 • If a violation is found, the remedy could be:

• an exclusion order, under which Customs would prevent the import of infringing goods; and/or

• a cease and desist order, which would prevent named respondents from selling inventories of infringing goods, etc. 19

About section 337• The Commission intends to finish all Sec. 337 investigations within 12-15 months

• Usage of the Sec. 337 process has been rising

• The ongoing increase in workload may make the short timeframe infeasible

• Sec. 337 process requires more resources

20

Number of new Sec. 337 cases, and those involving Korea

Fiscal Year Total Korea 2003 19 1

2004 27 3

2005 25 3

2006 34 6

2007 31 5

2008 43 8

21

Sec. 337 activity involving Korea• 13 investigations of products from Korea, all involving allegations of patent infringement

• 3 investigations in which Korea is the complainant (1 by LG Electronics, 2 by Samsung)

• Korea is the most active foreign user of sec. 337.

• Samsung has been, and continues to be, a respondent in some patent infringement cases, and a complainant in others.

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Litigation involving Sec. 337 determinations

• 2005: 15 appeals pending

• 2006: 9 appeals pending

• 2007: 34 appeals pending

• 2008: 21 appeals pending

23

Economic downturn, patent filings, and patent litigation

• Data from the Patent and Trademark Office show that original utility patent application filings have slowed in FY2009.

• Yet patent infringement cases at the ITC are at an all time high, 43 new cases filed in 2008.

• Intellectual property is one of the most important categories of assets held by many firms.

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Industry and economic investigations at the USITC

• Analysis of trade and competitiveness issues, including section 332 reports

• Independent research on various issues (e.g., enhanced economic modeling)

• Analysis of probable economic effects ofproposed trade agreements

• Currently 15 active investigations25

Report on Korea-U.S. FTA

• Assess economy-wide and sectoral effects of the FTA

• Delivered on Sept. 20, 2007

• Use a variety of analytical methods, including general and partial equilibrium

models

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Report on Korea-U.S. FTA

• Report released to the public in September of 2007

• The key finding was that both the United States and Korea would experience modest but overall positive economic effects from a bilateral FTA.

• The empirical analysis captured only the barriers that could be easily measured (e.g., tariffs, tariff rate quotas) but did not include trade barriers in services and other nontariff barriers such as regulatory measures.

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Historically, world trade volumes and incomes have grown together

-2

0

2

4

6

8

10

1950-60 1960-70 1970-80 1980-90 1990-00 2000-07 2001 2002 2003 2004 2005 2006 2007

Volume of total ex ports GDP

Growth rate of volume of world merchandise exports and gross domestic product, 1950-2007

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But recent trade volumes have plummeted

Quarterly world export developments since 2005 (2005Q1=100, in current US dollars)

29

World trade plunged by two-thirds over 1929-1933

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Recent trends in international trade Dramatic drop in world trade, and WTO forecasts at

least a 10 percent decline in global export volumes for 2009

GDP contractions have been minor compared to trade 5 or 6 percent in some countries compared to 30

percent for trade contractions. Trade contraction due to decrease in demand and to a

lesser extent credit crunch These effects dwarf any from trade remedies

But still not comparable to experience in the early 1930s

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Decomposing Chinese Electronics Exports to the US value increased from $22 bil to Decomposing Chinese Electronics Exports to the US value increased from $22 bil to $78 bil between ’02 and ’06 or from 31% to 39% of total US imports - potentially $78 bil between ’02 and ’06 or from 31% to 39% of total US imports - potentially substantial indirect effects on Koreasubstantial indirect effects on Korea

Domestic and Foreign Value Added in Selected Electronic Product Exports to the US

0

5,000

10,000

15,000

20,000

25,000

Products, 2002 - 2006

To

tal E

xp

ort

s t

o U

S, M

illio

ns o

f d

ollars

DVA

FVAElect. Machinery

Telecom

Computers

Comp. Periperal

Elect. Elements and devices

TVs, etc

Other comm. Equip.

Instruments

USITC Resources Extensive resources are available on the USITC

website: www.usitc.gov The USITC’s Interactive Tariff and Trade Data

web (http://dataweb.usitc.gov/) provides international trade statistics and U.S. tariff data to the public full-time and free of charge.

The USITC Website also includes case files and statistics for trade remedy proceedings and extensive economic and industry research materials.

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THE END