Countervailing Duties

• Author: International Law Group
• Pages: 224-226

Page 224

In the following opinion, the U.S. Court of Appeals for the Federal Circuit provides a comprehensive overview of the current U.S. countervailing duty laws and the division of authority between the two agencies in charge, the U.S. Department of Commerce ("Commerce"), and the U.S. Customs and Border Protection ("Customs").

After an investigation, Commerce determined in 1992 that Norsk Hydro Canada, Inc. (NHC) received grants from the governments of Canada and Quebec that were countervailable subsidies of its magnesium products. See 57 Federal Register 30,946 (July 13, 1992). Since then, Canadian magnesium products have been subjected to countervailing duties in the U.S., which are reviewed annually.

Customs collected duties on NHC's 1997 magnesium and magnesium alloy imports at improperly high rates. Instead of collecting at the proper 2.02 percent rate, Customs collected between 3 percent and 7 percent. NHC did not protest until Commerce reviewed the countervailable subsidy in 2001. Commerce denied a setoff of the overcharge against the duties due. NHC appealed to the Court of International Trade, which remanded to Commerce with instructions to permit the setoff. Commerce did the setoff under protest, and when the matter again came before the Court of International Trade, it again found for NHC. Commerce appealed.

The U.S. Court of Appeals for the Federal Circuit reverses.

At the outset, the Court comprehensively outlines the current countervailing duty law:

"If the production of goods abroad is subsidized by a foreign government, the goods can be subject to a countervailing duty ('CVD') when imported ... to the United States. 19 U.S.C. ß 1671. In general, the goal of these duties is to protect American firms from unfair competition by setting off the amount of certain export subsidies foreign fi rms selling goods in the United States receive from their government. The Secretary of Commerce administers the countervailing duty laws. Id. ß 1677(1). Two showings must be made before a CVD can be imposed: (i) that a government subsidy was received, and, (ii) that the subsidy resulted in, or threatens, material injury to American industry. Id. ß 1671(a). These two determinations are made by separate bodies. The International Trade Commission determines whether material injury to American industry has occurred, while Commerce determines whether a subsidy was received. ... Subsidies from certain nations may trigger a CVD even in the...