The China-U.S. Trade Law Blog has not posted a new article in a while, but mostly because Elliot Feldman and John Burke have been working on a major article – Testing The Limits Of Trade Law Rationality: The GPX Case and Subsidies in Non-Market Economies for the American University Law Review. It will be published this week and we are pleased to provide a link here.
Chinese merchandise has been the subject of most international trade disputes, all over the world, for several years. All of China’s principal trading partners, including the United States, Japan, and the European Union, treat China as a non-market economy (NME), applying special methodologies for determining whether Chinese enterprises are exporting merchandise at less than fair value. However, until 2006 the recognition of China as an NME meant that unfair trade allegations were based on pricing theories for antidumping, never government programs or actions unfairly subsidizing exported merchandise. The general rule was that government subsidies are countervailable only when they distort markets, and NMEs have no markets to distort.
The United States began launching simultaneous antidumping (AD) and countervailing duty (CVD) investigations of Chinese merchandise after the November 2006 congressional elections. This change in practice inevitably triggered legal disputes that collectivized under the banner of GPX, an American importer of off the- road tires (OTR Tires) from China. The U.S. Court of International Trade (CIT) and the U.S. Court of Appeals for the Federal Circuit (CAFC) were asked to decide whether CVD investigations into merchandise from NMEs were in accordance with law and, if they were, whether they could be conducted simultaneously with antidumping investigations. The United States Congress, unhappy with the decisions of the appellate court, swiftly rewrote the law. The constitutionality of the revised statute then was challenged in the same courts.