U.S. Laws and Regulations Applicable to Imports From Nonmarket Economies Could Be Improved

ID-81-35: Published: Sep 3, 1981. Publicly Released: Sep 3, 1981.

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Laws and regulations designed to protect U.S. industry from unfair or disruptive imports are difficult to apply to products from nonmarket, principally Communist, countries. GAO conducted a review to identify needed improvements in these laws in order to make them more effective and easier to administer.

The antidumping law stipulates that, when an economy is State-controlled to an extent that a producer's prices or costs cannot be used to determine whether dumping has occurred, a comparison price for its product is to be simulated. The simulation process leads to difficulties in selecting surrogate market producers and verifying data. The antidumping law as applied to nonmarket economies is difficult to administer, highly unpredictable in outcome, and costly for the parties involved. Relief has nevertheless been obtained under the law. The antidumping law also provides methods to suspend dumping investigations before they are completed by settlement agreements. Because of the ways in which dumping is calculated in nonmarket economy cases, it is doubtful whether some of these suspension methods could be used. The countervailing duty law of the United States provides for assessing duties to offset certain foreign subsidies on products exported to the United States. To date, the complexity of identifying and quantifying subsidies on goods from nonmarket economy countries has discouraged U.S. industries from requesting investigations of such subsidy practices. A new method of estimating subsidies makes it much easier to impose countervailing duties on nonmarket goods. The Trade Act provisions which provide additional protection from disruption caused by imports from Communist countries has been used infrequently and no relief has been granted under it. Some Government and private sector interests believe that the provisions inhibit increased trade with Communist countries.

Matters for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should amend the Tariff Act of 1930 to include additional provisions for settling nonmarket economy dumping cases.

  2. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should amend the Tariff Act of 1930 to make available in any dumping proceeding both: (1) the weighted average U.S. price of the lowest price market producer, including U.S. producers, selling in the United States; and (2) the constructed value of the nonmarket economy producer's product based on valuing its actual factors of production at appropriate market economy prices.

Recommendations for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Commerce should direct the Deputy Assistant Secretary to amend Department of Commerce regulations to more accurately reflect the criteria for selecting surrogate countries and producers and to publish the reasons for selecting surrogate producers in individual dumping cases.

    Agency Affected: Department of Commerce

  2. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: To improve the process of deciding when to use simulation methods, the Secretary of Commerce should direct the Deputy Assistant Secretary for Import Administration to develop and publish criteria in the Code of Federal Regulations for determining whether a respondent's actual prices or costs can be used.

    Agency Affected: Department of Commerce

  3. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The U. S. Trade Representative should develop, for Presidential approval and publication, criteria for accepting petitions for consultations under section 406 of the Trade Act of 1974.

    Agency Affected: Executive Office of the President: Office of the U.S. Trade Representative

 

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