China-U.S. Trade Law

Feldman, Burke Examine GPX Case and NME Subsidies

Jing Zhu — Tue, 21 May 2013 15:46:42 -0600

The China-U.S. Trade Law Blog has not posted a new article in a while, but mostly because Elliot Feldman and John Burke have been working on a major article - Testing The Limits Of Trade Law Rationality: The GPX Case and Subsidies in Non-Market Economies for the American University Law Review. It will be published this week and we are pleased to provide a link here.

Introduction

Chinese merchandise has been the subject of most international trade disputes, all over the world, for several years. All of China’s principal trading partners, including the United States, Japan, and the European Union, treat China as a non-market economy (NME), applying special methodologies for determining whether Chinese enterprises are exporting merchandise at less than fair value. However, until 2006 the recognition of China as an NME meant that unfair trade allegations were based on pricing theories for antidumping, never government programs or actions unfairly subsidizing exported merchandise. The general rule was that government subsidies are countervailable only when they distort markets, and NMEs have no markets to distort.

The United States began launching simultaneous antidumping (AD) and countervailing duty (CVD) investigations of Chinese merchandise after the November 2006 congressional elections. This change in practice inevitably triggered legal disputes that collectivized under the banner of GPX, an American importer of off the- road tires (OTR Tires) from China. The U.S. Court of International Trade (CIT) and the U.S. Court of Appeals for the Federal Circuit (CAFC) were asked to decide whether CVD investigations into merchandise from NMEs were in accordance with law and, if they were, whether they could be conducted simultaneously with antidumping investigations. The United States Congress, unhappy with the decisions of the appellate court, swiftly rewrote the law. The constitutionality of the revised statute then was challenged in the same courts.

多年来，中国产品在世界各国都是贸易救济调查的首选目标。中国的主要贸易伙伴——美国、日本、欧盟都将中国视为非市场经济，用特殊计算方法计算中国产品面临的反倾销税率。然而在2006年之前，非市场经济计算方法只适用于反倾销案件，对反补贴案件并不适用。当时的准则为：只有当政府补贴扰乱市场时才适用反补贴措施，而非市场经济体中不存在市场。

从2006年11月国会中期选举开始，美国开始针对中国产品同时展开反倾销、反补贴（“双反”）调查。这一转变引发了GPX为代表的一系列案件，GPX是从中国进口轮胎的美国进口商。美国国际贸易法庭以及美国联邦巡回区上诉庭双双面临需判定对非市场经济体出口展开反补贴调查是否合法的难题。同时，如果可对非市场经济体展开反补贴调查，可否同时展开反倾销调查？美国国会对上诉庭判决不满，立即迅速修改法律。随即，两个法庭又需回答修改后的贸易法是否符合美国宪法这一新难题。

英文全文请点击这里。

Hong Kong Seeks to Strengthen Trade, Investment Ties with U.S.

Jing Zhu — Thu, 02 May 2013 14:50:10 -0600

The largest-ever Hong Kong promotion in the United States will be held this summer to showcase Hong Kong's advantages for American companies looking to tap new business opportunities in Asia, particularly on the Chinese mainland.

"Think Asia, Think Hong Kong," will feature two major symposia in New York and Los Angeles on June 11 and 14 respectively. Speakers include The Honourable C Y Leung, Chief Executive of the Hong Kong Special Administrative Region and over 60 prominent senior executives from global companies will participate. The event is organized by the Hong Kong Trade Development Council, (HKTDC) with support from 14 Hong Kong partners and nearly 100 U.S. supporting organizations.

USA-Hong Kong Ties

"As the global economic balance continues to shift to Asia, Hong Kong is the ideal business platform from which to access the myriad regional business opportunities now available in the growing ASEAN area and Chinese mainland," said HKTDC Chairman Jack So. "Our low taxes, free economy, rule of law, English-speaking environment and world-class business services make us the preferred partner for any overseas businesses wishing to tap these growing possibilities."

There are approximately 1,400 U.S. firms in Hong Kong, concentrated in trading, banking and finance, and transport. As of October 2012, there were 333 regional headquarters and 536 regional offices of US companies in Hong Kong, ranking first among other regions.

U.S. exports to Hong Kong in 2012 grew by 41 percent from 2010 to over $37 billion. Over the past decade (2003-2012), U.S. exports to Hong Kong have surged by 177%. In response to the U.S.'s National Export Initiative, HKTDC launched the Pacific Bridge Initiative (PBI) to further encourage American companies to use the Hong Kong platform. Since its implementation, the number of "new-to-market export successes" increased by 124 percent year-over-year in 2011, while the dollar value of export successes was up by 161.4 percent.

Symposia Will Highlight Advice and Opportunities for Entering Asian Markets

The sessions will feature information on why U.S. companies should consider using Hong Kong's business advantages. These sessions also will consider how mainland enterprises have been expanding their international presence through Hong Kong, and what they are looking for when seeking global partners. In addition, there will be approximately 10 industry sessions to provide practical tips on selling consumer brands to China and throughout Asia, explore technology partnership opportunities, discuss finance-related topics, and learn about the latest trends of Chinese outbound investment and collaborations on film and digital entertainment.

Extended Networking Opportunities

More than 100 Hong Kong government officials and business leaders from a wide spectrum of sectors including lifestyle products, fashion, food and wine, technology, finance, accounting, legal, logistics and marketing will take part in the June program, and participate in business matching with U.S. companies onsite. The TATHK campaign is expected to attract more than 2,000 American corporate leaders, government representatives, heads of SME's and opinion leaders with a special interest in Asia.

Feldman Says Trade Law Impedes Renewable Energy Development

Jing Zhu — Thu, 28 Feb 2013 12:18:09 -0600

Elliot Feldman delivered the Distinguished Alumni Lecture at the University of Chicago’s Center in Paris on February 5, 2013. He explained how international trade law is impeding the development of renewable energy such as solar, wind, and electric cars, focusing on relations between China and the United States.

费德门博士于2013年2月5日在巴黎举办的芝加哥大学杰出校友论坛上发表演讲，详细分析国际贸易法如何影响中美关系以及可再生能源发展，例如太阳能、风能以及电动汽车等。

Feldman Lecture on U.S. Elections and China-U.S. Relations

Jing Zhu — Mon, 14 Jan 2013 09:21:24 -0600

After the November elections, Elliot Feldman lectured on their implications for China-U.S. relations at the University of Chicago Center in Beijing. The link to the lecture is here. It features video of the remarks by candidates Obama and Romney on China during the presidential debates.

总统大选结束后，费德门博士在芝加哥大学北京中心发表演讲，分析大选如何影响中美关系发展。他的讲座深入浅出、赢得听众阵阵掌声，他为讲座精心准备的短片也异常精彩。

So What's The Big Idea?

Dr. Elliot J. Feldman — Mon, 10 Dec 2012 14:08:53 -0600

中文翻译请点击这里

The discovery and development of economically efficient means to extract shale oil and gas, “fracking,” is undermining efforts to reduce the use of hydrocarbons because alternative energy production, especially through solar cells and wind turbines, is more expensive than natural gas for producing electricity, particularly in North America. Many governments, demonstrating a priority for clean energy production, have been subsidizing solar and wind power to produce electricity (and batteries to power automobiles), but their own international trade laws confound their efforts: they cannot export the subsidized clean technology without encountering countervailing duty complaints.

This problem is particularly acute among China, the United States, and the European Union. The United States and the European Union’s trade laws are blocking the export of Chinese-made solar cells and wind towers; China’s trade laws have been gearing up to block American battery-powered cars and have applied “Buy China” rules excluding foreign imports, especially of higher technology solar cells and wind turbines. We previously described some of these issues on this blog in our article The Sun Does Not Shine on Trade Policy: Hypocrisy in Technological Green. There is a critical and accelerating need to reconcile unavoidable subsidies for alternative energy (enabling it to catch up to a century or more of subsidies for “conventional” energy) with fair trade, and to dismantle other protectionism.

Our “big idea” is a proposal to move forward alternative energy through a Chinese initiative. The reasoning, in summary, is:

1. Climate change is a critical issue;
2. Climate change is caused, at least in significant part, by human dependence on and burning of hydrocarbons;
3. Dependence on hydrocarbons cannot be arrested without alternatives;
4. The United States and China are the world’s leading consumers of hydrocarbons;
5. The world often looks to the United States for global leadership, but on this subject the President of the United States is stymied by domestic politics, competing priorities, and a growing perception that the matter is not urgent because of a bonanza in shale oil and gas that will make the United States the world’s leading producer of oil and gas by 2017;
6. China’s new leaders, at the National Party Congress, already have claimed a clean environment to be a top priority; they also called for raising living standards for all Chinese, maintaining economic growth, encouraging innovation and expanding imports, all objectives that would be served by this proposal;
7. The development and deployment of green technologies, such as solar and wind, can enable reductions in dependence and use of hydrocarbons;
8. Trade laws impede the development and deployment of green technologies by challenging subsidies when products are exported;
9. China is in an ideal position to assume leadership: it is the exporting power most impacted negatively by the application of the trade laws; it has the greatest potential for deploying green technologies; most dependent on coal, it has the greatest need to find and deploy alternatives to hydrocarbons; it has the clearest commitment of its political leaders;
10. There are two specific ways in which China can assert leadership now:
a. Commit to a specific number of gigawatts to be produced in China by solar and wind by 2020 that that would equal 50 percent of projected Chinese electricity consumption;
b. Use this commitment as a challenge to other countries to convene a global conference on climate change in Beijing in May 2014.
11. Challenge and commitment are good for China: China would export less and consume more at home of rapidly developing and improving solar and wind technology, thereby saving jobs that might have been lost in trade wars impeding Chinese exports, while cleaning up China’s air and environment;
12. Challenge and commitment are good for the United States: President Obama has championed efforts to arrest climate change; he would be helped by an irresistible challenge from China defined as a commitment to reduce Chinese exports, increase domestic consumption, and clean up the environment, all in one bold policy;
13. The global conference should lead to an international agreement that subsidies for the development of green technologies would be excluded from trade remedy actions so that the public policies developing these technologies would not be victims of traditional international trade disciplines. The Marrakesh Round established precedent for such an agreement, making subsidies for the adaptation of existing facilities to meet new environmental standards non-actionable subsidies under Article 8.2 of the WTO’s Subsidies and Countervailing Measures Agreement.

Explaining The Big Idea

Climate Change, International Trade, And Policy Priorities

The United States

The 2012 American elections concluded in the midst of “Superstorm Sandy,” a hurricane that collided with a second storm to yield one of the lowest readings of barometric pressure on record. Although climate change probably did not cause the storm, it arguably did contribute to its intensity and to its devastation. Politicians had avoided the subject of climate change throughout the autumn electoral campaign, but Sandy reminded them that the subject could not forever be avoided.

There is no apparent constituency to address climate change in the Republican Party, but President Barack Obama’s persistent commitment to science and research has energized some of his supporters who are persuaded that climate change may be the single most important issue of the day. Many Democrats want the President to take environmentally protective actions that will arrest the damaging effects of climate change.

President Obama was quick to say after his re-election, and after Sandy had passed, that climate change is not one of his immediate policy priorities. He has promised to address the economy and the “fiscal cliff,” and then to deliver immigration reform, especially to those groups who were instrumental in his electoral victory. He left Washington for Asia within two weeks of his re-election to reinforce his convictions about a “pivot” in American foreign policy, and could not avoid a new military crisis in the Middle East. Climate change appears to be slipping quickly off his agenda.

China

Within days of President Obama’s re-election, the Chinese Communist Party was naming new leadership for the first time in a decade. The new leaders, in turn, like Obama, focused primarily on domestic matters. However, they were also keen to assert China’s expanding role as an emerging world power, and they acknowledged that a clean environment is important to their goal of a better life for all Chinese.

The new Chinese leadership emphasized an openness to new ideas and called for more domestic consumption; more imports; and a commitment to raise living standards. All these goals would be served by a commitment to a radical expansion of alternative energy use and an assertion of global leadership on climate change.

Climate Change And Trade

Trade with China, by contrast with climate change, remains a priority for President Obama and was the subject of his final remarks as he departed Asia for the United States just before Thanksgiving. Yet, the President does not seem to have connected climate change with international trade, even as American trade actions against Chinese products may be impacting climate change profoundly.

President Obama has championed the development of alternative energy sources, specifically solar, wind, and electric cars. During a visit to China in 2009, he and President Hu Jintao entered mutual commitments to promote the development of all three. Yet, since then, all three have been the subjects of dispute and trade protectionism from both sides.

The United States and China urgently need to address together the contradictions in promoting green technologies while invoking trade restrictions. Customarily this blog offers observations and analyses of trade matters arising between China and the United States. This article, by contrast, proposes specific actions to resolve the contradictions.

The Trade Law Impedes Going Green

We have written before that the trade law impedes the development of green technologies. Presidents Obama and Hu agreed to develop wind and solar power and electric cars. Both poured subsidies into their respective industries. However, China had the temerity to out produce the United States and to export product. U.S. industries, very subsidized themselves, employed the trade law to halt Chinese exports, and China retaliated in kind.

The U.S. petition against Chinese solar cells has succeeded, although many believe that petitioners seriously erred in defining scope, resulting in a substantial loophole that will enable Chinese producers, well within the law, to circumvent the antidumping and countervailing duty orders. Chinese solar cells, therefore, may continue to enter the U.S. market in large volumes, despite the orders. Had petitioners been more careful and effective, the analytical results in the Department of Commerce and at the International Trade Commission likely would have achieved their objectives.

China is exporting around 90 percent of the solar cells it is producing. The wave of imports has created thousands of jobs in the United States because there are many more jobs to be had in installation and maintenance than in fabrication. Nonetheless, there are two obvious problems with this situation: China continues to build coal-fired plants to produce electricity instead of expanding substantially its use of solar energy; the United States falls behind in needed research and development in solar energy because its production is sharply curtailed and its R&D capabilities starved for capital by underpriced, unfairly competing Chinese cells.

China’s retaliation was on automobiles. China complained about subsidies to electric cars, even though no electric cars were being exported to China and they were not the subject merchandise. The findings against a class of American saloon cars, consequently, could not be interpreted reasonably as anything but retaliation for American actions against China’s subsidies for green technologies.

The U.S. petition against wind towers from China will be decided by the International Trade Commission in January. The U.S. wind power industry has survived, making it competitive with conventional energy, only because of a Production Tax Credit, yet the tower industry petitioned against Chinese subsidies. But for the Chinese towers, the development of wind power on the coasts and islands (east and west, Puerto Rico and Hawaii) would not have been possible, and if the U.S. tower industry were to prevail in their complaint, it would jeopardize the future of the U.S. wind turbine industry, which in terms of jobs and advanced manufacture is far more valuable to the American economy. One domestic industry injuring another and more valuable domestic industry, all for the purpose of excluding Chinese products.

American and other international producers are not without their reasonable complaints regarding Chinese protectionism in the development of wind power. China has applied “Buy China” rules effectively keeping out foreign wind power components, while pirating foreign technology. The United States has brought this matter to the WTO.

There is no ultimate solution within the trade law for these problems. The law enables self-defined industries to petition and, when they satisfy a checklist, to pursue measures that would exclude foreign products. The non-market economy methodology employed by the U.S. Department of Commerce against Chinese goods almost guarantees findings of dumping and subsidies. Chinese often imagine that the President could mitigate or moderate these actions, he is powerless to do so. Unlike in China and many other countries, there is no public interest provision in U.S. law. When the Department of Commerce finds dumping or subsidies and the International Trade Commission finds an American industry injured by reason of unfairly traded imports (any petitioning industry), the Department of Commerce must issue a tariff order and Customs and Border Protection must enforce and collect it. There is no role for the President.

Conventional energy has been subsidized in every imaginable way for more than a century. Oil, gas, and coal have benefited from everything including depletion allowances, direct subsidies, special tax provisions, and free land leases. New technologies such as solar and wind cannot compete with them and keep energy costs down for consumers without being subsidized themselves. Dependence only on domestic markets is financially hazardous, but exports are exposed instantly to subsidy complaints. Hence, without subsidies these industries will not develop and compete; without exporting they will not compete successfully; when subsidized and exporting, they will be subject to crippling trade remedy actions.

Solving The Problem

The development of green technologies means, as President Obama frequently has claimed, creating new and many jobs. The obverse also is true: shutting down production in these industries costs jobs.
These technologies will not develop without government subsidies because the century of subsidies conferred on their energy competitors leaves them too far behind to compete without help. Yet, the trade law then intervenes to threaten their very survival.

China does not want to reduce solar cell production because its products may now be excluded from the United States and probably, soon, the European Union. It would cost China many thousands of jobs. But China could continue to produce solar cells without worry if it were consuming more of them at home.

Many in China say the difficulty is in connecting solar to the country’s electricity grid. This technical excuse is not credible. China has taken immense pride in conquering virtually all technical obstacles – building roads, high speed rail, new airports -- yet claims it has to export solar energy components, reducing the pace of development at home, for a technical reason. China surely can solve this technical problem and reverse ratios: consuming 90 percent of solar cell production at home, and exporting 10 percent.

Were China to reverse the solar ratio and deploy solar modules throughout the country, it would produce many gigawatts more of electricity from clean, green sources. It would save jobs threatened by trade actions in the United States and Europe. It would cast a glow of leadership throughout the world.

A Proposal For Addressing Climate Change

China has new leaders. There has been much skepticism about what these leaders may do. They are mostly unknown. But they enunciated in the closing days of the National Party Congress commitments to prosperity, peace, a clean environment, and world leadership.

The convergence of climate change (accepted by most scientists as accelerating due, in major part, to the burning of hydrocarbons) and trade law (impeding and retarding the development of clean, green technologies) requires bold leadership. Although President Obama apparently would like to lead, he acknowledges that American politics prevents him from moving forward while other priorities capture his attention. China and the United States are the world’s leading polluters. Improvement in this area will come about only through their leadership.

The new Chinese leaders should call immediately for a global conference on climate change, to be convened in Beijing in May 2014. Eighteen months from the time they ascended to power ought to be sufficient to organize such a conference, and it would guarantee six months of remaining flexibility for President Obama before his mid-term elections.

There is no compelling reason why the world should rally to a conference called by China on climate change. China has shown no leadership to date, exploiting the development of green technologies for export, pirating foreign innovation, without demonstrating significant commitment at home. China, therefore, must base its call for a conference on a promise – that by 2020 half the electricity it generates for domestic consumption will be generated by wind and solar power.

This promise would yield for China many dividends: solar cell and wind tower production would continue apace through domestic consumption, thus preserving the manufacturing jobs jeopardized by international trade remedy actions; the world would recognize that alternative energy sources can significantly fuel an economy and society; China would reduce substantially its own pollution, thereby fulfilling the promise of new leaders to clean up the environment.

The combination of a call for the world to convene on climate change and the Chinese guarantee of a major conversion to clean technologies for energy ought to be irresistible to world leaders. President Obama should rally to it as a conscientious Chinese contribution to a better world, acting upon the agenda the President feels paralyzed from pursuit at home himself. India could not be idle if China and the United States agreed to meet, and the rest of the world could be expected to follow.

The Proposal’s Objective

The 2014 Global Conference on Climate Change in Beijing should have as its primary objective a treaty that would sideline application of the trade law as to the development and deployment of green technologies. China would have demonstrated a powerful preference for the domestic consumption of such technologies, but should not then be held back from exploiting its achievement through export, especially as the exported product should help arrest climate change. The United States would not face a threat of retaliation or trade action were it to begin exporting electric cars or wind turbines to China, each country thus experiencing the comparative advantage it derives from superiority in different technologies. Like the exclusion in the Marrakesh Round for adapting facilities to new environmental standards, the treaty would bar countries from impeding trade that helps clean up the environment and arrests climate change. The general public good would trump the narrow interests promoted by trade protectionism.

