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US Trade Policy – A Tool to Help Combat the Climate Crisis

trade policy

US Trade Policy – A Tool to Help Combat the Climate Crisis

A climate crisis is upon us—the scientific evidence is overwhelming. The question is how to respond quickly and decisively on all fronts—at both a domestic and an international level. Carbon pricing is a key mechanism that economists believe is essential to reduce carbon emissions and mitigate climate change. With this in mind, we believe the time has come to harness the power of global trade by using international trade laws to create incentives for a global economy in which the price of carbon is considered in regulating international trade flows. A new administration in Washington provides an opportunity for a more creative approach in which trade policy also serves climate policy. Indeed, President Biden explicitly stated in his climate change platform that “[w]e can no longer separate trade policy from our climate objectives.”

The Biden administration can use existing international trade laws—without delay and without legislation—to take action in response to the global climate crisis. By doing so, the US can lead the way and help shape an international regime that will provide an incentive for companies around the world to price carbon in connection with their operations or face economic consequences at the US border.

Two existing trade remedy laws facilitate such an approach: (1) Section 301 of the Trade Act of 1974 and (2) the countervailing duty law. Together or individually, these laws provide a basis for immediate action creating commercial incentives for responsible behavior by US trading partners. Thoughtful use of Section 301 and the countervailing duty law would be consistent with sound climate policy and ensure that US workers are not disadvantaged by competition with foreign industries that ignore the carbon cost of products they export to the United States.

Section 301 authorizes trade retaliation against “an act, policy, or practice of a foreign country” that “is unjustifiable and burdens or restricts United States commerce.” This broad language should be interpreted as including industrial practices that fail to recognize the cost of carbon in the production of products imported into the United States. For example, the production of steel in China benefits from low-cost, carbon-intensive manufacturing. These unpriced carbon costs disadvantage US steel companies, which compete with Chinese steel imports, no less than other Chinese government policies that directly subsidize the Chinese steel industry. The United States could utilize Section 301 to increase pressure on trading partners such as China and, absent a change in behavior, impose duties to offset the negative impact of carbon-intensive production practices on US industries.

Likewise, the US countervailing duty law is sufficiently flexible to facilitate recognition of the cost of carbon, consistent with other efforts to expand the concept of what constitutes an unfair subsidy. For example, just last year the Department of Commerce revised its countervailing duty regulations to permit currency undervaluation to be treated as a subsidy.  Under this new approach, Commerce recently determined that Vietnam’s currency practices provide an unfair advantage to Vietnamese exporters and justify the imposition of countervailing duties on Vietnamese imports. The simple point is that US trade officials have now recognized that a broader set of foreign government policies are just as pernicious as the traditional subsidization practices that have long been the basis for imposing countervailing duties to protect US workers from unfair foreign competition.

We anticipate that our suggestions could be met with skepticism on the grounds that we are advocating an expansion of traditional notions of unfair trade practices. So be it. We are in a global crisis and business as usual will not do. Our point is to cut through the red tape and bureaucratic delays that have traditionally characterized the federal government’s response to the climate crisis. If nothing else, these trade tools could serve as forcing mechanisms to incentivize more effective international cooperation to fight climate change. Better to act immediately using the international trade tools we already have at our disposal than engage in a lengthy debate over procedure while the jobs and prosperity of US citizens are threatened by imports from countries unwilling to do their part in combatting climate change. There is no time to wait.


Mark Herlach, a partner at Eversheds Sutherland, is an international lawyer with a practice focused on energy, international trade and defense matters. Mark represents a broad range of clients, including corporations, advanced-technology companies and governments. Emily Rosenblum, an associate at Eversheds Sutherland, is a member of the Energy Group and international trade practice. Emily advises clients on a wide range of regulatory and commercial issues involving international trade.


COVID-19 and the Future of Actions Against Unfairly Traded Imports

The first half of 2020 has presented unanticipated and unique challenges to businesses, both in the United States and worldwide, due to public health-related restrictions on customers and the consequent economic effects. The challenges are likely to continue throughout 2020 and well into 2021. In a world trading system where supply chains often have been disrupted and competition for U.S. companies from foreign suppliers changes frequently, clients report that top management teams are seeking ways to address these challenges both through business actions and, when necessary, through legal action.

Foreign producers are facing many of the same challenges that U.S. companies are. As demand in their home markets decline, these foreign companies often look to the United States, a relatively open market, as a place to sell their goods. Sometimes these sales are at prices that under the law are considered unfairly low. Manufacturers at times even make loss-making transactions in order to cover their variable costs and make some contribution to fixed costs, in an effort to keep their businesses afloat. At other times, foreign government subsidies prop up foreign companies and allow them to sell products in the U.S. market. For U.S. companies faced with this kind of business challenge from overseas competition, there are legal means to help address the problem.

