Trade Law Enforcement Act of 2011

Madam Speaker I rise today in order to debate H.R. 4105, ``To apply the countervailing duty provisions of the Tariff Act of 1930 to nonmarket economy countries,'' would ensure that the Department of Commerce can continue to apply countervailing duty law (CDV) to non-market economies (NME), such as China and Vietnam. Countervailing duties aim to offset the benefits of government subsidies to industries. Anti-dumping (AD) duties apply to goods sold overseas at or below the price in the home country.

As we enter the first full week of spring and trees are regaining their leaves. We are once again faced with finding ways to help strengthen our economy. After years of witnessing a decline in manufacturing, before us this year there has been a revival. This legislation that

would further enhance the economic viability of our manufacturing industries against unfair competition is welcome news.

The measure before us would enable U.S. manufactures to fairly compete with goods which enter our stream of commerce. Goods supplied to the United States from nonmarket economies have a significant market advantage. Those goods receive multiple subsidies from their governments that allow them to be sold at a steeply discounted price in the United States and thereby gain a competitive advantage against products that are unsubsidized and manufactured in the United States.

Just think of a main street which employs hundreds of local workers. The main manufacturing plant on main street supplies both goods and services to the community. When outside goods and manufacturers, from nonmarket economies, compete with main street manufacturers by undercutting prices the result will be that manufacturers on main street will close. American workers will lose jobs and it will cause the death of main streets all over the country.

We must continue to support measures that will establish and ensure a level playing field for American workers and American companies. The issue before us is how to address goods from countries like China and Vietnam that have entered our stream of commerce, and compete with our business but have a significant market advantage because they are heavily subsidized.

I firmly believe in the importance of continuing a balanced trade relationship with China. Trade between the United States and China has expanded dramatically in the years since China acceded to the World Trade Organization in December 2001. In 2009, bilateral trade in goods totaled $366 billion, with U.S. imports from China totaling $296 billion and U.S. exports to China totaling $70 billion.

In my home State of Texas we have also increased our exports of goods to China. In the District I represent, the 18th Congressional District of Texas, we export chemicals, machinery, computers & electronics, fabricated metal products, and primary metal manufacturing. Yet, I can attest that more can be done to ensure that our trading relationship must improve.

Experts agree that the disparity in imports and exports has resulted in a U.S. goods trade deficit with China. In 2009, there was a trade deficit with China for $227 billion in which accounts for 45.3 percent of the overall U.S. goods trade deficit.

In trade in services, the United States runs a surplus with China, with exports to China of $16 billion in 2008 (the latest year for which numbers are available) and imports from China valued at $10 billion.

The United States' bilateral goods trade imbalance with China may be attributed to a variety of factors such as alleged unfair trade practices and their undervalued currency and their impact on the U.S. economy.

Chinese officials, who cite different figures for the bilateral trade deficit provided by the United States, routinely seek to shift some of the blame for the trade deficit to the United States by criticizing U.S. controls on exports of advanced technology. They further argue that the sharp increase in exports to the United States reflects the shifting of production from other countries to China and many ``made- in-China'' products contain components from other countries.

Since 2006, the U.S. government has repeatedly raised concerns about alleged backsliding in China's implementation of commitments it made as part of its 2001 accession to the World Trade Organization. Most prominently the problem of ``excessive trade-distorting government intervention intended to promote or protect China's domestic industries and state-owned enterprises.'' China's inadequate protection of intellectual property rights has also been a major concern. Under the Obama Administration, there have been four cases filed against China with the World Trade Organization, including three in 2010.

Those four cases relate to China's import substitution subsidies in the wind energy sector, its anti-dumping and countervailing duties on grain-oriented electrical steel from the United States, its restrictions on foreign suppliers of electronic payment services, and its restraints on exports of raw materials used in the steel, aluminum, and chemical sectors.

