House China Bill Would Overhaul ADD/CVD Statute

The trade provisions of the America COMPETES Act of 2022, the House's answer to the Senate U.S. Innovation and Opportunity Act, proposes some dramatic changes to antidumping and countervailing laws. The ADD/CVD section draws on a bipartisan bill from the Senate led by Ohio's two senators, but co-sponsored by Sen. Todd Young, R-Ind. 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 AD duty case in another country, if the company in the second country incorporated dumped or subsidized inputs. The House 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/CVD tariffs 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 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 AD duty or CVD duty 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.