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Trade Remedies: A Primer
Vivian C. Jones
Specialist in International Trade and Finance
January 8, 2010
Congressional Research Service
7-5700
www.crs.gov
RL32371
CRS Report for Congress
P
repared for Members and Committees of Congress
c11173008

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Trade Remedies: A Primer

Summary
The United States and many of its trading partners use laws known as trade remedies to mitigate
the adverse impact of various trade practices on domestic industries and workers.
U.S. antidumping (AD) laws (19 U.S.C. § 1673 et seq.) authorize the imposition of duties if (1)
the International Trade Administration (ITA) of the Department of Commerce determines that
foreign merchandise is being, or likely to be sold in the United States at less than fair value, and
(2) the U.S. International Trade Commission (ITC) determines that an industry in the United
States is materially injured or threatened with material injury, or that the establishment of an
industry is materially retarded, due to imports of that merchandise. A similar statute (19 U.S.C. §
1671 et seq.) authorizes the imposition of countervailing duties (CVD) if the ITA finds that the
government of a country or any public entity has provided a subsidy on the manufacture,
production, or export of the merchandise, and the ITC determines injury. U.S. safeguard laws (19
U.S.C. § 2251 et seq.) authorize the President to provide import relief from injurious surges of
imports resulting from fairly competitive trade from all countries. Other safeguard laws authorize
relief for import surges from communist countries (19 U.S.C. § 2436) and from China (19 U.S.C.
§ 2451). In each case, the ITC conducts an investigation, forwards recommendations to the
President, and the President may act on the recommendation, modify it, or do nothing.
On September 11, 2009, President Obama announced that he had determined to provide import
relief under a China-specific safeguard provision with respect to certain tires from China.
Effective September 26, 2009, the Obama administration imposed additional duty on these tires
for a three-year period, beginning at 35% ad valorem the first year, declining to 30% the second
year, and 25% the third year. This China-specific safeguard measure, a provision in the law that
granted China permanent normal trade relations status (P.L. 106-386), gives relief to U.S.
producers of like or competitive products from import surges of goods that cause, or threaten to
cause, market disruption.
In the 111th Congress, legislation has been introduced seeking to amend trade remedy statutes
strengthen U.S. antidumping, countervailing, and safeguard statutes (H.R. 496, H.R. 3012, and S.
2821) and to address issues regarding the applicability of these laws to China and other
nonmarket economy countries (H.R. 499, H.R. 2378, S. 1027, S. 1254). In addition, the
American Recovery and Reinvestment Act of 2009 (P.L. 111-5) expanded the application of
Trade Adjustment Assistance (TAA), making workers found to be adversely affected by trade that
results in a final AD, CVD, or safeguard determination by the ITC eligible to apply for Trade
Adjustment Assistance.
In World Trade Organization (WTO) negotiations, work continues in the Negotiating Committee
on Rules on suggested revisions to the Antidumping Agreement and the Agreement on Subsidies
and Countervailing Measures should an agreement be reached in the Doha Development Round
(DDA).
This report explains, first, U.S. antidumping and countervailing duty statutes and investigations.
Second, it describes safeguard statutes and investigative procedures. Third, it briefly presents
trade-remedy related legislation in the 110th Congress. Finally, the Appendix provides a brief
chart outlining U.S. trade remedy statutes, major actors, and the effects of these laws.

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Contents
Introduction ................................................................................................................................ 1
Overview .............................................................................................................................. 1
Congressional Interest ........................................................................................................... 1
Legislation in 111th Congress........................................................................................... 2
World Trade Organization Negotiations........................................................................... 4
Administration Actions in the 110th Congress on Trade Remedies.................................... 4
AD and CVD Laws and Investigations ........................................................................................ 5
U.S. Statutes and Eligibility Criteria ...................................................................................... 5
Petition and Eligibility .................................................................................................... 6
U.S. International Obligations ............................................................................................... 7
AD and CVD Investigations.................................................................................................. 7
Preliminary Determinations............................................................................................. 8
Final Determinations....................................................................................................... 9
Critical Circumstances .................................................................................................... 9
Termination of Investigation and Suspension Agreements ............................................. 10
Administrative and Sunset Reviews............................................................................... 11
Outcome of AD and CVD Investigations ............................................................................. 13
AD and CVD Duty Orders by Product Group................................................................ 14
Orders by Country ........................................................................................................ 15
Worldwide Trade Remedy Initiations ............................................................................ 16
U.S. AD/CVD Disputes in WTO ......................................................................................... 18
Antidumping Act of 1916.............................................................................................. 18
Continued Dumping and Subsidy Offset Act ................................................................. 18
Zeroing ......................................................................................................................... 20
Safeguard (Escape Clause) Measures ........................................................................................ 22
Statutory Authority.............................................................................................................. 22
Section 201 Eligibility Criteria ............................................................................................ 22
U.S. International Obligations ............................................................................................. 23
NAFTA Provisions........................................................................................................ 23
Section 201 Safeguard Investigations .................................................................................. 24
ITC Role....................................................................................................................... 24
Presidential Action ........................................................................................................ 25
Midterm Review ........................................................................................................... 25
Section 201 Outcomes................................................................................................... 26
2002 Steel Safeguard Action ............................................................................................... 27
Section 406 Relief............................................................................................................... 28
“Surge Protection” from Chinese Imports (Section 421) ...................................................... 28
Tire Safeguard Imposed ................................................................................................ 29
Conclusion................................................................................................................................ 30

Figures
Figure 1. U.S. Trade Remedy Orders in Place by Product Group ............................................... 15
Figure 2. U.S. Trade Remedy Orders in Place by Country.......................................................... 16
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Figure 3. Worldwide Trade Remedy Initiations and World GDP Growth.................................... 17
Figure 4. Outcome of Section 201 Safeguard Cases, 1975-Present ............................................. 26
Figure 5. Safeguard (Section 201) Petitions and Outcome by Product Group ............................. 27

Tables
Table 1. Disposition of AD and CVD Investigations, Fiscal Years 1980-2007 ............................ 13

Appendixes
Appendix. Summary of U.S. Trade Remedy Laws ..................................................................... 31

Contacts
Author Contact Information ...................................................................................................... 34

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Introduction
The United States and many of its trading partners use trade remedy laws to lessen the adverse
impact of various trade practices on domestic industries, producers, and workers. These laws are
deemed consistent with U.S. international obligations provided they conform to the trade remedy
provisions agreed to as part of the Uruguay Round of multilateral trade negotiations (1986-1994)
and other trade agreements to which the United States is a party.
Overview
The three most frequently applied U.S. trade remedy laws are antidumping, countervailing duty,
and safeguards. Enforcement of these laws is primarily carried out through the administrative
investigations and actions of two U.S. government agencies: the International Trade
Administration (ITA) of the Department of Commerce, and the International Trade Commission
(ITC).
Antidumping (AD) laws provide relief to domestic industries that have been, or are threatened
with, the adverse impact of imports sold in the U.S. market at prices that are shown to be less than
fair market value. The relief provided is an additional import duty placed on the dumped imports.
Countervailing duty (CVD) laws are designed to give a similar kind of relief to domestic
industries that have been, or are threatened with, the adverse impact of imported goods that have
been subsidized by a foreign government or public entity, and can therefore be sold at lower
prices than similar goods produced in the United States. The relief provided is an additional
import duty placed on the subsidized imports.
Safeguard (also referred to as escape clause) laws give domestic industries relief from import
surges of goods that are fairly traded. The most frequently applied safeguard law, Section 201 of
the Trade Act of 1974, is designed to give domestic industry the opportunity to adjust to the new
competition and remain competitive. The relief provided is generally an additional temporary
import duty, a temporary import quota, or a combination of both. Safeguard laws also require
presidential action in order for relief to be put into effect.
This report outlines the statutory authority, investigative procedures, and statistical outcomes for
(1) U.S. AD and CVD actions and (2) U.S. safeguard actions. Additional trade remedy laws not
discussed in this report include Section 337 of the Tariff Act of 1930, as amended, which treats as
unlawful imports sold through unfair competition or products infringing U.S. intellectual property
rights. Sections 301-310 of the Trade Act of 1974, as amended, give the United States Trade
Representative (USTR) authority to enforce U.S. rights under international trade agreements and
act against unfair foreign trade practices that burden U.S. trade. Trade Adjustment Assistance
(TAA) programs provide readjustment assistance for firms and workers who have suffered due to
increased imports as a result of trade agreements. A brief description of these trade remedy laws
appears in an Appendix to this report.
Congressional Interest
Trade remedies have been the focus of much domestic and international debate in recent years.
On the domestic front, the preservation of U.S. authority to “enforce rigorously its trade laws”
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was a major negotiating objective included in presidential Trade Promotion Authority (TPA) in
the 107th Congress (P.L. 107-210). Many in Congress continue to support the rigorous
enforcement and application of trade remedy laws.
At the beginning of the WTO Doha Round of multilateral trade negotiations, other WTO member
countries were concerned about the intensifying worldwide use of trade remedies since the
enactment of the Uruguay Round Agreements in 1995. Developing nations, such as India and
South Africa, had begun using trade remedy actions more frequently, when they were tools used
almost exclusively by developed nations in the past. The increasing international concern led
several countries to press for negotiations on changes to the WTO Antidumping (formally known
as the Agreement on Implementation of Article VI) and Subsidies (Agreement on Subsidies and
Countervailing Measures) Agreements, despite the efforts of U.S. trade negotiators and some in
Congress to keep them off the table. Thus, if a multilateral trade deal is ultimately reached
through the Doha Round negotiations, possible modifications to the WTO Antidumping and
Subsidies agreements (and thus, possible changes in U.S. trade remedy laws) could become a key
focus of debate during congressional consideration.
Some congressional observers also expressed concern when WTO dispute settlement and
Appellate Body panels made determinations against two U.S. trade remedy provisions, the
Antidumping Act of 1916 and the Continued Dumping and Subsidy Offset Act (CDSOA)—
finding that these measures violated U.S. obligations under the WTO.1 The Antidumping Act of
1916 was repealed in the Miscellaneous Trade and Technical Corrections Act of 2004 (Section
2006 of P.L. 108-429, December 3, 2004). Despite considerable congressional resistance to
repealing the CDSOA, it was ultimately repealed in a budget reconciliation bill in 2006 (P.L. 109-
171). However, since the repeal allowed disbursements under the act to continue for all goods
entering the United States prior to October 1, 2007, and because collection of AD and CVD duties
is a retrospective process, some domestic producers and interested parties continue to receive
disbursements under the law.
An administrative practice used in AD and CVD investigations known as “zeroing” was also
challenged in a WTO dispute, and on January 9, 2007, the WTO Appellate Body determined
against the United States in a dispute on zeroing. Compliance in this dispute could possibly be
accomplished without legislative action, and the Commerce Department began implementing new
administrative procedures in mid-April 2007.2 These WTO determinations, which some consider
as adverse to U.S. interests, have caused some in Congress to call for greater congressional
scrutiny of WTO dispute settlement and Appellate Body decisions involving the United States.
Legislation in 111th Congress
In the 111th Congress, the American Readjustment and Recovery Act (P.L. 111-5) included
legislation (sec.1802) expanding the Trade Adjustment Assistance Act to workers adversely
affected by dumped or subsidized imports. In order to become eligible, a workers’ firm must be
“publicly identified” by the International Trade Commission in an “affirmative final
determination of material injury or threat thereof” in an antidumping or countervailing duty