The White House reports, however, that it made progress on some long- standing trade issues with China at the December 2010 meeting of the U.S.-China Joint Commission on Commerce and Trade in Washington, D.C.

Currently, there are more than 300 anti-dumping and countervailing duty orders to shield American-made goods, from honey to bedroom furniture, against global competition it deems unfair and damaging to U.S. companies. About half the orders target iron and steel products.

China accounts for a third of all U.S. unfair trade cases, the most of any country, including about 100 anti-dumping and two dozen countervailing duty orders, according to the U.S. International Trade Commission.

The U.S. Commerce Department would be allowed to apply duties to offset government subsidies in nations such as China and Vietnam under this bipartisan bill.

H.R. 4105, overturns the decision of the Court of Appeals for the Federal Circuit and preserves the validity of the countervailing duty proceedings against imports from China and Vietnam, beginning in 2006. This would ensure that the Department of Commerce can continue to apply countervailing duty law (CDV) to non-market economies (NME), such as China and Vietnam. Countervailing duties aim to offset the benefits of government subsidies to industries. Anti-dumping (AD) duties apply to goods sold overseas at or below the price in the home country.

The legislation also addresses an adverse World Trade Organization (WTO) finding that there may be ``double remedies'' in situations where countervailing duties are applied to NME exports at the same time that antidumping duties calculated using the so-called ``surrogate value'' methodology are applied to the exports.

As a senior Member of the Judiciary Committee it is not without hesitation that I join my colleagues in overturning a court ruling. I believe in the deliberative process from the judiciary and I was pleased that the court entrusted Congress to act.

In 2007, the Department of Commerce began applying countervailing duty laws (CVD). This was after nearly 20 years of not applying CVD laws to import from NME countries. In 2007, Commerce began to impose CVDs to imports from China, a country which it has long been considered to be a NME for the purposes of Anti-dumping /CVD laws.

The legality of applying both CVD/and AD laws to Chinese goods was first tested in the U.S. Court of International Trade (CIT) in 2009, when the CIT found that Commerce's approach unreasonable. GPX Int'l Tire Corp. v. United States, 645 F. Supp. 2d 1231, 1242 1243 (Ct. Int'l Trade 2009).

The CIT ruled that the prospect of a double remedy is likely when CVD duties are imposed at the same time as the NME AD duties. As the CIT explained, ``the NME AD statute was designed to remedy the inability to apply the CVD law to NME countries, so that subsidization of a foreign producer or exporter in a NME country was addressed through the NME AD methodology.''

The CIT instructed Commerce ``. . . to forego the imposition of CVDs on the merchandise at issue or for Commerce to adopt additional policies and procedures to adapt its NME AD and CVD methodologies to account for the imposition of CVD remedies on merchandise from the PRC.'' GPX Int'l Tire Corp. v. United States.

Commerce was unable to find a reasonable methodology to prevent the likely double-counting outcome and, under protest, it complied with the CIT's order not to apply CVDs on imports of tires from China, but appealed the CIT decision.

The Federal Circuit affirmed the holding of the Court of International Trade that such countervailing duties could not be collected but did so on different grounds. Without this legislation the Department of Commerce will be required to stop imposing countervailing duties on goods imported from nonmarket economies (NME).

Rather, in affirming the CIT's judgment, the CAFC held more broadly that the legislative history of the U.S. CVD laws, Commerce's longtime practice up to 2007 of not applying CVD law to NMEs, and the CAFC's 1986 opinion in Georgetown Steel Corp. v. United States, compel the interpretation that the CVD statute cannot be applied to NME countries. The CAFC reasoned that the earlier interpretation was considered and adopted by Congress, when Congress amended the Trade Act of 1930 in the 1988 Trade Act, and again in 1994 when it reenacted most of CVD law while making changes to conform U.S. law to its international obligations as part of the Uruguay Round Agreements Act. The Federal Circuit stated:

We thus find that in amending and reenacting the trade laws

in 1988 and 1994, Congress adopted the position that

countervailing duty law does not apply to NME countries.

