Weekly Trade Spotlight: Countervailing Duties
A World Trade Organization panel ruled last week in favor of the United States in a dispute brought by China regarding anti-dumping and countervailing duties. This trade spotlight clarifies the issues involved in the case.
The use/application of anti-dumping and countervailing duties is accepted in the international community as a right of countries to respond to the unfair trade practices of others.
Anti-dumping duties (AD) are tariffs placed on unfairly low-priced imports to protect the competitiveness of local companies. If a foreign company is found to be pricing its goods below the normal value in order to undermine the competition in an export market, the importing country has the right to protect the viability of their businesses and level the playing field.
Countervailing duties (CVD) respond to a different unfair trade practice. When a government gives subsidies to its companies that export, it makes those companies more competitive in foreign markets. To offset this unfair advantage, the importing country can impose countervailing duties on the subsidized product and restore fair competition.
The United States is proud of its commitment of standing up for Americans by promoting fair trade. Its imposition of anti-dumping and countervailing duties on certain products as discussed in this case, including circular welded pipe, pneumatic off-the-road tires, light-walled rectangular pipe and tubes, and laminated woven sacks, are a demonstration of U.S. dedication to protecting American companies from the unfair trade practices of other countries.
The World Trade Organization’s finding on AD and CVD issues on October 22 is confirmation of the United States’ ability under the WTO rules to counter the negative effects of unfairly-priced and subsidized imports. In particular, the WTO panel defended the right of countries to use special rules to calculate antidumping duties, and impose both antidumping and countervailing duties at the same time on imports from China.
USTR and the Obama administration have outlined a trade policy that protects and promotes American companies and will continue to fight for fair competition for American products at home and abroad.