1 19 U.S.C. 1675c, P.L. 106-387, Title X. Also known as the Byrd Amendment, the act required that duties collected
pursuant to antidumping or countervailing duty orders be distributed annually to “affected domestic producers” for
certain qualifying expenditures.
2 Ibid.
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investigation. Workers adversely affected by safeguard investigations that result in affirmative
determinations are also eligible. In the case of AD or CVD determinations, workers must file a
petition to receive benefits within one year of the publication of the action in the Federal Register.
In the case of safeguard determinations (of either material injury as in a “section 201” safeguard
determination, or “market disruption” as in a “section 421” or “section 406” safeguard
determination), a petition to receive benefits must be filed within one year of the publication of
the summary of the ITC’s affirmative determination and report submitted to the President.
Workers must also have been totally or partially separated from the firm within the one-year
period, or the one-year period preceding it.
In the Omnibus Appropriations Act of 2009 (P.L. 111-8, March 11, 2009), legislation
appropriating funds for the International Trade Administration of the Department of Commerce
specified that “negotiations shall be conducted in the World Trade Organization to recognize the
right of members to distribute monies collected from antidumping and countervailing duties,” a
reference to a WTO Appellate Body ruling which found that the United States was not consistent
with its WTO obligations when it distributed AD/CVD duties to petitioners and others in support
of the successful investigations. The appropriations language further required that WTO
negotiations “shall be conducted within the World Trade Organization consistent with the
negotiating objectives contained in the Trade Act of 2002.” One of these principal objectives in
the 2002 Act required U.S. negotiators to “preserve the ability of the United States to enforce
rigorously its trade laws, including the antidumping, countervailing duty, and safeguard laws, and
avoid agreements that lessen the effectiveness of domestic and international disciplines on unfair
trade, especially dumping and subsidies, or that lessen the effectiveness of domestic and
international safeguard provisions, in order to ensure that United States workers, agricultural
producers, and firms can compete fully on fair terms and enjoy the benefits of reciprocal trade
concessions; and to address and remedy market distortions that lead to dumping and
subsidization, including overcapacity, cartelization, and market-access barriers.”
With regard to AD/CVD investigations, H.R. 496, the Trade Enforcement Act of 2009 (Rangel),
seeks to express the sense of Congress that the United States should “restore the balance between
rights and obligations” struck during the WTO Uruguay Round, and that the ability of the United
States to “enforce rigorously its trade laws” (including antidumping, countervailing duty, and
safeguard laws) should be preserved. The bill also expresses the sense of Congress regarding
certain WTO Appellate Body panels that have ruled against the United States on offsets for non-
dumped comparisons (“zeroing”), saying that dispute settlement panels are obligated to follow
WTO negotiated agreements and not Appellate Body jurisprudence. In addition, the bill would
require that countervailing action to nonmarket economy countries.3
With regard to China-specific legislation, H.R. 496 seeks to revise requirements for presidential
action on safeguards when the International Trade Commission (ITC) finds that an imported
Chinese product causes or threatens to cause market disruption to a like U.S. product.
H.R. 499 (Davis/Brown-Waite, introduced January 14, 2009), seeks to amend trade laws to
specifically apply countervailing action to nonmarket economy countries such as China. H.R.
2378 (Ryan, introduced May 13, 2009) seeks to “clarify that fundamental exchange-rate

3 See CRS Report RL33550, Trade Remedy Legislation: Applying Countervailing Action to Nonmarket Economy
Countries.
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misalignment by any foreign nation is actionable under U.S countervailing and antidumping duty
laws.”
H.R. 3012 (Michaud) and a similar bill in the Senate, S. 2821 (Brown) seek to ensure that any
future U.S. trade agreements that contain trade remedy provisions must: (1) preserve fully U.S.
rights to enforce its trade remedy laws; (2) allow U.S. authorities to calculate 100% of the
dumping in all antidumping proceedings and disburse domestically AD/CVD duties as the United
States determines; (3) not decrease the effectiveness of international unfair trade prohibitions,
including dumping, subsidies, and safeguard provisions; (4) establish mechanisms to address and
remedy market distortions that lead to dumping and subsidization; (5) allow the United States to
apply CVD laws when exporters receive tax rebates for indirect taxes upon export; (6) allow the
United States to maintain import safeguards for a minimum of two years; (5) establish
mechanisms to address currency misalignment; and (6) allow the United States to establish
safeguard measures or apply countervailing duties if a foreign currency is deliberately misaligned
by a party to a trade agreement.
World Trade Organization Negotiations
In the WTO, debate continues on possible multilateral AD and CVD reforms in the Negotiating
Committee on Rules as part of the continuing Doha Development Agenda (DDA) round of trade
talks. One of the negotiating objectives in the DDA called for “clarifying and improving
disciplines” under the WTO Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade 1994 (Antidumping Agreement or ADA) and WTO Agreement
on Subsidies and Countervailing Measures (Subsidies Agreement or ASCM). The frequent use of
trade remedies by the United States and other developed nations—and increasingly, developing
countries—has come under criticism by some WTO members as being protectionist.4
Some in Congress cite U.S. use of trade remedies as necessary to protect U.S. firms and workers
from unfair international competition. Some also credit the existence of trade remedies with
helping to increase public support for additional trade liberalization measures. These Members
favor increased enforcement of trade remedies. Others in Congress, especially those who
represent U.S. importers, manufacturers, or export-oriented businesses, tend to support
liberalizing the ADA and ASCM, in ways that could make use of U.S. trade remedy laws less
frequent and relief harder to obtain. For example, some in Congress have supported legislation
introduced in a previous session that would have required administering authorities to determine
whether or not a trade remedy action (such as imposing an AD or CVD duty) is in the overall
public interest before such a measure can be implemented.
Administration Actions in the 110th Congress on Trade Remedies
During the 110th Congress, the Bush Administration began to take steps to address the issue of
applying countervailing action to nonmarket economy countries—an issue of interest to many in
Congress. First, on November 27, 2006, the ITA initiated a CVD investigation against an NME
country (China) for the first time since 1991. In the first phase of the investigation, the
International Trade Commission (ITC) preliminarily determined on December 15, 2006 “that
there was a reasonable indication that a U.S. domestic industry is materially injured or threatened

4 CRS Report R40606, Trade Remedies and the WTO Rules Negotiations.
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with material injury” by reason of allegedly subsidized coated paper from China—thus referring
the case to the ITA for a preliminary determination on subsidization. On March 30, 2007, the ITA
announced an affirmative preliminary determination of subsidy in the CVD investigation,
effectively reversing the previous long-standing determination with regard to China—although
the NME designation still continues to apply.5 On October 18, 2007, the ITA made a final
affirmative determination of subsidies, finding that Chinese producers/exporters received net
countervailable subsidies ranging from 7.40% to 44.25%. On December 13, 2007, the ITC
announced a final negative determination of injury in the case, meaning that the investigation was
terminated and no CVD order was issued.6 However, in a subsequent case, on raw flexible
magnets from China, the first CVD order was imposed against products from China on July 3,
2008.7 The ITA’s decision on the ability to find subsidies in China does not apply to other NME
countries, such as Vietnam.
Second, on February 2, 2007, U.S. negotiators requested WTO talks with China on subsidies. On
November 29, 2007, then-USTR Susan Schwab announced that China had agreed to terminate
twelve subsidies that the United States had identified as prohibited. In the Memorandum of
Understanding (MOU) signed by the United States and China, China agreed to end these export
subsidies (mostly on steel, wood, and information technology products) and import substitution
subsidies (designed to encourage Chinese companies to buy Chinese products over imports) by
January 1, 2008.8 According to the USTR, the Chinese government removed these subsidies, but
concerns about additional export subsidies remain. In December 2008, the United States formally
requested consultations with China asking for the termination of many subsidies aimed at
supporting the export of “famous brands” of Chinese merchandise. Negotiations were continued
by the Obama Administration, and on December 18, 2009, USTR Ron Kirk announced that the
United States and China had reached an agreement confirming the termination of these subsidies.9
AD and CVD Laws and Investigations
U.S. Statutes and Eligibility Criteria
Statutory authority for AD investigations and remedial actions is found in Subtitle B of Title VII
of the Tariff Act of 1930, as added by the Trade Agreements Act of 1979, and subsequently
amended. The law permits the imposition of antidumping duties if (1) the Department of
Commerce10 determines that the foreign subject merchandise is being, or likely to be, sold in the
United States at less than fair value, and (2) the U.S. International Trade Commission (ITC)
determines that an industry in the United States is materially injured or threatened with material

5 72 F.R. 17484.
6 72 F.R. 70892.
7 See factsheet at http://ia.ita.doc.gov under Highlights and News.
8 U.S. Trade Representative. China to End Subsidies Challenged by the United States in WTO Dispute, Press Release,
November 29, 2007.
9 United States Trade Representative. 2009 National Trade Estimate on Foreign Trade Barriers and “United States
Wins End to China’s “Famous Brand” Subsidies after Challenge at WTO; Agreement Levels Playing Field for
American Workers in Every Manufacturing Sector,” Press Release, December 18, 2009.
10 The International Trade Administration (ITA) of the Department of Commerce conducts AD and CVD
investigations.
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injury,11 or that the establishment of an industry is materially retarded, by reason of imports of
that merchandise.12
Statutory authority for CVD investigations is found in Subtitle A of Title VII of the Tariff Act of
1930,13 as added by the Trade Agreements Act of 1979 and as subsequently amended. The statute
provides that countervailing duties will be imposed, first, when Commerce determines that the
government of a country or any public entity within the territory of a country is providing,
directly or indirectly, a countervailable subsidy with respect to the manufacture, production, or
export of the subject merchandise that is imported or sold (or likely to be sold) for importation
into the United States. Second, in the case of a country that is party to the WTO Subsidies
Agreement, that has assumed similar obligations with respect to the United States, or that has
entered into certain other agreements with the United States, the ITC must determine that a
domestic industry is materially injured or threatened with material injury, or that the
establishment of a domestic industry is materially retarded, by reason of imports of that
merchandise.14
Petition and Eligibility
AD and CVD investigations are conducted on the basis of a petition filed simultaneously with the
ITC and the ITA on behalf of a domestic industry, or by the ITA on its own initiative.15 Industry
representatives may include domestic manufacturers, producers, or wholesalers of a product like
the investigated imports, unions, other groups of workers, trade associations or other associations
of manufacturers, producers or wholesalers. Petitioners may allege (1) a subsidy (CVD petition),
(2) sales at less than fair value (AD petition), or (3) that both conditions exist.16
If an investigation is initiated by petition, the ITA must determine within 20 days (1) whether the
petition accurately alleges the existence of dumping or subsidies, (2) whether there is enough
information in the petition to support the investigation, and (3) whether the petition has been filed
by or on behalf of an industry.17 If the ITA’s determination at this stage is negative, the petition is
dismissed and the proceedings end.18

