House China Bill Proposes Major Changes to ADD/CVD; Pivotal Republican Senator Supports Them

The House Majority Leader Steny Hoyer, D-Md., said he will bring the massive America COMPETES bill up for a vote soon. While it may not need to attract any Republican votes to pass there, a bipartisan compromise will be necessary in conference. House Ways and Means Committee Chairman Richard Neal, D-Mass., said that the Senate's U.S. Innovation and Competition Act (USICA) was not adequate, aside from the issue that revenue measures, such as the Miscellaneous Tariff Bill, must start in the House. "This legislation is the boldest, best option we have to stand up to China’s harmful actions and support American workers, and I look forward to discussing these proposals further during our conference on the package with the Senate," he said.

His Republican counterpart on the committee, Rep. Kevin Brady of Texas, slammed the bill, issuing a statement that said: "Democrats in Congress aren't serious about confronting China, holding them accountable for their trade commitments, or insisting China stop cheating America and other countries. ... I'm convinced there is a smart, bipartisan path forward on trade and on China, but this isn't it."

Sen. Todd Young, R-Ind., was one of the prime movers behind USICA, and before the text of House bill, with longer name America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength Act of 2022, was released, he said during a video interview that the House and Senate have had "some substantive, and I think, principled, disagreements as it relates to trade. I'd remind my House Democratic colleagues that the trade title of the Senate version of the legislation passed with 91 votes for, four opposing."

The main differences between the House and the Senate China packages on trade center on the following topics:

• More eligibility criteria for the Generalized System of Preferences benefits program and a shorter renewal
• Making it so that future Miscellaneous Tariff Bill lists could not include consumer products
• Adding trade adjustment assistance
• Barring Chinese packages from qualifying for tariff-free entry under the de minimis statute
• Numerous changes to antidumping duty and countervailing duty laws to make them more favorable to domestic petitioners.

The Coalition for GSP complained that the House version of the China package only reauthorizes GSP through Dec. 31, 2024, rather than through Jan. 1, 2027, and it doesn't require public comment before punitive actions can be taken against beneficiary countries. It said that is "a basic good governance issue to prevent abuse of the (current and proposed) eligibility criteria by some unknown future Administration."

The ADD/CVD section draws on a bipartisan bill from the Senate led by Ohio's two senators, but co-sponsored by Young, colloquially known as the Level the Playing Field 2. Young will be a major player on the conference committee, so that suggests that the ADD/CVD changes could well end up in the final package.

The ADD/CVD changes include allowing cases to consider government subsidies to a country's companies with factories abroad. It would also allow subsidies from one country to be considered in an antidumping duty case in another country, if the company in the second country incorporated dumped or subsidized inputs. The Rules Committee's summary of this provision gave this example: "For example, DOC may determine whether there is a 'particular market situation' if a Turkish pipe and tube sector is using subsidized Chinese steel slab to manufacture pipe and tube products that are dumped in the U.S. market."

This section of the bill would also create a "successive investigation" framework, aimed at stopping hopscotching low-cost imports after an ADD/CVD case stops imports from one country. For instance, if washers from China faced high duties, so Chinese companies opened factories in Malaysia, U.S. washing machine producers could file a case against Malaysian washers. That case would have an expedited timeline -- Commerce would have to issue a preliminary determination within 85 days, with an extension only permitted if the petitioner asks for it. Final determinations would have to follow in 75 days. It also would be easier to prove than those sorts of cases are now, because any recovery of profitability or sales after levying ADD/CVDs would be disregarded; the volume of imports from the second country would not have to result in a global increase in imports, as long as the flow from the second country was expected to be as large as the flow used to be from the first country. Also, Commerce would consider whether the remedy provided for in the first case would be undermined by the imports being challenged in the second case.

These rules could apply to a case going on at the same time, or any time within two years of the first case.

The same section of the law changes how duty evasion and circumvention are handled. Commerce would have to respond to any circumvention inquiry request within 30 days, and if it rejects the request, it would have to explain why. Preliminary determinations of circumvention would have to be made within 135 days, and final determination within 180 days, at most, with extensions. "Currently there are no statutory process or timelines for circumvention inquiries," the summary says.

It also specifies that Commerce may need to clarify if the imported good is within the scope of an ADD or CVD order, and that it would need to do so within 335 days of the inquiry request. The section directs Commerce to order liquidation suspension and posting of a cash deposit when a circumvention inquiry begins on a product. "The section also clarifies that DOC shall apply a circumvention determination on a country-wide basis, unless it is more appropriate to apply the determination to particular producers or exporters," the summary says.

All the new rules would not only apply to cases initiated after the bill became law, but also to cases that already have a preliminary determination, as long as those preliminary determinations were no more than 45 days before the law's enactment.

This section also requires that nonresident importers have U.S. assets and customs bonds. And it wouldn't allow protests of liquidation from an importer when CBP has determined there's evasion.

On de minimis, the changes would be almost immediate, with the change coming 15 days after enactment. The bill currently only applies to China, as it is the only country that is both on the priority watch list for intellectual property and a non-market economy. However, it says that Treasury could add other exceptions to de minimis if it is consistent with the purpose of the bill, "or is necessary for any reason to protect the revenue or to prevent unlawful importations."

Young said he hopes the conference committee won't drag on for months and months. "I would certainly hope we could get this done by Memorial Day," he said.