US Commerce Department seeks enhanced trade regulations

The United States Department of Commerce has proposed a sweeping set of new rules to clarify and streamline the administration and enforcement of anti-dumping and countervailing duty laws.

The proposed changes will enhance its efficiency and “create new enforcement tools… to address circumvention and evasion of trade remedies,” the agency claimed in its 33-page public notice of the new rules, published on the Federal Register last month. The comment period for that document ends on September 14.

The proposed rules aim to make changes in how Commerce conducts the scope of its proceedings and how it deals with circumvention of its anti-dumping and countervailing duty orders. The proposal also revises rules covering how Commerce will conduct reviews of potential new shippers that might be subject to duties, in addition to providing procedural changes for filing requirements and the timing of filing deadlines.

“Successful trade cases are far too often undercut by a variety of schemes to skirt the law and avoid duty payment. These regulations will give Commerce new tools and confirm its authority to crack down on circumvention schemes and hold duty evaders responsible,” according to Timothy Brightbill, partner in the international trade practice at Wiley Rein and chair of the Committee to Support US Trade Laws, an organization of companies, trade associations, labor unions and workers.

“It’s particularly notable that Commerce is clarifying its ability to self-initiate a circumvention inquiry, and to apply a circumvention ruling to a whole country if necessary,” Brightbill said. In the past, Commerce’s approach on circumvention has been on a company-by-company basis, so this change – which is consistent with recent practice – is very welcomed by domestic industries, he added.

Products including grain-oriented electrical steel (GOES), reinforcing bar, coated steel and oil country tubular goods (OCTG), among others, have faced circumvention probes in recent years. As Fastmarkets has previously reported, affirmative circumvention findings can result in higher domestic prices.

Notably, Mexico last month agreed to establish an export permit program to prevent non-domestically produced steel goods from being passed as domestic Mexican products into the United States. And in July the US House of Representatives passed an amendment to set minimum funding levels for trade enforcement activities at the International Trade Administration’s Office of Enforcement and Compliance.

Commerce also proposed changes to bring more clarity to its scope inquiries, which seek to determine whether a given product is covered by anti-dumping rulings.

If it is determined that a particular product is found with the scope of a ruling, duties can be imposed retroactively, Brightbill explained.

“The ability to make scope rulings retroactive will also deter evasion and help in enforcement efforts,” he added.

Industry reaction
Other trade law experts have expressed support for the proposed changes.

“It will probably make it a little bit easier to argue for certain, more protectionist use of the trade laws,” Nithya Nagarajan, partner at Husch Blackwell, said.

Tamara Browne, who heads the government affairs practice at Schagrin Associates, said that these changes are being made to a vital part of trade law.

“The laws that Commerce administers on the Title VII side [of the Tariff Act of 1930] are the only tools of recourse any party can use to fight back against unfair trade – either a dumping or subsidy claim,” Browne noted.

“Even though anti-dumping and countervailing duty laws have been used successfully over the years, unfair trade practices have continued. They have not abated,” Browne said. “This has been a record year for filings. It’s been a very busy year.”

But not everyone cheered the proposals.

As of Wednesday September 2, attorneys from three law firms – Mowry & Grimson, deKieffer & Horgan and Husch Blackwell – had filed comment letters with Commerce requesting that the deadline for comments be extended until mid-October.

Noting that the proposal presents “the most significant group of proposed regulatory changes [since 1996],” the Mowry & Grimson attorneys objected to the fact that the proposal “was released without warning, in the middle of August, and in the midst of a pandemic.”

Others argued that while the new rules might make circumvention findings easier, they still might fail to stop the flow of products into the US from exporters such as China.

“The proposed regulations take a situation that is already pretty bad and makes it worse,”  Lewis Leibowitz, an international trade law attorney, told Fastmarkets.

Leibowitz also contended that the new rules could prompt some American manufacturers that rely on imports to eventually move all of their operations outside the US, effectively defeating the purpose of the rules – that is, protecting domestic US steel production.

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