In response to the US Federal Court’s ruling on GPX International Tire Company and Hebei Xingmao Tyre Co., Ltd., U.S. Department of Commerce spokesman Truman issued an email response on December 23, 2011, stating that the US Department of Commerce “is considering the judiciary and legislation. Means and will act as soon as possible."
This statement of the Ministry of Commerce has laid a slogan for the politicization of this case. On December 19, the U.S. Federal Circuit Court ruled that government financial assistance under non-market economy conditions cannot be considered a subsidy. "Anti-subsidy laws are not applicable to non-market economy countries." This means that more than 30 US anti-subsidy investigations against China are expected to be withdrawn.
The actions that the US Department of Commerce may take in this ruling include delaying implementation, lobbying Congress to levy anti-subsidy duties on non-market economy countries, and partially recognizing China's market economy status in order to include China in the “double reverse†scope.
U.S. Trade Special Issue "China-US Trade Insider" article analyzed that the U.S. trade protection forces had caused trade laws to be amended to try to legalize the dual counter-report against China, and even led to the U.S. political forces that require the appreciation of the renminbi.
“The U.S. Department of Commerce will inevitably try to use political power to recoup its losses, but the success rate of such operations will be very low,†said the Chinese lawyer, William Barringer, to our reporter a few days ago.
Bai Lingjie is a partner of Winston Law Firm and a member of the Chinese Lawyers Team of the Engineering Tire Case. He is usually based in Washington, DC, and provides trade advisory services to the Chinese government.
Ruling "will be implemented sooner or later"
The next step in the U.S. Department of Commerce may be to delay the execution of the award. Bai Lingjie said that even if the verdict has been dropped, China still needs a lot of work to make the U.S. Department of Commerce terminate its taxation. "The ruling is a huge victory, but it will take a while to implement the ruling."
The Federal Circuit’s ruling affects not only the plaintiff’s two companies, but also the fate of the remaining 28 companies that are subject to US anti-subsidy sanctions, as well as other Chinese companies that are under investigation or appeal.
The countermeasures that these companies should take can be divided into three categories: Enterprises that have already been subject to countervailing duties should apply for a moratorium on taxes until the US Department of Commerce issues an argument for the engineering tire case; companies that have been sentenced to countervailing subsidies and have not yet appealed should The Ministry of Commerce reiterated that the companies that are appealing should refer to the latest legal rulings and request the Ministry of Commerce to revoke the anti-subsidy award.
Bai Lingjie told reporters that after the ruling, many Chinese companies came to inquire about the possibility of letting the U.S. Department of Commerce abolish anti-subsidy. However, there is no enterprise to follow up to the U.S. Department of Commerce for recourse. More people want to wait until the U.S. Department of Commerce does terminate its anti-subsidy duties on GPX and Xingmao Tire.
Bai Lingjie said that the U.S. Congress will not easily accommodate the requirements of the U.S. Department of Commerce. He expects the U.S. Department of Commerce to implement the case’s ruling sooner or later, but whether it will pursuing past anti-subsidy cases is still suspenseful.
Lobbying Parliament Legislation to Taxes
Bai Lingjie analyzed that in addition to delaying enforcement of the ruling, the U.S. Department of Commerce will also do two things to Congress: It urges Congress to pass legislation allowing non-market economy countries to levy anti-subsidy tariffs, and strive to make the law retrospectively. The legalization of anti-subsidy that has already occurred. This may be a dangerous signal that the political friction between China and the United States has intensified.
However, it is not easy for the National Assembly to open a green light against China. Bai Lingjie said.
"The U.S. Department of Commerce is not likely to expect Congress to approve at a glance the implementation of countervailing duties on non-market economies such as China, because it is neither in line with existing US trade laws nor WTO rules."
In March 2011, the WTO had ruled that a number of US anti-subsidy duties levied against China were inconsistent with the WTO rules and were double levies. At the time, the WTO arbitration team urged the United States to fulfill its obligations and make the relevant trade measures consistent with the WTO.
Considering that the United States has always advocated WTO members to abide by the rules, Bai Lingjie judged that the US Congress will not ignore the WTO ruling to relocate to the US Department of Commerce. The Ministry of Commerce will eventually terminate these countervailing duties.
If the way to revise the law through the Congress does not work, the aforementioned article in the US trade special issue “Sino-U.S. Trade Insider†analyzes that the U.S. Department of Commerce maintains the power to counter-subsidy investigations of existing cases and retain countervailing investigations of future cases. It will be possible to adjust China’s non-market economy status to meet the legal conditions for the collection of countervailing duties.
The article analyzes that the US Department of Commerce may adopt a partial approach to recognize China's market economy status. Although gaining market economy status will also help improve China’s treatment in the WTO and make the US anti-dumping investigation closer to fairness, it also provides an opportunity for those who want to impose countervailing duties on China.
In addition, the article also judged that if the U.S. trade protectionist excuse the PGX's ruling to the U.S. Congress, it could also provide the soil for the renewal of the U.S. Congress’s RMB exchange rate legislation, due to the introduction of the renminbi exchange rate appreciation bill introduced by Schumer and others. It is hoped that the anti-subsidy will be used to tax the "undervalued" part of the RMB exchange rate as a subsidy.
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