11 “Material injury” is defined in 19 U.S.C. 1677(1) as “harm which is not inconsequential, immaterial, or
unimportant.”
12 U.S. International Trade Commission (U.S. ITC). Summary of Statutory Provisions Related to Import Relief.
Publication 3125, August 1998, p. 2. http://www.usitc.gov/.
13 19 U.S.C. 1671 et seq.
14 U.S. ITC Publication 3125, p. 1.
15 CVD: 19 U.S.C. 1671a(a); AD: 19 U.S.C. 1673a(a).
16 CVD: 19 U.S.C. 1671a(b)(1); AD: 19 U.S.C. 1673a(b)(1). Both citations refer to a definition of “interested party”
found in subparagraphs (C),(D),(E),(F), or (G) of 19 U.S.C. 1677(9).
17 As a general rule, the ITA determines that a petition has been filed on behalf of an industry if (1) the domestic
producers or workers supporting the petition account for at least 25% of the production of the domestic like product, or
(2) the domestic producers or workers who support the petition account for more than 50% of the domestic like product
produced by that portion of the industry expressing support for or opposition to the petition (CVD:19 U.S.C. 1671a
(c)(4)(A); AD: 19 U.S.C. 1673a(c)(4)(A)). The statute allows for an extension of the 20-day time period if Commerce
determines that the petition does not establish sufficient industry support and must poll or survey the industry in order
to determine adequate support for the petition.
18 CVD: 19 U.S.C. 1671a(c)(3); AD 19 U.S.C.1673a(c)(3).
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U.S. International Obligations
Disciplines regulating the use of antidumping laws appear in Article VI of the General
Agreements on Tariffs and Trade (GATT) and in the Antidumping Agreement adopted in the
Uruguay Round (1986-1994) of trade negotiations. The Uruguay Round Antidumping Agreement
outlines requirements regarding procedures to be used in antidumping investigations and the
implementation and duration of AD measures.
Article XVI of the GATT and the Subsidies Agreement negotiated during the Uruguay Round
regulate the use of subsidies and countervailing measures. The Subsidies Agreement defines the
term “subsidy” as a financial contribution by a government or public body within the territory of
a WTO member, which confers a benefit. Three categories of subsidies are identified: (1)
prohibited subsidies, (2) actionable subsidies, and (3) non-actionable subsidies. Also, to be
covered by the Subsidies Agreement, subsidies need to be specific to an industry, except that
prohibited subsidies (i.e., export subsidies and import substitution subsidies) are considered per
se specific.19 The Subsidies Agreement also provides transitional rules for developed countries
and Members in transition to a market economy, as well as special and differential treatment rules
for developing countries.
Other trade agreements that the United States has adopted also include specific AD and CVD
articles. For example, article 1902 of the North American Free Trade Agreement (NAFTA) states
that each party to the agreement reserves the right to apply its antidumping and countervailing
duty laws to any other party. The right of parties to change or modify these laws is also retained,
provided the amending statute specifically states that the amendment applies to the other NAFTA
parties; the other parties are notified; and the changes are either consistent with the GATT and
WTO agreements, or the object and purpose of the NAFTA and its AD and CVD chapter. Articles
1903 and 1904 allow a review of statutory amendments and a review of final AD and CVD
determinations by a bi-national panel. The Agreement also puts a consultation and dispute
settlement system in place so that other parties to the agreement may challenge statutory changes.
In addition, final determinations in AD and CVD cases may be subject to bi-national panel review
instead of judicial review.
AD and CVD Investigations
Although antidumping and countervailing duty laws address fundamentally different forms of
unfair trade behavior, the remedies provided (a duty reflecting the “dumping margin” or amount
of subsidy), the investigation processes, and the economic effects of the actions are similar. In
some cases, AD and CVD investigations are also conducted simultaneously on a targeted product.
Therefore, for purposes of this report, the investigation of AD and CVD petitions will be
addressed together.
Prior to the imposition of an AD or CVD order, the ITA and ITC conduct a detailed investigative
process. Some political economists opposing this type of import relief have pointed out that the
administrative nature of AD and CVD investigations makes it easier to institute “protectionist”
measures. They maintain that the laws delegate the investigation and imposition of duties to

19 The non-actionable subsidies category was applied provisionally for five years ending December 31, 1999 and was
not extended.
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administrative agencies so that the decisions (and possible negative political fallout) are removed
from the President and Congress.20 In addition, since a certain amount of prior knowledge is
necessary in order to follow the procedure, the process is engineered so that it does not lend itself
to close public or media scrutiny.21 Some analysts have also criticized the administrative agencies
(particularly the ITA) for administering investigations in such a way that they are biased in favor
of domestic industries.22
Supporters of trade remedies point out that current AD and CVD procedures have been worked
out through painful and difficult multilateral trade negotiations, and that this is one of the reasons
that the investigative procedure is so detailed. Furthermore, supporters maintain that the process
is detailed because investigations must be transparent and provide a voice for all parties
concerned.23
Preliminary Determinations
As soon as a petition is filed, the ITC begins to investigate whether there is a reasonable
indication of injury. If the ITC’s preliminary determination is negative, or the ITC determines
those imports of the subject merchandise are negligible, the proceedings end. The ITC must make
its preliminary determination within 45 days after a petition is filed or an investigation is begun
by the ITA on its own initiative.24
If the ITC’s preliminary determination is affirmative, the ITA begins its preliminary investigation
to determine whether the alleged unfair practice exists. In CVD cases, the ITA has 65 days to
make a preliminary determination, or 130 days at the petitioner’s request or if the case is
extraordinarily complicated.25 In AD cases, the ITA must make its determination within 140 days,
or within 190 days at the petitioner’s request or if the case is extraordinarily complicated.26 If the
ITA determines in the affirmative, it also estimates a subsidy margin or a weighted-average
dumping margin for each exporter or producer individually investigated, and an “all-others rate”
for all other exporters.27
If the ITA finds that there is a reasonable indication of dumping or subsidies, it orders the U.S.
Customs and Border Protection (Customs) to delay the final computation of all duties on imports
of the targeted merchandise (suspension of liquidation) until the case is resolved and to require
the posting of cash deposits, bonds, or other appropriate securities to cover the duties (plus the
estimated dumping or subsidy margin) for each subsequent entry into the U.S. market. If the
ITA’s determination is negative, both the ITA and the ITC continue the investigation.

20 Finger, J.M.; Hall, H. Keith; Nelson, Douglas R. “The Political Economy of Administered Protection,” American
Economic Review, 72:3 (June 1982), p. 452.
21 Ibid.
22 Ibid.
23 Mastel, Greg. Antidumping Laws and the U.S. Economy, New York: Economic Strategy Institute, 1998, p. 103.
24 CVD: 19 U.S.C. 1671b(b)(2); AD: 19 U.S.C.1673b(b)(2). If ITA has extended its deadline, the ITC must make its
preliminary determination within 25 days after the ITA informs the ITC of the initiation of the investigation.
25 19 U.S.C. 1671b(b) and (c).
26 19 U.S.C. 1673b(b) and (c).
27 CVD: 19 U.S.C. 1671b(d); AD 19 U.S.C. 1673b(d).
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Final Determinations
In CVD investigations, the ITA makes its final determination within 75 days after the date of its
preliminary determination. In AD cases, ITA’s final determination must be made within 75 days
after the preliminary determination, or within 135 days at the request of exporters (if the
preliminary determination was affirmative) or at the request of the petitioner (if the preliminary
determination was negative).28 Before issuing a final determination, the ITA must hold a hearing
upon request of any party to the proceeding.
If the ITA’s final determination is negative, the proceedings end, and any suspension of
liquidation is terminated, bonds and other securities are released, and deposits are refunded. If the
ITA’s final determination is affirmative, it orders the suspension of liquidation if it has not already
done so.
If the ITA’s preliminary determination is affirmative, the ITC must make its final determination
(a) within 120 days of the ITA’s preliminary affirmative determination or (b) within 45 days of an
affirmative final determination by the ITA, whichever is later. If the ITA’s preliminary
determination was negative, the ITC’s determination must be made within 75 days of the ITA’s
affirmative final determination.
If the final determination of the ITC is affirmative, the ITA issues a countervailing or
antidumping duty order within seven days of notification of the ITC’s decision. The duty imposed
is equal to the net subsidy or dumping margin calculated by the ITA. If the final determination of
the ITC is negative, no AD or CVD duties are imposed, any suspension of liquidation is
terminated, bonds or other securities are released, and deposits are refunded.
Critical Circumstances
If a petitioner alleges that critical circumstances exist in an AD or CVD case, an extra step in the
investigation is required. In CVD cases, the ITA must promptly determine whether there is a
reasonable basis to expect that the alleged subsidy is inconsistent with the WTO Subsidies
Agreement and that massive imports of the subject merchandise have occurred over a relatively
short period. In AD cases, the ITA determines whether (1) there is a reasonable basis to suspect
that there is a history of dumping, combined with material injury due to the imports), or that the
importer knew or should have known that the exporter was selling the merchandise at less than
fair value, and also knew that there was likely to be material injury due to the sales; and (2)
whether massive imports of the merchandise have occurred over a relatively short period. If the
ITA makes an affirmative critical circumstances finding, it extends the suspension of liquidation
of any unliquidated entries of merchandise into the United States retroactively to 90 days before
the suspension of liquidation was first ordered.
Whether or not the ITA’s initial critical circumstances determination is affirmative, if its final
determination on subsidies or dumping is affirmative, the ITA includes with its overall final
determination an additional determination on critical circumstances. If the final determination on

