United States Court of Appeals for the Federal Circuit

Federal Circuit Affirms Decision on Upholding Application of Countervailing Duties on Non-Market Economies 

 In GPX International Tire Corporation et al.  v. United States, Case Nos. 2014-1188, 2014-1248 (March 13, 2015), GPX International Tire Corp. and Hebei Starbright  Tire Co., Ltd. (collectively, “GPX”) appealed a Court of International Trade (“Trade Court”) decision  upholding the Department of Commerce’s (“Commerce”) imposition of both antidumping and countervailing duties. Commerce acted pursuant to a 2012 law that overruled this court’s decision in GPX International Tire Corp. v. United States, 666 F.3d 732 (Fed. Cir. 2011) (“GPX I”), reh’g granted, 678 F.3d 1308 (Fed. Cir. 2012) (“GPX II”), and permitted Commerce to impose countervailing duties with respect to non-market economy (“NME”) countries retroactively to proceedings initiated on or after November 20, 2006.

Under the Tariff Act of 1930, as amended, Commerce may impose two types of duties on imports that injure domestic industries: (1) antidumping duties on goods “sold in the United States at less than . . . fair value,” 19 U.S.C. § 1673; and (2) countervailing duties on goods that receive a “countervailable subsidy” from a foreign government, id. § 1671(a). For goods imported from market economy countries, Commerce may impose both antidumping and countervailing duties. Until recently, Commerce maintained that it could not impose countervailing duties on imports from NME countries—focusing on Soviet bloc countries—because of the difficulty in calculating countervailing subsidies in those countries. See GPX I, 666 F.3d at 735. Beginning on November 20, 2006, however, Commerce indicated that it was considering taking a new position by applying countervailing duties to imports from China, a NME country. On July 15, 2008, Commerce issued its final countervailing duty determination in this case, Certain New Pneumatic Off-the-Road Tires from the People’s Republic of China: Final Affirmative Countervailing Duty Determination and Final Negative Determination of Critical Circumstances, 73 Fed. Reg. 40,480 (Dep’t of Commerce July 15, 2008), after which GPX filed a lawsuit to challenge the Countervailing Duty.  This court affirmed the Trade Court’s holding that countervailing duties could not be applied to imports from NME countries, concluding that Congress had ratified Commerce’s prior position. Congress subsequently overruled the Federal Circuit’s decision by enacting a law in 2012 which allowed for countervailing duties on NME countries. See  Pub. L. No. 112-99, 126 Stat. 265 (2012), amending 19 U.S.C.S. §§ 1671 and 1677f-1.

The Federal Circuit examined the 2012 law in Guangdong Wireking Housewares & Hardware Co. v. United States, 745 F.3d 1194 (Fed. Cir. 2014) (“Wireking”) and determined that it was more remedial than punitive regardless of whether the law applied retroactively, and as such was not subject to the Ex Post Facto Clause. See Wireking, 745 F.3d at 1202–03 (citing Smith, 538 U.S. at 92). The new law authorized the imposition of countervailing duties on NME countries both prospectively and retrospectively, applying to “all proceedings initiated . . . on or after November 20, 2006.” 126 Stat. at 265 § 1(a); see also Wireking, 745 F.3d at 1197 & n.1.  Moreover, retroactive application, according to the Federal Circuit, satisfies due process when there is a rational legislative purpose for such an application.  Here, because the law is not new; because it resolved the uncertainty as to whether CVDs applied to NME countries; because it is applied retroactively for a period shorter than other retroactive statutes not deemed to violated due process; because it is directed toward remedial administration of dumping duties; and where notice was provided to plaintiff-appellant that the countervailing duties would apply prior to the imports in this case —  the Federal Circuit found that the new law neither violated the Ex Post Facto Clause of Article I, Section 9 of the U.S. Constitution or the Due Process Clause of the Fifth Amendment to the U.S. Constitution.  The Federal Circuit affirmed the Trade Court’s decision. 

Note: The information contained in this memorandum is for general information only, and is not intended as advice or counsel regarding any specific situation. If you have an issue relating to the subject matter discussed in this memorandum, you should consult with counsel or your customs advisers concerning the proper course of action to be followed in your case.

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