A thorough analysis of the number and scope of antidumping and countervailing duty investigations initiated and completed by the Department of Commerce and the U.S. International Trade Commission over this past year shows that Washington has significantly stepped up its trade remedy activities against mainland Chinese products and that it has been targeting a relatively broad range of products. Trade remedy activity was relatively subdued during the first half of 2009 but accelerated considerably in July and especially during the month of September. This increase in activity, which also included the first-ever safeguard action against a mainland Chinese product (certain new pneumatic off-the-road tyres) under Section 421 of the Trade Act of 1974, appears to be closely linked to the severe recession that battered the U.S. and global economies during 2008 and 2009. U.S. manufacturing production and employment have been hard-hit during this period, compelling producers in a range of sectors to pursue trade remedy actions against imported merchandise, particularly mainland Chinese goods.

While trade remedy activity may drop off in 2010 as the U.S. economy gets back on track, the fragile condition of several key industrial sectors in the United States in combination with the relatively swift recovery of the Chinese economy and the emergence of CV duty actions and Section 421 safeguards as key weapons against mainland Chinese products means that the likelihood of additional trade remedy actions remains high.

The U.S. had 80 AD duty orders in place against mainland Chinese products as of 30 June 2009 (82 orders were in place as of 30 September 2009), compared to 61 orders as of 30 June 2008, 62 orders as of 30 June 2007 and 60 orders as of 30 June 2006. In addition, even though the U.S. imposed its first-ever CV duty order on a mainland Chinese product as recently as 22 July 2008, China has become the U.S. supplier with the highest number of CV duty orders in place against its products with 10 orders as of 30 June 2009 (12 orders were in place as of 30 September 2009), followed by India with seven and South Korea with four. The sharp increase in the number of AD and CV orders during a relatively short period of time is unparalleled and has affected a broad range of mainland Chinese products. Perhaps even more troubling, there has been a slew of AD/CV petitions in recent weeks, which means that there could easily be as many as 94 AD duty orders and 22 CV duty orders in place on mainland Chinese products as of October 2010, an all-time high.

The U.S. has also targeted products from other suppliers but at a much more measured pace. To wit, Japan was the U.S. supplier with the second largest number of AD duty orders on its products with 20 as of 30 June 2009, down from 21 as of 30 June 2008, followed by Taiwan with 16 (up from 15), India with 15 (up from 14), South Korea with 14 (up from 13) and Brazil with 11 (up from 10). Tellingly, the U.S. has more AD duty orders in place on mainland Chinese products than on those of Japan, Taiwan, India, South Korea and Brazil combined.

The U.S. initiated four new AD and CV investigations on mainland Chinese merchandise during the first half of this year, involving oil country tubular goods, pre-stressed concrete steel wire strand, certain steel grating and wire decking. By comparison, the U.S. launched eight investigations during the same period in 2008, involving uncovered innerspring units, small diameter graphite electrodes, circular welded austenitic stainless steel pressure pipe, steel threaded rod, 1-Hydroxyethylidene-1, 1-Diphosphonic acid, frontseating service valves, certain circular welded carbon quality steel line pipe, and citric acid and certain citrate salts. The U.S. initiated four AD investigations during January-June 2007, on sodium hexametaphosphate, certain steel nails, circular welded carbon-quality steel pipe and certain new pneumatic off-the-road tires.

While data on new AD investigations initiated by the DOC/USITC shows that the popularity of these trade remedy actions declined to some extent during the first half of this year, the recent surge in new investigations ensures that we will end the year with a higher number of new AD and CV initiations than in calendar year 2008. AD/CV activity has been unusually frenetic during July-September 2009, with two AD investigations initiated on woven electric blankets and seamless refined copper pipe and tube and six AD and CV investigations launched on narrow woven ribbons with woven selvedge, magnesia carbon bricks, seamless SLP pipe, standard steel fasteners, sodium and potassium phosphate salts, and certain coated paper suitable for high-quality print graphics using sheet-fed presses.

In all, the U.S. launched 12 new AD investigations and 10 new CV proceedings on mainland Chinese products during the period 1 January through 16 October 2009, compared to 10 AD investigations and five CV investigations during the whole of 2008.

AD duty actions are especially problematic for mainland Chinese exporters because the application of the non-market economy methodology by U.S. authorities can yield large dumping margins, effectively closing the U.S. market to Chinese exports. In addition, AD duty orders are normally renewed beyond their initial five-year expiration period and typically remain in place for many years, if not decades. To illustrate, nine of the 82 AD duty orders in place on mainland Chinese products as of 30 September 2009 were originally established back in the 1980s, 20 were established in the 1990s and the remaining 53 were established this decade.

Sunset reviews, which are performed every five years, are supposed to result in the elimination of a significant number of AD duty orders from year to year. However, this has not been the case in recent history. The U.S. completed 35 sunset reviews during the period 1 January 2006 through 30 September 2009, which represents about half of the AD duty orders currently in place. Those reviews resulted in the continuation of nearly 89 percent of the orders in place (31 orders) and the elimination of only four. One of those four orders – on certain colour television receivers – was rescinded during the first half of this year, two - on brake rotors and lawn and garden steel fence posts - were rescinded during the first half of 2008, and the other - on persulfates - was eliminated during the first half of 2007.

Not all is bad news for mainland Chinese exporters, however. As previously reported, the U.S. Court of International Trade ruled on 18 September that if the DOC wants to continue imposing both AD and CV duties on goods from non-market economy countries it must develop additional policies and procedures for doing so. The court upheld the DOC’s right to impose both types of duties simultaneously but said its current approach to doing so is unreasonable. Depending on how it is implemented by the DOC, this decision could potentially reduce the appeal of CV duty actions for U.S. importers.