What will the impact be if the china currency bill passed by the House eventually becomes law? Scott Lincicome explains:
Assuming the bill becomes law as written, a large spike in CVD petitions against China is highly unlikely in the near term. Instead, only a small number of “test case” petitions would likely be filed initially in order to determine how the Department of Commerce intends to exercise its initiation authority under the revised legal standard. It's important to remember that the revised bill does not force the Department to initiate a CVD investigation based on alleged currency undervaluation. It only narrows the Department's discretion to refuse to initiate based on an allegation of export contingency and describes how the Department must calculate the subsidy benefit. In short, if the administration wanted to not initiate a CVD investigation of alleged currency undervaluation, the door's still open for Commerce to do so, but only a little. (And it's also important to remember that the US courts are highly deferential to technical administrative decisions like that.)
Should DOC decide to initiate CVD investigations in those test cases and then go on to find significant levels of subsidization, several more petitions would likely follow. However, even if DOC signals a broad and aggressive desire to go down this road, the number of new petitions will still be limited by (1) practical considerations surrounding the time and expense of filing a CVD petition; (2) the requirement of proving "material injury" at the International Trade Commission before the imposition of remedial tariffs (and that's typically the more difficult part of any AD/CVD investigation); and (3) the requirement that the petition be supported by a significant proportion of a domestic industry that manufactures a "like" product. On the other hand, the new law would likely encourage industries with existing CVD orders on Chinese goods to request administrative reviews and submit new subsidy allegations to increase countervailing duties under those orders.