经济有效地开发提取页岩油和天然气----"水力压裂法"将破坏减少碳氢化合物排放的努力，因为使用替代能源的价格，尤其是通过太阳能电池和风力涡轮机的价格在北美等地区超过使用天然气发电的价格。许多将清洁能源生产列为优先事项的政府已补贴太阳能和风能发电（包括绿色汽车电池），但这些国家的国际贸易法律却阻挠这些努力：当他们出口补贴的绿色技术时将面临反补贴申诉。

这个问题在中国、美国和欧洲联盟之间尤为严重。美国和欧盟贸易法律阻止中国制造的太阳能电池及风塔出口至本国市场；中国也摩拳擦掌、试图利用贸易法规阻止美产绿色汽车出口至中国，并运用"购买中国产"规定限制国外产品、尤其是高技术太阳能电池和风力涡轮机出口至中国。我们曾在本博客刊登《太阳无法涉及的贸易政策：伪善的技术绿色》介绍这些问题。如何调和不可避免的替代能源补贴与公平贸易使其能够赶上已经发展了一个多世纪的"常规"能源补贴，并排除其他贸易保护主义已经成为关键性紧迫问题。

我们的建议是通过中国的倡议推动替代能源发展。推理可概括如下：
1、气候变化是一紧迫问题；
2、导致气候变化的主要原因是人类依赖并生产碳氢化合物；
3、减少依赖碳氢化合物排放的唯一途径是寻找替代能源；
4、中美两国的碳氢化合物消费水平领先于世界其他国家；
5、世界其他国家往往期待美国率先表态，但是受国内政治限制，美国总统将迟迟无法表态。
6、中国领导人在全国党代会上宣布将清洁环境列为工作重点，并同时提出提高人民生活质量、保持经济增长速度、鼓励创新、增加出口。这些目标都可通过这一政策实现。
7、发展绿色科技可减少对碳氢化合物的依赖。
8、贸易法阻碍绿色科技发展因为当出口绿色产品时将面临补贴指控。
9、中国处于施展领导权的有利位置：作为出口强国，中国受国际贸易法强烈冲击；中国具有进一步发展绿色科技的巨大潜能；中国目前严重依赖煤炭，急需寻找替代品；同时，中国领导人给予强有力支持。
10、中国可通过两种方式展示领导地位：一，承诺在2020年实现百分之五十的电力消费依靠太阳能以及风能发电；二，通过本国承诺激励他国在2014年五月在北京举行的气候变化国际会议上做处类似承诺。
11、挑战和承诺对中国有益：中国将消费更多太阳能以及风能技术产品、减少出口，这将有助于改善中国环境质量、避免在贸易战中减少就业。
12、挑战和承诺对美国有益：奥巴马总统提倡控制气候变化，而中国的承诺将帮助他实现承诺。
13、2014年气候变化国际会议应当促成将绿色科技排除在贸易制裁之外的国际协议，这将有助于绿色科技免受传统国际贸易法限制。例如，马拉喀什回合谈判将改进现有设备、使之符合环保标准的补贴列为《世界贸易组织反补贴和约》第8.2款中包含的合法补贴。

The U.S. Election and China-U.S. Relations

Jing Zhu — Sun, 25 Nov 2012 10:20:00 -0600

Dr. Elliot J. Feldman last week led discussions on the U.S. presidential election’s impact on China-U.S. relations at the University of Chicago Center in Beijing, the Beijing Arbitration Commission, and two other fora in Shanghai and Guangzhou. The video clips he prepared from the presidential debates exposed substantial anti-China rhetoric but also more nuanced policy positions. He forecast more bilateral trade disputes, but noted that President Obama’s re-election should contain any escalation in animus toward China that might have been featured in a Romney Administration.

Additionally, Dr. Feldman addressed business audiences about the legal and political hurdles Chinese investors may face when they invest in the United States, based on the treatise, Mergers and Acquisitions in the United States: A Practical Guide for Non-U.S. Buyers, that . BakerHostetler LLP has published with Aspen/Wolters Kluwer/CCH. Dr. Feldman is the editor and coauthor of the treatise, which has been published in both English and Chinese.

Try To See It My Way

Dr. Elliot J. Feldman — Fri, 02 Nov 2012 14:56:28 -0600

中文请点击这里

Presidential races in the United States are always characterized by the classic principle connecting domestic to foreign affairs: conjure a foreign foe against whom disparate domestic interests can coalesce. For a very long time, the Cold War provided the Soviet Union. Political campaign disagreement was never about how best to get along. Instead, it was always about which candidate would be tougher on the Soviet Union, which meant asking which one would amass more arms, spend more money on defense, deploy forces to more corners of the globe to combat the Communist threat driven from Moscow. Debates were not about whether to build more missiles, but whether there was a dangerous “missile gap” requiring immediate attention.

The end of the Cold War presented a strategic problem for Americans. Some even imagined it was the “end of history.” Yet, everyone can always find a foreign foe. Even Canada, under Pierre Trudeau, in the early 1980s, thought it could rally domestic unity (meaning committing Québec to Canadian unity) by complaining about the United States. The National Energy Program and the Foreign Investment Review Act were legislative initiatives making the United States Canada’s bogeyman.

During the 1980s, Americans tried out Japan as a potential substitute for the Soviet Union, specifically with regard to Japan’s apparent (and, as it turned out, somewhat illusory) economic rise. Soviet proxies, such as Cuba, remained available, but threatening as instigators, not themselves a danger to Americans. Bitter critics, such as Hugo Chavez, were not taken very seriously. Implacable enemies, such as the Iranian Ayatollahs, were more of a threat to Americans’ friends, such as Israel, than to the United States itself.

September 11, 2001 delivered a new kind of foe and threat, an enemy without a state. Al Qaeda filled a critical gap that President Bush felt impelled to invoke when declaring his war on terrorism as a war with Iraq. But then, the war in Iraq wound down and Osama Bin Laden was eliminated. The United States had gone from the Cold War with the Soviet Union to an economic war with Japan and military conflict with Al Qaeda, Iraq, and Afghanistan.

And then came China, the perfect potential foe against whom all political candidates could agree. The decision-making of the Middle Kingdom was inscrutable, and China obliged the American need for a foe by alternating between pleas for understanding as a developing country and bluster as a rising star and emerging global power.

It has not been enough to conjure China as an economic challenge. Americans have made much of growing Chinese military might, even though China remains decades behind American military capability. Unlike the Soviet Union, there is no talk of missile gaps, but like the Soviet Union, China champions a centrally-controlled economy and a suppression of individual freedoms and free speech. If not a threat to American military security, China is seen by many as somehow a long-term threat to the American way of life.

China bashing has become as commonplace in American presidential campaigns as pledges of fidelity to Israel and hosannahs for the capacities of the American armed forces. It is assumed, within American politics, that post-election the rhetoric and apparent hostility will fade, with the brickbats of campaign promises shaved into chopsticks for shared culinary celebrations.

These assumptions require Chinese to absorb the insults, recognizing them as little more than populist appeals for votes in a democratic society that may exaggerate respect for the ignorant and willfully ill-informed. Yet, now and again diplomacy ought to require a response to the Beatles’ refrain, pleading, “Try to see it my way,” and “We can work it out.” Were Americans to hear comparable criticism from China—if they routinely were called cheaters and pirates, refusing to play by the rules, stealing Chinese jobs, stacking the legal deck—they might not respond with the equanimity and good humor they seem to expect of the Chinese. There may come a point where, as the rhetoric translates into consequential acts, the electoral benefits of escalating attacks on China may be more far-reaching and damaging than the politicians begging for understanding may ever have foreseen.

Giving Substance To Chatter

Prior to the presidential debate of October 16, Republican candidate Mitt Romney thundered that, “on Day One” of his presidential term he would declare China a currency manipulator. His action would be insulting, and probably inaccurate (tying one’s currency to the U.S. dollar is hardly manipulative, especially as the ties do not bind and the RMB has floated cautiously upward, as much as eleven percent in the last twenty-four months). And the threat is oblivious to the Brazilian allegation that the United States is a currency manipulator, printing dollars to drive down their value and enhance American exports. Yet, Romney decided to add lightning to the percussion, and whereas the sound might be harmless, the electric bolt of trade sanctions based on the currency manipulation tag could do palpable harm to Chinese trade. During the debate, Romney not only repeated the promise, but added that he would use the new label to impose tariffs unilaterally on Chinese exports to the United States. His amended promise ignored the trade laws, but then the trade laws have not much informed presidential debates.

Just prior to the first presidential debate (October 3), on September 28, President Obama exercised powers granted pursuant to the Defense Production Act of 1950 to order a Chinese wind power industry out of Oregon. It seemed not to matter that he and President Hu Jintao had agreed in 2009 to cooperate in the promotion of wind power.It seemed not to matter that the Chinese enterprise apparently had reached accommodation directly with a neighboring naval facility and had express clearance from the Federal Aviation Administration (which had included Department of Defense review). Instead, the order was swift and abrupt, demanding that the Chinese abandon immediately, without compensation, this investment in the United States. Coinciding with final antidumping and countervailing duty determinations against Chinese solar cells, it seemed that multiple branches of the United States Government were acting in concert against Chinese economic interests.

President Obama persistently has boasted throughout the campaign that he saved 1000 jobs by exercising presidential powers against imports of low-cost tires, largely manufactured by American companies relocated in China. Because the consequence of his action was not to restore the production of these tires in the United States, the claim of saved jobs is doubtful (and no one seems to care where those jobs may be). But imagining them to be real, the Peterson Institute for International Economics has calculated them to have cost consumers, in higher prices caused by the presidentially-imposed tariffs, $1.1 billion, or more than $1 million per job.

There is no debate over any of these developments. Candidate Romney would hardly question an anti-China presidential action, any more than President Obama would denigrate directly the Romney promise on the currency – even though for four years Obama has resisted prudently calls to classify China the way Romney now promises he will, and the U.S. Department of the Treasury has postponed until after the election its statutorily required biannual pronouncement on China’s currency. Instead, there is a soft arms race of anti-China actions and promises. Obama claims to have been tougher on China than any of his predecessors, claims which, in the implementation of Section 421 of the Trade Act of 1974 (the safeguard against tires); the invocation of Section 721 of the Defense Production Act of 1950 (to order abandonment of the Oregon windfarms); and the number of complaints brought to the WTO, are undeniable. Romney, however, promises to be even tougher, particularly as he declares impatience with international organizations and would prefer to act unilaterally.

These economic confrontations are particularly important because both Chinese and Americans identify trade as the single greatest interest they have in common (a majority of the Chinese public, according to the Committee of 100’s recently published Opinion Survey of 2012, and a plurality of Americans). American protectionism threatens Chinese jobs, just as Americans believe unfair Chinese trade practices threaten American jobs. Asked, “What are the two most likely sources of conflict between the U.S. and China in the near future?” a plurality of all American respondent groups (general public, opinion leaders, business leaders, and policymakers) said “trade” first. For every Chinese group, the plurality’s first answer was Taiwan.

Tempering The Rhetoric

By the third and final presidential debate of 2012, on October 22, Romney was retreating from the stridency of his earlier statements. He still insisted upon declaring China a currency manipulator “on Day One,” but he no longer threatened to act further, and his surrogates told the press that the declaration would have little meaning or impact. Perhaps someone had advised him that the President does not have the power to impose trade sanctions unilaterally based upon a presidential declaration of currency manipulation. Or perhaps, as he began believing he might be President on January 20, 2013, he was reflecting on exactly what he was promising.

Romney’s retreat ran deeper. He talked of China as an economic partner, even as he again characterized China as a competitor and adversary.

Obama was not retreating. China continued to test him, not only in trade but in strategic issues. He dispatched his Secretary of State to the Asia Pacific region in September, in the midst of the campaign, reassuring putative allies even as he was not characterizing China as a foe. And he emphasized his WTO complaint over autoparts while reinforcing the actions of the Committee on Foreign Investment in the United States against the Ralls Corporation’s Oregon windfarm (a subsidiary of China’s Sany Corporation).

Both candidates continued, on and after October 22, to campaign against China almost as much as against each other, but with a new tone and direction. In the October 22 debate, Romney recast his pronouncements on foreign policy to become more an echo of the Obama Administration than a choice. He concurred generally with Obama on the Arab Spring, on Israel and Iran, on North Africa, Afghanistan and Pakistan. And, in the end, on China.

What It May Mean

According to the Committee of 100 survey, Chinese and Americans admire one another, profess to like one another, but do not trust each other. Americans and Chinese see themselves as trading partners, to each other’s advantage, but as competitors with different long-term visions of their place in the world. Chinese generally accept the United States as a lone superpower for many years to come, but also expect one day to surpass the United States.

These views may be more enlightened than those of leaders in both countries. The leaders tend to see the competition as more intense and immediate. They see as much threat as friendship. They perceive a need to speak regularly to what divides China from the United States, perhaps more than what may unite them. The general public in both countries appears more favorable toward one another than their elites, and less ambitious for superiority.

Fortunately for the health and well-being of Chinese-U.S. relations, Chinese leaders are preoccupied with their own imminent leadership change. They respond publicly and vigorously to American slights, of which there have been many, especially during the presidential campaign. But they are likely sensitive to nuance. They will have detected the change in tone in the October 22 debate and the rhetoric thereafter.

By the end of the second presidential debate there was reason to believe that a Romney presidency would cast China as a cold war adversary, changing course from the sophistication of the Obama Administration balancing many Asian and global interests. In the final weeks of the presidential campaign, the Romney strategy has been to seem more experienced by seeming to endorse Obama’s foreign policies. The strategy is designed to reassure Americans that a change in the White House would not mean a radical change in foreign policy.

Romney, despite this strategy, is burdened by advisers who populated the most prominent positions in the Bush Administration. It is difficult to imagine a President appointing advisers with whom he is known to disagree, yet the Romney positions on and after October 22 sound a lot more like Obama, and a lot less like Bush. Should Romney win, the first test will be in whom he appoints, not what he has said. What he was saying before October 22 was consistent generally with the views of his advisers. What he has said since seems closer to what he must believe Americans want to hear. Whether he would govern as he imagines Americans would want, or as his more experienced advisers would tell him, is a question that ought to be of grave concern to China.

If there be a change in course in the Obama view of China during the campaign, it has been to harden positions, but then the 2008 campaign was full of rhetoric about NAFTA that never meant anything for the Obama presidency. China is an almost inevitable target, both because of the international relations principle of identifying a foreign foe, and because China is a soft target in what Americans see as the zero-sum game of jobs. For Obama, protecting the U.S. economy against China – using whatever legal weapons may be in the arsenal – is foremost a campaign necessity designed to reassure Americans that the economy, and employment in particular, are the President’s leading priorities.

Obama must hope that China hears the rhetoric of the campaign – and policy actions during the campaign -- his way, as part of the American electoral process. Romney must hope China sees and hears his way, with shifting positions more the product of campaign necessity than a forecast of untrustworthy or unpredictable conduct. And China must hope that both candidates, at least occasionally, see things the Chinese way, as insulting, presumptuous, but not a threat to a long-term and mutually valuable partnership. All must conclude that “we can work it out,” or leadership in both countries could move the bilateral relationship in unpredictable directions.

美国总统大选的传统特色是将国内政策与外交相结合：树立国外假想敌，并利用这一假想敌把国内利益整合在一起。冷战时期，苏联一直是最好的假想敌。这期间，政治竞选的争议话题不是如何更好和平共处，而是哪位候选人将更严厉地对待苏联——武器竞赛、增加军备开支、增兵海外…….辩论的焦点不是是否应当建造更多导弹，而是导弹配置是否落后、需要立即提升装备。

冷战结束为美国人带来战略难题。一些学者甚至担心这是“历史终结”。但是，每个人都可以随时找到外国假想敌。例如，1980年代初期加拿大总理皮埃尔•特鲁多相信可以通过抱怨美国紧密团结包括奎北克民众在内的全国人民。他推出国家能源计划和外资审查法案妖魔化美国。
同在1980年代，美国试图用利用日本逐渐增长的经济地位取代苏联敌人。苏联爪牙古巴等国依然存在，但是它们并不真正造成威胁。委内瑞拉前总统查维斯的尖锐批评并未引起重视。伊朗等冷酷无情的敌人只对美国友邦造成威胁。

2001年9.11事件制造了新型敌人和威胁——没有国家的敌人。基地组织推动布什总统向伊拉克宣战。现在，伊拉克战争接近尾声，拉登也被消灭。美国从对苏联的冷战进入与日本的经济战，最后卷入与基地组织、伊朗和阿富汗的武装冲突。

中国的崛起使之成为所有候选人共同的潜在敌人。东方大国的决策机制令人费解，中国又在寻求理解的发展中国家和咆哮的、冉冉上升的世界强国两个角色间徘徊，这为美国的敌对论提供了最佳借口。

但是将中国视为经济对手还不足气候。虽然中国的军事实力落后美国十多年，美国却对中国的军事发展忧心忡忡。与苏联不同，美国没有讨论导弹装备差异；和苏联相同，中国也奉行中央控制经济同时限制个人自由和言论自由。即使不把中国视为美国的军事威胁，很多人也把中国视为威胁美国生活方式的长期威胁。

和誓死保卫以色列、祈祷上帝保卫美国军事实力一样，抨击中国的言论成为美国总统大选中的家常便饭。美国政治圈内认为针对中国的敌意论调都将在大选后消退，竞选中许诺的大棒将变成品味美味佳肴的筷子。

这些假设要求中国面对侮辱隐忍不发，将这些言论视为民主社会中为吸引选票而对无知的敬意。但是，外交应响应甲壳虫乐队歌曲《试图用我的方式看世界》（Try to see it my way）和《我们可以解决》（We can work it out）寻求共同点。如果，美国人听到中国不断发出同样的负面批评 ——骗子、海盗、不遵守游戏规则、窃取工作机会，他们会象中国人一样平和、风趣地对待这些指责吗？很可能在不久的将来，攻击中国的言论将带来政客们不曾预料的巨大负面作用。

Challenges To Applying CVD Law To China Move Forward In U.S. Court

John J. Burke — Tue, 04 Sep 2012 08:57:48 -0600

August 2012 was a busy month for challenges to the U.S. Department of Commerce (“Commerce”) imposing countervailing duties against China, and other non-market economies, while applying the non-market economy methodology in companion anti-dumping cases. On August 17, three Chinese companies filed briefs in the GPX case at the U.S. Court of International Trade (“CIT”), arguing that the March 13, 2012 legislation requiring Commerce to apply the countervailing duty law against non-market economies is unconstitutional because it violates the equal protection guarantees of the Fifth Amendment to the United States Constitution. On August 20, a fourth Chinese company filed two new cases at the CIT, also claiming that the March 13 law is unconstitutional because it violates the equal protection guarantees of the Fifth Amendment to the United States Constitution.

As reported previously on this blog, the U.S. Court of Appeals for the Federal Circuit (“CAFC”) ruled on December 19, 2011 that U.S. law forbade the application of countervailing duties to non-market economies. The U.S. Congress reacted to that ruling by enacting new legislation on March 13, 2012, titled “Application of Countervailing Duty Provisions to Nonmarket Economy Countries.” The new law, also discussed in detail in a previous article posted on this blog, provides that “the merchandise on which countervailing duties shall be imposed . . . includes a class or kind of merchandise imported, or sold (or likely to be sold) for importation, into the United States from a nonmarket economy country.” It provides in a separate section that the Department of Commerce should try to avoid “double counting” when imposing both countervailing and antidumping duties on the same merchandise from a non-market economy, which means Commerce should not count an alleged subsidy in a countervailing duty determination as a cost of production in the antidumping proceeding, thereby assessing duties on the same alleged program or conduct twice. The first provision of the March 2012 law, that countervailing duties should be applied to merchandise from non-market economies, was made retroactive to November 20, 2006, but the second provision, to avoid double counting, applies only to new cases initiated on or after March 13, 2012, when the new law was enacted.

