CIT Rejects ITA Approach to AD/CV for NMEs, Orders No CV for China Tires

The Court of International Trade rejected the International Trade Administration’s approach to combined antidumping (AD) and countervailing duty (CVD) tariffs on imports from non-market economies, and ordered the agency to forego imposing CVDs on off-the-road (OTR) tires from China. The ruling is likely to mean lower combined rates in the future for diverse imports from China and other non-market economy countries¹ that are subject to both types of trade remedy tariffs.

Chinese and U.S-Owned Importers Sued Over Combined AD and CVD Tariffs

Chinese OTR tire producers Starbright and TUTRIC were mandatory respondents in the ITA’s 2007-2008 parallel AD and CVD investigations of OTR tires from China, in which the ITA gave Starbright a 29.93% AD rate and a 14% CVD rate, and TUTRIC an 8.44% AD rate and a 6.85% CVD rate. TUTRIC together with Starbright’s then U.S. parent GPX challenged the ITA’s actions over the use of CVD in NME cases, among other issues. (GPX filed bankruptcy in 2009, citing the combined duties as the major cause, but the suit continued.)

Imports from NME Countries Were Previously Not Subject to CVD Tariffs

Prior to 2007, the ITA did not apply CVD tariffs to NME imports, having determined in earlier CVD investigations that subsidies could not be defined in economies in which governments controlled the means of production. However, following Congressional interest in 2005, the ITA and the ITC initiated multiple CVD investigations in which China, and soon after Vietnam as well, were included in the producer countries.

CIT Gave Qualified Approval to CVD for China, but Must Avoid "Double Counting" or Not Apply CVD

The court earlier ruled that the ITA is not barred by statute from applying CVD tariffs to imports from China, but found the ITA’s use of the NME AD and CVD statutes together to be “unreasonable,” as well as faulting the agency’s methods on other counts.

In its first remand, among other issues, the court ordered the ITA to “adopt additional policies and procedures” to avoid double counting when applying AD and CVD tariffs, or else exercise its discretion not to impose CVDs as long as it is using NME AD methodology. In response to the remand the ITA offset Starbright’s CVD against its AD cash deposit rate, reasoning that it was “the least confusing option” to avoid double counting. The agency did not apply the same offset for TUTRIC because the company had not cited the issue in its own briefs.

CIT Said ITA's Proposed CVD-Offset not Permitted by Statute

Among other pronouncements, the court faulted the unequal treatment of TUTRIC and, most importantly, ruled out the ITA’s proposed CVD-offset as not authorized by statute, citing also the importers’ argument that the method would cause respondent companies to incur great additional expense and effort in CVD investigations and reviews, only to face the same AD rates they would get if no CVD case were pursued at all. The court ordered the ITA to forego applying CVDs to the merchandise at issue.

¹The current list of NME countries is Armenia, Azerbaijan, Belarus, China, Georgia, the Kyrgyz Republic, Moldova, Tajikistan, Uzbekistan, and Vietnam.

(See ITT’s Online Archives or 09/05/08 news, 08090535, for BP summary of the AD duty order for OTR tires from China. See ITT’s Online Archives or 09/05/08 news, 08090540, for BP summary of the CV duty order for OTR tires from China.)