By  on October 25, 2010

A World Trade Organization panel issued a ruling Friday that said U.S. trade officials upheld their right to simultaneously apply two sets of punitive duties on imported products from nonmarket economies, such as China, when they are unfairly subsidized and dumped at less than fair market value.

The decision stemmed from a complaint brought by China against the U.S. in 2008, challenging duties the U.S. imposed in separate trade remedy cases involving circular welded pipe, certain pneumatic off-the-road-tires, light-walled rectangular pipe and tube and laminated woven sacks.

China challenged U.S. authority to impose dumping and countervailing duties concurrently on the same imported products. Dumping occurs when a foreign company sells products in the U.S. at below fair market value or less than the cost of manufacturing. Subsidies involve a foreign government offering financial assistance to companies that run afoul of bilateral or global trade rules and, if confirmed, can trigger the imposition of countervailing duties

The WTO panel also issued rulings in the four individual U.S. trade remedy cases that were in part favorable to China and in part favorable to the U.S.

Both sides can appeal the decision within 60 days.

“This is a significant win for American workers and businesses affected by unfairly traded imports,” said U.S. Trade Representative Ron Kirk. “We are pleased that the panel recognized that the concurrent application of AD [antidumping] and CVD [countervailing duty] duties on subsidized Chinese goods to level the playing field for U.S. companies and workers is fully consistent with our WTO obligations.”

While there are no pending countervailing duty or antidumping cases involving apparel, the WTO’s affirmation of the authority of the U.S. to impose both dumping and countervailing duties on the same imported products could have some indirect implications for the industry.

In April, the U.S. International Trade Commission voted to clear the way for punitive tariffs to be imposed on plastic retail bags from Vietnam, Indonesia and Taiwan in a trade remedy case with implications for U.S. industries such as textiles.

In the case of Vietnam, the ITC ruled the imported retail bags had been both subsidized by the Vietnamese government and dumped in the U.S. The ITC found that Indonesia and Taiwan sold the bags below fair market value, but that those governments did not subsidize the bags.

The plastic retail bag case was the first in which the U.S. ruled that Vietnam subsidized a product in violation of U.S. trade remedy laws. Vietnam has traditionally been considered a nonmarket economy and therefore not subject to the same market forces and trade laws as countries with more open systems.

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