28 CVD: 19 U.S.C. 1671d; AD: 19 U.S.C. 1673d.
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critical circumstances is affirmative, retroactive duties, if not yet ordered, are ordered on
unliquidated entries at this time.29
The ITC may also find critical circumstances in conjunction with its final determination of injury.
If both the ITC and the ITA make affirmative critical circumstances determinations, any AD or
CVD duty order applies to the goods for which the retroactive suspension of liquidation was
ordered. If the final critical circumstances determination of either agency is negative, any
retroactive suspension of liquidation is terminated.30
Termination of Investigation and Suspension Agreements
The ITA may terminate or suspend antidumping or countervailing duty proceedings at any point
in favor of an alternative agreement with the foreign government (in the case of subsidies) or the
exporters (in the case of dumping).
The ITA or the ITC may terminate an investigation if the petitioner withdraws the petition, or the
ITA may terminate an investigation it initiated.31 If the ITA decides to terminate an investigation
in favor of accepting an agreement with the foreign government (CVD) or exporters (AD) to limit
the volume of imports, the ITA must be satisfied that the agreement is in the public interest.
Public interest factors include (1) a finding that the imposition of duties would have a greater
adverse impact on U.S. consumers than an alternative agreement; (2) an assessment of the relative
economic impact on U.S. international economic interests; and (3) a consideration of the relative
impact of such an agreement on the domestic industry producing like merchandise.32
The ITA may suspend an investigation if (1) the government of the country alleged to be
providing the subsidy, or the exporter’s accounting for substantially all of the subject merchandise
agree to eliminate the subsidy or dumping margin, to offset the net subsidy completely, or to
cease exports of the subject merchandise into the United States within six months of the
suspension of the investigation; (2) if there are extraordinary circumstances33 and the government
or exporters agree to take action that will completely eliminate the injurious effect of the subject
imports (including a quantitative restriction agreement with a foreign government); or (3) the
agreement concerns alleged sales at less than fair value from a nonmarket economy country and
that country agrees to restrict exports of its merchandise into the United States.34 Before
suspending an investigation, the ITA must be satisfied that the suspension is in the public interest
and that the agreement can be effectively monitored by the United States.35

29 CVD: 19 U.S.C. 1671e; AD: 19 U.S.C. 1673e.
30 U.S. International Trade Commission, Publication 3125, p.5.
31 CVD: 19 U.S.C. 1671c(a)(1); AD: 19 U.S.C. 1671(a)(1). According to 19 U.S.C. 1671c(a)(3) and 19
U.S.C.1673c(a)(3), the ITC may not terminate an investigation until a preliminary determination is made by the ITA.
32 CVD: 19 U.S.C. 1671c ; AD: 19 U.S.C. 1673c.
33 “Extraordinary circumstances” are described in 19 U.S.C. 1671c(c)(4)(A) and 19 U.S.C. 1673c(2)(A) as
circumstances in which “(i) the suspension of an investigation will be more beneficial to the domestic industry than
continuation of the investigation, and (ii) the investigation is complex.”
34 CVD: 19 U.S.C. 1671c(b)(c); AD: 19 U.S.C. 1673c(b)(c).
35 CVD: 19 U.S.C. 1671c(d); AD: 19 U.S.C. 1673c(d).
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WTO Negotiations
Article 18 of the WTO Subsidies Agreement authorizes the termination and suspension of
investigations through the use of voluntary “undertakings.” These undertakings may involve (1)
the government of the exporting Member agreeing to eliminate or limit the subsidy, or take some
other action concerning its effects; or (2) the exporter agreeing to revise its prices to eliminate the
injurious effects of the subsidy. A similar measure (Article 8) in the Antidumping Agreement
allows the use of “price undertakings,” or voluntary, mutually agreed upon, price increases on the
part of the importer to eliminate the injurious effects of the imports. Price increases may not be
higher than the duty necessary to eliminate the dumping margin, and if a lower increase would be
adequate to remove the injury, a lesser increase is recommended.
Many WTO members were critical of the rapidly expanding worldwide use of antidumping and
subsidy measures in general and, in particular, the perceived U.S. implementation of inflated
dumping and subsidies margins. These countries recommended, among other things, that Doha
Round negotiations on the Antidumping and Subsidies Agreements strengthen the undertaking
provisions and require increased use of these voluntary measures in AD and CVD actions.36
Administrative and Sunset Reviews
Each year, during the anniversary month of the publication of an AD or CVD duty order, any
interested party may request an administrative review of the order. The ITA may also self-initiate
a review. If none of the interested parties request a review, and if there is no objection, the review
may be deferred for an additional year. During the review process, the ITA recalculates the
amount of the net subsidy or dumping margin and may adjust the amount of AD or CVD duties
on the subject merchandise. Suspension agreements are also monitored for compliance and
reviewed in a similar fashion. The ITA must make a preliminary determination in CVD
administrative reviews within 120 (or 180 days if the 120 day deadline is not practicable), and a
final determination within 245 days (which may be extended up to 365 days). Preliminary
determinations in AD reviews must be made in 90-150 days, and final determinations in 180-300
days.37
Administrative reviews are also mandated under certain circumstances by the WTO Antidumping
and Subsidies Agreements. Article 11.2 of the Antidumping Agreement and Article 21.2 of the
Subsidies Agreement require authorities to periodically review the need for continued imposition
of duties, where warranted. Authorities must also conduct examinations at the request of
interested parties to examine whether the continued imposition of the duties are necessary to
offset the dumping or subsidies, and whether the injury would be likely to continue or recur if the
duty were removed, or varied, or both.
Changed Circumstances Review
An interested party may also request a “changed circumstances” review at any time. In this case,
the ITA must determine within 45 days whether or not to conduct the review. If the ITA decides

36 World Trade Organization. Doha Ministerial Declaration 2001 (WT/MIN/(01)/DEC/1), November 20, 2001, Article
28.
37 19 U.S.C. 1675 and 19 C.F.R. 351.213.
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that there is good cause to conduct the review, the results must be issued within 270 days of
initiation, or within 45 days of initiation if all interested parties agree to the outcome of the
review.38
“New Shipper” Reviews
If the ITA receives a request from an exporter or producer of merchandise subject to AD or CVD
orders who (1) did not export the subject merchandise during the initial period of investigation
and (2) was not affiliated with any producer or exporter who did, it must conduct a review to
establish an individual AD or CV duty rate for that exporter or producer.39 A preliminary
determination in a new shipper review may take up to 180 days (or up to 300 days if
“extraordinarily complicated”). Final determinations of the duty rate may take from 90 to150
days, depending on complexity.40
While the new shipper review is being conducted, the ITA is required to direct the Customs
Service to allow (at the option of the importer) the posting of a bond or security in lieu of a cash
deposit for each shipment of merchandise entering the United States until the review is completed
and the AD or CV duty rate is established. Some U.S. producers complained that Customs had
difficulty collecting the actual amount of AD/CV duties owed on subject merchandise, and have
cited the new shipper bonding privilege as a “loophole” that importers exploit in order to
circumvent the duties. For example, Louisiana crawfish producers estimated, and Customs
confirmed, that between 2002 and 2004, Customs collected only $25.5 million of about $195.5
million in AD duties owed on crawfish. A March 2008 report by the U.S. Government
Accountability Office (GAO) estimated that abuse of the new shipper bonding privilege was
responsible for about 40% of the uncollected duties from fiscal years 2001 to 2007.41
Language seeking to suspend new shipper bonding privilege was inserted, along with other trade
provisions, into H.R. 4, the Pension Protection Act of 2006 (Boehner). As enacted, the provision
suspended the new shipper bonding privilege from April 1, 2006, to June 30, 2009 (sec. 1632 of
P.L. 109-280).
Sunset Reviews
Before passage of the Uruguay Round Agreements Act (P.L. 103-465, URAA), AD and CVD
orders had no set termination date, and generally were revoked only if the ITA determined
through three consecutive annual administrative reviews that no dumping or subsidies had
occurred. Currently, sunset reviews must be conducted on each AD or CVD order no later than
once every five years.42 The ITA determines whether dumping or subsidies would be likely to
continue or resume if an order were to be revoked or a suspension agreement terminated, and the

38 19 U.S.C. 1675(b).
39 19 U.S.C. 1673d(c)(B). In investigations of non-market economy countries, an individual rate is established only if
the exporter or producer is able to provide sufficient evidence that government controls over the decision-making
process on export-related investment, pricing, and output do not exist.
40 19 U.S.C. 1675(a)(2)(B).
41 Government Accountability Office (GAO). Antidumping and Countervailing Duties: Congress and Agencies Should
Take Additional Steps to Reduce Substantial Shortfalls in Duty Collection. GAO-08-391, March 2008, p. 13.
42 19 U.S.C. 1675(c).
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ITC conducts a similar review to determine whether injury to the domestic industry would be
likely to continue or resume. If both determinations are affirmative, the duty or suspension
agreement remains in place. If either determination is negative, the order is revoked, or the
suspension agreement is terminated.43 Sunset reviews are required in the WTO Antidumping
(Article 11.3) and Subsidies (Article 21.3) Agreements.
Outcome of AD and CVD Investigations
Table 1 lists the possible outcomes of AD/CVD investigations. From 1980-2007, there were
1,606 AD or CVD cases initiated.44 Of these investigations, 115 were withdrawn before the
preliminary ITC determination. Generally, petitions are withdrawn at that stage because they do
not meet the criteria for initiation—either due to inadequate information or insufficient industry
support. 282 investigations were determined in the negative by the ITC, meaning that the
investigations were terminated. 1,148 investigations received an affirmative preliminary
determination that there was , meaning that the investigation went forward to the next stage at the
ITA
Of the investigations that continued, 244 were terminated at some stage during the ITA dumping
or subsidies investigations. The terminations could have occurred due to withdrawal of the
petition at the request of the petitioner, the ITA making a negative final determination of dumping
or subsidy, or the ITA reaching a suspension agreement with the exporter (or public entity in the
case of subsidies investigations).
Of the investigations that reached the final determination of injury stage at the ITC, 614
investigations were determined in the affirmative and 351 in the negative.
Table 1. Disposition of AD and CVD Investigations, Fiscal Years 1980-2007
Outcome Number
Percent
Terminated before preliminary ITC Determination
115
7%
Negative ITC determination (results in termination of
282 18%
investigation)
Terminated after an affirmative preliminary ITC
244 15%
determination but before a final ITC determination (includes
cases where petition was withdrawn or the ITA did not
initiate an investigation)
Affirmative final ITC determination (antidumping or
614 38%
countervailing duty order issued)
Negative final ITC determination
351
22%
Source: U.S. International Trade Commission. Import Injury Investigations Case Statistics (Fiscal Years 1980-
2007), December 2008.

