US Court of Appeals for the Federal Circuit (CAFC) ruled, on December 19, 2011, concerning off-road tires case that US Department of Commerce (Commerce) cannot launch countervailing investigation against China as a non-market economy (NME).
Pursuant to the Tariff Act of 1930 as amended, Commerce may place antidumping duties on imports from a market economy (ME) that Commerce determines are unfairly priced. Under its current practice, Commerce applies countervailing duties in the same manner if it finds that imports illegally gained a price advantage through government subsidies. Antidumping and countervailing duties are added to existing applicable tariffs. In some cases, the United States chooses to recognize China as a market economy, under which it would legally apply anti-dumping and countervailing duties, because MEs cannot legally subsidize their industries under international trade law. But because the United States sometimes treats China as a NME, the court ruled that using the anti-subsidy law against Chinese imports is illegal in all cases.
Leader of Chinese Ministry of Commerce (MOFCOM) commented on the issue that the US has been making countervailing investigations on Chinese products for many years. It is not only in violation of WTO rules, but also not in line with US law. China hope the US corrects the wrongdoing of making countervailing investigation as soon as possible when it holds China as a non-market economy. Since November, 2006, Commerce has started countervailing investigation against China by not recognizing China as a market economy. Especially after the international financial crisis, more frequent use of anti-dumping and countervailing measures by the US against Chinese products occurred. Up to now, Commerce has started 30 anti-dumping and countervailing investigations that, according to MOFCOM, were not in accordance with US law, which abuses trade remedy measures and is typical of trade protectionism.
Source: Ministry of Commerce Website; http://english.mofcom.gov.cn/aarticle/newsrelease/policyreleasing/201112/20111207897927.html