On March 13, 2015, the Court of Appeals for the Federal Circuit (CAFC) issued a decision upholding the constitutionality of a 2012 law which allows the imposition of countervailing duties on non-market economy (NME) countries.  The controversial law was enacted on March 13, 2012, less than three months after the CAFC issued a decision disallowing the Department of Commerce (Commerce) policy of imposing countervailing duties on NME countries.  The law “authorizes the imposition of countervailing duties on NME countries both prospectively and retrospectively, applying to “all proceedings initiated…on or after November 20, 2006,” which is the day Commerce indicated it would begin imposing countervailing duties on NME countries.

Specifically, the CAFC held the law does not violate 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 primary contention of the appellant, GPX International Tire Corporation (GPX), was that the retroactive provision of the law is unconstitutional.  However, the CAFC found the law was remedial, rather than punitive, and therefore does not violate the Ex Post Facto Clause.  Furthermore, the Court employed a five factor test to determine that Congress had a rational basis for the retroactive application of the law and thus the law’s retroactive application does not violate the Due Process Clause.

The dispute originates from the 2006 Commerce decision to begin applying countervailing duties to imports from China, a NME country.  Historically, Commerce had not imposed countervailing duties on imports from NME countries because of the difficulty in calculating countervailing subsidies in those countries.  This longstanding policy was upheld by the CAFC in Georgetown Steel Corp. v. United States, 801 F.2d 1308, 1314–18 (Fed. Cir. 1986), as not being contrary to the statute.  Then, as noted, Commerce changed this policy and began applying countervailing subsidies to imports from NME countries and GPX filed a lawsuit, challenging these duties.  This suit lead to the overruling of the policy and subsequent passage of the law noted above.

As a result of the CAFC decision upholding the law, Commerce will be able to continue assessing countervailing duties on imports from NME countries.  Of substantial importance is that China is classified as a NME country and imports from China account for a large percentage of antidumping and countervailing duty investigations and orders.

The case is labeled GPX International Tire Corp. v. United States, (Case No. 2014-1188, 2014-1248, Fed. Cir. March 13, 2015).

If you have questions about countervailing duties or antidumping duties, please contact Frohsin & Barger at (205)-933-4006 ext. 5.