CAFC Again Upholds Validity of CV Duties Imposed on China in 2007-2012
The U.S. Court of Appeals for the Federal Circuit on March 13 again upheld the validity of a law allowing countervailing duties on non-market economy countries like China and Vietnam (here). Although the 2012 law had effectively imposed CV duties retroactively on imports from 2007 through 2012, Congress did not violate the Due Process clause of the constitution because it acted with the rational purpose of protecting U.S. manufacturers from unfair trade practices, said the court.
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The law had followed a December 2011 decision from CAFC that found countervailing duties could not be applied to non-market economies under the law in effect at the time. The ruling, which stemmed from a challenge brought by GPX International and other Chinese exporters against CV duties on off-road tires, threatened to invalidate 24 CV duty orders in effect at the time (see 11122210).
Congress acted quickly, passing a law in March 2012 that, in addition to authorizing CV duties on non-market economies going forward, also kept in place the 24 CV duty orders that had been issued since 2007 (see 12031403). CAFC promptly sent the case down to the Court of International Trade for a decision on whether the new law was constitutional (see 12051106. The lower court ruled in January 2013 that the new law was valid and CV duties imposed between 2007 and 2012 could remain in effect (see 13010830).
In the meantime, while CIT’s ruling in the GPX case was on appeal, CAFC ruled in a similar case involving CV duties on kitchen appliance shelving and racks from China that the retroactive application of the law does not violate the Ex Post Facto clause of the Constitution (see 14031919). In its March 13 ruling on GPX, CAFC found that holding applies to all countervailing duty cases, not just to the limited facts of the kitchen appliance shelving and racks case.
The appeals court also held that the retroactivity of the 2012 law does not violate the due process clause of the Constitution. “Companies, such as GPX, that operate in the highly regulated field of international trade can expect some retroactive liability, even if the remedial legislation were “severely retroactive” (which the new law is not),” said CAFC. “Under these circumstances, we cannot say that the new law does not rationally relate to the government’s interest in retroactively remedying the damage from unfair foreign trade practices.” Given the court’s earlier ruling and Congress’ rational purpose, “the new law violates neither the Ex Post Facto Clause nor the Due Process Clause,” said CAFC.
Circuit Judge Kathleen O’Malley once again issued a concurring opinion that the law should be upheld, but disagreeing with the idea that the new law was retroactive.
(GPX International Tire Corp. v. U.S., CAFC No. 14-1188, dated 03/16/15, Judges Dyk, O’Malley and Taranto)