What Every Corporate Counsel Needs To Know About Trade Remedies

Monday, May 1, 2006 - 01:00

Editor: Why do corporate counsel need to know about international trade remedy laws?

Brightbill: Corporate counsel need to have an understanding of the trade remedy laws because they are one of the few tools available in situations where they may face unfair trade competition from dumped imports, subsidized imports or surges of imports. Companies may wish to file these cases, or they may be named as a respondent in a trade case in another country. In either event, they will need to understand these laws and know how to act or react quickly.

Companies need to know about these laws in order to do strategic planning. By understanding how the laws work, they will be better able to make decisions about where to source products from or whether they want to support a trade remedy case.

Wiley Rein & Fielding has represented both sides in these disputes, but we primarily represent U.S. companies and U.S. industries filing these cases in the United States. Our practice focus is in assisting U.S. companies that may be facing these forms of potentially unfair trade practices. We may offer advice to U.S. companies that are named as respondents in other countries, but they often retain counsel in the country where the suit is taking place.

The ABA book tries to explain these laws objectively, and from a a balanced perspective. There are more than 15 authors and contributors, including U.S. government attorneys as well as attorneys who work primarily with responding companies and foreign governments.

Editor: What are some of the most important remedies companies can invoke in combating unfair trade practices?

Brightbill: One main remedy is antidumping law, which involves showing that imports are sold here in the United States at a lower price than the companies are selling them in their home markets, or for less than their cost of production. The Commerce Department conducts this portion of the investigation, and calculates the "dumping margins." The complainant domestic industry also needs to show that it is materially injured, or threatened with material injury, as a result of those imports. The U.S. International Trade Commission makes the injury determination. A domestic industry has to show both dumping (at Commerce) and injury (at the Commission) in order to prevail.

In a countervailing duty or subsidy case, the injured domestic industry needs to show that a foreign government is providing subsidies to its producers - a financial contribution that provides a benefit. In addition, the subsidies must be specific to a few industries or companies. If you can show these factors as well as material injury (or threat) to the U.S. industry, then a countervailing duty order will result. In both antidumping and subsidy cases, the remedy is an order from the Commerce Department, and the assessment of additional tariffs by U.S. Customs and Border Protection to offset the unfair dumping or subsidy.

The book also covers safeguards cases, in which a surge of imports has caused serious injury to a domestic industry. The imports need not be dumped or subsidized. There are a variety of safeguards provisions that may be useful to U.S. companies, including global and China-specific safeguards laws.

Editor: What are some of the most common mistakes made by participants in trade remedy proceedings?

Brightbill: One mistake is for large global companies to assume that these laws will not help them. In many cases, they may well be useful. Other mistakes include companies failing to participate in these proceedings, or not participating fully. Active participation involves collection of a great deal of data and a substantial investment of a company's time and resources. However, respondent companies that fail to participate may be subject to higher duties at the end of the proceedings. As a result, corporate counsel must carefully weigh the costs and benefits of participating in these cases.

For companies filing cases, there are a number of important strategic decisions that must be made right at the outset: the types of products that will be included in (and excluded from) the case, the number of countries to file against, the definition of the domestic industry, and how to address the concerns of customers and importers. All of these must be carefully considered well in advance.

Editor: What rights of appeal do companies and governments have?

Brightbill: The book discusses a variety of appellate options. The losing party in a U.S. trade remedy proceeding can appeal to the U.S. Court of International Trade, and then to the Court of Appeals for the Federal Circuit. Parties in NAFTA countries can use the Chapter 19 panel process in lieu of a court appeal. And governments (but not private parties) can appeal to the World Trade Organization, claiming that the decision or the underlying law or regulation violates a WTO agreement. WTO appeals are initially considered by dispute settlement panels, with a further potential appeal to the Appellate Body.

Editor: Is it worthwhile to challenge agency decisions? Aside from appeals, what other avenues are available?

Brightbill: There are many ways to challenge an order resulting from an antidumping or countervailing duty investigation. In addition to appeals, all anti-dumping ("AD") and countervailing duty ("CVD") orders can be reviewed annually by any party requesting a review. These administrative reviews, conducted by the Commerce Department, can significantly increase or decrease the margins on an AD or CVD order. Another WTO requirement is that these orders be reviewed once every five years, in a "Sunset Review," which is another opportunity for foreign producers and governments to eliminate the order. Sunset reviews take place at both the Commerce Department and the ITC.

Editor: How are WTO judgments enforced?

Brightbill: Under U.S. law, WTO judgments are not self-executing. The United States has to decide after an adverse decision whether to implement the WTO decision, either through a change in its law or regulations or agency practice. If a country chooses not to bring its laws into conformity with the WTO decision, then the prevailing party can seek to retaliate by suspending trade concessions it has granted. The retaliation may take place in the same trade sector, but it may also target industries that are unrelated to the underlying WTO case. In the vast majority of cases, countries have chosen to comply with WTO rulings, although there have been high-profile cases where compliance has taken a long time.

Editor: Would you describe the new book, "Trade Remedies For Global Companies" published this month by the ABA?

Brightbill: The book was a collaborative effort by the ABA Section on International Law. Its purpose is to provide in one volume a common sense explanation of trade remedy laws that will be useful to corporate counsel, serving as a guide for non-experts as to how these laws work. I am one of three editors of the book along with Peggy Clarke of Powell Goldstein LLP in Washington and Linda Chang, who was an attorney with the Commerce Department for 13 years and is now a trade consultant in China. We obtained chapter submissions by trade law experts covering most of the key decision points of trade remedy proceedings. We also discuss foreign trade remedy laws and how they may differ from U.S. law, as well as the kinds of things that companies should keep in mind as they are deciding to use these laws.

The chapter that I wrote is on petitions - how these investigations are started. I discuss the key information that must be included in a petition, the strategic decisions that companies need to make upfront, and tips for assembling an effective petition.

The book can be ordered through the ABA website: www.ababooks.org, under the "New Releases" tab.

Please email the interviewee at tbrightbill@wrf.com with questions about this interview.