Administrative Deference to Liberalizing and Maintaining Free Trade: an Argument for Allowing the Department of Commerce to Bestow Retroactively Calculated Remedies Upon Importers Under Section 129(c)(1) of the Uruguay Round Agreements Act

• Jurisdiction: United States,Federal
• Citation: Vol. 41 No. 1
• Publication year: 2012

ADMINISTRATIVE DEFERENCE TO LIBERALIZING AND MAINTAINING FREE TRADE: AN ARGUMENT FOR ALLOWING THE DEPARTMENT OF COMMERCE TO BESTOW RETROACTIVELY CALCULATED REMEDIES UPON IMPORTERS UNDER SECTION 129(C)(1) OF THE URUGUAY ROUND AGREEMENTS ACT

Daniel John Olds^*

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Table of Contents

I. Introduction...............................................................................278

II. Background.................................................................................282

A. The Uruguay Round Agreements and the U.S.' Implementing Legislation—The Uruguay Round Agreements Act (URAA)...............................................................................282
B. The Antidumping Issue and the U.S. Methodology of Zeroing in Calculating Antidumping Duties............................284
C. The U.S. System of Duty Assessment........................................285
D. WTO Jurisprudence on Zeroing: Three Examples...................287
E. The Department of Commerce's Initial Proposal and Surrounding Issues...................................................................288

III. The Legal Problem: Does Section 129(c)(1) Allow for Retroactive Application of Alternative Methodologies?..........................................................................290

A. The Legal Framework..............................................................290
B. The Uruguay Round Agreements Act's Statement of Administrative Action: Simple Legislative History or Binding Domestic Law?...........................................................291
C. Analysis Under the Chevron Doctrine.....................................295

1. Step One of the Chevron Analysis......................................295
2. Step Two of the Chevron Analysis.....................................304

IV. Conclusion...................................................................................305

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I. Introduction

Over the last few years, the Appellate Body of the World Trade Organization (WTO) has ruled that one of the United States' methodologies for calculating antidumping (AD) duties, known as "zeroing," violates relevant WTO member treaty obligations.¹ Zeroing is "a practice in which [the Department of] Commerce ignores negative dumping margins — instances when no dumping is found — when comparing export prices and normal prices of a given product to calculate an overall dumping margin."² After a series of adverse rulings by the WTO with regard to U.S. zeroing practices, the United States finally began to take the first steps toward complying with the WTO's rulings by convincing the European Union to suspend arbitration proceedings commenced to determine the ways in which the EU could retaliate against the United States for not complying with the rulings.³ A few months later, the United States announced a similar deal with Japan.⁴

After these announcements, the Department of Commerce (DOC) released a proposal, which it believed would bring the United States into

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compliance with the WTO's anti-zeroing decisions.⁵ The proposal however, failed to address a crucial question: whether the DOC would recalculate AD duties from past reviews that used now WTO-inconsistent methodologies instead use legal, or WTO-consistent, methodologies.⁶ Subsequently, the EU, Japan, and Mexico indicated that they would push the U.S. to recalculate the AD duties and refund the difference.⁷ In other words, these countries wanted the U.S. to go back to instances where it had applied zeroing to assess AD duties on imports from these countries, recalculate the duties using a WTO-consistent legal methodology, and then provide refunds to importers based on the difference between the duties calculated using zeroing and the duties calculated using a new methodology deemed acceptable by the WTO.⁸

There are potential legal problems however, with the DOC retroactively assessing AD duties and providing refunds to importers. Even if the DOC would like to go back and recalculate AD duties, two sections of the Uruguay Round Agreements Act (URAA),⁹ the U.S. statute that implements the Uruguay Round agreements to which the U.S. is a signatory, may prevent it from doing so. According to Section 129 of the URAA, two criteria must be met in order to implement adverse WTO decisions.¹⁰ First, implementation of adverse WTO decisions can only apply to unliquidated entries of goods into the U.S. market.¹¹ Second, implementation of these decisions can only apply to imports that enter the U.S. "on or after the date when the Office of the U.S. Trade Representative directs" the DOC to implement the WTO decisions.¹² The potential problems stem from the fact

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that: (1) many of the past AD duties calculated using zeroing "have already been 'liquidated,' or finally assessed and collected, by U.S. Customs and Border protection," and (2) the imports in question have already entered the U.S. market.¹³ This Note will focus on the second issue: whether the time at which the goods entered the U.S. precludes the DOC from being able to recalculate the duties and provide refunds.

