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US Trade Remedies in the Trump Presidency

8/2/2017

Many have wondered what will happen with trade-remedies actions once reality-TV personality and real estate developer, Donald Trump, takes the reins of the United States government.  Given the people he listens to, trade remedies actions — antidumping and countervailing duty investigations and reviews — will at best maintain their present course, but could become more belligerent.

 

The current trend is bad for China and anyone who buys input materials from China.  The U.S. Department of Commerce has just recently begun a new crusade against China — this time by attacking Chinese-made goods indirectly.  A recently enacted law allows the Department of Commerce to apply “any methodology” to calculating dumping margins when Commerce declares that a Particular Market Situation exists.

 

In the pending reviews of OCTG from Korea and Rebar from Turkey, U.S. steel companies have begun alleging that particular market situations exist where companies under investigation have, or may have purchased significant production inputs from China.  The steel companies speculate that anything purchased from China must be dumped in every country in the world, thus the export price of the product under investigation must be distorted, and can not be used to calculate dumping margins.  In place of the traditional (predictable and manageable) antidumping duty calculation methodologies, U.S. steel companies suggest using the non-market-economy methodology of determining the factors of production and finding surrogate values for potential Chinese-origin inputs.  This methodology was invented to create high dumping margins, and — if the U.S. steel companies allegations and suggestions are accepted — will result in higher dumping duties on products from around the world.  This new practice is intended to battle with Chinese production, and to compel other countries to join the U.S. in the battle.  And, as with all battles, there will be collateral damage in the form of reduced free trade and unhappy trading partners around the world.

 

Trump’s trade policies are heavily influenced by the former president and CEO of one of the steel companies that is pushing the new practice, so you can be sure that the Trump administration will further support application of the Particular Market Situation methodologies wherever they can be applied.

 

But more than Particular Market Situation, Trump has signaled graver trade policies.  Among other things, Trump has proposed spending $1,000,000,000,000 (One Trillion Dollars) to rebuild U.S. infrastructure using U.S. produced steel, among other U.S. produced products.  This campaign promise — if it excluded products produced in other countries — would likely run afoul of the WTO obligations under the procurement agreement.  That the United States would be acting inconsistently with its WTO obligations does not mean that the United States will refrain from that conduct, it only means that adversely affected countries will likely have to take the U.S. to the Dispute Settlement Body at the WTO to enforce their rights vis-a-vis the US.  In the end, given Trump’s apparent attitude toward U.S. courts, one can imagine that the U.S. may not immediately comply with the recommendations of the DSB.  Thus countries will need to plan for effective retaliation strategies under WTO sanction that will place maximum pressure on the U.S. to comply, while at the same time providing for maximum recovery of benefits at a minimum of expense to their own citizenry.

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