The CAFC responded on May 9, 2012 by sending the case titled GPX International Tire Corp. v. United States back to the CIT for the lower court to consider the constitutionality of the March 13 legislation. Two Chinese companies, GPX International Tire Corporation and Hebei Starbright Tire Co., Ltd., argue in their August 17 brief that the new law violates the equal protection requirement of the Fifth Amendment to the U.S. Constitution because, they say, the law treats companies differently depending upon when petitions were filed against them. The retroactivity in the law applies penalties for alleged offenses before the law permitted such penalties.

A third Chinese company, Tianjin United Tire & Rubber International Co., Ltd., filed a separate brief in the GPX case, making essentially the same argument, and a fourth Chinese company, Beijing Tianhai Industry Co., Ltd., made the same argument in the complaints it filed on August 20 , challenging the Commerce Department’s final affirmative determinations in the antidumping and countervailing duty investigations of High Pressure Steel Cylinders from China. However, Tianhai challenged the constitutionality of the March 13 law in the antidumping case, as well as in the countervialing duty case because the March 13 law calls for Commerce to make adjustments for double counting in the companion antidumping case, rather than in the countervailing duty case.

All four companies argue the new law violates the equal protection clause of the U.S. Constitution because the provision applying the countervailing duty law to non-market economies was made retroactive to 2006, whereas the provision requiring Commerce to try to avoid double counting when antidumping and countervailing duties are imposed on the same merchandise applies prospectively only. The law thus discriminates against companies subject to cases initiated before March 13, 2012, exposing them to both antidumping and countervailing duties without any provision to avoid double counting. By contrast, Commerce must at least make an attempt to avoid double counting in cases filed after March 13, 2012.

Should the CIT conclude that the new law is unconstitutional, Commerce can be expected to appeal that decision back to the CAFC. Even were the CAFC to agree that the new law is unconstitutional, that decision might apply only to the GPX case, the Beijing Tianhai case, and the few other cases in which Commerce applied both countervailing and antidumping duties to the same merchandise from non-market economies between November 20, 2006 and March 13, 2012. The argument presented in court has been limited to the unequal treatment afforded to the companies whose investigations were initiated between the two effective dates. A favorable ruling would benefit only those companies.

While Chinese companies were busy in August in U.S. courts, challenging the simultaneous application of antidumping and countervailing duties and the new U.S. law, the Chinese Government was active at the World Trade Organization (“WTO”), challenging the U.S. application of countervailing duties to Chinese goods. On August 20, the Government of China requested the establishment of a WTO panel to examine its complaint that the United States Department of Commerce violated WTO obligations in twenty-two countervailing duty investigations of products from China. China’s request for a WTO panel challenges the conduct of those cases generally, as well as specific subsidy findings, but does not challenge the application of the countervailing duty law itself to China.

The Commerce Department and the petitioners in the GPX case will be filing their responses to the constitutional challenge by October 1, 2012 and the Chinese companies' replies would then be due by October 16, 2013. There is no set date by which Judge Restani would need to make her decision, but there is a reasonable change she would do so before the end of the year. At that point, the losing party is likely to appeal her decision back to the CAFC. The Tianhai case would be on a later schedule with briefing likely to occur early next year.

The American Government Still Has Three Branches: The Court of Appeals Tells Congress It May Have Acted In Haste

John J. Burke — Sat, 09 Jun 2012 01:00:00 -0600

The United States Court of Appeals for the Federal Circuit on May 9, 2012 sent the case titled GPX International Tire Corp. v. United States back to the United States Court of International Trade for the lower court to consider the constitutionality of legislation passed earlier this year overturning the Federal Circuit’s earlier ruling that countervailing duties may not be imposed on non-market economies. The Federal Circuit, as previously reported on this blog, ruled on December 19, 2011 that U.S. law forbids the application of countervailing duties to non-market economies.

Not willing to accept judicial defeat, the U.S. Department of Commerce, and other interests who support imposing countervailing duties on China while treating China as a non-market economy, convinced the United States Congress to rewrite the law and overturn the Federal Circuit’s December ruling.

The new law, also discussed in detail in a previous article posted on this blog, provides that “the merchandise on which countervailing duties shall be imposed . . . includes a class or kind of merchandise imported, or sold (or likely to be sold) for importation, into the United States from a nonmarket economy country.” It provides in a separate section that the Department of Commerce should try to avoid double counting when imposing both countervailing and antidumping duties on the same merchandise from a non-market economy, which means Commerce should not count an alleged subsidy in a countervailing duty determination as a cost of production in the antidumping proceeding, thereby assessing duties on the same alleged program or conduct twice. The first provision, that countervailing duties should be applied to merchandise from non-market economies, was made retroactive to November 20, 2006, but the second provision, to avoid double counting, applies only to new cases initiated on or after March 13, 2012.

GPX argued to the Federal Circuit that the new legislation is unconstitutional because (1) the retroactive effect of the first section would change the outcome of the GPX case after the Federal Circuit already had rendered its decision in favor of GPX last December based on the law as it was when GPX had been investigated; and (2) the new law improperly creates a special rule applicable only to GPX and to a few other cases in which Commerce may impose both countervailing and antidumping duties on the same merchandise from a non-market economy without attempting to avoid double counting. In effect, GPX argued that the different treatment it and a few other companies whose cases were initiated between the two effective dates would receive, as compared to all other companies for which investigations will be initiated after March 13, 2012, violated the Equal Protection Clause of the U.S. Constitution because GPX and those few other companies will be treated differently and for no reason. Although the Equal Protection Clause itself applies only to the states, the courts have long interpreted the Due Process Clause of the Fifth Amendment to the U.S. Constitution as imposing an equal protection obligation on the Federal Government. The Federal Government, which includes Congress as well as the Executive Branch, must treat everyone equally or have a powerful rationale for doing otherwise. That the merchandise happens to be Chinese is not such a powerful rationale for such discrimination.

The Federal Circuit quickly rejected the first argument because the GPX case still was pending when Congress acted and, therefore, the constitutional prohibition on Congress changing the outcome of a decided court case did not apply. The Federal Circuit must have concluded that the second argument might have merit, however, because it sent the case back to the Court of International Trade with instructions to the lower court to make “a determination of the constitutionality of the new legislation and for other appropriate proceedings.”

The case now goes back to the Court of International Trade to consider the constitutionality of the new law. Should that court conclude that the new law is unconstitutional, Commerce can be expected to appeal that decision back to the Federal Circuit. However, even were the Federal Circuit to agree that the new law is unconstitutional, based on GPX’s second argument, that decision would apply only to the GPX case and the few other cases in which Commerce applied both countervailing and antidumping duties to the same merchandise from non-market economies between November 20, 2006 and Match 13, 2012. It would apply only to those cases because that argument is limited to the unequal treatment afforded to GPX and the few other companies whose investigations were initiated between the two effective dates.

To win its first argument, that GPX was being treated differently because a judicial decision in its favor was being overturned by legislation, GPX would have needed a judicial decision that would have had to be final before the new law had been passed. But the second argument is not so limited by the facts: GPX would be one of only a small number of companies treated differently from all other companies in non-market economies.

The Federal Circuit’s remand order is broad enough that it might be possible for GPX to argue, and for the Court of International Trade to agree, that the new legislation is unconstitutional on other grounds that would apply more generally. Such broader arguments are unlikely to succeed, however, because Congress has extensive authority under the U.S. Constitution to regulate international trade. Consequently, GPX may prevail, but only on the narrow grounds of unequal treatment with respect to double counting.

Lessons For China From Canada

Dr. Elliot J. Feldman — Sun, 08 Apr 2012 12:53:06 -0600

中文请点击这里

The final part of “Nothing Unites The United States Congress Like China (And Not In A Good Way): Treating China Like Canada (Maybe Even Worse),” we present this week. It is called, “Lessons From Canada.” Part One, entitled “Rewriting Subsidies Law To Fit Chinese Facts,” was posted two weeks ago; Part Two, “The Broken Promise To China,” was posted last week.

China is not the first trade partner of the United States to experience losing by winning, going through the process by the rules only to have Congress change them. Perhaps there is something in the American culture that accepts Lucy enticing Charlie Brown and then snatching the football from him. We cautioned, in an article posted August 2, 2009, about “How The U.S. Treats Its Friends In Trade Disputes.” We did not elaborate there on changing the law, but Canada has experienced exactly what has now happened to China, and it has left a lasting impression on Canadians.

To overcome what it interpreted as an intractable bias against foreign countries and entities in U.S. courts, Canada successfully negotiated an alternative dispute resolution system for trade cases, Chapter 19 of the Canada-U.S. Free Trade Agreement, that became Chapter 19 of the North American Free Trade Agreement (“NAFTA”). Chapter 19 creates binational panels of trade experts from both Canada and the United States to replace the U.S. Court of International Trade for appeals of administrative determinations on countervailing duty and antidumping investigations at the Department of Commerce and the U.S. International Trade Commission. The binational panel decisions cannot be appealed except for limited “extraordinary challenges” brought by the governments for gross panelist misconduct or ultra vires panel actions that threaten the review process, so the panels replace the Court of Appeals for the Federal Circuit as well as the Court of International Trade.

Chapter 19 came into effect in 1989 and Canada won some of its first appeals to binational panels within the year. The United States promptly began to curtail the authority of Chapter 19 panel decisions. The Department of Commerce refused to recognize panel decisions from one administrative review to another, forcing Canadian entities to appeal every year determinations finding certain programs to be countervailable subsidies after binational panels had found, in the previous year, that they were not. This practice did not deviate radically from the Department of Commerce’s tendency to ignore CIT decisions as well, but Canada had thought that the Free Trade Agreement would mean greater comity.

Canada found the United States continuously ignoring binational panel decisions. When binational panels decided that the United States Customs Service had no legal authority to collect more than $1 billion in duty deposits, the United States refused to return the money to Canadians as the law seemed to require. The United States used the money as leverage to force Canada into a settlement of a case that Canada had won.

Most egregious, perhaps, and most consistent with China’s experience now, Congress used the occasion of implementing trade liberalization – the Uruguay Round Agreements Act of 1994 – to enhance protectionism, explicitly changing trade rules in the law to reverse adverse judicial decisions in the ongoing feud with Canada over softwood lumber. A section of the trade law, 19 U.S.C. § 1677(A)(5A)(D)(iii), was scripted by U.S. petitioners expressly to overcome decisions favoring Canada in trade remedy judicial appeals.

During the last war over softwood lumber, the United States forced Canada into extraordinary challenges under NAFTA and into U.S. courts to enforce NAFTA and WTO decisions. The United States turned its defeats at the WTO into opportunities to rehabilitate rejected agency determinations. Matters were prolonged for years while Customs collected deposits on duties that would never be owed. The United States accumulated $5.5 billion while bleeding out the cash flow of Canadian companies.

Canadians became completely discouraged. No matter how many times they won legal decisions, the United States kept collecting and holding onto their money. The dispute dragged on for five years. All the while, Canadians remembered well how the United States was willing and able to change the laws when Canadians had enjoyed legal victories, or to interpret laws in novel and doubtful ways.

Nor was the experience with the Uruguay Round implementation entirely new. The Department of Commerce, invoking Section 304 of the trade law, had imposed “interim measures” against Canadian softwood lumber in October 1991, collecting duty deposits, without a petition, self-initiation, nor a preliminary determination. It took two years for an international panel of the General Agreement on Tariffs and Trade (“GATT”) to find this action “inconsistent with Article 5:1 [of the GATT]. The United States then did nothing to comply with the GATT decision. This experience, too, Canadians remembered many years later.

Eventually, Canadians gave up, entering an agreement in which they handed over $1 billion to the United States, half of which was given to the U.S. industry that had lost the legal battles. It was not the first such cash payment to settle a trade dispute (Mexican cement companies paid $150 million), but it was the first not to result in free trade. The Canadians accepted managed trade at higher duty rates than prevailing at the time of the settlement when the legal process had promised free trade. The United States persuaded Canadians that, in the end, they could not win, no matter how much the law supported them. International rulings could not be enforced, and the domestic law could always be changed.

The United States deployed a powerful combination of actions against Canada, defying adverse legal decisions, collecting and withholding money illegally, changing the law. In the end, the United States got its way, not by celebrating the rule of law, but by bending the law to its will. Nothing impressed Canadians more negatively than completing a cycle of the judicial process only to have the law changed.

China Is Not Canada
In addition to the common lessons for China and Canada from different cases – that participation in the judicial process is no guarantee of a fair outcome – there are lessons, too, from the same cases. To pursue subsidies allegations against a non-market economy, the Department of Commerce adopted a methodology in parallel to its antidumping methodology for NMEs. Eschewing values in an economy with no market, the Department has looked to values in other countries. These surrogate values are meant to substitute for values in China that cannot be relied upon absent market forces.

The caprice in selecting surrogate values is perhaps inescapable, but the Department of Commerce has been aggressive in abusing the virtually unlimited discretion it enjoys with a silent statute. The NME methodology for antidumping has statutory rules concerning the selection of surrogate values. Because no statute ever authorized countervailing duty investigations in NME countries, there are no rules. H.R. 4015’s pithy two pages introduce none.

In the countervailing duty investigation of Laminated Woven Sacks, the Department used land values in Bangkok as surrogates for rural Shandong Province. The Department did not even acknowledge in its final determination the testimony of a land use expert that such comparisons of land values across countries and between urban and rural areas are nonsensical.

The Department of Commerce justified its use of out-of-country benchmarks to evaluate subsidy allegations against products from China by citing its final determination in Softwood Lumber from Canada, the very trade dispute in which the United States kept changing the rules. There, the Department had reasoned that provincial government ownership of Canadian forests meant excessive government control of the market and prices, preventing the Department from measuring alleged subsidies. The Department therefore selected prices from the United States, “cross-border benchmarks,” effectively treating Canada as a non-market economy.

A Canada-U.S. Free Trade Agreement binational panel had struck down the cross-border benchmarks in a previous iteration of the dispute over softwood lumber, and a NAFTA panel, more than a decade later, rejected them again. The WTO Appellate Body ruled that out-of-country benchmarks might be justified in some cases, but not in this one. Claiming the WTO rejection of the cross-border benchmarks in this case to be an approval of cross-border benchmarks in principle, the Department of Commerce persisted in using them until Canada capitulated more generally for a settlement.

The Softwood Lumber final determination – repudiated by a binational panel and hardly endorsed by the WTO – has been the legal basis for the Department of Commerce’s methodology in applying surrogate values to China in the subsidies cases that the U.S. Congress has now blessed. The legislation never addressed this issue at all, and China has failed to challenge judicially this fundamental infirmity in the legal process. The Chinese countervailing duty cases are, therefore, the direct progeny of the U.S. treatment of Canada, its best friend and leading trade partner.

Although China is experiencing what Canada has experienced, China is not Canada. Four decades have passed since Canada underwent a drastic reappraisal of its relations with the United States and decided it had to diversify, only to conclude in a Royal Commission Report thirteen years later that Canada would always be dependent on the United States and needed to secure access to the American market. The free trade agreements were supposed to provide that security, but once binational panels began ruling in favor of Canada, the United States hastened to change, in fact and in legal interpretation, the terms to which it had agreed.

The United States has always taken Canada for granted. Canada has not always had to accept that relationship, but it has almost always elected to do so.

The United States cannot now, and never will be able, to take China for granted the way it does Canada. China will not bend so easily to the American will. During the last decade it has been chic in Canada to talk about a foreign policy that “punches above its weight,” highlighting the contradiction between Canada’s prosperity and international influence, on the one hand, and its very small population, on the other. China, by contrast, is thought not to punch its weight at all, still presenting itself partially as a developing country not ready for a full international role. Yet, the Chinese economy already surpasses Canada’s in size and is second only to Canada’s in two-way trade with the United States. Canada will never be a regional power in a region with the United States; China is already a regional power and is growing more powerful.

The United States cannot reasonably expect China to accept the kind of international trade treatment it has gotten Canada to accept. China will have no less a memory of what has happened, and may have no less bitterness that, having played by the rules and participated in the process, China had to face the United States simply changing the rules. But unlike Canada, China will not accept merely what the United States will permit it to have.

The Dangers Of What Has Been Done
Notwithstanding the celebration of bipartisanship and the suggestion of national unity against China in legislating H.R. 4015, the United States has embarked on a perilous course. Following the way it has treated Canada, the United States risks a trade war and endless antagonism with China. It risks, too, the whole international trading system now defined by the WTO, which the United States carefully has built over the last sixty-five years.

It is hazardous to exaggerate U.S. dependence on China as the leading creditor and emerging export market for the United States. China, on many dimensions including trade, is dependent on the United States. Nor should one romanticize the role China plays in the international marketplace. China’s economy is largely controlled from the center and the government does try to pick winners and losers. Notwithstanding protest and denial from China’s Minister of Commerce, there are instances when the appropriate question is not whether the state subsidizes, but whether those subsidies are actionable under U.S. and WTO laws and obligations.

The United States will remain for many years to come a greater power than China in virtually every respect. But unlike Canada, whose ambitions have been contained in a desire to be a faithful and trusted friend and ally, China’s ambitions are to be America’s equal. Probably nothing more; certainly nothing less.

China could interpret this most recent experience as a reason to give up on the rules, to bow out of the judicial processes. To a startling degree, that is what has happened with Canada.

China could devise ways to retaliate or, perhaps worse, imitate American conduct. China will not be inclined from the overheated rhetoric in the United States to conciliate, and it surely will not, like Canada, capitulate. The United States does not need a hostile or antagonistic China, and China will not benefit from a trade war with the United States. This latest episode, however, could be a turning point, as it was for Canadians who harbor an eternal resentment about the American willingness to change the rules when the United States does not like an outcome. Crowing about changing the rules after losing a legal proceeding is no way for the United States to avoid alienating the Chinese the way it has alienated many Canadians. To most Americans, it may not matter how Canadians feel. They still bend. But this time, with China, the United States is dealing with a much less forgiving and compliant friend.