43 19 C.F.R. 351.218.
44 CRS calculations based on trade remedy statistics of the U.S. International Trade Administration, CY2000-2006.
http://ia.ita.doc.gov.
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AD and CVD Duty Orders by Product Group
Figure 1 illustrates AD and CVD orders in effect as of November 19, 2009, by product category.
The largest product groups subject to AD/CVD orders currently in force are competing imports
associated with the steel industry, including steel mill products (stainless steel bar, plates, sheet
and strip, wire rod; carbon steel plate, hot-rolled carbon steel flat products, steel concrete
reinforcing bar, etc.), iron and steel pipe products (such as welded carbon steel pipe, small
diameter seamless pipe), and other products of iron and steel (ball bearings, stainless and carbon
steel butt-weld pipe fittings, etc.). According to ITC data, products associated with the steel
industry account for approximately 45 percent of all AD and CVD orders.
The second largest group of duty orders currently in effect are on competing imports of chemicals
and pharmaceuticals, such as solid urea, granular polytetrafluoroethylene resin, and citric acid.
The third largest group of duty orders is applied to various miscellaneous manufactured items,
such as petroleum wax candles, natural bristle paint brushes, wooden bedroom furniture, and
ironing tables. The fourth largest group consists of agricultural, forest, or processed food products
including honey, pasta, preserved mushrooms, shrimp, crawfish tail meat, and pistachios. The
fifth largest group of products are minerals and metals, such as brass sheet and strip; gray
portland cement and clinker, and magnesium.
Compared to these categories, there are relatively few AD or CVD orders in other product groups,
such as in the plastic, rubber stone, glass (PRSG); textiles and apparel; transportation and other
machinery equipment; or in the electronics and communications categories. However, in the past
few years there have been some high-profile trade remedy investigations of certain imports of
these items, such new pneumatic off-the-road tires and polyethlylene retail carrier bags in the
PRSG product category.
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Figure 1. U.S. Trade Remedy Orders in Place by Product Group
November 2009

Source: U.S. International Trade Commission.
Orders by Country
Figure 2 shows AD and CVD duty orders in effect as of January 18, 2008, by product country of
origin. Products from China lead this group with 81 AD orders and 12 CVD orders, followed by
the European Union with 33 AD orders and 2 CVD orders, India (14 AD orders, 7 CVD orders)
Japan (20 AD orders), South Korea (15 AD orders, 4 CVD orders), Taiwan (15 AD orders), Brazil
(11 AD orders, 3 CVD orders, Mexico (9 AD orders), and Indonesia (6 AD orders, 3 CVD
orders). The actual number of antidumping and countervailing duty orders in effect changes
frequently due to administrative and sunset review processes as well as ongoing investigations.
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Figure 2. U.S. Trade Remedy Orders in Place by Country
November 2009

Source: U.S. International Trade Commission
Worldwide Trade Remedy Initiations
Figure 3 illustrates worldwide AD and CVD initiations (meaning that petitions have been
introduced but that investigations may or may not have been carried out or implemented) from
1980-2008. Initiations peaked in 2001, but then began a steady decline. One reason for the
downward trend could have been a result of globalization. For example, many U.S. domestic
manufacturers now import at least some portion of their product lines from overseas, thus
reducing their interest in bringing trade remedy cases.
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Figure 3. Worldwide Trade Remedy Initiations and World GDP Growth
1995- 2008

Source: World Trade Organization and EIU Market Indicators Statistics
A 2004 AD investigation on wooden bedroom furniture from China created a deep and vocal
controversy in the U.S. furniture industry because some larger U.S. companies had decided to
import certain furniture lines from China while continuing domestic production of more high-end
items. Many furniture retailers reportedly became furious with furniture industry petitioners
because they feared that the higher prices caused by possible AD duties would depress sales and
result in the layoffs of retail employees. Furniture makers and unions supporting the investigation
countered that far more manufacturing jobs were being lost than would have been lost on the
retail side.45 The debate was so heated that the ITA took the unusual step of polling the industry to
determine whether there was sufficient industry support for the petition, which resulted in a
finding that only slightly more than half of the industry approved.46 AD duties ranging from 2.3%
to 198.08% were ultimately imposed on the targeted merchandise.47

45 Becker, Denise. “Government Delays Ruling on Tariffs; the Furniture Industry Must Wait Until June 17 for Action,
if Any, on China,” Greensboro News and Record, April 13, 2004.
46 19 U.S.C. 1673a(c)(4) requires that the ITA determine if the petition has been filed by or on behalf of the industry.
For purposes of this memorandum, ITA officials Maria Dybczak and John Herman were interviewed by telephone on
June 24, 2004.
47 Department of Commerce, ITA. Wooden Bedroom Furniture from China. Fact Sheet, December, 28, 2004.
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Some observers have also mentioned that, also as a result of globalization, manufacturers are
operating plants all over the world. The largest steel manufacturer in the United States, for
example, is now Mittal Steel USA, a subsidiary of a global firm based in Luxembourg. Since
these multinational firms often import goods from foreign subsidiaries to fill out U.S. product
lines, they might be less inclined to favor trade remedy actions.
A third reason that trade remedy initiations have declined in recent years may be the growth rate
of the world economy. As Figure 3 also illustrates (see GDP Growth, right scale), AD and CVD
petitions have historically tended to increase during periods of economic recession and decrease
during growth periods. The rapid increase in antidumping initiations in 2008, then, could be a
reflection of economic pressures facing industries as a result of the ongoing global economic
downturn.
U.S. AD/CVD Disputes in WTO
Antidumping Act of 1916
The earliest U.S. antidumping measure, the Antidumping Act of 1916,48 made it unlawful to
systematically import articles into the United States at prices substantially lower than the actual
market value or wholesale price of the imports with the intent of destroying or injuring a domestic
industry in the United States. The statute assigned criminal penalties and provided for a civil
award of triple damages to the injured party. A WTO dispute resolution panel and the Appellate
Body found that the law provided penalties not authorized by the Antidumping Agreement or the
GATT, and therefore violated U.S. WTO obligations. Congress repealed the law in Section 2006
of the Miscellaneous Tariff and Technical Corrections Act of 2004 (P.L. 108-429).
Continued Dumping and Subsidy Offset Act
Section 1003 of P.L. 106-387, the “Continued Dumping and Subsidy Offset Act (CDSOA) of
2000,” amended the Tariff Act of 1930 by requiring that all duties collected as a result of AD and
CVD orders be redistributed to the petitioners (“affected domestic producers”) that have been
injured by the subject imports. The funds must be used for certain “qualifying expenditures,”
including employee training, research and development, manufacturing facilities, or equipment.
Disbursements under the act amounted to $231 million in FY2001, $330 million in FY2002, $190
million in FY2003 (an additional $50 million is held in reserve pending the resolution of a court
case), $284 million in FY2004, $226.1 million in FY2005, $380.1 million in FY2006, $295
million in FY 2007, $190 million in 2008, and $248 million in 2009.49
The CDSOA was controversial for several reasons. First, opponents believed that the measure
encourages the filing of AD and CVD petitions, limited the benefits of collections under the act to
petitioners (placing other domestic producers at a competitive disadvantage), and exacerbated
market inefficiencies caused by AD and CVD actions. Second, some also found it controversial
because it was inserted into the legislation during conference and received no committee or floor
consideration in either House. Supporters, including many in Congress and many domestic

48 15 U.S.C. 72.
49 U.S. Department of Homeland Security. U.S. Customs and Border Protection. CDSOA Annual Reports, various
years. http://www.customs.gov/xp/cgov/import/add_cvd/.
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industry representatives, believed that money distributed through the CDSOA is a relatively small
amount to invest in assisting U.S. companies to remain competitive.
WTO dispute settlement and Appellate Body panels determined that the law violated U.S.
obligations under the WTO Antidumping and Subsidies Agreements. The level of retaliation was
determined through arbitration, and most of the co-complainants in the case, including the
European Union, India, Japan, and Korea, received formal WTO authorization to “suspend
concessions” on targeted U.S. goods in late November 2004. Canada began assessing additional
tariffs on U.S. exports of live swine, cigarettes, oysters, and specialty fish in May 2005.50 The
European Union established an additional 15% tariff on imports of certain women’s apparel,
office supplies, crane trucks, sweet corn, and spectacle frames, also beginning on May 1, 2005.51
Mexico began retaliating in a similar manner on August 17, 2005, and Japan on September 1,
2005.52 According to WTO agreements, any retaliation is temporary, and may only occur if
“recommendations and rulings are not implemented in a reasonable period of time.53
The CDSOA was repealed as of February 8, 2006 in section 7601 of P.L. 109-171, the Deficit
Reduction Act of 2005. The repeal language specified, however, that “all duties on entries of
goods made and filed before October 1, 2007 ... shall be distributed as if [the CDSOA] had not
been repealed.”54
Industries still continue to receive CDSOA disbursements for several reasons. First, the almost
two-year time difference between the repeal and the actual statutory date for the end of
distributions allowed additional disbursements to continue. Second, AD and CV duties are not
assessed until the product “entry” is actually liquidated (as opposed to being stored in a bonded
customs warehouse) and the goods subsequently enter the commerce of the United States. Third,
AD and CVD duties are applied retrospectively—meaning that Customs and Border Protection
(CBP) does not collect the payment for these duties until long after the goods have entered U.S.
commerce. In many cases, AD and CV duty payments are collected more than a year after
liquidation. Fourth, CDSOA payments are disbursed early (within 60 days) in the fiscal year
following the date they are received. Since duties are collected and distributed in this fashion, the
petitioners and industry supporters are likely to continue receiving CDSOA payments for some
time. The European Union, Canada, Mexico, and Japan indicated that they would continue to
retaliate against these disbursements until they actually cease.55

50 Canada Department of Foreign Affairs and International Trade. “Byrd Amendment: Canada to Retaliate Against
United States,” United States,” News Release No. 56, March 31, 2005.
51 Commission on the European Communities. Proposal for a Council Regulation Establishing Additional Customs
Duties on Imports of Certain Products Originating in the United States of America. Brussels, March 31, 2005.
52 World Trade Organization. Dispute Settlement Body. Minutes of Meeting on 31 August 2005, September 30, 2005,
WT/DSB/M/196.
53 World Trade Organization. Understanding on Rules and Procedures Governing the Settlement of Disputes, Article
22:1.
54 Section 7601(b) of P.L. 109-171.
55 World Trade Organization. Dispute Settlement Body. Minutes of Meeting on 17 February 2006, March 31, 2005,
WT/DSB/M/205.
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Zeroing
“Zeroing” is an administrative practice used in the calculation of dumping margins. In U.S. law,
AD orders imposed on targeted merchandise must be equal to the dumping margin or “the amount
by which the normal value exceeds the export price or constructed export price of the subject
merchandise.”56 The ITA typically calculates the margin by first identifying, to the extent
possible, all U.S. transactions, sale prices, and levels of trade for each model or type of targeted
merchandise sold by each company in the exporting country. These model types are then
aggregated into subcategories, known as “averaging groups,” which are used to calculate the
“weighted average export price.” The export prices for each subgroup are then compared to the
corresponding agency-calculated “weighted average normal value.” Finally, the results of all of
these comparisons are added up to establish the overall dumping margin of the targeted product.57
When authorities add up the dumping margins of each of the subgroups to establish an overall
dumping margin for the subject merchandise, they sometimes encounter negative margins in a
subgroup (an indicator that the items in that subcategory not being dumped). However, rather
than including the negative margin in their calculations, which could result in a lower overall
dumping margin, ITA officials factor in the results of that subgroup as a zero.58 Officials use a
similar practice when recalculating dumping margins in administrative reviews of AD orders or
suspension agreements. One justification for the zeroing practice is that the dumping margin
could be skewed if, when determining the weighted average dumping margin, the subgroup that
has the negative dumping margin represents a substantial percentage of export sales.
The U.S. practice has been challenged in the WTO on a number of fronts. In two disputes, WTO
dispute settlement and Appellate Body panels have found that the U.S. practice of zeroing is in
violation of its obligations under the WTO Antidumping Agreement.59 On February 6, 2004, the
European Union formally requested the establishment of a dispute settlement panel on zeroing,
citing 31 U.S. AD cases targeting products of the EU. The EU claimed that the dumping margin
would have been minimal, or even negative, if U.S. officials had not used zeroing. A panel was
established on March 19, 2004. In a split decision in late October 2005, the dispute settlement
panel report found for the United States in its use of zeroing in the course of administrative
reviews, but against U.S. practice when conducting initial investigations.60 On April 18, 2006, the
Appellate Body found that the practice of zeroing could be challenged as it relates to original
investigations, and upheld the panel’s finding that the practice is inconsistent with Article 2.4.2 of
the Antidumping Agreement.61 In that case, the interim report of a compliance panel is pending,
with a final report expected in mid-July 2008.62 In October 2006, the EU filed an additional