Although Commerce has wide discretion in administering

countervailing duty and antidumping law, it cannot exercise

this discretion contrary to congressional intent.

It is a broader ruling from several points of view, which, in practice, may succeed in providing more clarity on the issues than if the CAFC had affirmed GPX by adopting the CIT's rationale. First, the CAFC did not distinguish between NME countries, as Commerce did in 2007 when it found that CVD law can be applied to China. In essence the CAFC's opinion tells Commerce that it cannot have it both ways: where the agency makes a determination that a country is a NME, it does not have authority to assess CVDs on imports from that country. Second, GPX involved an

alleged ``domestic subsidy,'' which generally benefits both domestic and exported goods, as opposed to an ``export subsidy'' which applies only to exports. The CIT's opinion in GPX may have not prevented Commerce from countervailing export subsidies in other cases. However, the CAFC's language does not distinguish between subsidies and holds that ``countervailing duty law does not apply to NME countries.'' Third, as noted supra, the CAFC did not adopt the CIT's reasoning of double-counting of remedies. The CIT's reasoning left open the possibility that Commerce may come up with a methodology that somehow eliminates double-counting, while imposing both ADs and CVDs on imports from a NME. The CAFC's decision in GPX closed that possibility by explicitly stating that one cannot apply CVD law to a NME country. In short, had the CAFC adopted the CIT's reasoning in GPX, it is possible that some of Commerce's authority to proceed with CVD investigations-- albeit on a much more restricted scale--would have survived. However, the CAFC's decision, once final, will compel Commerce to cease its current CVD practice with respect to countries designated as NMEs.

The problems raised by this decision has been addressed by this legislation. As H.R. 4105 amends the Tariff Act of 1930 regarding the imposition of countervailing duties on imports into the United States from a country subsidizing, directly or indirectly, the manufacture, production, or export of merchandise which materially injures a U.S. industry or threatens to.

Declares that merchandise on which countervailing duties must be imposed includes merchandise from a nonmarket country, unless the administering authority cannot identify and measure subsidies provided by the government of the nonmarket economy country (or a public entity within its territory) because the economy of that country is essentially composed of a single entity.

Requires the administering authority to reduce the antidumping duty on a class or kind of merchandise from a nonmarket economy country in cases where: (1) such country (or a public entity within its territory) has provided the merchandise with a countervailable subsidy (other than an export subsidy), (2) the subsidy has reduced the average price of imports of that class or kind of merchandise during the relevant period, and (3) the extent to which the subsidy, in combination with the use of normal value, has increased the weighted average dumping margin for such merchandise can be reasonably estimated.

Requires the administering authority, in such cases, to reduce the antidumping duty by the amount of the increase in the weighted average dumping margin estimated (but not by more than the portion of the countervailing duty rate attributable to the countervailable subsidy).

Madam Speaker, I rise in strong, vigorous support of H.R. 4105, and I want to commend Chairman Camp for his leadership in bringing this appropriate bill to the floor today.

As a supporter of free and fair trade, I believe that U.S. companies and workers deserve a level playing field in order to successfully compete around the world. This bill restores Commerce's ability to protect American jobs and companies from unfair, WTO-inconsistent practices, inconsistent trade practices perpetrated by nonmarket economies, mainly China and Vietnam.

This is an important tool being used by several industries in my home State of Louisiana, the ability to use countervailing duties, companies that produce steel pipe, aluminum extrusion, woven sack industries, just to name a few. More importantly, many key industries such as shrimp processors want to make sure that this tool remains in place in case they need to use it in the future to deal with unfair trade practices.

As our industries expand and compete for businesses around the world, it's irresponsible to not have these types of measures, enforcement measures, in place and to take this vital tool away from the Department of Commerce.

This has been a practice that is WTO compliant. We have used it for years, and now because of a recent Federal court ruling, it has been taken away.

