DOW JONES27,960.80-1031.61 -3.56%
S&P 5003,225.89-111.86 -3.35%
NASDAQ9,221.28-355.31 -3.71%

US Countervailing Duty Assessments To Consider Currency Subsidies

The U.S. Commerce Department's International Trade Administration published a final rule on Tuesday that will allow the agency to take into account what it deems to be unfair currency subsidies when imposing countervailing duties on imported products.

Benzinga · 02/04/2020 19:02

The U.S. Commerce Department's International Trade Administration published a final rule on Tuesday that will allow the agency to take into account what it deems to be unfair currency subsidies when imposing countervailing duties on imported products.

"This Currency Rule is an important step in ensuring that unfair trade practices are properly remedied," said Secretary of Commerce Wilbur Ross in a statement. "While successive administrations have balked at countervailing foreign currency subsidies, the Trump administration is taking action to level the playing field for American businesses and workers."

The rule, Modification of Regulations Regarding Benefit and Specificity in Countervailing Duty Proceedings, received dozens of public comments questioning the authority of the Commerce Department to assess the effects of foreign currency undervaluation activity when imposing countervailing duties.

"Congress gave Commerce the authority to remedy injurious subsidies, regardless of what form they take," the department said in its final rule. "The CVD [countervailing duty] law gives U.S. domestic producers the right to petition Commerce to investigate allegedly injurious foreign subsidies, and it requires Commerce to conduct such investigations."

The final rule, which takes effect April 6, specifies the criteria Commerce will use to determine if countervailing duties should be imposed for industry subsidies in the form of currency undervaluation that results from government action on the exchange rate.

U.S. law defines a countervailing subsidy as a financial contribution from a government or public entity that provides a specific benefit to an overseas producer or exporter.

The Trump administration has increased the use of antidumping and countervailing duty measures, particularly against China. The department has, so far, initiated 198 new antidumping (AD) and CVD investigations, a 168% increase over the previous administration. Commerce currently maintains 516 AD and CVD orders.

Image by 3D Animation Production Company from Pixabay