56 19 U.S.C. 1677f-1(d)(A)(i) and (ii).
57 See Department of Commerce, Import Administration. Antidumping Manual, Chapter 6, “Fair Value Comparisons.”
1997 edition http://ia.ita.doc.gov/admanual/index.html.
58 Ibid.
59 World Trade Organization, Dispute Settlement Body. United States—Laws, Regulations, and Methodology for
Calculating Dumping Margins (“Zeroing”). Request for the establishment of a panel by the European Communities,
WT/DS294/7, February 6, 2004. Ruling of the Panel distributed October 31, 2005. Available at
http://docsonline.wto.org/. See also Appellate Body Report, United States—Laws, Regulations and Methodology for
Calculating Dumping Margins (“Zeroing”), WT/DS294/AB/R (April 18, 2006).
60 Ibid.
61 Ibid.
62 “United States Rings in New Year Facing Full Slate of WTO Disputes” Inside U.S. Trade, January 4, 2008.
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complaint against the United States regarding zeroing, and the final dispute settlement panel
report is expected in early September 2008.63
The use of zeroing was also challenged by Japan in November 2004. On September 20, 2006, a
dispute settlement panel also concluded in this case that the U.S. zeroing methodology, when
used in certain instances, was inconsistent with the Antidumping Agreement.64 In January 2007,
the Appellate Body made a similar determination.65 The United States has officially informed the
DSB that it intends to implement the ruling but needs a reasonable period to do so.66
Mexico also challenged U.S. zeroing in the context of an AD investigation on stainless steel.67 On
December 20, 2007, the Dispute Settlement Panel issued a split decision, saying that the United
States did not violate its obligations when using simple zeroing, “as such” and when used in five
specific reviews on stainless steel from Mexico. However, the panel ruled against the United
States in its use of model zeroing “as such” and when used in a specific original investigation on
subject merchandise from Mexico.68 Mexico has appealed the panel ruling.69
Since these rulings challenged a U.S. administrative practice rather than U.S. statutes, they may
not necessarily require legislative action to implement. In the first dispute mentioned above, the
United States told the DSB in May 2006 that it intended to implement the recommendations and
rulings of the panels. On February 22, 2007, the ITA initiated proceedings under section 129 of
the Uruguay Round Agreements Act (URAA). The ITA recalculated the weighted-average
dumping margins in twelve of the fifteen EU cases found to violate WTO rules (three of the AD
orders had been previously revoked). The final recalculated dumping margins for eleven of the
cases were announced on May 1, 2007,70 but the implementation of the finding in the twelfth case
was delayed due to a clerical error in the underlying investigation.71 The ITA also announced that
it would “no longer make average-to-average comparisons in antidumping duty investigations
without providing offsets for non-dumped comparisons.” 72

63 WTO. Request for Consultations by the European Communities, United States—Continued Existence and
Application of Zeroing Methodology. WT/DS350/1 (October 3, 2006), and Addendum, WT/DS350/1/Add.1 (October
11, 2006).
64 World Trade Organization, Dispute Settlement Body. United States—Measures Relating to Zeroing and Sunset
Reviews. Report of the panel. WT/DS322/R (September 20, 2006).
65 Appellate Body Report, United States—Measures Relating to Zeroing and Sunset Reviews, WT/DS322/AB/R
(January 9, 2007).
66 For a more detailed review of WTO dispute panel findings in these cases, see CRS Report RL32014, WTO Dispute
Settlement: Status of U.S. Compliance in Pending Cases, by Jeanne J. Grimmett.
67 World Trade Organization, Dispute Settlement Body. United States: Final Antidumping Measures on Stainless Steel
from Mexico. Report of the panel. WT/DS350-R (December 20, 2007).
68 Ibid.
69 “United States Rings in New Year Facing Full Slate of WTO Disputes” Inside U.S. Trade, January 4, 2008.
70 International Trade Administration. “Final Results for Section 129 Determinations,” http://ia.ita.doc.gov/ia-
highlights-and-news.html.
71 International Trade Administration, Issues and Decision Memorandum for the Final Results of the Section 129
Determination, April 9, 2007. http://ia.ita.doc.gov/download/zeroing/zeroing-sec-129-final-decision-memo-
20070410.pdf.
72 72 F.R. 9306, March 1, 2007.
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Safeguard (Escape Clause) Measures
“Safeguard” or “escape clause” trade laws are designed to provide domestic industries with relief
from injurious import surges resulting from fairly competitive trade. In order to obtain relief, the
ITC must determine that a domestic industry is substantially injured by import surges.
Presidential action is necessary to obtain relief under these statutes.
Although individual U.S. safeguard actions (in particular, the 2002 action on steel) have been the
subject of intense debate, on the whole, many economists find safeguard measures less
objectionable than AD or CVD actions. Some reasons for this include their temporary nature, the
requirement that industries take steps to positively adjust to import competition, the higher injury
threshold, and the requirement of Presidential action.73
Statutory Authority
Sections 201-204 of the Trade Act of 1974, as amended,74 provide relief for imports from all
countries. Investigations under this statute are often known as “section 201 investigations.”
Section 406 of the same Act, as amended,75 provides a similar relief for market-disruptive imports
from communist countries. Section 421, added to the Trade Act of 1974 in October 2000,76 is a
country-specific trade remedy that applies only to injurious imports from China. Another
provision, Section 302 of the NAFTA Implementation Act,77 provides similar relief due to
injurious imports originating in Canada or Mexico.
Section 201 Eligibility Criteria
A Section 201 investigation may be initiated by the filing of a petition by any group considered to
be representative of an industry, including a trade association, firm (especially if the firm is the
sole domestic producer), a certified or recognized union, or group of workers.78 An investigation
may also be initiated at the request of the President, the United States Trade Representative
(USTR), the House Ways and Means or Senate Finance Committees, or by the ITC itself.79
The ultimate goal of a section 201 action is to facilitate a domestic industry’s positive adjustment
to import competition. The petition for relief must also include a statement describing specific
purposes for which the action is being sought (e.g., to allow time for the domestic industry to
transfer its resources into other productive pursuits) and may include a plan submitted by the
petitioner to facilitate the industry’s positive adjustment to import competition (if a plan is not
filed with the petition, it must be filed within 120 days).

73 Lawrence, Robert Z. and Litan, Robert E. Saving Free Trade: A Pragmatic Approach, Washington, D.C.: Brookings,
1986, p. 97.
74 19 U.S.C. 2251-2254.
75 19 U.S.C. 2436.
76 19 U.S.C. 2451, as added by section 103 of P.L. 106-286, Division A, Normal Trade Relations for the People’s
Republic of China.
77 19 U.S.C. 3352.
78 19 U.S.C. 2252(a)(1).
79 19 U.S.C. 2252(b)(1)(A).
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Section 201 relief may apply to imports of the targeted merchandise from all countries or from
any country or countries specifically identified as a cause of the import surges.
U.S. International Obligations
Article XIX of the GATT, Emergency Action on Imports of Particular Products, authorizes
contracting parties to “suspend the obligation in whole or in part or to modify the concession” in
the event of “unforeseen developments” caused by obligations or tariff concessions under the
Agreement.80 The WTO Safeguards Agreement provides rules for the application of Article XIX.
Under the Agreement, safeguard measures are considered “emergency” actions with respect to
imports of particular products. WTO provisions require that safeguard measures: (1) be time-
limited; (2) be imposed only when imports are found to cause or threaten serious injury to a
competing domestic industry; and (3) be applied on a non-selective (i.e., most-favored-nation)
basis, and (4) be progressively liberalized while in effect. In addition, the Member imposing a
safeguard is expected to maintain a substantially equivalent level of concessions between it and
exporting Members affected by the safeguard. To achieve this, Members may agree on
compensation; if negotiations fail, the exporting Member may, in certain circumstances, suspend
concessions vis à vis the Member imposing the safeguard.
NAFTA Provisions
Article 8 of the NAFTA allows any party subject to the agreement to use bilateral (within the
NAFTA) “emergency actions” if an import surge or a duty reduction is a substantial cause of
serious injury to a domestic industry. Consultations between affected parties are required. The
remedy allowed is a suspension in the further reduction of a duty, or an increase in the rate of
duty at a level not to exceed (1) the most-favored-nation (MFN) applied rate of duty in effect at
the time the action is taken, or (2) the MFN-applied rate of duty in effect on the day immediately
preceding the date of entry into force of the NAFTA. In the case of seasonal products, the duty
rate applied cannot exceed the MFN applied rate of duty that was in effect on the good for the
corresponding season immediately preceding the date of entry into force of the NAFTA. For most
products, the term of a safeguard action may not last more than three years.
Each party to the NAFTA also retains the right to engage in global safeguard actions under Article
XIX of the GATT, but must exclude other parties to the NAFTA unless (1) imports from a party,
considered individually, account for a substantial share of the imports and (2) imports from a
party, considered individually, or in extreme circumstances, collectively, contribute importantly to
the injury, or threat thereof, caused by imports. Proposed emergency actions are not subject to
dispute settlement proceedings under the NAFTA.
Safeguard provisions are also included in the U.S.-Jordan Free Trade Agreement (FTA), the U.S.-
Singapore FTA and the U.S.-Chile FTA.