The bill simply amends the 1930 Tariff Act to allow this WTO- compliant technique to be used to impose countervailing duties on nonmarket economies when they use unfair subsidies. It's fully consistent with our international trade obligations, it restores current practices, and it is the right thing to do for American businesses and workers. I strongly encourage our colleagues in this House to support this important bill.

American Shrimp

Processors Association,

Biloxi, MS, March 5, 2012.

Hon. Dave Camp,

Chairman, Ways and Means Committee, Cannon House Office

Building, Washington, DC.

Hon. Sander M. Levin,

Ranking Member, Ways and Means Committee, Longworth House

Office Building, Washington, DC.

Dear Chairman Camp and Ranking Member Levin: The American

Shrimp Processors Association (ASPA) strongly supports, H.R.

4105, the bill you introduced on February 29, ``to apply the

countervailing duty provisions of the Tariff Act of 1930 to

nonmarket economy countries.'' We appreciate that you took

the lead on this measure and are working hard to quickly pass

this critical bipartisan legislation that allows the Commerce

Department to continue to apply countervailing duty laws to

non-market economies. We believe passage of this measure is

critical to the continued ability of domestic industries like

ASPA to fight unfair Chinese and Vietnamese trade practices.

Additionally, we salute the strong support offered to this

measure by our Gulf coast Ways and Means Committee Member

Charles Boustany, Jr.

This bipartisan and bicameral legislation aims to correct a

problematic decision by the Court of Appeals for the Federal

Circuit that found that U.S. law prohibits the Department of

Commerce from applying countervailing duties to non-market

economies like China and Vietnam. We understand that Congress

must act by March 15th to ensure that the law is changed

prior to final action in the courts.

As a domestic industry that has struggled to survive amidst

a barrage of subsidized imports from Asian non-market and

market economies alike, ASPA has a strong interest in seeing

U.S. countervailing duty law enforced. If the Congress were

to do nothing, important trade orders already in place on

subsidized imports from China and Vietnam would disappear.

These orders have corrected Chinese and Vietnamese practices

that have injured a broad range of domestic industries and

threatened the jobs of tens of thousands of American workers.

Additionally, and more importantly to ASPA members, the

recent Court decision would prohibit the U.S. shrimp industry

from ever using the U.S. trade laws designed to correct

unfair government subsidies on shrimp exported from non-

market economies like China and Vietnam, which have been

flooding the U.S. market for years.

While the U.S. shrimp industry has repeatedly demonstrated

its resilience in the past, the failure to pass this

important legislation leaves the domestic shrimp industry,

and all U.S. industries, at a permanent disadvantage, as they

will be unable to take any action to redress the harm that

subsidized imports from non-market economies cause. All our

major trading partners have trade laws that allow them to go

after government subsidies from non-market economies. Why

would the United States want to unilaterally disarm?

Without this legislative fix, ASPA members' ability to go

after egregious trade practices in China and Vietnam would be

severely limited. ASPA urges you to maintain a level playing

field for all domestic industries by passing this legislation

this week.

Sincerely,

C. David Veal,

Executive Director.

Madam Speaker, I yield myself such time as I may consume.

This bill will send a clear signal, especially with an overwhelming vote, that there are clear consequences when a nation violates the rules. China is, indeed, tilting the field of competition by not playing by the rules. This bill restores a key instrument for our Nation to hold China and other nations accountable. The failure to pass it would be an enormous step backwards at a time when, indeed, we need to fast-forward our efforts to rein in China's abusive trade practices that, in part, have led to our record $295 billion trade deficit with China. This legislation ensures that tools remain available under U.S. trade law so that manufacturers can fight back against China's unfair trade subsidies.

Countervailing duties have been a part of U.S. trade law for nearly 120 years, and today, almost one-half--23 of 50--of all countervailing duty orders in place involve China. This is not surprising. A central element of Chinese industrial policy has been to provide massive subsidies to its producers to help them knock out competitors and to dominate the market. These include loans at below-market interest rates, cheap or sometimes free land, extensive tax breaks, and other subsidies designed to advantage domestic industry.

