In a ruling that has critics prophesying doom for American industries, a three-judge panel of the Federal Circuit Court of Appeals held that the government cannot impose countervailing duties against China's subsidized tires.
Because China is a non-market economy, the Federal Circuit upheld the U.S. Court of International Trade's order that U.S. countervailing duty law does not apply to Chinese imports. However, the federal court of appeal unanimously affirmed the Trade Court's ruling on a different ground.
The Trade Court initially held that imposing countervailing duties on non-market economy goods could lead to "double counting" since antidumping duties are already assessed on such goods. The Federal Circuit, on the other hand, held that Congress did not intend for government payments to companies in non-market economies be characterized as subsidies.