80 General Agreement on Tariffs and Trade, Article XIX.1(a) and (b).
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Section 201 Safeguard Investigations
ITC Role
The ITC determines whether the targeted merchandise is being imported in such increased
quantities that it is a “substantial cause of serious injury, or threat of serious injury”81 to the
domestic industry producing articles “like or directly competitive with” the imported article.82
The ITC must normally make its injury determination within 120 days, but it may take up to 30
additional days to make a determination if the investigation is extraordinarily complicated. If the
ITC determines affirmatively, it also provides the President with one or more remedy
recommendations. The ITC’s report must be submitted to the President within 180 days of the
petition, or within 240 days if critical circumstances are alleged.83
Provisional Relief
If critical circumstances are alleged to exist and the petitioner requests that provisional relief be
provided, the ITC must make a determination on critical circumstances within 60 days of
receiving the petition. If the critical circumstances determination is affirmative, the ITC must also
suggest a recommended amount of relief (preference is given to increasing or imposing a duty on
imports) to prevent or remedy the injury. The ITC must immediately report its findings to the
President.84
Within 30 days of receipt of an affirmative determination from the ITC, if the President finds that
provisional relief is warranted, he may proclaim whatever provisional relief he believes necessary
for a period not to exceed 200 days.85
Perishable Products
Provisional relief may also be requested if the targeted merchandise is a perishable agricultural or
citrus product. In these cases, the industry representative files a request with the USTR (in
advance of a section 201 petition) for monitoring of imports of the product. The USTR
determines (within 21 days) (1) if the imported product is a perishable agricultural or citrus
product and (2) if there is a reasonable indication that the product is being imported in such
increased quantities as to be, or likely to be, a substantial cause of serious injury, or threat of
serious injury, to the domestic industry. If these determinations are affirmative, the USTR
requests the ITC to monitor and investigate the imports for a limited time period, not to exceed
two years.86

81 “Substantial cause” is defined in 19 U.S.C. 2252(b)(1)(B) as “a cause which is important and not less than any other
cause.” Criteria for assessing “serious injury” are described in 19 U.S.C. 2252(c)(1)(A).
82 19 U.S.C. 2252(c).
83 19 U.S.C. 2252(f)(1).
84 19 U.S.C.2252(d)(1)(E) and (F).
85 19 U.S.C. 2252(d).
86 19 U.S.C. 2252(d)(1)(B) and (C).
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In order to receive provisional relief, the perishable product must be the subject of ITC
monitoring for at least 90 days prior to initiation of the investigation, and the petitioner must
request provisional relief. The ITC has 21 days to make an injury determination, and immediately
reports its findings and remedy recommendations to the President. If the ITC makes an
affirmative determination, the President has seven days to proclaim provisional relief if he
considers it necessary to prevent or remedy the serious injury. If the ITC’s determination is
negative, no relief is given and the proceeding is terminated.87
Presidential Action
Within 60 days of receipt of an affirmative ITC determination and report, the President is
instructed to “take all appropriate and feasible action within his power which the President
determines will facilitate efforts by the domestic industry to make a positive adjustment to import
competition and provide greater economic and social benefits than costs.” On this basis, the
President may (1) implement the ITC’s recommendations, (2) modify the ITC provisions or
provide another form of remedy, or (3) take no action due to U.S. economic or national security
interests.88
Import relief may be granted for an initial period of up to four years and extended one or more
times.89 The total period of relief, however, may not exceed eight years. If the President decides
not to provide relief, or to provide relief other than that recommended by the ITC, his decision
may be overridden by a congressional joint resolution (adopted within 90 days), in which case the
ITC’s recommendations would be implemented.90
Midterm Review
The ITC is required to monitor section 201 actions as long as they stay in effect, especially with
respect to the efforts and progress of the domestic industry and workers to adjust positively to
import competition.91 If the initial period of the action exceeds three years, the ITC is also
required to submit a midterm review to the President and Congress. The ITC holds a hearing in
which any interested parties may participate, and upon request, advises the President of the
probable economic impact of any reduction, modification or termination of the action.92
After the President receives the ITC review and seeks the advice of the Secretary of Commerce
and the Secretary of Labor, he may modify, reduce, or terminate the action if he determines that
changed circumstances warrant such actions either because: (1) the domestic industry has not
made adequate efforts to adjust positively to import competition, or (2) the effectiveness of the
action has been impaired by changed economic circumstances. He may also terminate, modify, or
reduce the action if the majority of industry representatives petition the President to do so on the
basis of positive adjustment to import competition.93

87 19 U.S.C. 2252(d)(1)(A).
88 19 U.S.C. 2253.
89 19 U.S.C. 2253(e)(1)(A) and (B).
90 19 U.S.C. 2253(c).
91 19 U.S.C. 2254(a)(1).
92 19 U.S.C. 2254(a)(2) and (3).
93 19 U.S.C. 2254(b).
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The President may also extend an action. Between six and nine months before the safeguard
action is scheduled to terminate, at the request of the President or if an industry petition is filed,
the ITC must investigate to determine whether an extension of the action is necessary and if the
domestic industry is making positive adjustment to import competition. Within 60 days of the
termination date, the ITC must transmit the results of the investigation and its determination,
unless the President specifies a different date.94
Section 201 Outcomes
In the seventy-three section 201 safeguard investigations conducted from 1975 to date, the ITC
has recommended some form of relief 47% of the time. The President has provided import relief
in 26 instances (35.6%).
Figure 4 illustrates the outcome of section 201 cases from FY1975 to the present. In the cases in
which the President granted relief, the most common form has been tariff increases, followed by
adjustment assistance, tariff rate quotas, or some combination thereof.
Figure 4. Outcome of Section 201 Safeguard Cases, 1975-Present

Source: ITC.

94 19 U.S.C. 2254(c).
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Figure 5. Safeguard (Section 201) Petitions and Outcome by Product Group

Source: ITC.
Figure 5 shows Section 201 safeguard petitions from 1975 to date and their outcomes by product
group. The largest number of petitions has been filed in the category of miscellaneous
manufactures, such as footwear, stainless steel flatware, fishing tackle, fishing rods, and
clothespins. Agricultural products are the second largest category, including asparagus,
mushrooms, shrimp, honey, roses, and cut flowers. It appears, generally, that a greater percentage
of domestic producers of end-use consumer goods have filed and obtained relief through
safeguard petitions as opposed to AD or CVD orders.
2002 Steel Safeguard Action
On June 5, 2001, President Bush responded to steel companies, union representatives, and many
in Congress by requesting that the ITC begin a broad section 201 investigation on steel import
surges. The request, covering more than 500 steel mill products, was forwarded to the ITC by
then-USTR Robert Zoellick on June 22. The ITC staff grouped this large number of products into
33 product categories under four broad groupings. For each of these 33 categories, the ITC
investigated whether or not imports of the subject merchandise were a substantial cause of serious
injury to the domestic steel industry.
On September 17, 2001, the ITC began a series of hearings on the issue of injury to the domestic
steel industry, and on October 22, 2001, made an affirmative determination in 16 of the 33
product categories. Products in the remaining 17 categories were dismissed from further
consideration. The ITC continued the remedy phase of the investigation for the 16 categories, and
held hearings in November 2001. On December 19, 2001, the ITC submitted its findings and
remedy recommendations to the President.95 On March 5, 2002, President Bush announced trade

95 All public documents regarding the ITC steel investigation are available on the ITC website, http://www.usitc.gov/
trade_remedy/731_ad_701_cvd/investigations/2003/204_steel/finalphase.htm.
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safeguard remedies for all products that the ITC had found substantial injury, except for two steel
specialty categories.96
The President’s implementation of safeguard measures on steel was controversial both
domestically and internationally. A number of U.S. trading partners challenged the decision
through the WTO, and on July 11, 2003, the dispute settlement panel found that the safeguard
measures were inconsistent with U.S. WTO obligations. An Appellate Body determination
confirmed the main points of the panel decision on November 10, 2003. After the WTO panel
rulings, the European Union announced that it would retaliate by establishing substantial tariff
penalties against $2 billion in imports from the United States beginning in December 2003.
The President terminated section 201 safeguard measures on steel in December 8, 2003.97 The
USTR stated that the termination was the result of a midterm review of the progress of the steel
industry to cope with the increased competition and changed economic circumstances. The
United States faced retaliation from the European Union equivalent to $2.2 billion in increased
tariffs on U.S. exports due to WTO dispute settlement and Appellate Body findings. In the
proclamation, the President continued the licensing and monitoring of imports of certain steel
products and delegated the function to the Secretary of Commerce.
Section 406 Relief
Section 406 of the Trade Act of 1974,98 as amended, was established to provide a remedy against
market disruption caused by imports from Communist countries. This statute applies to any
Communist country, whether or not it has received non-discriminatory (normal trade relations)
treatment. This provision was enacted out of concern that trade remedy laws already in place
were insufficient to deal with a rapid influx of imports that can result from a Communist
government’s control of its industry pricing levels and distribution processes. Section 406
investigations follow a similar format to section 201 proceedings, however, (1) the standard of
injury (market disruption as opposed to “substantial cause of serious injury” or threat thereof) is
lower; and (2) domestic industries are not required to plan for or demonstrate positive adjustment
to import competition. Import relief may apply only to imports from the subject Communist
country or countries. If the President decides to grant relief, he may do so for up to five years,
with a possible additional three-year extension.
“Surge Protection” from Chinese Imports (Section 421)
A country-specific safeguard on imports from China is found in section 421 of the Trade Act of
1974.99 This provision, enacted in section 103 of P.L. 106-286, superseded section 406 with
respect to goods from China after the President extended permanent nondiscriminatory (normal
trade relations) treatment to China following its accession to the WTO.100 The legislation

96 To Facilitate Positive Adjustment to Competition from Certain Steel Products, Proclamation 7529, March 5, 2002
(67 F.R. 10593).
97 Proclamation 7741, 68 F.R. 68481.
98 19 U.S.C. 2451.
99 P.L. 93-618, Section 421, as added by section 103(a)(3) of P.L. 106-286, 19 U.S.C. 2451.
100 To Extend Nondiscriminatory Treatment (Normal Trade Relations Treatment) to the Products of the People’s
Republic of China, Proclamation 7616 of December 27, 2001, 67 F.R. 479.
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implemented an anti-surge mechanism established under the U.S.-China Bilateral Trade
Agreement, concluded on November 15, 1999. This transitional safeguard measure is scheduled
to terminate 12 years after China’s WTO accession.
According to the Protocol on the Accession of China to the WTO, import relief may be granted
“only for such period of time as may be necessary to prevent or remedy the market disruption.” If
import relief is granted due to a relative increase in imports, China may retaliate by suspending
equivalent trade concessions or obligations if the measure remains in effect for more than two
years. If relief is granted due to an absolute increase in imports, China may retaliate after three
years.101
Although the procedure under section 421 action is similar to that under section 201, the section
421 safeguard is different in four major respects: (1) the statute provides relief for subject
merchandise from China only, whereas the remedy in section 201 applies to subject imports from
all countries; (2) consultations with Chinese trade authorities are required; (3) in addition to the
ITC, the USTR takes part in the procedure and also submits recommendations to the President;
and (4) the standard for relief is “market disruption”—a lower standard than in section 201
proceedings.
To date, there have been seven section 421 investigations completed during the Bush
Administration, as follows: Pedestal Actuators (ITC case number TA-421-1), Wire Hangers (TA-
421-2), Brake Drums and Rotors (TA-421-3), and Ductile Iron Waterworks Fittings (TA-421-4),
Uncovered Innerspring Mattress Units (TA-421-5), Circular Welded Non-Alloy Steel Pipe from
China (TA-421-06), and Certain Passenger and Light Truck Vehicle Tires (TA-421-7). The ITC
made affirmative determinations in five of these cases and negative determinations in two cases
(brake drums and rotors and innerspring mattress units). In each of the four cases in which the
ITC made affirmative determinations during the Bush Administration, the President decided not
to grant relief because he determined that providing such relief was not in the national economic
interest of the United States.
Tire Safeguard Imposed
On September 11, 2009, President Obama announced that he had decided to impose remedies on
certain passenger and light truck vehicle tires from China, thus marking the first time that a
section 421 safeguard was implemented. The remedy, effective September 26, 2009, imposes
additional tariffs on tires imported from China for a three-year period, beginning with 35% ad
valorem the first year, decreasing to 30% the second year, and 25% the third year.102
This decision by the President was announced after the ITC ruled in the affirmative in a section
421 investigation (ITC investigation TA-421-7). The suggested ITC remedy was an additional
duty on the subject merchandise for a three-year period, beginning at 55% ad valorem the first
year and decreasing 10% each year the duty is imposed. The ITC also proposed that adversely
impacted workers and firms should receive expedited consideration of Trade Adjustment