To date, countervailing duties have been the singular form of relief available to American workers and companies devastated by these mercantilist policies. Over the last 6 years, Commerce has put in place 23 countervailing duty orders against China--23--and five other investigations are currently underway. More than $4 billion in subsidized imports have been covered by these measures, shielding an estimated 80,000 American jobs from unfair competition.

Yet, in December, based on a deeply flawed assessment of congressional intent, the court of appeals for the Federal circuit ruled that Commerce, which administers our countervailing duty laws, does not have the authority to apply those laws to nonmarket economy countries like China. That decision threatens to eviscerate the U.S. right to apply countervailing duties to China, a right protected under WTO rules; and it threatens to cripple Commerce in its efforts to combat Chinese subsidies that harm our industries.

With this bill, we are making clear that the Federal circuit's decision was wrong and that it cannot stand. Commerce has always had the authority to apply countervailing duties to nonmarket economies such as China, and now it shall continue to have and exercise this vitally important authority in the future.

Because of this bill--and I urge the strongest possible support--tens of thousands of American workers and scores of American companies in 38 States across this country that have shown that they are entitled to relief from unfair subsidization by nonmarket economies will continue to get that relief. This bill ensures all of the existing orders and investigations remain in place.

For these reasons, I support the passage of H.R. 4105, and I urge all of my colleagues to support it.

Madam Speaker, I reserve the balance of my time.

I yield 1\1/2\ minutes to a distinguished member of our committee, the gentleman from Massachusetts (Mr. Neal).

I yield 2 minutes to another distinguished member of our committee, the gentleman from Oregon (Mr. Blumenauer).

Madam Speaker, I now yield 2 minutes to Mr. Pascrell from the great State of New Jersey, another very active member of our committee.

Madam Speaker, I now yield 2 minutes to the gentleman from Maine (Mr. Michaud) who is very active in trade matters.

I now yield 1 minute to Mr. Critz from the great State of Pennsylvania, a gentleman who is most active on these issues.

I now yield 2 minutes to our ranking member on the Rules Committee, the gentlelady from New York (Ms. Slaughter).

I yield myself the balance of our time.

The need is clear, the answer is clear, and I hope the vote will be clear. I yield back the balance of my time.

Madam Speaker, on that I demand the yeas and nays.

Madam Speaker, I move to suspend the rules and pass the bill (H.R. 4105) to apply the countervailing duty provisions of the Tariff Act of 1930 to nonmarket economy countries, and for other purposes.

Madam Speaker, I yield myself such time as I may consume.

I ask unanimous consent that all Members have 5 legislative days within which to revise and extend their remarks and include extraneous material on the bill under consideration.

Madam Speaker, I urge the passage of this legislation to ensure that we can continue to fight unfair subsidies from countries like China that violate the WTO, injure our industries, and cost U.S. jobs. This legislation reaffirms that our antisubsidy laws, or countervailing duty laws, apply to subsidies from China and other nonmarket countries, and it overturns an erroneous decision by the Federal circuit that the Department of Commerce does not have the authority to apply these countervailing duty rules to nonmarket economies.

China distorts the free market by giving enormous subsidies to its producers and exporters, and our companies and our workers should not be expected to compete against the deep pockets of the Chinese Government. That is why it is vital that we preserve this important tool and ensure that current countervailing duty orders and investigations from nonmarket economies remain in place and that this important tool is available in the future.

In addition, this legislation fully complies with our WTO obligations. China agreed to be subject to countervailing duty laws when it joined the WTO in 2001, and the WTO has reaffirmed our right to apply these laws to China. Failing to enact this legislation would mean that we're unilaterally giving away a right that allows us to protect American workers. This legislation also brings the United States into compliance with its obligations by requiring the Department of Commerce to make an adjustment when there is evidence of a double remedy.