从加拿大汲取经验

中国并不是唯一面临这种虽赢犹输、依法行事却被国会改变一切的国家。早在2009年8月2日的文章中我们就提醒中国《美国在纠纷中如何对待贸易伙伴》。加拿大的经历和中国经历如出一辙，令加拿大人永远不能忘怀。

加拿大认为美国法庭歧视国外政府及企业，因此和美国谈判后签署了另一争端解决体系——《美加自由贸易协定》第十九章。根据第十九章，两国选派贸易专家建立多个双边仲裁委员会以取代美国国际贸易法庭重新审阅美国商务部和国际贸易委员会的反补贴、反倾销调查结果。只有两国政府可以向根据《美加自由贸易协定》建立的特别委员会提出重新审理上诉双边仲裁委员会裁决的申请，且只有当委员的不当举动或是仲裁委员会的行动阻碍进程时才可上诉。如此，这两个级别的委员会取代美国联邦上诉庭及美国国际贸易法庭进程。

《美加自由贸易协定》第十九章于1989年生效，同年加拿大赢得第一批案件的胜利。美国立即开始削弱第十九章委员会裁决的法律效力。美国商务部在一年一度的行政复审中拒绝承认委员会裁决，迫使加拿大每年上诉反补贴裁定。这并未改变美国商务部对国际贸易法庭裁决置之不理的恶习，但这打破了此前加拿大认为《美加自由贸易协定》更具效力的错觉。

此后，加拿大发现美国持之以恒地忽视双边仲裁委员会的裁决。例如，双边仲裁委员会裁定美国海关收缴10亿美金关税定金的行为没有法律依据，但是美国拒绝依法将这笔巨款退还加拿大。相反，美国利用这笔巨款作为谈判筹码，迫使加拿大参与谈判已经获胜的案件并达成和解。

与中国的经历极其相似，美国国会利用开放贸易的时机——1994年《乌拉圭协定法案》增强贸易保护主义，修改贸易法以改变不利于美国软木行业的司法裁定。19 U.S.C. § 1677(A)(5A)(D)(iii)即为美方杰作，针对加拿大取得的一系列司法上诉胜利，他们推动制定了这一新章节。

在上一轮软木大战中，美国迫使加拿大运用《美加自由贸易协定》特殊上诉机构和美国法庭以敦促美国实施美加自由贸易协定和世贸组织裁定。美国虽然在世贸组织挫败，但却迟迟不执行世贸组织裁定。加拿大企业一边滴血，一边眼睁睁地看着美国海关不断收缴关税定金。这几十亿美金永远也不可能返还加拿大。

毫无疑问，加拿大深感挫败。无论加拿大取得多少法律胜利，美国总是能设法收缴并保留税金。这一纠纷持续了五年，这五年里美国修改法律以挫败加拿大的法律胜利让加拿大记忆深刻。

美国实施乌拉圭回合谈判的表现也不再让加拿大惊讶。美国商务部于1991年10月在没有接到调查申请书、未自发展开调查、未发布初裁结果的情形下向加拿大软木采取“暂时措施”，征收关税定金。世贸组织前身——关贸总协定历时两年才裁定这一举措不符合关贸协定第5:1条。但是美国并未采取任何行动实施这一裁定。时隔多年，加拿大仍记忆犹新。

最终加拿大不得不放弃，与美国签订协定并将10亿美金拱手让给美国，其中二分之一被败诉的美国企业获得。此前墨西哥在水泥案中也付出价值1.5亿的赔偿金，但在自由贸易时代这还是第一次。虽然司法裁定支持自由贸易，但加拿大仍被迫签署限制贸易、高税率的软木贸易协定。美国成功说服加拿大，无论法律如何支持加拿大，国际裁定无法在美国落实，而美国法律总可被修改。

总而言之，美国运用了一系列武器对付加拿大：重新解释不利裁决、非法扣留税金、修改法律。最终美国并非通过依法行事、而是通过扭曲法律实现自己的目标。这只给加拿大留下负面印象。

中国不是加拿大

中加两国可从这些案件中汲取一共同教训—— 参与司法程序并不保证公平结果，此外还有更多经验教训值得中国参考。美国商务部对非市场经济国家展开反补贴、反倾销调查时使用了特殊计算方法，即使用第三国价格作为参考价格。美国商务部认为中国没有市场，因此中国的价格不具参考价值，必须用第三国价格取代。

任意选择第三国价格无法避免，但是美国商务部竭尽全力充分利用这一调查方法令人发指。美国法律对反倾销调查中选择第三国价格有详尽规定。但是因为美国法律并未授权对非市场经济国家展开反补贴调查，因此并未就此制定法规。薄薄两页的H.R. 4105也并未触及这一重要问题。

在复合编织袋反补贴调查中，美国商务部使用曼谷的土地价格作为山东农村土地价格的参考价格。土地专家作证指出，这种跨越国界、城市价格取代农村价格的做法极不合理，但是美国商务部在发布终裁结果时甚至未提及这一证词。

美国商务部引述加拿大软木终裁结果这一案例法为自己使用第三国价格指标衡量补贴辩解，而这一案件正是美国不断修改法律维护自身利益的最好例证。在软木案中，美国商务部认为加拿大省政府拥有森林资源，这意味着政府过分控制市场和价格，美商务部无法估量补贴指控。因此美国商务部选择美国价格，即“第三国价格指标”，视加拿大为非市场经济体。

美加自由贸易协定双边仲裁委员会在仲裁软木案时裁定，使用第三国价格指标违法；十多年后，另一仲裁委员会再次否定这一计算方法。世贸组织上诉机构则裁定，在某些案件中使用第三国价格指标合法，但在软木案件中不合法。美国商务部却声称世贸组织的裁定表明世贸组织原则上支持使用第三国价格指标，美国商务部一直使用这一调查计算方法直至美加两国签署协议和解这一贸易纠纷。　

这一被美加自由贸易协定双边仲裁委员会以及世贸组织否定的终裁结果却成为美国商务部计算向中国产品征收反补贴税税率的法律依据，更不可思议地得到美国国会支持。最近通过的法案没有触及这一重要法律问题，中国在司法诉讼中也并未挑战这一原则性错误。因此，中国成为美国错误对待加拿大的受害者。　

虽然中国重蹈加拿大覆辙，但中国不是加拿大。四十多年前加拿大评估美加关系，总结认为应当使双边贸易更加多元化。十三年后，加拿大却总结得出加拿大将永远依赖美国市场，因此必须确保美国市场对加拿大产品开放。《美加自由贸易协定》理应为加拿大提供保障，但是当看到双边仲裁委员会的裁决有利于加拿大时，美国立即修改法律并重新诠释它的法律承诺。

美国一直视加拿大的态度为理所当然。虽然加拿大可以改变这一惯例，但是加拿大总是选择避免采取这一行动。

美国现在无法像对待加拿大那样任意摆布中国，将来更不可能。中国不会轻易屈服于美国压力。过去十年，加拿大流行一说法“轻量级选手的重量级出击”，即加拿大的富裕及国际影响与其有限人口形成鲜明对比。与此相反，中国却有所保留、并未使出全力，以尚不能承担国际领袖职责的发展中国家出现。但是中国的经济实力已经远远超出加拿大，中美双边贸易量仅次于美加双边贸易。加拿大永远不能和美国并肩成为区域领袖，但是中国已经是强大、且茁壮成长的区域领袖。　

理智的美国不会期待中国接受加拿大已经接受的贸易待遇。中国参与世界贸易体系、遵循贸易规则，但它可能将长久品位苦涩。

The Broken Promise To China

Dr. Elliot J. Feldman — Thu, 29 Mar 2012 16:46:36 -0600

中文请点击这里

This week we present Part Two of “Nothing Unites The United States Congress Like China (And Not In A Good Way): Treating China Like Canada (Maybe Even Worse).” It is entitled, “The Broken Promise To China.” Part One, entitled “Rewriting Subsidies Law To Fit Chinese Facts,” was posted last week.

The Broken Promise To China

Entry into the WTO a decade ago has paid off handsomely for China, enabling its trade to flourish and accelerate its economic growth and development. However, a critical element of China’s accession was acceptance of the rule of law. China was required to accept the arbitral procedures and consequences of WTO membership, but reciprocally was promised the benefits of those procedures. Not long after its accession, the United States and other countries brought cases against China. China quickly joined other countries challenging American safeguards against steel, and soon thereafter began to bring cases against the United States and other countries on its own.

Nothing could be more satisfying to proponents of the international rule of law than to persuade a country operating outside that framework for more than a half-century to change its ways and enlist in the procedures of the international community. China was quick, in the first cases brought against it, to accede. Instead of availing itself of the full and often protracted means of delaying undesirable outcomes, China promptly settled cases, acknowledging with little dispute when the complaints against it seemed justified.

It took longer for China to appreciate that generosity with the rules typically is not reciprocated in the WTO, least of all by the United States. The United States normally resists claims against it through every procedural device and interpretation possible. Perhaps the most celebrated example is the antidumping technique of “zeroing,” which the United States lost before the Appellate Body of the WTO in 2004, yet has found ways to continue the practice, in one form or another and despite more than a dozen WTO cases brought against it, since it first lost before a WTO panel a decade ago. The United States has insisted that it plays by the rules and that China does not. To the extent that China has been playing by the same rules as the United States since its accession to the WTO, it has played by the same rules differently and generally not as characterized by the United States.

The WTO is not the only forum in which China had to be persuaded to participate as a price and privilege of conducting its affairs according to the rule of law. Until November 2006, trade remedy cases against China in the United States did not technically or formally involve the Chinese Government because they were always and only antidumping cases. Antidumping allegations revolve around setting prices, which as a matter of the antidumping law is done by companies, not governments. Once the U.S. Department of Commerce began accepting countervailing duty petitions, however, the Chinese Government could not remain on the sidelines. The allegations necessarily involved government activities and programs, and even were it not to avail itself of legal rights, the Government of the People’s Republic of China would have to answer questionnaires and be involved in the investigations.

China was far more reluctant to avail itself of the judicial institutions and procedures of the United States than it had been of the WTO. For all foreign governments there is a hesitation to be a party in U.S. courts and submit sovereignty to the judgments and authority of U.S. judges. For six years, the Government of China has avoided initiating legal procedures in trade matters in U.S. courts, but with caution and reluctance it has begun to participate, conspicuously as an interested party in the GPX case.

Lawyers representing the Chinese Government in countervailing duty cases have urged the Government to participate in the domestic judicial process of the United States. The WTO is slow and its remedies, prospective only, are limited in time, scope, and character. At best, a prevailing party can impose tariffs on products of a losing party. Because disputes are over imports and exports, the merchandise subject to WTO compensation (commonly called “retaliation”) is not the merchandise subject to the dispute. Consequently, the WTO resolves disputes, when parties do not capitulate, through collateral attacks on other merchandise. Often the consumers of the prevailing country are the losers.

Domestic judicial procedures in the United States can move more quickly than the arbitral procedures at the WTO, and remedies are more generous and comprehensive. Deposits being held can be returned with interest, whereas a WTO order cannot see to the return of deposits at all. Obstacles to trade can be removed swiftly. Agencies can resist judicial orders for a long time but, in most instances, the U.S. market can reopen for subject merchandise more quickly than from decisions at the WTO because all of the procedural protections the agencies enjoy domestically they enjoy at the WTO in addition to the WTO’s own procedural obstacles for a complaining country. At the WTO there can be almost endless contention over remedies, whereas prescribed remedies in domestic law are known early in the process even though it may take a very long time to implement them.

These preferable remedies of the domestic judicial process are valid only when the process is fair and transparent and all the parties have reason to believe that they will be treated equally under the law. In general, U.S. judicial proceedings live up to this promise and, in the GPX case, did so for China.

The promise to China of reward and fair treatment from playing by the rules is being broken and, ironically, it is China standing accused of a disregard for the rule of law. According to the Ranking Member of the House Ways and Means Committee, Sander Levin (D-Michigan), “China is tilting the field of competition by not playing by the rules and this bill restores a key instrument of our nation to hold China accountable.” The Ranking Member of the Trade Subcommittee, Jim McDermott (D-Washington), added to the theme, “China has been breaking international trade rules . . . Now our own courts have naively weighed in . . .” Presumably, then, China naively trusted in the U.S. judicial system. Trade Subcommittee Chairman Kevin Brady (R-Texas) asserted that the legislation “provides a WTO-consistent tool to offset these market-distorting subsidies.” Except that the legislation is not WTO-consistent and the alleged subsidies, according to the United States, have no market to distort.
China challenged the United States at the WTO and won. It joined a suit in U.S. courts and won. Congress then stepped in and, as the White House trumpeted the result, “This legislation overturns that [Court of Appeals] decision,” even though it does not overturn the decision as to the parties in the case. So much for playing by the rules.

Next: Lessons For China From Canada

未能坚守的承诺

加入世贸组织这一重大决策十多年来给中国带来丰厚回报，贸易激增、经济腾飞。加入世贸组织的重要组成部分是接受法治。作为世贸组织一员，中国的职责之一是接受裁决程序和结果，但同时也享受利益。中国加入世贸组织后不久，美国等国就利用世贸组织争端解决机制递交针对中国的案件。

看到先前游离于世界法律体系之外长达半个世纪的国家，改变做法、加入世界体系，没有这更能让积极推广世界法制的有识之士更欣慰了。当面临第一起世贸案件时，中国迅速妥协、承认指控合法，放弃利用漫长的世贸组织争端解决机制推延不利结果的产生。

一段时间之后中国才意识到自己的慷慨之举不可能得到回报，尤其是美国的回报。美国一般充分利用每一环节抵制针对自己的指控。最著名的恐怕就是“零合法”案了，2004年世贸组织上诉机构判美国违法。十年来，美国置十多个世贸组织案件判决而不顾，依然通过各种途径沿用这一反倾销调查方法。但美国声称自己履行世贸章程，而中国没有。

不仅在世贸组织，中国在其他法律舞台上也为履行法治而付出代价。2006年11月之前，美国针对中国展开的贸易救济案件并不正式涉及中国政府，因为当时只有反倾销调查。反倾销指控围绕价格操纵，因此仅针对企业。当美国商务部开始接受反补贴调查申请时，中国政府再也不能袖手旁观了。反补贴调查针对政府行为及项目，中国政府必须答复美国发布的调查问卷、参与调查。

比较参与世贸争端解决机制，中国更不愿参与美国国内司法程序。其他国家政府也都不愿成为美国法庭前的原被告，放弃主权、让美国法官评判其政策。中国政府六年里一直回避在美国法庭开展贸易诉讼，但逐渐开始小心翼翼、犹豫地参与，成为GPX案中的利害关系方。

代表中国参与反补贴调查的律师一直敦促中国政府参与美国国内司法程序。世贸机制缓慢、且其救济举措只针对未来，时间、规模及特征都极其有限。最理想的结果是胜诉方可向败诉方征收额外关税。由于进出口商品的差异，最终被征收WTO惩罚性关税的商品并非最初的、纠纷产品。因此，WTO机制通过双方联手攻击其他产品解决纠纷，胜诉方的消费者成为受害者。

与世贸机制相比，美国国内司法程序进展更快，救济措施更慷慨大方、更广泛。交纳的惩罚性关税可带息返还，但是世贸裁决无法返还关税。且美国国内司法程序还可更快消除贸易壁垒。美国政府机构可长时间抵制司法裁决，但是该产品市场重新开放的速度将远远超过利用世贸机制解决贸易纠纷的速度，因为政府机构仅享受美国司法程序保护，无法再利用世贸机制提供的程序壁垒。在世贸机制下，双方可反复就救济争执不休，但是一开始就可预见美国国内司法程序，即使这一程序非常漫长。

只有当美国国内司法程序公平透明、双方都相信法律面前人人平等时，它的优越性才能充分体现。总体而言，美国司法实现了它的承诺，GPX案裁决有利于中国。

知法守法将带来回报的承诺没有实现，更讽刺的是中国却面临不依法行事的指控。众议院筹款委员会副主席、民主党人Sander Levin 批评：“中国凭借不守法增强自己的竞争力，这一法案旨在恢复我国的重要工具、敦促中国负责。贸易分会副主席华盛顿州民主党人Jim McDermott 附和道：“中国至今仍违背国际贸易规则，现在我们的法庭却发挥负面作用……”中国天真地信任美国司法体系。贸易分会主席德克萨斯州共和党人Kevin Brady 认为这一法案提供了“符合世贸章程、消除扰乱市场补贴的工具。”可是，这一法案违背了世贸规则，而根据美国自相矛盾的指责：受指控的补贴没有市场可扰乱。

Nothing Unites The United States Congress Like China (And Not In A Good Way): Treating China Like Canada (Maybe Even Worse)

Dr. Elliot J. Feldman — Tue, 20 Mar 2012 09:12:29 -0600

中文请点击这里

We begin today one story in three parts, “Nothing Unites The United States Congress Like China (And Not In A Good Way): Treating China Like Canada (Maybe Even Worse)” by Dr. Elliot J. Feldman. Part One, “Rewriting Subsidies Law To Fit Chinese Facts,” examines the first legislation expressly for trade with China passed by the United States Congress and signed by the President since China’s accession to the WTO a decade ago. Over the years various bills have been introduced aimed at China, especially on currency valuation, but H.R. 4105, mandating the imposition of countervailing duties determined in investigations of subsidy allegations in non-market economies, is the first to win bipartisan and presidential support.

Part Two, which will appear next week, sharply criticizes this legislation because it breaks a promise to China concerning acceptance of the international rule of law and does not conform with WTO obligations. Dr. Feldman demonstrates that the passage of the new law, in deliberately overturning a judicial decision while failing to comply with a related WTO decision, suggests to China that it cannot rely on the rule of law to settle trade disputes with the United States.

Part Three, which will appear two weeks from now, explains that the American treatment of China with respect to the WTO and U.S. domestic law is reminiscent of the American treatment of Canada with reference to NAFTA, the WTO (the GATT at the time) and U.S. law. The United States, after losing trade disputes in the judicial process, changed the law. Dr. Feldman describes the impact of that conduct on trade relations with Canada and predicts that China will react differently and with much greater risk for the international trading system.

Rewriting Subsidies Law To Fit Chinese Facts

The Congress of the United States has been gridlocked for years now by partisan bickering on almost every issue to come before it but one – China. And, in confronting China, the suddenly bipartisan Congress usually has presidential support. As Bill Reinsch, President of the National Foreign Trade Council, recently stated, “For the last 20 years, every presidential challenger has run against every incumbent by accusing him of being soft on China. Any intelligent, prepared administration will do its best to inoculate itself, and this administration has chosen to do that by launching much more aggressive enforcement [of trade actions against China].”

The Administration of Barack Obama and all the remaining Republican candidates for President agree that China trades unfairly in the international marketplace. In a stunning bipartisan display, it took Congress less than three months to become seized of a need for a legislative change and to complete the process. The process itself unfolded in less than a week, and it took only a few days for the President to sign into law the congressional action.

What Happened Before Congress Stepped In?
The United States Court of Appeals for the Federal Circuit, as previously reported on this blog, ruled on December 19, 2011 that U.S. law forbids the application of countervailing duties to non-market economies. GPX International Tire Corporation et. al. v. United States. On March 8, 2012, the U.S. House of Representatives completed the process of overturning the decision of the Court of Appeals, rewriting U.S. law.

From 1986 until November 2006, U.S. law on the subject of non-market economies had been governed by a Court of Appeals decision, Georgetown Steel Corp. v. United States, 801 F.2d 1308 (Fed. Cir.1986). By defining “subsidy” to be a financial contribution by a government that distorts a market, there could be no “subsidy” without a market and, as the Georgetown Steel court suggested, non-market economy governments “would in effect be subsidizing themselves.”

Democrats seized control of Congress in the November 2006 mid-term elections and the Department of Commerce, two weeks later, accepted a petition for countervailing duties on imports of coated free-sheet paper from China. It promptly became routine for petitioners to couple countervailing duty with antidumping petitions, and routine for the Department of Commerce to find both dumping and subsidies by applying, in both, non-market economy methodologies that repudiate domestic values in favor of surrogate prices from third countries.

The United States Court of International Trade (“CIT”) had struck down the subsidy finding of the Department of Commerce on GPX tires twice before, in 2009 and in October 2010, but on narrower grounds effectively affirmed by the World Trade Organization on a Chinese appeal in March 2011. These decisions did not conclude that the application of countervailing duties was forbidden by U.S. law, nor by WTO obligations, but that countervailing duty and antidumping cases potentially lead to a double-counting that unlawfully would exaggerate remedies. The CIT had ruled that the Department of Commerce could not pursue both simultaneously without a methodology to solve the double-counting problem.

