Law360: Shoe On Other Foot As China Investigates U.S. Autos
Washington, D.C., partner Elliot Feldman, leader of Baker Hostetler's international trade practice, was quoted in the December 10, 2009, International Trade Law360 article, "Shoe On Other Foot As China Investigates U.S. Autos."
According to the article, an anti-dumping and countervailing duty investigation by China into sedans and sport utility vehicles imported from the United States could mark a significant development in trade relations between the two countries, giving China the chance to turn the tables on the United States.
Feldman, an author of the firm's China-U.S. Trade Law blog, said that there was more to the petition than meets the eye. Though it nominally targets a few types of cars that do not constitute a great deal of Chinese imports from the United States, the investigation is a move by the Chinese government to call into question American trade actions against China, Feldman said. The cars the United States exports to China each year "is not what the case is really about," he said. "Now China is doing the same thing to us as we do to them." Now that the United States has spent hundreds of billions of dollars bailing out banks and the auto industry, the petition makes the argument that American automakers should be subject to Chinese countervailing duty laws, said Feldman.
The investigation could have serious implications for the trade relationship between the U.S. and China, Feldman said. If China applies countervailing duties to the auto industry "it's a huge challenge for the U.S. approach to fair trade," he said. If China imposes countervailing duties on U.S. cars, many other similar investigations of U.S. industries could follow in China and other countries, making similar arguments about U.S. subsidies, Feldman said. Though it does not say it in so many words, the petition can also be read as challenging China's status as a nonmarket economy in U.S. trade policy, which has long irritated China, he said. Now that the U.S. government has made so many interventions in the economy over the past year, the petition "is a way for China to say to the U.S., 'How are you a market economy?'" Feldman said.
The United States should convene multilateral talks as part of the Doha Development Round of World Trade Organization negotiations to reconsider the meaning of what constitutes a countervailable subsidy, given the huge number of governments that have bailed out key industries around the world in the past year, Feldman said. Countervailing duties cases involving those bailouts are likely to proliferate around the world if the issue is not resolved, he said.