Finally, I am pleased that this legislation, which has already passed the Senate, is bipartisan and has administration support.

For all of these reasons, we urgently need to pass this important legislation. I urge all of my colleagues to support this bipartisan bill.

Madam Speaker, I reserve the balance of my time.

I yield 2 minutes to the distinguished chairman of the Trade Subcommittee, the gentleman from Texas (Mr. Brady).

I yield 2 minutes to the distinguished gentleman from California (Mr. Rohrabacher).

I yield the gentleman an additional 15 seconds.

I yield 2 minutes to the distinguished chairman of the Oversight Subcommittee, the gentleman from Louisiana, Dr. Boustany.

Madam Speaker, at this time I yield 1 minute to the distinguished gentlewoman from North Carolina (Mrs. Ellmers).

I yield the gentlewoman an additional 15 seconds.

Madam Speaker, I yield 1 minute to the distinguished gentleman from Pennsylvania (Mr. Kelly).

At this time, I yield 2 minutes to a distinguished member of the Ways and Means Committee, the gentleman from New York (Mr. Reed).

Madam Speaker, I yield myself such time as I may consume.

In summary, I'd like to say that an identical bill to this passed the Senate with unanimous consent. The ability of the U.S. to impose countervailing duties on nonmarket economies, specifically on China, was something China agreed to when it entered the WTO. There are massive subsidies that distort the free market and cost us jobs here in the United States. This is an important tool, as so many have said, as speakers today have said, for us to have to address unfair subsidies from China that hurt our U.S. workers.

I think this is an important bill. It has bipartisan support, and I urge the passage of this legislation.

I yield back the balance of my time.

Madam Speaker, the December 2011 ruling by the U.S. Court of Appeals for the Federal Circuit bars the Department of Commerce from applying countervailing duties (CVDs) on goods produced by heavily subsidized foreign companies from non-market economy countries like China and Vietnam.

This ruling is a significant blow to U.S. manufacturers and workers. If action is not taken to remedy the situation, the Department of Commerce could likely be forced to terminate 24 existing CVD orders against unfairly subsidized products from China and Vietnam, including a CVD order to help companies and families in southwest Ohio.

In my community, paper manufacturers New Page, SMART Papers and Appleton Papers, petitioned the International Trade Commission to levy CVDs on subsidized imports of coated fresh-sheet paper from China and Indonesia. In 2008, NewPage was forced to close its sheeting facility for coated paper due to these unfair trade practices, resulting in a loss of 175 Ohio jobs. Just recently, Appleton Papers announced it would cut 330 jobs from the West Carrolton plant in my Dayton community as it struggles against unfair competition.

I strongly backed the application of CVDs against this unfair trade practice and testified before the ITC in support of the petition, which was unanimously approved in 2010. However, the court's recent ruling could negate the ITC's unanimous action and threaten more jobs in my community.

Madam Speaker, we must move swiftly to ensure U.S. manufacturers and workers can compete on a level playing field in the global marketplace. That is why I am an original co-sponsor of H.R. 4105, bipartisan legislation that confirms the Department of Commerce may continue to apply CVDs against unfairly subsidized imports from nonmarket economies like China.

At the same time, with 95 percent of consumers overseas, it is essential that U.S. companies have the opportunity to export their products. U.S. exporters face many non-tariff barriers that violate existing trade agreements, hampering the ability of U.S. companies to access foreign markets and create jobs. My bill, H.R. 3112, the Trade Law Enforcement Act, provides an affordable way for U.S. companies to have their market access complaints investigated and resolved in a manner consistent with U.S. international obligations.

Madam Speaker, I strongly support H.R. 4105 and urge my colleagues to vote yes on this important legislation. I also urge my colleagues to support and co-sponsor my bill, H.R. 3112, to help U.S. manufacturers reach new consumers abroad and spur job creation right here at home.