This timing problem was so challenging for the U.S. to overcome that it continued to resist providing the EU and Japan with retroactively calculated refunds for several years. On February 6, 2012, after continued settlement deadline extensions, the U.S. announced that it had reached settlement deals with both the EU and Japan, and agreed to no longer use zeroing in administrative reviews.¹⁴ However, in what the U.S. considered a major victory, retroactively calculated refunds were not required under these deals.¹⁵ An anonymous observer stated that this was likely, at least in the EU case, because of fatigue related to pressing the U.S. on the issue, leading them to simply give up hope the U.S. would provide refunds.¹⁶ In light of the settlement though, other countries are now coming forward demanding the U.S. provide refunds to their importers and threatening the new litigation at the WTO if the U.S. does not.¹⁷ Thus, the legal issue of whether the DOC can actually provide these refunds remains an ongoing concern.

The DOC believes it will not need new legislation from Congress in order to comply with the rulings.¹⁸ Indeed, as will be shown in Part II, domestic political pressure over concerns of "lost sovereignty" as a result of being a part of the WTO would make it highly unlikely that any new attempts by Congress to allow a federal agency more discretion in complying with WTO law would succeed. Thus, the statute that is analyzed in this Note will be the URAA and its Statement of Administrative Action (SAA).

The answer to whether the United States can retroactively apply new methodologies to calculate past AD duty reviews under domestic law has serious implications. If the U.S. does not retroactively apply a new methodology, it would contradict the WTO rulings. This would allow WTO members such as the EU, Japan, and Mexico the legal authority under WTO law to impose the retaliatory measures that the U.S. has staved off so far.

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These measures would likely include tariffs against U.S. goods exported to these countries.¹⁹ Overall, the inability or refusal of the United States to implement these could decrease the total volume of international trade, and damage the WTO's mission to liberalize international trade.

This Note will argue that the DOC can at least make a valid and persuasive argument that it does have the legal authority under the URAA to retroactively calculate AD duties that were originally derived using zeroing and to provide refunds to importers, assuming the entries have not been liquidated. Part II discusses the background of all the relevant issues, including the history behind the Uruguay Round agreements and how the U.S. implemented its provisions through the URAA. The AD issue, specifically the use of zeroing in assessing AD duties, will be placed into context, and the peculiarities of the U.S.' retrospective method of duty assessment will also be examined. Then this Note will discuss specific issues behind several WTO cases brought against the U.S. for its use of zeroing and attempts at compliance—including a look at the first proposal by the DOC.

Part III will discuss the legality of retroactively calculating AD duties with new methodologies and of providing refunds to importers. This will be done by looking at the actual text of the URAA and the text of its SAA. Issues of statutory interpretation and administrative law, including the possible elimination of the SAA from the context of a traditional statutory construction analysis and use of the Charming Betsy canon of statutory interpretation²⁰ in a Chevron²¹ analysis will then be examined. Decisions of the U.S. Court of International Trade and the U.S. Court of Appeals for the Federal Circuit will be analyzed as well.

This Note will then draw the conclusion that the DOC at least has a strong argument that it can legally recalculate AD duties retroactively and provide refunds to importers. Finally, Part IV summarizes the argument and examines the implications of U.S. compliance versus non-compliance. This Note concludes by discussing the overall implication of this issue for the WTO's future and the liberalization of international trade. Overall, the legal issue of retroactive calculation is a good case study of the interaction between U.S. domestic law and international law and illuminates some of the problems that can arise when implementing legislation is used in lieu of self-executing treaties.

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II. Background

A. The Uruguay Round Agreements and the U.S.' Implementing Legislation—The Uruguay Round Agreements Act (URAA)

No effective discussion of the issue at hand can take place without a basic knowledge of the General Agreement on Tariffs and Trade (GATT) and its progeny leading to the formation of WTO. In the immediate aftermath of World War II, international leaders, mostly from the U.S. and Great...