The Court of Appeals in the GPX case skipped over the double-counting problem and went straight to the underlying premises of Georgetown Steel. The law, the Court of Appeals concluded, does not permit the assessment of countervailing duties against non-market economies.

Congress To The Rescue
The U.S. Congress in 2012 agrees on almost nothing except an antagonism toward China. Maps and globes still display China as a huge land mass, and most Americans believe that some 1.3 billion people are working there to produce goods that will overwhelm American manufacturing and put Americans out of work, all with the aggressive financial support of a centralized Communist Government.

This capitalist image is little changed from the American caricature of China since the founding of the People’s Republic in 1949. The traditional, sympathetic American view of China, captured best, perhaps, by Pearl Buck’s The Good Earth, transformed with the Cold War. In both the Korean and Vietnamese Wars, Americans envisioned Chinese hordes pouring southward into narrow peninsulas, threatening the survival of nascent democracies. Now, Americans envision those same hordes, but hard at work in soulless factories, exploiting child labor, for the advancement of the Communist state against western capitalism.

Successive Presidents have strived to cure Americans of these distorted images, but every two years when it is time to elect a new Congress, the classic demagoguery of conjuring a common foe has fixed China as a popular target. The unanimous Court of Appeals decision from a three-judge panel chaired by the Chief Judge in December 2011 started a clock because, without a successful request for rehearing en banc or a successful writ of certiorari to the Supreme Court – both improbable – all of the pending and prior countervailing duty determinations against China would be stopped or reversed. Only Congress could prevent a chaotic turnabout, a role Congress (now Republican, confirming the bipartisan antipathy toward China) welcomed because of its popular resonance.

The House of Representatives Ways and Means Committee referred the corrective legislation to the full House on the same day it had been introduced to the Committee, February 29. Less than a week later, on March 6, the Committee’s Republican Chair moved to suspend the rules in order to expedite passage of the bill. All on that same day the House suspended the rules, debated the bill, proceeded through various rule technicalities and voted the bill itself 370-39. It went to the Senate the next day.

On March 7, the Senate read the bill twice, considered it, read it a third time, and passed it without amendment by Unanimous Consent. It was sent to the White House one day later, and was signed by the President on March 13. For anyone wondering how often bills go from committee introduction to presidential signature in a fortnight: not often, but not often is there legislation targeting China on which almost everyone agrees.

What The Legislation Does, And Does Not, Do
H.R. 4105 (112th Congress), “To apply the countervailing duty provisions of the Tariff Act of 1930 to nonmarket economy countries, and for other purposes,” statutorily directs the imposition of countervailing duties on merchandise imported from non-market economy countries with one exception, where “the economy of that country is essentially comprised of a single entity.” This language reflects continuity with one aspect of Georgetown Steel (the reference to subsidizing itself), but also supports the rationale offered by the Department of Commerce in 2007 for finding subsidies in China: there is enough of a market in China, according to the Department of Commerce, to find subsidies, but not enough to treat China as a market economy, nor to find any sector sufficiently market-based to be treated as “market oriented.” It is a position probably indefensible in logic or law prior to H.R. 4105, but now provided with some statutory support, albeit still indirect.

In response to an initial Republican resistance to the new legislation, voiced by House Ways and Means Committee Chairman Dave Camp (R-Michigan), the bill contains a second section, “Adjustment of Antidumping Duty In Certain Proceedings Relating To Imports From Nonmarket Economy Countries.” Camp was concerned that the legislation could violate WTO obligations enunciated in the March 2011 Appellate Body decision warning against double-counting. Officially, the Obama Administration has avoided public pronouncements as to whether the legislation accomplishes Camp’s goal. At the very end of his March 13, 2012 White House press briefing, Administration spokesman Jay Carney was asked:
“Also, the China commerce minister believes that the bill that President signed into law today should not only break the WTO rules but also sort of violate the U.S. domestic trade laws, which America -- trade laws.”

Carney answered evasively:

“Well, I haven’t heard those comments. Obviously the President signed the bill because he thought it was -- it merited signing. So I don’t have any comments with regards to that official's statement.”

Privately, nonetheless, the White House appears convinced that this section of the bill assures that the legislation conforms with WTO obligations. Unfortunately, China’s Commerce Minister is right. The legislation does not comply with WTO obligations.

H.R. 4105 directs the Department of Commerce when finding both dumping and subsidies, to “reduce the antidumping duty by the amount of the increase in the weighted average dumping margin estimated by the administering authority [i.e., the Department of Commerce] . . .” This reduction depends, however upon the Department of Commerce’s ability to “reasonably estimate the extent to which the countervailable subsidy . . . in combination with the use of normal value [from the antidumping calculation] has increased the weighted average dumping margin for the class or kind of merchandise.” When it cannot make that estimate, it cannot make the adjustment, but by statute it must still assess countervailing duties. This statutory mandate is not materially different from the CIT conclusion that effectively halted countervailing duty cases against merchandise from China inasmuch as it instructs the Department of Commerce to do something it does not know how to do, but whereas the CIT concluded that the Department of Commerce consequently should not do it, the statute instructs that it must.

The CIT had ordered the Department of Commerce to figure out a solution to the double-counting problem before finding subsidies. The new legislation orders the Department to find subsidies and then figure out a solution. Under this instruction, the Department is no more likely to figure out a lawful solution than before, but now it will, under statutory direction, double-count. Companies in non-market economies will be required to contest the illegal double-counting on a case-by-case basis.

Finally, the new law contains an astonishing provision regarding its effective date because it “applies to . . . all proceedings initiated . . . on or after November 20, 2006.” The Department of Commerce thus is ordered by statute to revisit all countervailing duty petitions filed against China and Vietnam since November 20, 2006 and find subsidies without regard to double-counting and without regard to decisions of the CIT and the Court of Appeals for the Federal Circuit. It then, to the extent it can figure out how, must try to adjust for double-counting. Petitioners are granted the benefit of a law that did not exist when they filed their petitions.

Belt And Suspenders: Request For Rehearing
The United States and its petitioning allies could avoid reversal of the final subsidies determination in GPX International Tire Corporation and other countervailing duty cases against China and Vietnam only by congressional act or by en banc appeal in the Court of Appeals for the Federal Circuit by March 5. As quickly as Congress moved, the legislation was not in place on time.

The U.S. Department of Justice and the petitioners, including above all the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union of the AFL-CIO-CLC, filed separate petitions at the Court of Appeals for rehearing en banc on March 5. Because the Court of Appeals decision is final (but subject to further appeal), H.R. 4105 could not overturn it as to the parties in the GPX case. Only the court can reverse the specific outcome. The legislation does reach twenty-four existing orders and six pending investigations, none of which went to final decision in the U.S. courts, but only the rehearing petitions can help the GPX petitioners.

Next Week: The Broken Promise to China

今天开始，我们将分三期连续刊登费德门博士的评述《中国将美国国会团结在一起——中国惨遭加拿大待遇(甚至不及)》。第一部分——《重写反补贴法以适应中国特色》，讨论自中国加入世贸组织十年来第一部针对美中贸易制定的美国法律。过去几年里，针对中国及其货币政策的法案数不胜数，但是H.R. 4105是第一部获得两党及总统支持、允许向非市场经济体征收反补贴税的法案。

我们将于下周刊登评述的第二部分，严厉批评这一法案，因为它违背了美国为鼓励中国接受国际法体系而做出的承诺，且不符合世贸组织章程。费德门博士指出这一法案使法院裁决失效并与世贸组织裁决相左，因此它暗示中国依靠法治与美国解决贸易争端是死路一条。

文章的第三部分指出美国依据世贸组织章程及美国法律处理美中贸易，与美国依照世贸组织、《北美自由贸易协定》及本土法律处理美加贸易如出一辙。美国在司法程序中落败后，立即修改法律。费德门博士将分析此举对美加贸易关系的冲击，并预测中国将做出不同反应、且面临更多威胁。

重写反补贴法以适应中国特色

美国国会多年来一直对急需讨论的事项争执不休，只有一个例外——中国。当与中国正面冲突时，国会总是突然统一战线，还获得总统支持。就像美国全国对外贸易委员会( National Foreign Trade Council) 主席Bill Reinsch所指出的那样：“过去二十多年里，每个竞选总统职位的在野党候选人总是指责总统对待中国太软弱。包括本届政府在内的任何智慧、准备充分的政府都竭尽全力（针对中国）采取更严厉的贸易举措。”

奥巴马政府以及共和党候选人都一致认为中国采取不公平贸易政策。国会仅用三个月时间就通过这一法案令人惊讶，几天后总统就签署了这一法案。

国会介入之前

本博客曾报道美国联邦上诉庭于2011年12月19日宣判——美国法律禁止向非市场经济体征收反补贴税（见GPX轮胎公司诉美国一案）。2012年3月8日美国众议院通过法案，驳回上诉庭裁决，重新书写美国法律。

自1986年至2006年11月，乔治城钢铁公司诉美国一案的裁决是美国处理与非市场经济贸易的法律依据。这一裁决指出，“补贴”是政府采取的扰乱市场的财政行为，因此没有市场即意味没有补贴，而非市场经济体政府只是为自身提供补贴。

2006年11月中期选举时，民主党重新掌控国会，美国商务部两周后立即接受反补贴调查申请对国产铜版纸展开调查。此后，美国企业习以为常地提出双反调查申请，而美国商务部也养成采用非市场经济体计算方法、对中国产品双重征税的做法。

美国国际贸易法院分别于2009年及2010年10月驳回美国商务部在GPX轮胎案中做出的反补贴裁决。世贸组织2011年3月的裁决支持这一法院裁决，只是适用范围稍窄。这些裁决并未认定对非市场经济体征收反补贴税属于违法行为或违背世贸承诺，而是指出同时展开双反调查可导致增加惩罚性关税，即双重征税。美国国际贸易法院裁定商务部应在修正双重征税后才可同时展开双反调查。

上诉法院在GPX一案中跳过双重征税，直接讨论乔治城钢铁案的前提，认为这一案例法禁止向非市场经济体征收反补贴税。

国会救驾

美国国会在2012年几乎未就任何议案达成协议，仅在针对中国的行动中意见统一。中国疆域辽阔，几乎所有的美国人都相信1.3亿中国人在遥远的东方努力生产产品直至取代美国产业，造成大量美国人失业。而这一切都离不开中国共产党中央政府提供的财政支持。

自1949年新中国成立以来，资本主义美国对中国的印象并未改观。传统、同情中国的美国观点以赛珍珠的《大地》为代表，但这一观点随着冷战的推移而转变。在越战和朝鲜战争中，美国人看到中国人滔滔不绝地涌入半岛，威胁民主国家的存亡。当前，美国民众眼前浮现的是数以万计辛勤劳动的工人机械地做着枯燥乏味的工作，这其中还包括备受剥削的童工。他们的劳动成果是共产党中国与西方列强竞争的重要支柱。

历任美国总统都努力改变美国人心目中这些错位印象，然而两年一次的美国国会选举都选择中国作为批评目标。2011年12月上诉庭三位法官意见一致的裁决开启了计时器——如果没有全体法官出庭重新判决、或是诉状移送令移送至最高法院（两者都不可能），则所有先前已宣布的调查结果都将失效、当前正展开的反补贴调查也将被迫中止。只有美国国会可以改变这一切，而国会的这一举动深入民心（现在共和党人也承认两党对华态度一致）。

众议院筹款委员会在委员会讨论该议案的当日，也就是2月29日，将这一议案提交众议院全体讨论。不到一周，即3月6日，该委员会共和党主席又暂停常规以加快这一法案的通过。同日，众议院也暂停常规，讨论并以370票对39票通过了这一议案。第二天，这一议案送交参议院。

3月7日，参议院讨论并全票通过了这一议案。次日这一法案被送交白宫，奥巴马总统于3月13日签署了这一法案。人们也许会问，如此迅速讨论是否常见？答案是并不常见，但快速通过人人赞同的中国议案却非常普遍。

法案的权责范围

第112届国会众议院第H.R. 4105号法案——《非市场经济国家适用1930年关税法反补贴条款》，正式立法明文要求向非市场经济国家出口的商品征收反补贴税（当这个国家仅有一个经济体时例外）。这一法案仅沿用了乔治城钢铁案中对补贴的论述，同时支持美国商务部2007年就中国产品征收反补贴税的逻辑：中国存在一定市场经济活动，因此存在补贴；但是不足以成为市场经济体，因为没有一个行业以市场为指导。通过这一法案前，这一立场无论从逻辑还是法律角度看都立不住脚，但是现在忽然却拥有法律支持。

一开始，筹款委员会主席米歇根州Dave Camp众议员为首的众议院共和党人抵制这一新议案，因此这一议案新增了“调整向非市场经济国家出口品征收的反倾销税。”Camp众议员担心这一议案将违反世贸组织承诺，因为2011年世贸组织上诉机构的裁定禁止双重征税。奥巴马政府在公开场合避免就这一议案是否实现了Camp的目标发表官方评论。2012年3月13日白宫新闻发布会上，有记者提问：“中国商务部部长认为总统签署的这一法案不仅违背了世贸章程，也违背了美国贸易法。”白宫新闻发言人Jay Carney回答：“我并未获悉这一评论。总统签署了这一法案，显然他认为这一议案应当成为法律。因此我对中国官员的意见没有任何评论。”

在私下场合，白宫坚信这一法案符合世贸组织章程。遗憾的是，中国商务部长的意见正确，这一法案与世贸章程相左。

H.R. 4105指令美国商务部在调查发现反补贴、反倾销同时存在时，应“降低反倾销税税率，即减去调查机构估计的反倾销税平均税率。”但是降低幅度取决于“美国商务部合理估计反补贴税、以及在反倾销调查中使用的正常价值导致这一类产品反倾销税平均税率的增加幅度。”当美国商务部无法估计这一幅度时，它就无法调整平均税率，但是根据法律规定，它还必须征收反补贴税。这一法律以及国际贸易法庭停止反补贴调查的裁决都针对美国商务部行动，但是国际贸易法庭最后总结认定美国商务部应停止行动，但是这一法案却要求商务部必须采取行动。

国际贸易法庭下令美国商务部在征收反补贴税前找出解决双重征税的方法。新法案却要求商务部先征收反补贴税然后找出解决方案。新法案虽然已经出台，但是美国商务部却并未增加解决双重征税这一难题的可能性，而且还必须依法双重征税。非市场经济国家的企业则必须针对双重征税逐一通过法律途径抗争。

最后，这一新法案的生效日期亦令人惊愕，因为这一法案适用于“2006年11月20日起展开的反补贴调查。”美国商务部因此必须忽视美国国际贸易法庭及上诉庭裁决，重新审理自这一日期以来所有针对中国和越南产品的反补贴调查。并在能力允许的范围内，找到克服双重征税的方法。调查申请人因此享受他们在递交申请时法律并未授予的权利。

申请重新审理

美国政府及其调查申请方只可通过两个渠道维持GPX轮胎案以及其他针对中国和越南产品展开的反补贴调查的结果：国会行动或是在3月5日前通过联邦上诉庭重新审判。虽然国会加速审议通过这一法案，但还是迟了一步。

截至3月5日，美国司法部以及劳工联合会等申请人分别向联邦上诉庭提出重新审理要求。因为上诉庭的裁决已为最终裁决，因此H.R. 4105不适用于GPX轮胎案中的利害关系方。只有法院可以驳回这一裁决。这一法案也无法触及已经颁布的24项反补贴令以及6项正在进行的调查（法院未就其中任何一项调查做出最终裁决），只有重新审理可以帮助GPX案的反补贴调查申请方。

Driving Over The Brink

Dr. Elliot J. Feldman — Fri, 17 Feb 2012 15:43:23 -0600

Two years ago, we reported that China was initiating an investigation, based on dumping and subsidy allegations, into imports of U.S. automobiles. We warned that the published petition was more a political than a legal document, telling a peculiar and nationalistic version of industrial history and concentrating on alleged subsidies, particularly for the development of electric cars, that had nothing to do with the subject merchandise. The petition was a political statement about a rising China and a declining United States.

Although the implementation of the WTO trade obligations into Chinese law sets schedules for antidumping and countervailing duty proceedings, China’s Ministry of Commerce (“MOFCOM”) is not slave to the prescribed deadlines. It does not publish petitions upon receipt, nor even generally make their existence known (although it often leaks information about them to favored Chinese lawyers). It may decide, based on its own judgment of the public interest, whether to initiate an investigation, regardless of a petition’s worthiness. It does not adhere to deadlines to initiate investigations following the receipt of petitions it accepts, nor does it adhere to deadlines to announce results. Consequently, when investigations are initiated, and when results are announced, inevitably arouse suspicions as to whether timing has been political and reactive, and whether outcomes adverse to foreign interests may be retaliatory.

China’s December 14, 2011 announcement that it was imposing antidumping and countervailing duties on certain automobiles from the United States, culminating an investigation begun conspicuously in November 2009 on the eve of President Obama’s arrival in Beijing for a state visit and just after he had imposed safeguard duties on Chinese tires, was equally conspicuous in its timing because it followed almost immediately upon the initiation of American investigations into Chinese solar cells and after China’s appeal of the tires safeguard at the WTO had been denied. According to MOFCOM’s internal schedule, the imposition of duties followed a final determination by more than seven months.

The imported cars subject to duties do not boast green technology, but the petition had complained at length about green subsidies, especially for the development of electric cars that China and the United States had pledged, at the time of the announced initiation of the investigation, to develop together. The cases on cars and solar cells, as they refer and relate to green technologies, are linked, at least as much as the cases on cars and tires. China may have decided to impose duties on the American cars most any time during the last seven months or more (regardless of the “official” date now displayed on the record of the case), but it is reasonable to interpret the timing of the announcement, if not of the decision, as retaliatory, whether because of China’s failed appeal on tires, or because of the American investigation into solar cells.

The December 14 announcement is notable in several respects. There is consensus that the duties will have little or no effect on trade in automobiles. The decision has aroused almost universal agreement that it is retaliatory, and many Chinese (experts and former officials) have asserted as much. The Obama Administration and Congress have expressed dismay if not outrage. Although the decision required an injury determination, the paltry importation of cars from the United States, particularly in market niches not served by domestic manufacture in China, could inflict no discernible injury on a Chinese industry. It is the injury determination, above all, that makes the action almost purely political, albeit the subsidy judgment, in particular, is well-founded.

Retaliation
Chinese themselves seem to boast that trade remedy actions against products from the United States are retaliatory. Zhou Shijian, cited as a “senior expert on China-US trade” from Tsinghua University, has been quoted as calling the duty on American cars “proper and equal,” a “counterattack to US trade investigations aimed at China.” Li Zhongzhou, identified as “a former official from the Ministry of Commerce and a WTO expert from the EU-China Trade Project,” has been quoted saying, “China should strike back in its own good time as the US always stirs up investigations targeting China by routinely using trade remedy measures.” China Daily has quoted Zhou Shijian saying, “It’s reasonable self-defense for China. An eye for an eye is a sound way for China to face trade disputes with the US under WTO regulations.”

The South China Morning Post immediately labeled the announcement of duties on American cars as “Beijing’s retaliation after China lost its final appeal to the WTO in September against a 2009 US move to impose anti-dumping duties on tyres imported from China.” Of course, the United States did not impose anti-dumping duties on imported tires, instead relying on the safeguard provisions of China’s accession protocol to the WTO, and China’s WTO appeal never stood any chance of success because it was wrong on the law. The automobiles investigation launched in November 2009 resulted in duties in December 2011 just as the tires safeguard decided by Obama in November 2009 resulted in a WTO appellate decision in September 2011. The initiation dates made the outcome dates linked; there was no need for a calculated retaliation.