101 An absolute increase in imports is indicated if imports of the subject merchandise surged in one year and were very
low or zero previous years. A relative increase means that the ratio of imports relative to domestic production has
rapidly increased from one year to the next.
102 The President, "Proclamation 8414 - To Address Market Disruption From Imports of Certain Passenger Vehicle and
Light Truck Tires From the People's Republic of China," 74 Federal Register 47861, September 11, 2009.
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Assistance by Department of Labor and the U.S. Department of Commerce if the required
petitions are filed (as provided for in section 1802 of P.L. 111-5).103
According to the section 421 statute, the USTR was required to make a recommendation to the
President within 55 days of receiving the ITC’s report, and the President had to determine
whether to provide relief within 15 days of the USTR’s recommendation.104 The USTR held a
hearing on this section 421 case on August 7, 2009.
Conclusion
Many in Congress support trade remedy laws and actions because they can assist in mitigating the
adverse effects of international trade on domestic industry, producers, and workers. Some key
industries may currently be facing injury from increased import competition, which can lead to
factory closures and loss of domestic manufacturing jobs. Some workers in the service sector are
also feeling the effects of import competition due to increased offshore outsourcing. These
factors, among others, are reasons that many in Congress support strengthening these laws and
insist that the United States must preserve the ability to “rigorously enforce its trade laws” in
international negotiations.
Others believe that trade remedy actions (the vast majority of which are AD or CVD
investigations and orders) in and of themselves introduce inefficiencies in both domestic and
international economies that result in decreased economic welfare. For example, some in
Congress have become concerned about the additional costs accruing to U.S. producers who use
imports of intermediate goods subject to AD and CVD orders in finished products, such as steel,
to manufacture finished products such as automobiles and buildings. In addition, in a global
trading environment in which many domestic manufacturers (makers of shoes and furniture, for
example) also import a portion of their product lines, the distinctions between U.S. domestic
producers and foreign exporters have become less clear.
Competitive advantage and a liberalized world trading system create both winners and losers in
domestic economies. Acting on legislation in a manner consistent with previously agreed upon
multilateral commitments, balancing that action with the need to regulate and minimize unfair
trade practices, and assisting domestic import-competing industries to become more
internationally viable presents Congress with unique challenges.

103 U.S. International Trade Commission. Certain Passenger Vehicles and Light Truck Tires from China, Investigation
Number TA-421-7. Publication 4085, July 2009.
104 19 U.S.C. 2451 (h) and (k).
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Appendix. Summary of U.S. Trade Remedy Laws
Statutory Authority

Purpose
Administering
Agencies
Remedy
Countervailing Duty (CVD).

To offset any unfair and injurious advantage that
International
Trade

Countervailing duties are imposed when two
Tariff Act of 1930, Title VII,
foreign manufacturers, producers, or exporters of
Administration (ITA) of
conditions are met: (a) Commerce determines
as amended (19 U.S.C. 1671
a class or kind of merchandise might have over
the Department of
that the government of a country or public entity
et seq.)
U.S. producers as a result of a foreign authority
Commerce
is providing, directly or indirectly, a
providing a financial contribution, any form of
U.S. International Trade
countervailable subsidy with respect to the
income or price support, or a payment to a
Commission (ITC)
manufacture, production, or export of the subject
funding mechanism to provide the above.
merchandise; and (b) the USITC determines that
a U.S. industry is injured, threatened with
material injury, or that the establishment of an
industry is materially retarded, due to imports of
that merchandise.
Antidumping (AD). Tariff Act
To offset any unfair and injurious advantage that a
ITA, ITC

Antidumping duties are imposed when two
of 1930, Title VII, as
class or kind of foreign merchandise might have
conditions are met: (a) Commerce determines
amended (19 U.S.C. 1673 et
over a similar U.S. product as a result of the
that the foreign subject merchandise is being, or
seq.)
imported product being sold in the United States
is likely to be, sold in the United States at less
at less than fair market value (less than
than fair value; and (b) The USITC determines
comparable goods are sold in the home market,
that a U.S. industry is materially injured,
or in other export markets.
threatened with material injury, or that the
establishment of an industry is material y
retarded, because that merchandise is imported.
Sections 201-204 of the

Provides for investigations as to whether an

ITC, President

Action may be taken in the form of an increase in
Trade Act of 1974, as
article is being imported into the United States in
or imposition of a duty, a tariff-rate quota, a
amended (19 U.S.C. 2251 to
such increased quantities to be a substantial cause
modification or imposition of a quantitative
2254)
of serious injury, or the threat thereof, to a
restriction, one or more appropriate measures of
domestic industry producing an article like or
trade administration assistance, or a combination
directly competitive with the imported article.
of these actions.
Gives the President authority to withdraw or
modify concessions and impose duties or other
restrictions for a limited period of time on
imports of any article which causes or threatens
serious injury to the domestic industry producing
a like or directly competitive article.
Section 406 of the Trade Act
Provides for remedy against market disruption

ITC, President

Action may be taken in the form of increased
of 1974, as amended (19
caused by imports from communist countries.
rates of duty or quantitative restrictions that will
U.S.C. 2436).
prevent or remedy the market disruption.
Temporary emergency action may also be taken.
CRS-31

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Statutory Authority

Purpose
Administering
Agencies
Remedy
Section 421 of the Trade Act
Provides for remedy against market disruption

ITC, USTR, President

Action may be taken in the form of increased
of 1974, as amended (19
caused by imports from the Peoples’ Republic of
rates of duty or quantitative restrictions that will
U.S.C. 2451)
China
prevent or remedy the market disruption.
Temporary emergency action may also be taken.
Consultations with China are also required to
attempt to resolve the market disruption.
Section 301 of the Trade Act
Provides for investigations into allegations that (1)
USTR

Benefits of trade agreement concessions may be
of 1974, as amended (19
foreign countries are denying rights or benefits
suspended, withdrawn, or prevented; or duties or
U.S.C. 2411 et seq.)
under trade agreements or violating trade
other import restrictions may be imposed.
agreements to which the United States is a party;
Binding agreements with the foreign country to
or (2) the act, policy, or practice of a foreign
eliminate or phase out the action or restriction
country is unjustifiable and burdens or restricts
may also be entered into.
U.S. commerce. Sec. 301(a) requires mandatory
action, if the USTR determines that the above
conditions have occurred, unless the WTO has
adopted a report, or a dispute resolution
proceeding under any other trade agreement has
found, that rights of the United States have not
been violated, or the USTR finds inter alia that the
country has agreed to eliminate the practice, or
taking action would cause serious harm to U.S.
national security. Sec. 301(b) provides for
“discretionary action” if an act, policy, or practice
of a foreign country is “unreasonable or
discriminatory and burdens or restricts United
States commerce.”
“Special 301.” Section 182 of

The USTR is required, no later than 30 days of

USTR

The USTR is required to initiate Section 301
the Trade Act of 1974, as
release of the National Trade Estimates Report
investigations with respect to priority countries
amended (19 U.S.C. 2242)
(NTE) to identify foreign countries that (1) deny
or consult with the countries (unless he
adequate and effective protection of intellectual
determines that an investigation would be
property, or (2) deny fair and equitable market
detrimental to U.S. economic interests) and if
access to U.S. persons that rely on intellectual
possible, secure agreements for the elimination of
property protection. The USTR is also required
barriers.
to determine which of these are priority foreign
countries, that is, those with the most onerous or
egregious practices.
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Statutory Authority

Purpose
Administering
Agencies
Remedy
Section 337 of the Tariff Act

Declares unlawful unfair methods of competition

ITC

The ITC may issue an exclusion order instructing
of 1930, as amended (19
and unfair acts in the importation or sale of
Customs to bar the products at issue from entry
U.S.C. 1337 et seq.)
articles. “Section 337” investigations most often
into the United States.
involve intellectual property rights, including
allegations of patent, trademark or mask work
The ITC may also issue a cease and desist order
infringement. Other forms of unfair competition,
against named importers and other violating
such as misappropriation of trade secrets, false
parties to cease certain actions.
advertising, and violations of antitrust laws may
Expedited relief in the form of temporary
also be asserted.
exclusion orders and temporary cease and desist
orders may also be available in certain
exceptional circumstances.
The ITC’s exclusion orders become effective
within 60 days of issuance unless disapproved by
the President for policy reasons.







Trade Adjustment Assistance
Provides technical assistance to eligible firms
Department
of

Eligible firms may apply for technical assistance to
for Firms. Chapter 3 of Title
which (1) apply to Commerce for certification of
Commerce
implement recovery strategy.
II of the Trade Act of 1974
eligibility and (2) propose adjustment proposal
(19 U.S.C. 2431 et seq.)
that describes the firm’s recovery strategy and
[Program was temporarily
type of technical assistance it is seeking.
extended through December
31, 2007 by P.L. 110-89.]

Trade Adjustment Assistance
Provides trade adjustment assistance for eligible

ITC (in AD and CVD

Eligible workers may receive trade readjustment
for Workers. Chapter 2 of
U.S. workers if (1) a group of workers or their
cases), Department of
allowances, training and reemployment services,
Title II of the Trade Act of
certified or recognized union or representative
Labor (Labor), State
and relocation and/or job search allowances.
1974 (19 U.S.C. 2271 et seq.)
files a petition with the Department of Labor’s
agencies
Office of Trade Adjustment Assistance for
[Program was temporarily
certification of eligibility, and (2) the individual
expanded and extended by
worker is approved for benefits by the State
P.L. 11105.]
agency administering benefits.
Sources: U.S. International Trade Commission. Summary of Statutory Provisions Related to Import Relief. USITC Publication 3125, August 1998. United States Code
Annotated (USCA) Title 19, Customs Duties. U.S. Congress, House Committee on Ways and Means. Overview and Compilation of U.S. Trade Statutes (2005), WCMP
109-5.
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Trade Remedies: A Primer


Author Contact Information

Vivian C. Jones

Specialist in International Trade and Finance
vcjones@crs.loc.gov, 7-7823


Congressional Research Service
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