Commerce Finds Subsidies in First CVD Action Against Vietnam

The U.S. Department of Commerce has issued a preliminary determination in the first U.S. countervailing duty (CVD) action lodged against Vietnam.  (74 Fed. Reg. 45811, Sep. 4, 2009) The action relates to imports of polyethylene retail carrier bags (“PCRBs”), the plastic bags used for packaging dry cleaning and other consumer products.  The aggregate subsidy rates ranged from 0.20% (de minimis) to 4.24%.  This proceeding follows at least eight  U.S. CVD actions against Chinadating from 2006.  Both Commerce's rationale in departing from its long-followed policy of not lodging CVD actions against non-market economies (see Georgetown Steel Corp. v. United States, 801 F.2d 1308 (Fed. Cir. 1986)) and its calculation methodologies are similar to those used in the Chinese cases.  For example, in calculating the benefits afforded by interest subsidies Commerce rejected local bank rates because they were allegedly controlled by the Vietnamese Government, and relied instead on the average commercial bank lending rates in the World Bank's "lower middle income countries" (excluding those that are not market oriented).  Also, since local land use costs are also subject to government control (as there is no private ownership of land in Vietnam) Commerce used as a surrogate the commercial rental rates in Pune and Bangalore, India, both cities determined to have comparable size, per-capital GNI and population densities to Ho Chi Minh City. Assuming that the final determination (January 2010) produces similar results, one can reasonably expect additional CVD actions against Vietnam, not withstanding the relatively low volume of U.S. imports covered by this proceeding ($79 million, less than 1% of total Vietnamese exports to the U.S. in 2008).  A pending companion anti-dumping action against PCRBs is the third U.S. AD action against Vietnam (after Frozen Fish Fillets and Shrimp).