Timing, however coincidental, is at the heart of the conspiracy theories about retaliation. “Experts” in both countries assume that officials in the other country control timing. That China does not disclose the receipt and consideration of petitions contributes to the suspicions, and Chinese make assumptions about U.S. control notwithstanding the legal and practical impediments.

The Chinese declarations of retaliation are unfortunate because they assume that the United States orchestrates trade attacks against China. The U.S. Department of Commerce and the U.S. International Trade Commission do not solicit trade remedy petitions, and are bound by law, with minimal discretion, to initiate investigations when petitions satisfy legal requirements. Chinese experts may be skeptical given their experience in China, but trade remedies in the United States reflect a free market for petitioners within a law that has no public interest exceptions: the government must investigate when an identifiable industry files a qualifying petition.

It is not as if the U.S. agencies are taken by surprise by petitions, nor unable to encourage or discourage them. Both trade agencies assist prospective petitioners with drafts so that, when actually filed, a petition is likely to succeed in launching investigations. In the process of providing such assistance, which is undertaken in confidence (thereby preserving a petitioner’s advantage of surprise), the agencies can signal whether a petition is likely to succeed and whether it appears well-founded. Nonetheless, any industry determined to file can do so, whenever it wants. And when it files, its non-confidential version instantly becomes a public document.

In theory, the same rules apply in China. Any industry can file a trade remedy petition whenever it likes. However, MOFCOM does not reveal when it has received a petition, can decide whether to initiate an investigation without explanation, and can decide when to act because no one knows when a petition has been filed. Moreover, MOFCOM does not release full information about a petition and thereby arouses suspicion that MOFCOM itself might sometimes be the author. The petition against American automobiles could have been a MOFCOM document because it could not have been prepared by a private petitioner in the very short interval between the Obama safeguard decision on Chinese tires and MOFCOM’s initiation of the investigation.

Inside U.S. Trade quotes “a U.S. business source” in its December 16, 2011 edition complaining about Chinese “tit-for-tat” because the results on American automobiles were released “just days after the Office of the U.S.Trade Representative announced it would pursue a legal challenge at the World Trade Organization against Chinese AD/CVD on chicken ‘broiler products’ from the U.S.” The same “source” complained about China’s initiation of an investigation of U.S. shipments of polysilicon (essential for solar cell manufacture) right after the U.S. opened its investigation of Chinese solar panels and cells. In the normal course of business, such investigations, which must be based on petitions satisfying WTO rules, could not be launched instantly, but in an environment of mutual suspicion the normal course of business is regarded as captive to government control, and MOFCOM can act on petitions without warning and whenever it likes.

Subsidies
The United States is accustomed to accusing other governments of subsidizing industries exporting to the United States in violation of world trade rules. Not all subsidies contravene the rules of the World Trade Organization, but subsidies deliberately in support of exporting industries usually are. The routine American complaint is that American companies are the best in the world, able to compete with anyone, but not able to compete with foreign governments.

Because Communist countries made state enterprises their global competitors, the United States passed special laws to deal with them. For all that China has done to make itself a capitalist competitor, it does not deny Communist Party control and does not hide state enterprises behind private cloaks. The United States insists, therefore, that China is a non-market economy and that all of its state enterprises are effectively subsidized by the state.

The dilemma for the United States, amplified in the most recent decision of the U.S. Court of Appeals for the Federal Circuit, is that petitioners cannot challenge subsidies in non-market economies because subsidies are countervailable (contrary to international trade rules) only when they distort markets. Non-market economies have no markets to distort. The Court of Appeals therefore has ruled that countervailing duty cases cannot be brought against non-market economies, while state control of the economy implies that almost everything is unfairly subsidized.

Americans have grown so accustomed to perceiving foreign governments as subsidizing industry that they have become close to unconscious about the manifold subsidies in the U.S. economy. What they often see as illegal in other countries, such as European or Canadian farm subsidies, they see as innocently in the public interest in the United States. For many years, for example,the United States imposed countervailing duties on Canadian provincial crop insurance even as American crop insurance was more extensive and generous. The only difference was that Canadian agriculture was exported to the United States while little American agriculture made its way into Canada. No one seemed to observe that foreign agriculture would have difficulty competing in the United States against the heavily subsidized domestic product.

Americans became especially unaccustomed to foreign governments challenging American subsidies, but the Chinese challenge in 2009 was made inevitable by the American Recovery and Reinvestment Act. The United States had begun countervailing alleged Chinese subsidies in 2006, targeting especially Chinese bank loans because of state ownership of the banks. All Chinese state enterprises became targets because they were state enterprises. Now, the U.S. Government had acquired majority shares in many U.S. banks and in much of the automobile industry. The United States insisted this state ownership was temporary, but in no other significant way was there a distinction between Chinese and American ownership. If the United States were to countervail Chinese state ownership and bank loans and guarantees, China (and other countries) inevitably would begin to countervail American government ownership.

The solution to this escalation in world trade antagonism and protectionism, triggered by global recession and government rescues,was to reconsider the countervailing duty regime and what was to be considered an illegal subsidy. Instead, the United States was introduced to countervailing duties from the other side, at the very moment, albeit coincidentally, when it learned that this weapon was no longer available to the United States in its trade contests with China.

Symbolic Results And Injury
China assesses a 25 percent tariff on all imported automobiles, a price that has been very effective in persuading foreign manufacturers to produce in China. Consequently, only the most expensive cars for which buyers are relatively price-insensitive are manufactured elsewhere and imported into China. Manufacturers cannot afford to export to China cars that need to compete on price.

The additional tariffs China is now imposing on automobiles manufactured in the United States will have little practical effect. Chinese buyers interested in BMW sport utility vehicles from South Carolina that already cost upwards of $70,000 in China will not be deterred by a 2 percent surcharge, nor will buyers of Mercedes M-Class, R-Class, and GL-Class SUVs choose something else because of a 2.7 percent surcharge. Besides, only about 29,000 BMW and16,000 Mercedes in these classes were exported to China last year.

General Motors will have shipped in 2011 only around 11,000 SUVs and large vehicles, particularly the Buick Enclave, the Cadillac STS and the Cadillac Escalade. Even with a 21.8 percent duty the impact on sales probably will be negligible. Honda, selling 362 TL Model Acuras in China into December 2011, can hardly be concerned about a 4.1 percent antidumping duty. Only Chrysler, perhaps, needs to be concerned, with a 15 percent overall surcharge and substantial exporting ambitions, but for now the only vehicles it is shipping that are affected include the Jeep Grand Cherokee and, in future, its 300 Model large sedan. In the first ten months of 2011, Chrysler sold 13,686 Jeeps in China.

BMW, Mercedes, and Honda were all found free of countervailable subsidies, presumably because they were not part of the Obama bailout. The likelihood that they are dumping these large and expensive vehicles in China is small. The message of the Chinese decision, then, is that foreign manufacturers wishing to sell cars in China should manufacture them in China, not in the United States, because they could face harassment, if not legitimate duties, coming from the United States. China apparently wants to make the likes of BMW and Mercedes and Honda think again before they expand manufacturing in the United States. They should prefer, China seems to be telling them, to create manufacturing jobs in China.

For the American companies, the message was also indirect. Ford was investigated even though it does not export U.S.-made vehicles to China at all. The point seems to have been that Ford turned down federal rescue funds in 2009 and so was found in the investigation to be free of countervailable subsidies – even though there was no product to countervail. Investigating Ford was another way of sending a message to General Motors and Chrysler, who were found with countervailing duty rates of 12.9 percent and 6.2 percent respectively.

In order to impose antidumping and countervailing duties, China had to find that the American imports caused injury to a Chinese industry. MOFCOM raised the standard, dutifully declaring that the dumped and subsidized imports “substantially damaged China’s auto industry,” even though China’s auto industry does not manufacture any vehicles of the size, style, or price range of the subject merchandise and the number of imports is almost negligible. The injury determination thus was not credible, seeming to confirm MOFCOM’s political intent.

The U.S. Reaction
The American reaction to the new Chinese tariffs was predictably as exaggerated as China’s triumphalism about finding countervailable subsidies and dumping. U.S. Trade Representative Ron Kirk called China’s decision part of a “disturbing trend.” In a joint, bipartisan statement (nothing rallies congressional unity like China), House Ways & Means Committee Chairman Dave Camp (R-MI), Ranking Committee Member Sander Levin (D-MI), Trade Subcommittee Chairman Kevin Brady (R-TX), and Trade Subcommittee Ranking Member Jim McDermott (D-WA), saying they were “extremely concerned,” declared, “China’s actions are unjustifiable, and unfortunately, this appears to be just one more instance of impermissible Chinese retaliation against the United States and other trading partners.” They added, “This action appears to violate China’s WTO commitments, and we urge the Administration to exercise all available options to enforce U.S. rights, including, as appropriate, enforcing U.S. rights at the World Trade Organization.” Fortunately, Ambassador Kirk refrained from claiming the Chinese action violative of WTO obligations, and new Commerce Secretary John Bryson, in a coincidental speech criticizing China, said nothing about the automotive tariffs.

Policies to save the American automobile industry from extinction in the recession exposed exported vehicles to unfair subsidy claims. China was entirely justified in challenging those subsidies. China probably was less justified, however, in finding dumping of a handful of third country luxury vehicles, and arguably not justified at all in finding “serious damage” to a Chinese industry in the absence of a like competitive product. Yet, the specifics of this case are not what the case is about. Instead, the case appears to be about messages, subliminal and blunt, about state aid for green technologies and about domestic and foreign manufacture, affecting trade policy more than trade, and sales attitudes more than sales.

The House of Representatives leaders who issued the joint statement probably should be “extremely concerned,” but more by the competitive messaging than by competition, and more by outspoken boasting about retaliation than about the effectiveness of the WTO. The cars case is troubling, not because it will impede trade in cars, but because it threatens to impact trade relations and competition more generally and in the long term.

The Sun Does Not Shine on Trade Policy: Hypocrisy in Technological Green

Dr. Elliot J. Feldman — Wed, 18 Jan 2012 16:53:41 -0600

The Plan To Make The Planet Green In Cooperation With China

President Barack Obama committed his Administration soon after his election in November 2008 to the development of green technologies. He posited that investment in the creation of systems and equipment that would roll back climate change would create jobs while saving the planet, and as everyone in every country ultimately would share the mission of saving the planet, an American lead in green technologies would fuel exports. President Obama decided in the depths of the Great Recession that doubling American exports in five years was a key to recovery. He could see before him a coherent agenda: saving the planet and the economy at the same time by creating new jobs in new industries.

President Obama’s plans for green technology were compatible with China’s, whose published green technology plan in 2007 addressed the problems of energy dependence and severe, deadly pollution from coal. On the occasion of a state visit just one year after his election, in November 2009, President Obama enlisted China in his plan, although arguably it was the other way around. With agreement that “a green and low-carbon economy is essential and that the clean energy industry will provide vast opportunities for citizens of both countries in the years ahead,” China and the United States, according to the White House, committed “to strengthen cooperation in promoting clean air, water, transportation, electricity, and resource conservation” in a Ten Year Framework on Energy and Environment Cooperation. A new U.S.-China Energy Efficiency Action Plan was to be the vehicle for “the United States and China [to] work together to achieve cost-effective energy efficiency improvements in industry, buildings and consumer products through technical cooperation, demonstration, and policy exchanges. Noting both countries’ significant investments in energy efficiency, the two Presidents underscored the enormous opportunities to create jobs and enhance economic growth through energy savings.”

In pursuit of these goals, China and the United States created a joint “Clean Energy Research Center” to develop energy efficiency in buildings. They launched the “U.S.-China Renewable Energy Partnership” to “chart a pathway to wide-scale deployment of wind, solar, advanced bio-fuels, and a modern electric power grid in both countries and [to] cooperate in designing and implementing the policy and technical tools necessary to make that vision possible. Given the combined market size of the two countries,” proclaimed the White House Press Statement of November 17, 2009, “accelerated deployment of renewable energy in the United States and China can significantly reduce the cost of these technologies globally.”

China and the United States both understood well in 2009 what it meant for the two governments to commit to the development of green industries. Both contributed abundant research and development funds, China relying on its traditional state apparatus and Obama tapping into the $734 billion from Congress in the American Recovery and Reinvestment Act. In both countries, local, state, county and provincial governments are competing to attract industry and jobs, so where central or federal government funds have been available, non-central and non-federal financial incentives have been supplemental and generous. Once the Presidents of both countries declared their respective and joint commitments to this sector, the money flowed.

Collaboration Collapses

Less than a year after the announcements of collaboration between China and the United States, on October 15, 2010, the United States Steelworkers filed a petition, under Section 301 of the trade law, containing “allegations relating to a variety of Chinese practices affecting trade and investments in the green technology sector.” The United States Trade Representative (“USTR”) investigated and resolved a number of the allegations, primarily through Chinese commitments to terminate programs (and hence retard the global move to green technologies to which the two countries had pledged just a year earlier), but in December 2010 the United States formally requested consultations at the World Trade Organization (“WTO”) concerning China’s “Special Fund for Wind Power Manufacturing,” which the United States alleged was an illegal import substitution subsidy. Some other allegations remained under investigation at USTR.

Import substitution subsidies are decidedly protectionist, expressly to protect jobs by restricting inputs to domestically manufactured products. They are forbidden under WTO rules. They do not increase the dissemination of a finished product, and to the extent they are perceived as necessary, they may be substituting a less competitive component whose jobs, consequently, belong in the country most efficient in production. The United States certainly had a legitimate complaint, but the bigger picture remains the bilateral commitment to green technologies and the U.S. initiative to question China’s pathway to accomplishment of the commitment.

The Chinese programs, like many similar programs in the United States, were designed to “accelerate deployment of renewable energy,” although sometimes the Chinese programs expressly favored Chinese products. They were a logical response to the agreement, in 2009, that “climate change is one of the greatest challenges of our time.” According to the White House, “The two sides [China and the United States] maintain that a vigorous response is necessary and that international cooperation is indispensable in responding to this challenge.” Both countries interpreted “vigorous response” to mean, at a minimum, substantial financial aid to nurture infant industries. Pursuit of jobs meant, at least for China, favoring Chinese production.

Commitments of funds, whether through grants or loans or loan guarantees or tax breaks, are made through public policy choices. Deliberate decisions are made when money is spent or taxes forgiven. Even as some economists may discourage the state from exercising such choices and prefer the market to pick all winners and losers, no modern economy functions without governments offering incentives for some industries. Indeed, even the trade laws have provisions for “infant industries.” Nonetheless, the trade laws generally oppose government subsidies in a quest for “pure” competition.

The trade laws, especially in the United States, delegate to private interests rights to countermand public policy. They are designed to encourage competition and inhibit government aid. However much the Chinese and American governments may have agreed to collaborate in green technologies and support the development of related industries, the trade laws, particularly in the United States where there is no public interest exception, would limit their ability to do so.

The WTO challenge in 2010 against China’s green technology sector arose from a petition of a powerful trade union that had contributed significantly to President Obama’s 2008 election. It was the same trade union that had induced the President’s action a year earlier on low-cost tires. Whatever the President’s sincerity to collaborate with China in the development and accelerated deployment of low-carbon and renewable energy technologies, special interests and the trade laws had even more to say about the direction in which the President could go.

The two primary areas of new, green technology, apart from electric cars (which involve their own story discussed previously on this blog and to be revisited in a separate article following this one), are energy derived from wind and the sun. The United States complained to the WTO about China’s support of wind turbines; the U.S. Department of Commerce and the U.S. International Trade Commission now have taken on, one year after the WTO request for consultations on wind, China’s support for solar energy. China’s decision to impose duties on U.S. cars fairly completes the collaboration celebrated in the 2009 summit. Rather than collaborate to protect the planet against climate change, the United States and China are in a trade war over government support for the very public interest objectives they mutually endorsed.

Subsidizing Solar Power

Nothing illustrates President Obama’s coherent plan, China’s long-term plans, and the difficulty for the United States to collaborate with China on saving the planet, more than solar cells and solar power plants. The President understood the mass production of affordable solar cells would mean the development and expansion of a new industry, creating potentially thousands of new jobs, exactly as envisioned by the White House in November 2009. The product would replace carbon consumption with clean energy free of carbon emissions, reducing dependence on foreign oil and on coal. Inasmuch as almost every country would like to be free of dependence on oil and coal -- because of their direct costs, foreign policy implications, and environmental and health impact -- solar cells (like wind turbines) would be attractive to almost every human being, especially if they were produced at an affordable price. Harnessing the natural and renewable energy of sun and wind seemed far more sensible than the consumption of non-renewable natural resources, ultimately, and if for no other reason, because oil (and gas) and coal are potentially finite; the energy of the sun and wind are infinite.

Although a policy of subsidizing green technologies began with President George W. Bush, it accelerated and enlarged under Obama because of conviction, ideology, and the recession. Obama wanted to prove he was not beholden to big energy interests in the oil, gas and coal industries. He believed in the superiority of clean energy. And he believed a commitment to clean energy could help pull the economy out of recession – reducing fuel costs, lowering the trade deficit by reducing dependence on foreign resources, creating jobs to produce a domestic energy alternative and to export a universally desirable product.

There are many ways for governments to encourage industries. In the United States, the preferred way historically has been through the tax code. Companies can defer taxes, or take research and development credits, or enjoy particularized amortization, or receive many other special benefits, especially depending on the level of government. Local governments can defer or forgive property taxes, for example; state governments can exempt companies from sales or excise taxes, and can order public utilities to buy power from renewable sources on long-term contracts that benefit the energy producers more than consumers, who may pay a premium for the privilege of using green energy. The only apparent limitation on the ways in which companies can benefit from tax breaks and other subsidies is the imagination of the companies and their tax lawyers.

Solar energy, and solar cells in particular, have become the poster children for creative subsidies, not only in the tax code and regulations. The New York Times has offered the example of NRG Energy in California, which the Times estimates has received a “banquet of government subsidies valued at more than $5.5 billion,” beginning with below market construction loans and loan guarantees and including cash grants from the Treasury Department. California provides a perpetual property tax holiday, while mandating public utilities to buy a substantial portion of their energy from solar suppliers, usually at a premium passed on to ratepayers. Accelerated tax depreciation then completes the corporate savings.

The banquet is not limited to American companies, but is restricted to projects in the United States. The Times reports on Brookfield Asset Management, a Canadian investment firm, collecting enough in subsidies for a New Hampshire wind farm to cover between 46 and 80 percent of its entire cost in a $229 million project.

The backdrop for this bonanza for renewable energy producers is Solyndra, erstwhile manufacturer of the kinds of solar cells destined to populate “solar cities,” vast areas of solar power generation. Solyndra was trying to develop new and better solar cells that do not rely on the polysilicon whose export from China has been controlled by the Chinese government. Solyndra is the celebrated start-up on which the Obama Administration lost $528 million in loan guarantees when the company went bankrupt, proving that loan guarantees can be meaningful subsidies by transferring risk from the private sector to the government, and proving that governments, too, can lose bets.

