CAFC Grants Motion to Rehear Case on CV NME Duties After New Law, Remands Constitutional Issue
The Court of Appeals for the Federal Circuit granted petitions for a rehearing of GPX International Tire Corp. v. United States, in which CAFC ruled in December 2011 that countervailing duties may not be imposed on goods from China or other non-market economies (NME), in light of the new law upholding the application of CV duties to NME countries. CAFC remanded the case to the Court of International Trade to determine the legislation's constitutionality, in particular that of a "special rule" created by varying effective dates in the provision that, in this case,and according to CAFC "perhaps a few others," allow both antidumping and CV duties to be imposed without providing a mechanism to account for potential double counting.
CAFC Confirms Law is Retroactive for NME CV Duties, but not for "Double Counting" Ban
In support of its decision grant the motions to rehear the case, CAFC said the new legislation is specific in its retroactive application of CV law to NMEs, including to “all civil actions, criminal proceedings, and other proceedings before a Federal court,” and therefore applies to this proceeding. According to CAFC, Congressional intent to overrule CAFC’s decision in GPX was clear, noting that in the floor debate prior to enactment of the legislation, the CAFC’s decision in GPX was referenced by name and discussed at length.
However, CAFC said the provision of the new legislation prohibiting "double counting" (the offsetting of the same subsidization twice by the concurrent imposition of AD duties calculated on the basis of an NME methodology and CV duties) does not apply to this case. CAFC said the new legislation prohibits double counting when applying CV duties, but does not do so retroactively.
Two Other Issues Considered, One Remanded
The CAFC also ruled on two constitutional issues raised by GPX, remanding one to the CIT:
Timing of new law constitutional; final judgment had not yet been entered. In response to GPX’s contention that the new legislation is unconstitutional because it violates the separation of powers by attempting to prescribe a rule for this case after the CAFC already rendered a decision, CAFC said that argument was without merit. CAFC said final judgment was still pending at the time of enactment of the law because of this motion for rehearing, and, citing earlier judgments, said a statute affecting pending cases does not offend separation of powers because Congress was changing the law applicable to those cases rather than impermissibly interfering with the judicial process.
Issue of new law creating “special rule” remanded to CIT. GPX also argued that Congress’ legislation improperly creates a special rule applicable only to this case (or perhaps a few others), in which both AD and CV duties may be imposed, without providing a mechanism to account for potential double counting. As CAFC only received a cursory briefing on this issue, CAFC did address GPX's argument, but remanded it to CIT.
Therefore, CAFC granted the petitions for rehearing filed by the Government and the other defendant-appellants, and remanded the case to CIT for a determination of the constitutionality of the new legislation, in light of GPX’s argument that the legislation creates a special rule, and for other appropriate proceedings.
(The ITA began the practice of applying CV duties to NMEs in 2007, but CAFC ruled in GPX International Tire Corp. v. United States (12/19/2011) that Congress never explicitly authorized the ITA to do so, and therefore that CV duties may not be imposed on goods from NME countries. According to the U.S. Trade Representative, CAFC's ruling would have meant that the U.S. would have had to revoke 24 existing CV duty orders for China and Vietnam, as well as stop pending CV investigations for NME countries. In response, Congress passed a law amending 19 USC 1671 so that CV duties on NME countries could continue to apply, which was signed into law by President Obama on March 13, 2012. The law explicitly provided for imposition of CV duties on NMEs for proceedings initiated after November 20, 2006, and, in response to an adverse WTO ruling, provided for a mechanism to account for double counting effective March 13, 2012.
See ITT's Online Archives 11122210 for summary of CAFC's ruling prohibiting imposition of CV duties on NMEs, and 11051209 for summary of U.S. stating that it would implement the WTO’s ruling (DS379) that was adverse to the ITA’s AD/CV “double counting” of China’s subsidies in AD and CV investigations for certain products from China. See also ITT's Online Archives 12031403 for summary of enactment of law explicitly authorizing CV duties on NME countries.)