The nature of the cases

In the last few months, we have seen an uptick in cases filed with U.S. government agencies under the antidumping (AD) and countervailing duty (CVD) laws. The relief that can be granted from success in these cases are additional duties, and duties in the range of 25-35 percent are not at all unusual. AD and CVD cases may be filed separately or simultaneously.

The legal basis for AD cases is that a foreign product is being sold at unfairly low prices in the U.S. and that imports of the product are injuring the U.S. industry producing that product. The test for unfairly low pricing is complex, but the pricing of the foreign product need NOT be below cost, despite some news stories that misstate the standard. The legal basis for a CVD case is that foreign companies are being subsidized by foreign governments and the importation of such products into the U.S. are injuring the U.S. industry producing that product.

Market weakness likely explains rise in cases

The AD and CVD laws have been on the books for many years, and such cases tend to be filed more often in times of economic downturns and distress, when U.S. companies are feeling the injurious effects of the imports most acutely. Given the current economic turmoil—the Organization for Economic Co-operation and Development reported a 13 percent decrease in global gross domestic product during the first half of 2020—it is not surprising that the current economic environment has led several companies to consider this option.


Jeffrey Neeley is a Washington-based partner with the law firm Husch Blackwell LLP. He leads the firm’s International Trade Remedies team.

administrative review

Opportunity to Request Administrative Review

On August 4, 2020, Commerce announced in the Federal Register the opportunity to request an annual administrative review for products that are currently subject to antidumping and countervailing duties.

The products and countries that have August anniversary months are the following:

-Seamless Line and Pressure Pipe from Germany

-Sodium Nitrite from Germany and China

-Finished Carbon Steel Flanges from India and Italy

-Brass Sheet & Strip; Tin Mill Products from Japan

-Polyethylene Retail Carrier Bags from Malaysia, Thailand, and China

-Light –Walled Rectangular Pipe and Tube from Mexico, Korea, and China

-Dioctyl Terephthalate; Large Power Transformers; Low Melt Polyester Staple Fiber from Korea

-Small Diameter Carbon and Alloy Seamless Standard Line and Pressure Pipe from Romania

-Ripe Olives from Spain

-Certain Frozen Fish Fillets from Vietnam

-Steel Propane Cylinders from Thailand

-Silicomanganese from Ukraine

-Various Products from China

As part of this annual review process, Commerce intends to select respondents based on an analysis of U.S. Customs and Border Protection (CBP) data for U.S. imports during the period of review, which is released only to legal counsel for interested parties.

Any party wishing to participate in the antidumping and countervailing duty review process or who may be affected by duties on the products identified in the Federal Register notice should file a request for review no later than August 31, 2020.  In order to be eligible to participate in the review, a party must either be an exporter or importer of the specific products and during the specific time periods identified in the Federal Register notice.


Camron Greer is an Assistant Trade Analyst in Husch Blackwell LLP’s Washington D.C. office.

EU Files Boeing 777X Tax Incentive Dispute With WTO

Los Angeles, CA – The European Union (EU) has filed a dispute with the WTO Secretariat in Geneva against the U.S. regarding “conditional tax incentives” offered by the state of Washington to “commercial airplane manufacturers.”

The EU asserts in the dispute – a not-so-veiled slap at Boeing and its new 777X commercial jetliner – that the “vastly expanded tax incentives are conditioned on local content requirements prohibited by the WTO Agreement on Subsidies and Countervailing Measures.”

The request for consultations was made, the European Commission (EC) said, in response to a decision by the state of Washington in November 2013, to extend to 2040 subsidies to Boeing that were originally granted through 2024.

The EC is charging that the broadened subsidies were contrary to the WTO rules, “because they require the beneficiary to use domestic goods rather than imported ones.”

“The subsidies scheme extension is estimated to be worth $8.7 billion and will be the largest subsidy for the civil aerospace industry in U.S. history,” according to a Commission statement.

The 777X is a new version of Boeing’s successful 777 twin-engine wide-body jet. It’s scheduled to go into service in 2020. The company has reportedly received orders amounting to billions of dollars for the aircraft from a number of air carriers.

The EU’s request Friday for consultations is the first step in a dispute within the WTO’s Dispute Settlement System.

WTO rules call for Washington, D.C. to respond to the request within 10 days, but due to the Christmas holidays, the EU has agreed to extend the deadline until January 7.

The consultations will give the U.S. and the EU the opportunity to discuss the dispute and reach a solution without proceeding to litigation. The talks must begin within 30 days and generally cannot last longer than two months.

If both parties fail to reach an agreement, the EU can request that a “panel of experts” be commissioned to study the dispute and reach a verdict.