The Solar Cells Case

When U.S. solar manufacturers could not agree to petition for tariffs against Chinese imports, a breakaway group of eight formed a new coalition, led by a German subsidiary, filing on October 19, 2011 what may be, according to World Trade Online, “the largest trade remedy petition ever brought against China and the first on a renewable energy product.” The coalition, led by the German-owned SolarWorld Industries (the other companies have refused to disclose their identities), alleged both dumping and illegal subsidies, notwithstanding that the U.S. Court of International Trade (“CIT”) has ruled that the two cannot be brought together against China as long as the United States treats China as a non-market economy (“NME”), and the U.S. Court of Appeals for the Federal Circuit (“CAFC”) has upheld the CIT and gone further, ruling that countervailing duty cases against NME countries are forbidden altogether. Tianjin United Tire & Rubber v. United States, December 19, 2011. The methodology of NME status, the CIT ruled, guarantees double-counting unfair trade; the CAFC has added that the governing statute forbids applying the countervailing duty law to NME countries because it incorporates earlier judicial rulings, particularly in the case of Georgetown Steel Corp. v. United States. And, at the heart of the countervailing duty (subsidy) allegations in the petition against solar cells is a complaint about Chinese currency valuation, a subject the Department of Commerce has refused repeatedly to consider in petitions against Chinese imports. The countervailing duty complaint, pursuant to the CAFC decision, must now be abandoned, and with it the complaint about currency valuation.

For duties to be imposed once dumping is found, the trade law requires only that “an industry” in the United States be materially injured or threatened with material injury by reason of the dumped or subsidized imports. In this case, there is more than one industry impacted by Chinese imports. One could not reasonably doubt that the wave of Chinese imports since 2007 has been inundating the U.S. market and driving down the price for U.S.-manufactured solar cells (and solar cells from other countries; it is not merely coincidental that the leading petitioner is the wholly owned subsidiary of a German company that also exports to the United States and is challenged by Chinese imports). But even as the Chinese imports are competing successfully with the domestic product (as demonstrated by the increasing market share), the Chinese competition probably does not impact net jobs negatively because the manufacture of solar cells does not generate as many jobs as their installation. SolarWorld, the largest producer in the United States and the leader of the petitioning coalition, has boasted that labor is less than 10 percent of its costs. As Matthew Wald has reported in The New York Times, because solar cells are made substantially by robots, and there are no moving parts to service once they are up and running, they “may be an odd choice for job creation.”

The more solar cells are available, and the more their price falls, the more the installing industry generates jobs. Conversely, were the price of solar cells to stay high (as the petition seeks), fewer would be sold and there would be fewer jobs for installing them.

The different impact on different industries is substantial. Wald discloses a 2011 report from the Solar Foundation, which advocates for solar manufacturers, that there are only about 24,000 jobs in solar manufacturing in the United States. By contrast, there are 52,500 jobs in installation, up 6.8 percent since 2010. The implication, although not thoroughly examined by anyone to date, is that Chinese imports may be hurting domestic manufacturers (and employment in that industry may be declining), but they are increasing jobs for installers while lowering energy costs with renewable energy. Until this surge in Chinese imports of solar cells, renewable energy came at a premium, with customers paying extra to receive electricity from wind or solar sources instead of coal, oil, or gas.

Because there is no public interest exception in U.S. trade law, there is no way for the agencies or courts to consider the competing interests of related industries. The U.S. manufacturers want the price of solar cells to go back up. They prefer unit profits to bulk sales. The companies that install solar cells, however, want the price to continue down. It is less important who sells them solar cells, although they are concerned about quality. More important is a price so attractive that energy produced from the sun is competitive with hydrocarbons. The price stimulated by the surge of Chinese imports has been creating that direct competition.

Of course, more jobs for solar installers potentially mean fewer jobs for oil, gas, and coal workers, because as more energy is generated with renewable energy, the less may be required from traditional natural resources. Notwithstanding an overall global growth in demand for energy, in the United States the competition seems to support one industry at the expense of others.

Solar wattage has grown more than 70 percent/annum in the United States since 2008. China’s share of that market has grown from close to nothing in 2006 to 50 percent in 2011. In 2008, the average price of solar panels was $3.30/solar watt of capacity. When the U.S. manufacturers filed their petition, the price had fallen to $1.00-1.20. It has been good for consumers, and good for a related industry. Inevitably it is not so good for domestic solar cell manufacturers, some of whom have been moving, themselves, to manufacture in China, while China’s largest producer, SunTech, has put up a factory in Arizona to assemble parts coming from China.

The very nature of the solar cell industry makes it a poor candidate for job creation, and the Chinese competition has limited its promise for exports. Of course, the U.S. industry could try to imitate the Chinese industry, committing to huge volumes at low prices. But, the U.S. industry has preferred innovation, which seems to carry more risk. Solyndra was innovating, and it failed. Nonetheless, China, too, has problems, apparently over-producing for a consumer market that, despite rapid adoption and conversion, still cannot keep demand up to the supply.

The Hypocrisy Of The Trade Law And Its Application

President Obama could not have been clearer in defining the public interest: convert from carbon-intensive to green energy production. The public policy would combat climate change, clean up the environment, improve public health, welcome innovation, create new jobs, increase exports and improve trade balances. Collaborating with China would be important because the United States, without China, could not reverse the direction of climate change, and with China the potential market ought to accommodate the full productive capacity of both. The United States could continue to be a center of innovation; Chinese adoption of American innovation could mean a continuing and ever-expanding market for American ideas.

China proceeded more quickly and effectively than industries in the United States. There is little to separate them in terms of subsidies. The United States has been pouring money into solar development and has taken over most if not all the risk from the private sector. President Obama complained, on October 6, 2011, “the Chinese government will say, ‘We’re going to help you get started, we’ll help you scale up, we’ll give you low-interest loans or no-interest loans, we will give siting, we will do whatever it takes for you to get started here.’” Yet, most of what he said the Chinese government would say to solar start-ups the United States has been saying, too. And when he added, on November 2, that there are “questionable competitive practices coming out of China” in clean energy, he might have heard a similar complaint in the United States from the oil, gas, and coal industries. Their difficulty in complaining, however, arises from the special place they have enjoyed in the tax code for many decades.

In cases such as solar cells, the trade law works directly against the public interest. The public interest must be for more, affordable solar power, not less. Yet, the trade law requires that a petition from an industry demonstrating material injury or threat of injury to that industry from dumped foreign imports must lead to dumping duties, raising the price of the imports or even excluding them from the U.S. market. The U.S. government cannot prefer its notion of the public interest to the automatic commands embedded in the trade law obligations to respect the elements of a properly executed petition presented by private parties. Nor can it weigh the interests of another industry against the determination of the petitioner. Indeed, it is the absence of a public interest provision in the trade law that prevents the government from having a trade policy.

In the solar cells case, as in the low-cost tire safeguard a year ago, the public interest is determined by narrow private interests empowered even to produce a trade war. The United States Department of Commerce and the International Trade Commission must now, by law, check off a list of criteria leading to tariffs on Chinese imports that are more likely to cost American jobs installing solar power, increase prices for consumers of clean energy, and consign millions of people to continuing exposure to degraded and polluted air, all to assist an industry that may not have a significant manufacturing future and, if it did, would not likely create many jobs.

Rhetorically, China reacted angrily and quickly on news of the petition and the initiation of investigations. Practically, China announced the imposition of dumping and countervailing duties on U.S. cars, which the Financial Times promptly characterized as “retaliatory.” Mercedes, BMW, GM, Ford, Chrysler and Honda were all hit for cars manufactured in the United States and exported to China.

The complaining solar cells industry is a beneficiary of extraordinary, possibly unprecedented public largesse. Now it has turned to the trade law for still more help, and has forced the Obama Administration to question the Chinese effort to accelerate the deployment of clean energy, the very policy to which China and the United States agreed just two years ago. The United States has gone to the WTO to stop the Chinese from doing almost exactly what the United States and China agreed both should do, and is now also trying to stop China from fulfilling its promise within U.S. law. The trade law thus champions narrow private interests and forces the Administration to contradict what it had defined as the public interest, both at home and in its foreign commercial policy.

U.S. Appellate Court Rules That Commerce May Not Apply The Countervailing Duty Law To Non-Market Economies

John J. Burke — Wed, 28 Dec 2011 15:05:17 -0600

This blog reported on August 30, 2009 that Chief Judge Jane Restani of the U.S. Court of International Trade (“CIT”) ordered the U.S. Department of Commerce (“Commerce”) to revoke the countervailing duty ("CVD") order on pneumatic off-the-road tires from the People’s Republic of China in a case titled GPX International Tire Corporation v. United States. Her reasoning was that Commerce was unable to eliminate the double-counting inherent in imposing CVDs while at the same time imposing antidumping duties calculated by using Commerce's non-market economy ("NME") methodology. Commerce appealed the CIT’s decision to the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”). On December 19, 2011, the Federal Circuit upheld the CIT’s decision but for different reasons than those offered by Chief Judge Restani.

The Federal Circuit held that the U.S. CVD statute prohibits applying countervailing duties to NMEs. It found:

that when amending and reenacting [the] countervailing duty law in 1988 and 1994, Congress legislatively ratified earlier consistent administrative and judicial interpretations that government payments cannot be characterized as “subsidies” in a non-market economy context, and thus that countervailing duty law does not apply to [non-market economy] countries.

This finding, as a matter of U.S. law, definitively prohibits Commerce from applying CVDs even in cases without a companion antidumping investigation where there is no risk of double-counting. It has much broader impact than the CIT decision that Commerce appealed because the CIT would have permitted CVD investigations and orders, denying only CVD investigations and orders simulaneous and on the same goods as antidumping orders. It also has much broader impact than the WTO ruling in China’s favor on the application of countervailing duties in non-market economy cases, as reported on this blog on April 25, 2011, because the WTO challenge was based exclusively on the issue of double-counting.

Commerce determined that the CVD law could not apply to NMEs in a 1983 steel case against Czechoslovakia. The petitioners appealed. The Federal Circuit agreed with Commerce and established the rule that CVD petitions could not be filed against NMEs in Georgetown Steel Corp. v. United States.

In GPX Tire Corporation, the Federal Circuit reviewed the legislative history and concluded that Congress was well aware that Commerce and the courts were interpreting the CVD law as being inapplicable to NMEs when Congress amended the CVD law in 1984, 1988 and again in 1994. The Federal Circuit held that congressional awareness of this interpretation, when it amended the statute, constitutes legislative ratification of that interpretation. The court reasoned that in the face of this legislative ratification of Commerce’s previous determination that the CVD laws do not apply to NMEs, Commerce is no longer free to change its mind. The Federal Circuit concluded that:

Although Commerce has wide discretion in administering countervailing duty and antidumping law, it cannot exercise this discretion contrary to congressional intent. We affirm the holding of the Trade Court that countervailing duties cannot be applied to goods from [non-market economy] countries. As we concluded in Georgetown Steel, if Commerce believes that the law should be changed, the appropriate approach is to seek legislative change.

Commerce must now wish it had never appealed Judge Restani’s decision. Under the U.S. judicial system, Judge Restani’s decision only bound Commerce in the specific case that she had decided. Commerce was free to continue to apply countervailing duties in other NME cases because the CIT does not set precedent and its decsions only govern specific cases. By contrast, the Federal Circuit’s decision is precedent that binds the lower courts and Commerce not only in the specific case before the court, but in all future cases.

Judge Restani’s decision was based on the double-counting problem and had left Commerce free to use the CVD law in any cases in which there was not a companion antidumping case. It also had left open the possibility that Commerce, in a future case, might find a solution to the double-counting problem and impose both antidumping and countervailing duties on the same product. Because the Federal Circuit’s decision is based on its finding that the U.S. statute prohibits applying countervailing duties to NMEs, it will take an act of Congress before Commerce can again impose countervailing duties on a non-market economy.

China Challenges US Continuation Of Practice Inflating Dumping Margins Through Zeroing Almost A Decade After The WTO Struck That Practice Down

John J. Burke — Wed, 30 Nov 2011 20:40:11 -0600

China requested a WTO panel on October 13, 2011 challenging the U.S. practice of zeroing in the 2004 antidumping investigation involving warm water shrimp and the 2006 antidumping investigation of diamond saw blades. This challenge to the U.S. Department of Commerce’s (“Commerce”) practice of zeroing to inflate dumping margins is the 10th such challenge since the WTO Appellate Body first condemned the practice in 2004.

The United States apparently recognizes that China likely will succeed in its challenge. The two countries agreed to procedures to accelerate the panel process in which the United States agreed not to contest China's claim that the measures identified in the Panel Request are inconsistent with Article 2.4.2 of the Anti-Dumping Agreement, on the grounds stated in United States - Final Dumping Determination on Softwood Lumber from Canada.

Commerce computes a company’s dumping margin in an original investigation by calculating a weighted average U.S. price and Normal Value for each model of the investigated product, then comparing the two to create model specific dumping margins. Commerce subsequently weight-averages all of those product-specific margins to calculate a single dumping margin for the company. However, before performing this last calculation, Commerce resets all “negative” margins (i.e., cases in which the U.S. Price was higher than the Normal Value) to zero. This practice of “zeroing” results in higher dumping margins than would occur had Commerce calculated a true weighted-average. In some cases, it results in a dumping order being imposed on a company when overall that company was not dumping and no dumping margin otherwise could have been found.

The WTO Appellate Body repeatedly and consistently has condemned the U.S. practice of zeroing beginning in 2004 with cases brought by the European Union involving 15 anti-dumping investigations and Canada involving softwood lumber. In those cases, the United States came into compliance for the specific investigation by making a new determination without the use of zeroing. However, until 2006 the United States refused to change its practices for subsequent and future investigations and systematically limited the application even in the immediate cases (limiting them to investigations instead of administrative reviews, for example). Thus, the United States continued to zero and the affected countries were required to bring a fresh WTO challenge in each case and even in each phase of each case. Worse, unless the amended final determination resulted in a finding of “no dumping” (as opposed to a lower dumping margin), Commerce would use zeroing to calculate the actual dumping duties to be imposed in subsequent administrative reviews. (Under the U.S. retrospective assessment system, the original investigation only sets a rate for cash deposits of estimated duties; the amount of actual duties collected is determined after importation in separate annual administrative reviews.)

In December 2006 Commerce changed its practice for new antidumping investigations initiated after that date and no longer zeros in original investigations. However, it did not go back to undo zeroing in investigations initiated prior to that date. Thus, China had to bring another WTO challenge for warm water shrimp and diamond saw blades notwithstanding nearly a decade of rulings. Moreover, Commerce continued to zero in subsequent administrative reviews, notwithstanding several WTO Appellate Body rulings that zeroing in administrative reviews is no more consistent with WTO obligations than zeroing in original investigations. Thus, even after China succeeds in its WTO challenge in these two cases, eliminating zeroing would help the companies involved only if the elimination of zeroing were to result in a finding of “no dumping” and a revocation of the antidumping order for that company. Were the new calculation to result only in a lower dumping margin, the order would be continued and the actual duty assessment would be determined in the administrative reviews in which Commerce could continue to zero. Surprisingly and without explanation, although China included subsequent administrative reviews and the recent sunset review in its request for WTO consultations with the United States earlier this year, it did not include those reviews in its request for a WTO dispute resolution panel.

China and the United States agreed to expedited procedures in which the panel would issue its decision within three months of its composition and the United States would bring itself into compliance within eight months of the Dispute Settlement Body adopting the panel’s report. As compliance in this case merely requires a recalculation, the eight months to comply is consistent with an American pattern to take as long as possible to comply with WTO decisions whose effects are strictly prospective.

U.S., China Clash Over Internet Great Wall 中美决战互联网长城

Jing Zhu — Mon, 31 Oct 2011 08:50:53 -0600

U.S. Trade Representative Ron Kirk announced, on October 20th, 2011, that the United States, pursuant to World Trade Organization (“WTO”) rules, is requesting China to provide more information on its Internet restrictions. More than a week passed with Chinese media and the public paying the request little attention.

It is not surprising that China is giving this sensitive request the silent treatment. Although Kirk claimed that the WTO request relates “specifically to commercial and trade impact of the Internet disruptions,” China is likely to perceive it from a geopolitical point of view. Public communications, or propaganda, is one of the three pillars of the ruling Chinese Communist Party. Moreover, the timing of this request, whether deliberate or coincidental, is less than ideal – submitted in the wake of the Arab Spring, in which the mass public was mobilized by social media via Internet and mobile phones. Most importantly, China has little if anything to lose in extending this process, even if it could lead to a WTO dispute settlement proceeding.

Why China?

According to Google’s White Paper – Enabling Trade in the Era of Information Technologies: Breaking Down Barriers to the Free Flow of Information, more than 40 governments engage in broad-scale restriction of online information. Yet, the Office of U.S. Trade Representative (“USTR”) singled out Chinese Internet restrictions for a WTO request.

Internet based services companies, such as Apple, Facebook and Google, are playing a central role in the U.S. economy and probably in the submission of this request. Apple reported $6.62 billion in third-quarter profits, slightly below quarterly earnings expectations for the first time in years. Google’s third quarterly earnings soared to $9.72 billion and rebounded to its highest growth rate since before the 2008 financial crisis. It also added more than 2,500 jobs in the same period.

Expanding overseas is crucial to these companies’ growth. For instance, more than half of Google searches come from outside the United States, and revenues from abroad totaled $5.3 billion, representing 55 percent of its total revenues in the third quarter of 2011.

China is the largest market in terms of Internet population. The number of China’s Internet users has exceeded 500 million, according to the Economist Intelligence Unit’s data, which is larger than the total population of the European Union, and roughly twice the size of the U.S. market. More importantly, the Chinese number has been growing at double-digit rates since 2008, far exceeding the 2.5 percent to 4.5 percent U.S. growth rate.

No other market will be able to reach the size of the Chinese market any time soon. For instance, the second most populous country, India, has only 83 million Internet users, less than one third of the U.S. size. The growth rate of India’s Internet population is lagging behind the Chinese as well.

U.S. companies face challenges from Chinese Internet entrepreneurs in the Chinese market. A Silicon Valley venture capital investor – Dave McClure – recently praised his Chinese hosts as “most likely smarter and more aggressive” than their U.S. competitors. He probably went too far because the best-known Chinese Internet companies are copies of the leading U.S. high-tech companies. RenRen, which was modeled after Facebook, went public this year and is now valued at $2.25 billion as reported by the Financial Times’ Kathrin Hille. But McClure responded that, due to the vast size of the Chinese market, “it would be foolish not to copy” an idea that works.

China’s Internet Great Wall

USTR stated that the WTO request focuses solely on “commercial and trade impact of the Internet disruptions,” but it also pointed out that “the United States believes that economic and social development of the Internet globally is best served by policies that encourage the free flow of information and prioritize individual empowerment and responsibility” in its letter to the Chinese Ambassador to the WTO. Thus, the United States is aware that it is pressing China on one of its most sensitive policy issues.

Richard McGregor, Washington Bureau Chief and former Beijing Bureau Chief of the Financial Times, and author of the widely acclaimed book The Party: The Secret World of China's Communist Rulers, has written, “[t]he party is like God. He is everywhere [in China]. You just cannot see him.” He pointed out, at a Washington, DC seminar last July, that the Chinese Communist Party actively utilizes “3Ps” – personnel (the Central Organization Department, the world’s most powerful human resources outfit), propaganda, and PLA (the People’s Liberation Army) to maintain its power. The Party has fully realized the importance of the Internet in the digital era. Not surprisingly, outsiders have complained that “China has devoted extensive resources to building one of the largest and most sophisticated filtering systems in the world.”

The United States has been actively advocating human rights abroad and sees Internet freedom as an extension of traditional human rights contained in the universal declaration of human rights: free speech, free assembly, free association and freedom of the press. Secretary of State Hilary Clinton last year stepped in when Google clashed with the Chinese government over its Internet restrictions. After Google briefed the State Department, Secretary Clinton issued a statement: “[w]e look to the Chinese government for an explanation.” Despite USTR’s reference to commerce and trade, U.S. policy on human rights is bound up with the Internet.

