U.S. lays out plan to strengthen anti-dumping regime

WASHINGTON (Reuters) - The United States on Thursday announced plans to toughen rules against what it sees as unfair foreign trade practices, proposing a number of changes likely to irk China, its biggest import supplier.

At least some of the proposals could lead to higher anti-dumping or countervailing duties on goods from the Asian manufacturing giant, the most frequent target of U.S. complaints about unfair trade in recent years.

But the plan seeks to strengthen the effectiveness of U.S. trade protection measures "across a range of areas," a senior Commerce Department official told Reuters.

With President Barack Obama's popularity falling and Democrats in danger of losing control of Congress in November elections, the party has been pushing a "Make it in America" agenda aimed at creating U.S. manufacturing jobs.

"Today's announcement is another demonstration of our continuing efforts to sharpen our trade enforcement tools," U.S. Commerce Secretary Gary Locke said in a statement.

It outlined 14 proposals that increase penalties or toughen requirements on foreign companies that sell goods the United States deems unfairly priced or subsidized.

Although less than 3 percent of imports into the United States are hit with anti-dumping or countervailing duties, the trade laws can be an important source of protection for sectors such as steel, tires, paper and other industrial goods.

In a separate move on Thursday, the U.S. International Trade Commission voted to approve hefty anti-dumping and countervailing duties levied by the Commerce Department on magnesia carbon bricks from China and Mexico. The bricks are used in furnaces for the production of iron and steel.

INVESTIGATIONS JUMP

The number of U.S. investigations jumped to 34 in 2009, an increase of 79 percent from 2008. New cases have tapered off this year, although important decisions against China are pending in probes involving paper and aluminum products.

The department will issue specific proposals in coming months for public comment, but says it does not need legislation to make any of the changes.

One trade attorney, who asked not to be identified, said at first glance all the initiatives appeared aimed at creating "higher, more certain and longer-lasting duties."

Conspicuously missing was a decision on whether to investigate China's exchange rate practices as an unfair foreign subsidy, a diplomatically explosive issue before the department in the paper and aluminum cases.

Many lawmakers, manufacturers and economists say China's currency is undervalued, giving it an unfair price advantage in global markets. The department has been mulling for months if it has a strong legal footing to investigate the charge.

China accounted for 19 percent of U.S. goods imports in 2009 for a total of $296.4 billion. Next on the list was Canada with $224.9 billion, followed by Mexico, Japan, Germany, Britain, South Korea, France, Taiwan and Venezuela.

Department officials said tightening the anti-dumping and countervailing duties rules would help meet Obama's goal of doubling U.S. exports in five years by putting domestic firms that receive protection in a stronger position to compete.

But Lewis Leibowitz, a trade attorney with Hogan Lovells, said that connection is unclear since higher import duties could boost costs for many U.S. manufacturers.

PROPOSALS TARGET CHINA

Department officials spotlighted three proposals they believed would have the most impact, and said many of the ideas are intended to tighten procedures for investigations involving "non-market economies" like China.

One would require importers to pay a cash deposit to cover preliminary duties once they are announced.

Currently, importers have the option of posting bonds at a fraction of their liability for the five or six months until final duties are set.

That has led to problems collecting the full amount the government is owed, department officials said.

"We think this is a way to better ensure that companies that ... may ultimately be liable for a dumping duty actually have the wherewithal to pay," a department official said.

A second proposed change would allow the department to subtract Chinese export taxes when calculating the size of anti-dumping or countervailing duties.

That is common practice now for unfairly traded goods from "market economies" like Japan and countries in Europe. But it has not been the case for non-market economies like China on the theory the taxes are too hard to measure.

China will "undoubtedly" be upset by the proposal because it could lead to higher duties on its goods, the Commerce Department official said.

In a similar vein, the department also wants to make it harder for exporters in non-market economies to win more favorable "separate rates" by insisting on stronger proof the companies are independent of government control.

A third major proposal would stop the practice of removing individual foreign companies from anti-dumping orders if they can show during three annual administrative reviews they haven't dumped products in the United States.

Such companies could still receive a zero duty rate under the new proposal. But they would remain subject to the order, keeping them on notice their duty could be increased if Commerce finds new evidence of unfair trading.

Department officials also want to reduce the potential for fraud by toughening "certification requirements" and making attorneys and other company representatives more accountable for the accuracy of information they submit.

China, the European Union and others are expected to closely scrutinize the proposals, though U.S. officials insist they are within the bounds of World Trade Organization rules and in some cases match what others already do.

(Reporting by Doug Palmer; Editing by Vicki Allen and Jerry Norton)