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Impact of Trade Remedy Actions On U.S. Exports

Import Administration’s Office of Policy

September 28, 2012

Why are Trade Remedies Necessary?

• Unfair foreign pricing, government subsidies, or a sudden surge in imports may distort the free flow of goods and adversely affect business in a given country’s market.

• Trade remedy investigations are an accepted course for dealing with unfair trade practices and the appropriate use of measures to address these practices plays an important role in maintaining support for open markets and increased trade.

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Trade Remedies and U.S. Exporters

In the United States

• U.S. trade remedy laws address unfair foreign trade practices, thereby helping to level the playing field in the U.S. market, and to build strong, vibrant companies capable of expanding exports.

• U.S. trade remedy laws are fully compliant with U.S. World Trade Organization (WTO) obligations.

• Import Administration’s AD/CVD Operations administers and implements application of U.S. trade remedy laws and regulations.

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Trade Remedies and U.S. Exporters

In Foreign Markets

• Foreign use of trade remedies has a direct impact on access by U.S. exports to foreign markets.

• Import Administration (IA) monitors foreign trade remedy use for compliance with WTO rules.

• IA advocates for U.S. exporters that are treated unfairly or inconsistent with WTO rules in foreign trade remedy actions.

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By the Numbers

• On an annualized basis, approximately $9.8 billion of U.S. exports were subject to foreign trade remedy actions in 2011.

• In 2011, IA assisted more than 100 companies subject to foreign trade remedy actions. These companies employ more than 1.6 million U.S. workers.

• In 2011, 13 foreign trade remedy measures were terminated by foreign authorities. The export markets affected by these terminated measures are estimated to be worth approximately $330 million.

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What is Dumping?

• Generally, dumping occurs when a producer sells a product in a foreign market at a price that is below that producer’s sales price in the country of origin (home market), or at a price that is lower than the cost of production.

• If an industry, either U.S. or foreign, believes that it is being injured by unfair competition through dumping of a foreign product imported into its domestic market, it may request the imposition of an antidumping (AD) duty by filing a petition with its trade remedy administering authority.

• WTO rules allow application of AD measures when an authority finds that a domestic industry is being materially injured as a result of dumped imports. Dumping, injury, and causation must all be established.

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What is a Subsidy?• Foreign governments subsidize industries when they

provide financial assistance to benefit either or both of the:– Manufacture of goods – Exportation of goods

• Subsidies can take many forms such as:– Direct cash payments– Credits against taxes– Loans at terms that do not reflect market conditions

• Subsidies may be addressed if they meet conditions set forth under the WTO Agreement on Subsidies and Countervailing Measures (“SCM Agreement”).

• Subsidies can be addressed either multilaterally or under domestic countervailing duty (CVD) rules.

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What is a Safeguard?• A “safeguard” action may be taken by a WTO member to

protect a specific domestic industry from an increase in imports of any product which is causing, or which is threatening to cause, serious injury to the industry.

• Safeguards are not company or even country-specific. Rather, with certain exceptions specified in the WTO Safeguards Agreement, they apply to imports from all countries—hence the expectation that safeguards are to be used only in rare circumstances.

• If an industry feels that a sudden increase of imports is causing or threatening to cause serious injury, it may file a request with its administering authority to have a global safeguard measure temporarily put in place on those imports.

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Global Trade Remedy Activity

• On average, more than 100 new AD measures were imposed by WTO members in each of the last 10 years.

• Over 80 CVD measures were imposed during the last 10 years.

• Close to 40 global safeguard measures are currently in effect.

Source: WTO Trade Statistics as of December 2011

Most Frequent Users of AD/CVD Measures

Antidumping1. India 2. European Union3. United States4. Argentina 5. Turkey6. China7. South Africa8. Brazil9. Canada10.Mexico

Countervailing Duty1. United States2. European Union3. Canada4. Mexico 5. Brazil

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Source: WTO Trade Statistics as of December 2011

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Source: TRCS, as of August 7, 2012

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Argentina Australia Brazil CanadaChina Costa Rica European Union India

IndonesiaKorea Malaysia MexicoPakistanPeruSouth AfricaTurkey

There are approximately 80 antidumping actions affecting U.S. exports to the following countries:

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Source: TRCS, as of August 7, 2012

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Foreign Countries with Global Safeguard Measures in Place

BrazilDominican RepublicEcuadorEgyptIndiaIndonesia

PhilippinesRussiaThailandTurkeyUkraine

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Industries Worldwide Most Commonly Subject to Trade Remedies

Base Metals (steel) Chemicals Plastics Textiles Machinery (incl. parts)

Wood Pulp/PaperSource: WTO Trade Statistics, as of December 2011

How Can U.S. Exporters Reduce Their Vulnerability to a Foreign Trade Remedy Action?Antidumping• Closely monitor prices charged in foreign markets in

comparison to prices charged domestically. • Closely monitor increased shipments to foreign markets

by relevant industry participants as this may result in injurious import surges.