As propaganda plays such an important role in China, Chinese policy makers most likely would perceive the Google incident and the USTR request as events in a series of plots against China orchestrated by the U.S. government. China looks warily upon the destabilizing implications of the Arab Spring for authoritarian governments. In both China and the United States these revolutions are thought to have been fueled by Google and Facebook. It would be foolish to think that the Chinese government perceives the WTO request related only to the commercial and trade impacts of its Internet policies.

What’s Next?

USTR submitted its informational request under paragraph 4 of Article III of the General Agreement on Trade in Services (“GATS”): “Each Member shall respond promptly to all requests by any other Member for specific information on any of its measures of general application or international agreements within the meaning of paragraph 1.” According to the BNA International Trade Daily, this request could lead to a formal consultation request, which is the first step toward a WTO Dispute Settlement Body (“DSB”) proceeding. Paragraph 1 of GATS Article XXIII says: “If any Member should consider that any other Member fails to carry out its obligations or specific commitments under this Agreement, it may with a view to reaching a mutually satisfactory resolution of the matter have recourse to the DSU.”

China has little if anything to lose if it were not to respond to the U.S. request promptly. As we pointed out in previous blog articles, both the United States and China tend to exaggerate the significance of WTO DSB proceedings, and the United States treats every WTO defeat as sui generis, applicable to the immediate case and no others. Consequently, although the DSB Appellate Body issued a panel report favoring the United States in the case of market access to foreign audiovisual products (WTO DS363), China stalled for four years before taking action that would satisfy the United States. There is nothing to stop China from doing the same thing again were the United States to prevail, eventually, in an Internet case.

WTO DSB proceedings are notoriously prolonged. For instance, in Brazil’s challenge of U.S. upland cotton subsidies (WTO DS267), it took the two sides almost eight years to enter a framework for a mutually agreed solution. In the case of China, the United States spent four years trying to tackle China’s restrictions on market access of foreign audiovisual products. The United States submitted a consultation request in April 2007, and the WTO Appellate Body did not circulate its report until December 2009. In the following months, the United States “expressed concern over the lack of any apparent progress by China in bringing its measures into compliance” at DSB meetings. It was not until April 2011 that the two sides reported to the DSB their agreed procedures to implement the panel recommendations.

The United States-based Internet services companies are not likely to gain much while waiting four years for a favorable outcome, and they are not waiting. Instead, Silicon Valley venture capitalists are continuing frequent visits to China seeking investment opportunities. The WTO case may create political theater, but is not likely to achieve a legal resolution to a political problem.

China-U.S. Investment Forum 2011

Dr. Elliot J. Feldman — Mon, 10 Oct 2011 09:15:45 -0600

Editor’s Note: Dr. Elliot Feldman on October 5, 2011 presented the following speech at China-U.S. Investment Forum 2011.

Our firm has published a treatise, in English and Chinese, entitled Mergers & Acquisitions in the United States: A Practical Guide for Non-U.S. Buyers. I am one of the authors and the overall editor. My status as Senior Partner in the firm has made me a book peddler.

The treatise contains twenty chapters covering how to make a deal, how to paper it, how to arrange for the best tax situation, due diligence for labor, pensions, intellectual property and government contracts, dealing with national security issues and reviews, the Foreign Corrupt Practices Act, export controls, trade, customs, immigration, tax and bilateral investment treaties, Sarbanes-Oxley, antitrust, products liability – all focusing on issues arising from foreign ownership of corporations and subsidiaries in the United States. We have paid special attention to Chinese investors. One might say that this treatise has been written for you.

The overwhelming message of this conference is that your investments are welcome in the United States. People here, people you may engage to help you, want you to succeed. We all understand and recognize the importance of your mission for you and for us.

Good wishes and good will count a great deal in producing success, but business is business. It is competitive and it can be tough. As China has embraced capitalism it has come to understand competition. In every business dealing, your adversary is potentially your friend, and your friend is potentially an adversary. Because of this paradox, we memorialize just about everything in legal documents.

Perhaps more than in any other country, the American tradition has been to rely on legal systems to prevent, or alternatively, to resolve business disputes. An inability to appreciate this aspect of American culture can become a competitive disadvantage, even a liability.

For these reasons, I want to begin our discussion with three things the treatise does not say, at least not explicitly, and I want to present these points as questions:

First, welcome to the United States. Do you have a lawyer? In the United States, business is not conducted without lawyers. My partners, in writing the treatise, constantly wanted to say, “Don’t try this on your own,” or “You need a lawyer to understand the labor laws,” for example. I removed all of that language in editing because I thought it obvious that, in a book written about law by lawyers, once a corporate decision-maker understands generally the subject matter, he would know to get a lawyer. The decision-maker would know that there is a wide range of legal issues that may affect the success of an acquired investment – the point of the book—and he would ask informed questions of a lawyer so he could understand the impact of those issues on his particular investment. He then would make well-informed decisions and would know that it is most efficient for the lawyer, first, to provide counsel, and then to handle the details and documents necessary to execute decisions. My experience, however, at least with China, has been that these conclusions are not so obvious. So, I am telling you. You can’t enter complex transactions – you can’t make deals here – without a lawyer.

A recent issue of the China Business Law Journal makes this point. Entitled “Culture Clash,” the article notes, “Chinese businesspeople may still prefer to do deals on a handshake and a prayer, rather than to do their homework,“ and “our research suggests that foreign and even Hong Kong companies are more likely than their Chinese counterparts to engage advisers to tackle pre-merger due diligence. They are also more likely to seek external help with issues involving human resources, and other matters that can be the key to the success or failure of a merger or acquisition.” Your partners and your competitors for investment opportunities in the United States seek competitive advantages based in large part on the knowledge and advice they take from lawyers. You will miss opportunities for success if you are not equally well informed and advised.

Second question, in two parts: do you have a lawyer in China? Do you trust her? I ask these questions because there is an important cultural difference between China and the United States when it comes to lawyers. Here, lawyers owe a fiduciary duty to their clients. They take an oath to be loyal to their clients, and they take their oath seriously. It is not only a business matter. It is a matter of ethics. Lawyers here frequently tend to be trusted advisers and confidantes because information provided to the lawyers typically cannot be disclosed to the government, and because the more information the lawyer has, the more accurate, insightful and valuable is the advice that the lawyer can give. In China, in our experience, at least, lawyers are treated more like employees. They are used for technical purposes, not as trusted advisers. The relationship, and the expectations, are different here.

Third question: If you were to be dissatisfied with the legal services your lawyer might provide, would you expect to pay the lawyer’s bill? For lawyers, time is money, and when you use your lawyer’s time, even if you don’t like the result, you need to pay for it. Chinese companies unfortunately have acquired a reputation in the United States for not paying their legal bills, even when the agreed upon advice has been given. Perhaps because of the different relationships and expectations that I mentioned, Chinese companies do not seem to value legal advice as much, and agreements to pay for such advice are given less significance. There are exceptions of course, but it is the overall impression that may matter most. In the United States, engagement of counsel is a contract and bills must be paid. Over time, it will become more difficult for Chinese companies refusing to pay bills to find good counsel, which will become a critical problem for companies seeking valuable advice to keep pace with their competitors.

These are candid, perhaps even tough, opening remarks, especially on a panel of lawyers. But, as you can see, I have been around for awhile, and I am devoted to the proposition that China and the United States must understand each other, learn from each other, and work closely together for the prosperity of the whole world.

Too often, now, I have seen contracts major Chinese corporations have entered with Americans in which the Chinese either engaged inadequate counsel, or no counsel, or did not trust their counsel enough to achieve agreements favorable for their objectives. Such failures lead to resentments, misgivings, and missed opportunities for Chinese corporations to succeed. They are not necessary. So, as you consider investing in the United States, get a lawyer, preferably a legal team of many specialties, and trust them.

I urge you to think strategically about your investments, and for the long term. Even as the United States population is only about 25 percent the size of yours, we continue to be the world’s greatest consumers. Until recently, you have been making things we have been buying, but enormous pressure has built up that Americans need to be making more of the things that Americans are buying. In capitalism, profits still go to the owners of the means of production. There is no reason why Chinese cannot be the owners of some of the means of production in the United States, making things for Americans to consume, and to sell to other parts of the world.

The first wave of Chinese foreign investment has concentrated on the natural resources of other countries, buying and shipping them back to China. China must now embark more seriously on a second wave, not in a race to control the resources of others, but to invest in the long term for everyone’s prosperity. The opportunities for such investment and engagement are without limit.

You must start your quest by determining what it is you want to buy, and how it will fit with who you already are and what you or your company want to be. Americans – lawyers, investment bankers, consultants – can all help you identify specific targets of acquisition or merger, but only when you are able to articulate what you want, why you want it, the form you want it in, and what you can afford to pay for it.

Most of those first considerations are internal to your companies, but if you want a lawyer to understand fully what you are trying to do, you should include a lawyer in the discussions from the beginning. In negotiating the deal and packaging it with proper and legally complete documents, lawyers are not merely draftsmen decorating your thoughts with the right phrases. They are craftsmen making sure your interests are protected under the law. You cannot negotiate agreements and sign documents without lawyers who appreciate fully what you are trying to do.

There is a lot to do before getting to a handshake. We have encountered Chinese companies that understand taxes to be an important part of a deal, but few who have appreciated that the domicile of an enterprise and its structure (whether wholly foreign-owned or a subsidiary or sheltered through an offshore holding company, or a number of other possibilities) can determine whether the deal will be profitable or will lose money and fail. Taxes should not decide whether to make a deal, but certainly must be part of the consideration as to where and how to make it.

In deal-making a favorite phrase is “due diligence.” Conventionally, it refers to examining the financial books of a company – assets in buildings and equipment, liabilities in loans and accounts due, inventory on hand and in the pipeline. Traditional Mergers & Acquisitions lawyers concentrate on these considerations. In our treatise, we think of due diligence a little differently. A great attraction to investing in the United States is the presence of a highly educated and skilled work force. However, the work force can also be a serious liability. You need to know, before entering a deal, whether the labor force is unionized, whether there are health and pension plans that must be honored. There is a law in the United States – the WARN Act -- that prevents you from taking over a company and firing all the workers. Due diligence requires knowing all about the work force and its contractual and legal entitlements.

As the United States has become a service-based economy, the value and importance of intellectual property has become so important that it often exceeds, by far, the value of factories and inventory. In our view, potentially the greatest value in a deal will be found in intellectual property. However, intellectual property can also be contested. Before you invest, you need a complete inventory of the intellectual property. You need to know who owns it, whether and how it will convey in a merger or acquisition, and whether it is subject to pending or potential patent or trademark or trade secret lawsuits. Losing such lawsuits can destroy the value of a company.

Foreign ownership can mean the termination of contracts with the U.S. government. You need to know whether the company in which you are considering investment does business with the government, how dependent it is on that business, and whether the kind of business it is doing will be impacted by your financial intervention. A thorough examination of government contracts is also part of the due diligence process.

China is not unfamiliar with proposed projects implicating national security in the United States. There is a myth in China, however, that these projects always and must turn out badly. In fact, they can and usually do succeed, but there must be proper preparation, not only as to the legal process known as “CFIUS,” but the political process that lines up popular support. My partner Mike Oxley dealt with these issues intensively in Congress, and has written a chapter for our treatise all about them.

There is much more, of course, but I have no more time. I urge you to leap the first hurdle and get lawyers you trust and will engage from the very first steps in your journey. Then, start the journey with a detailed check list of what you need to know in order to make a deal. Finally, be prepared to make the deal. Become an investor here. Share in the profits of operating in the most technologically and economically advanced place in the world.

SPIL Mumbai Calls For Papers On International Trade

John J. Burke — Thu, 22 Sep 2011 13:21:07 -0600

This blog occasionally posts articles regarding international trade issues with respect to India that are connected to China - US trade issues. In that spirit we wish to bring to our readers' attention a recent call for papers to be presented at the 3rd Government Law College International Law Summit, organized by the Students for the Promotion of International Law (SPIL), Mumbai, in association with the Indian Merchants Chambers. The Summit is scheduled to take place from the 3rd - 5th February, 2012. SPIL Mumbai is calling for papers across the full spectrum of the Summit's theme, which this year is International Trade Law and Economic Policy. In particular, they are looking for papers on international trade law, international investment law, international taxation, and competition law. Please click here for more information on this call for papers.

Times Change 风水轮流转

Dr. Elliot J. Feldman — Fri, 09 Sep 2011 12:54:12 -0600

A year ago, American sentiment toward China, at least as expressed by many Members of Congress, was decidedly negative. Pending legislation included denunciations of China’s subsidization of exports and currency manipulation. Some Members of Congress wanted to restrict all Chinese imports. The slow American economic recovery was blamed to a significant degree on China.

Now, with Americans more focused on domestic economic woes than on any other single concern, complaints about China have receded. Illegal immigrants in the United States seem more of a target than anyone outside the country, even though there is no evidence at all that they have contributed to unemployment or economic stagnation. Historically, Americans tend to blame foreigners for economic hardship and there is a spike in trade remedy actions against foreign products. Not this time. Neither China nor anyone else but Americans themselves (and perhaps the aliens within), especially congressional leaders, seem to be blamed.

Still, China remains an available target, or at least a convenient means for collateral attacks on other trade priorities. The Obama Administration recognizes three pending trade agreements, with Korea, Colombia, and Panama, as potential stimuli for an expansion of exports that would create jobs. After three years renegotiating them to satisfy moderate Democrats as well as trade unions, the Administration declared them ready for congressional passage many months ago. Republicans, claiming to be champions of free trade, zealously advocated for their immediate passage until the Administration was satisfied with them. Then, Republicans launched a political campaign to deny workers displaced by trade agreements the Trade Adjustment Assistance (“TAA”) that for many years had enjoyed bipartisan support because the Administration linked TAA to passage of the trade deals.

The Administration may have pacified Democrats with the renegotiations and persuaded them that the trade agreements would bolster the economy, but not enough to prevent the insinuation of China as a barrier to final congressional approval. House of Representatives Minority Leader Nancy Pelosi (D-Calif.) has demanded a House vote on a bill retaliating against alleged Chinese currency manipulation as a pre-condition for voting on the trade deals. Her gambit, moreover, seems to have some companion support on the other side of Capitol Hill, where a small group of Senators plans to introduce a similar bill to retaliate against alleged Chinese currency manipulation. No such bill currently is pending, and none was passed in the last year, but Senator Jay Rockefeller (D-W. Va.) is proposing one, focused as much on a complaint about the WTO’s Appellate Body as on China.

With a crowded legislative agenda, bills on Chinese currency not yet fully conceptualized are not likely ever to become law. The very threat of them, however, could impede other international trade. The attempted linkage to the trade agreements with Korea, Colombia, and Panama is typical of congressional legislative tactics, but also a desperate sabotage of the Administration by its own political party.

The Administration wants and needs the trade deals. Republicans have wanted these trade deals, but have not wanted President Obama to enjoy the satisfaction and potential electoral help from passing them. The President could not pass them relying on his own party. At the moment when he seemed to have struck an agreement with Republicans to pass both TAA and the three free trade agreements, some Democrats seem to be seeking ways to stop him. Their general weapon of choice appears to be China, which Obama has not wanted to antagonize, and more specifically the currency, which his economists generally have advised not to pursue more than diplomacy has been pursuing already.

China, then, is no longer the principal target in bills about currency manipulation. In the Senate, the more fundamental complaint is about the WTO, and in the House the intended target is trade liberalization. In neither case is China likely to be used effectively, but it surely must be to China’s dismay that it is being used in these debates at all.

Other pending legislation regarding China arises more in the context of national security or simple nationalism: a resolution that would ban Chinese manufacture of parts for the President’s helicopter fleet; a ban on technology transfer from NASA. There is more than one “sense of” resolution, which has no legal consequence. Meanwhile, the Administration is promising China more from its export control reform than it can or will deliver, but at least it is actively gesturing in a desired direction.

Unlike a year ago, the legislative spotlight illuminating grievances over the economy and trade is not on China. Indeed, what some call the “Manchurian Candidate” for President, former Ambassador to China Jon Huntsman, has suggested that the United States must look to itself before looking to China for explanations of economic difficulties. The current focus should not be misinterpreted: the bills about China are not about China.

There are many reasons why. The most important is domestic. The summer spectacle of eighty-seven congressional freshmen holding the country’s debt ceiling hostage concentrated minds at home. Imminent possible failure of European banks, and of whole countries, has shifted focus from east to west. Renewed Wall Street bonuses and continuing home foreclosures are reminders of domestic greed, not foreign malevolence. The national conversation is not about China.

There is also a powerful explanation in the deliberate foreign policy toward China of the Obama Administration. Much has been done to routinize U.S.-China diplomacy and reduce earlier tensions. Even as there have been few concrete accomplishments, there have been many calming meetings. The Strategic and Economic Dialogue convened successfully. A summit of Presidents in Washington in January helped Obama recover from his doubtful Asian outing last November, and squads of potential Chinese investors have been visiting the United States, nurturing hope that some of the massive foreign reserves accumulated by China may yet find their way back to the United States. Better in the form of investments than loans or purchased bonds. China, at least rhetorically, has recognized that it cannot continue to attract foreign investment without making some foreign investments of its own.

In November, while in Asia, Obama called for resumption of the Doha Round. His Administration now admits that this objective is not likely to be fulfilled. With its failure will be a failure to capitalize on the imagined global trading rewards that might have energized the world’s economy, and diminish even more the instruments thought to be available for economic recovery. In place of multilateralism, bilateralism is a modest but nonetheless significant alternative.

Successful partnership with China becomes more important with every multilateral setback. Diplomacy that routinizes the relationship, that removes it from a critical spotlight, inevitably makes the partnership more attractive to China. The trick, however, must be to avoid appearing weak, or desperate, to China. As much as the United States needs China, China needs the United States. As congressional complaint about China is not about China, friendship with China is not necessarily so much about China either. Both are about solving economic problems felt at home but driven by forces as foreign as domestic.

And so it is for China, too. China needs the United States as much for China as for the United States, for domestic as well as foreign purposes.

Changes in American politics about China from a year ago say more about the United States than about China or U.S.-China relations. It will be important for both countries to recognize and understand the impact of domestic politics on their relations, and on the needs they have for each other.

一年前，美国明显对华不太友好，至少这是许多国会议员的态度。他们提交议案，指责中国对出口品提供不正当补贴以及操纵汇率。一些国会议员提议限制中国产品出口至美国。美国经济复苏缓慢也被认为是中国的错。

当前，美国民众对国内经济发展的关注程度远远超过其他任何议题，对中国的抱怨声开始消退。虽然没有证据表明在美非法移民导致失业率居高不下或经济停滞，但他们却成为众矢之的，而境外目标开始退出美国公众视野。回顾历史，美国总爱把导致经济困难的责任推在外国人身上，针对外国产品的贸易补偿行动数不胜数。但这次却不同。中国及其他国家并未面临指责，但是美国人从自身查找原因，国会领导人首当其冲。

但是中国仍可能成为被攻击对象，至少很容易成为其它贸易目标的附带牺牲品。奥巴马政府将尚待国会批准的与韩国、哥伦比亚以及巴拿马签订的双边贸易协定视为促进出口、增加就业的良方。奥巴马政府用了三年时间与三国重新谈判，以满足温和派民主党人以及工会的要求，并于数月前宣布谈判完毕、只待国会批准。然而自称倡导自由贸易的共和党人却坚持要求奥巴马政府满足他们的条件后才能通过这三个自由贸易协定。随后，共和党人又发起运动抵制向因受自由贸易协定冲击的失业工人提供贸易调整补助——这一补助多年来受到两党支持，但仅仅因为奥巴马政府将贸易调整补助和通过自由贸易协定联系在一起，共和党人就转变了立场。

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