NMEs: A Love Story - Nonmarket and Market Economy Status under U.S. Antidumping Law

By Laroski, Joseph A., Jr. | Law and Policy in International Business, Winter 1999 | Go to article overview
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NMEs: A Love Story - Nonmarket and Market Economy Status under U.S. Antidumping Law


Laroski, Joseph A., Jr., Law and Policy in International Business


I. INTRODUCTION

Under U.S. antidumping law, the approach of the U.S. Department of Commerce (DOC) to nonmarket economies (NMEs) in transition has been much criticized as a work in progress with few clear operating standards. With only minimal guidance from Congress on how to define and deal with NMEs in transition, the DOC alternately has developed and abandoned different methodologies dealing with the special circumstances that arise in antidumping investigations of NME exporters.

As the pace of the political process of making market oriented reforms in NME countries has lurched forward and stumbled backward, the problem of how to deal with the NME countries in the context of antidumping proceedings remains. No clear standard exists for determining when an NME has made the transition to market economy status. In 1993, the DOC determined that Poland had successfully made the transition. This offered the first clues as to the meaning of the six-factor test set forth by Congress in the 1988 amendment to section 771 of the Tariff Act of 1930.(1) As there has been no other example of an NME country successfully achieving market economy status, little guidance has emerged to indicate where the line between nonmarket and market economy status falls. More recently, however, the failed bids of the Russian Federation and Ukraine for market economy treatment offer some clarification as to where the DOC draws the line between nonmarket and market economy status.

This Article begins with an overview of U.S. antidumping law and the DOC's treatment of NME countries and NMEs in transition. Part III attempts to delineate the point at which the DOC will determine that a nonmarket economy has made the transition to market economy country under U.S. antidumping law through an analysis of the petitions for market economy treatment made by Poland, the Russian Federation, and Ukraine. These petitions help to better determine the meaning and relative weight given to each of the section 771 factors in the DOC's analysis. Finally, Part IV examines whether it is desirable for an NME country to achieve market economy status under U.S. antidumping law. This Part notes that certain attempts by NME countries to gain market economy treatment helped to clarify the point at which the DOC will deem that the transition to market economy has occurred. Finally, this Article concludes that the NMEs in transition, however, may find it more advantageous to preserve their status as NMEs under current U.S. antidumping and countervailing duty law.

II. OVERVIEW OF U.S. ANTIDUMPING LAW

A. Theory and Purpose of U.S. Antidumping Law

Dumping by definition is the sale of foreign goods in the United States at less than fair value or below the cost of production.(2) As a form of international price discrimination, merchandise is sold in one export market at a lower net ex-factory price than the net ex-factory price for which the merchandise is sold in the home market of the exporter or in other export markets.(3) Present U.S. antidumping law provides for the assessment and imposition of antidumping duties if the administrating authority determines that foreign merchandise is being imported or is likely to be imported and sold in the United States at less than its fair value, and by reason of the import or sale of such merchandise, a U.S. industry producing like merchandise is materially injured, materially retarded, or threatened with material injury.(4) Generally, the antidumping duty imposed equals the amount by which the normal value of the merchandise exceeds its export price.(5) The International Trade Administration, within the DOC, is the administrating authority for U.S. antidumping law and responsible for making the determination whether less-than-fair-value sales are occurring.(6) On the other hand, the International Trade Commission, an independent regulatory agency, makes the determination whether a U.

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NMEs: A Love Story - Nonmarket and Market Economy Status under U.S. Antidumping Law
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