• Maintain awareness of changing export-market conditions, e.g., market share held by foreign and domestic producers, joint ventures, new entrants, reduced barriers to entry, and shifts in supply or demand for goods; all of which can affect the dumping and injury situations.

• Gain an understanding of competitors and circumstances in which they have sought relief via trade remedies in other markets.

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How Can U.S. Exporters Reduce Their Vulnerability to a Foreign Trade Remedy Action?Countervailing Duty• Be mindful that if a company accepts federal, state or

local incentives, its exports could be subject to countervailing duties if the incentives are found to meet the criteria for a countervailable subsidy.

• This is true for a wide range of incentives such as tax rebates and exemptions, grants, certain preferential loans and loan guarantees, and government-provided goods or services, such as low cost electricity.

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How Can U.S. Exporters Reduce Their Vulnerability to a Foreign Trade Remedy Action?Safeguards

• The global, and not company or country-specific, application of a safeguard makes it difficult for an individual exporter to defend against.

• The best option is to monitor export markets closely and to avoid rapid import surges into those markets that are particularly distressed or depressed.

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What Import Administration Resources Exist to Help U.S. Exporting Companies?

• IA monitors foreign countries’ use of AD, CVD, and safeguard actions, as well as foreign government subsidies.

• IA also helps U.S. companies to understand U.S. unfair trade laws, and the process of and requirements for filing a petition requesting initiation of an AD or CVD investigation of imports into the United States.

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Import Administration’s Resources for U.S. Exporters

IA’s Office of Policy:

• Trade Remedy Compliance Staff (TRCS) is the U.S. Government’s watchdog charged with monitoring foreign trade remedy practices. TRCS proactively addresses trade remedy actions (AD and safeguards) taken by foreign governments in order to support U.S. industry efforts to compete on a level playing field in the international marketplace.

• Subsidies Enforcement Office (SEO) similarly monitors CVD actions and foreign subsidies. The SEO is further charged with monitoring foreign CVD cases, and works diligently to defend U.S. interests in cases launched against U.S. exports.

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Import Administration’s Resources for U.S. Exporters

IA’s Office of Policy (con’t):

• Petition Counseling and Analysis Unit (PCAU) helps U.S. companies understand U.S. unfair trade laws and the process of filing a petition requesting the initiation of an AD and/or CVD investigation.

• PCAU provides guidance in the type of information required to pursue an action against a foreign industry suspected of unfair trade practices and helps potential petitioners ensure that their petition is in compliance with statutory standards.

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Manufacturing & Services

Market Access & ComplianceU.S. Foreign

Commercial Service

United States Trade Representative

U.S. International

Trade Commission

U.S. Department of

State U.S. Department of Agriculture

IA Works Closely with Other ITA Bureaus and Interagency to Accomplish Our Compliance Mission

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Import Administration

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U.S. Treasury Department

Case Study—U.S. Chicken Industry and Trade Remedies

South Africa—AD determination by investigating authority taken to the South African courts for disposition

Ukraine– AD petition withdrawn by petitioner

China– AD and CVD duties now the subject of a U.S. challenge before the WTO Dispute Settlement Body

Mexico—AD investigation completed with duties suspended

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Case Study—U.S. Chicken Industry and Trade RemediesAspects of Interest:• Interagency collaboration—IA, USTR, FAS, State, ITC• Multiple respondents and industry association• Presence of case issues with multi-national application• Detection of both substantive and procedural concerns,

keeping in mind U.S. practices• Direct USG participation in the proceedings (e.g.,

hearing statements, written submissions)• Interventions in fora outside of investigating authorities

(e.g., WTO committees)• Evaluation of final outcome, and possible further action

(e.g., TPSC decision to challenge at the WTO)

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Steps to Take When A Company Facing a Foreign Trade Remedy Action Seeks Help• Contact IA immediately upon becoming aware of a

foreign trade remedy case—deadlines for participation/registration in a proceeding are often very tight.

• Let IA know if you hear from companies with concerns about foreign trade remedy cases—keep in mind there may be more than one U.S. company with an interest in the investigation.

• Coordination of outreach efforts (with both foreign governments and U.S. companies) can be critical, particularly since there are often U.S. practices to be considered

• Contacting IA will help you and the company:– Gain information on procedures and processes– Discuss avenues of response– Raise concerns with USG experts on trade remedies

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Import Administration Resourceshttp://www.trade.gov/ia/index.asp

• Trade Remedy Compliance Staff (TRCS)– Email: TRCS@trade.gov; Telephone: (202) 482-3415

• Subsidies Enforcement Office (SEO)– Email: SEO@trade.gov

• Petition Counseling and Analysis Unit (PCAU) – AD/CVD Petition Information Resource

Center/Hotline (202) 482-1255 – Email: Petition_Counseling@ita.doc.gov

• IA Communications (All other IA issues)– Telephone: 202-482-0063

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