S. 958

GAO testified on S. 958, a bill that would change U.S. import laws as applied to products from nonmarket economies. S. 958 would explicitly retain as a basic option in dumping and countervailing duty cases the use, when possible, of the actual prices or costs of a nonmarket producer. Under S. 958, when nonmarket economy enterprises' actual prices or costs are used in a dumping investigation, that investigation will not require a test of injury to domestic industry unless the nonmarket economy in question is party to an antidumping agreement. This is not consistent with the way other countries are treated. Market economy countries receive an injury test whether or not they are signatories of the antidumping code. This change could encourage the initiation of investigations involving products from nonmarket countries and could adversely affect trade with countries with which the United States wishes to trade for economic and foreign policy reasons. When actual prices or costs of a nonmarket producer cannot be used in an antidumping or countervailing duty investigation, the bill would replace existing procedures with an artificial pricing investigation. GAO believes that the method for calculating artificial pricing which the bill proposes is simpler and easier to administer than the methods currently used. However, exclusive reliance on this method of pricing would not allow a nonmarket producer to demonstrate economic efficiencies that would justify pricing its product below that of other producers. An alternative method is available and should be used. S. 958 is silent regarding an injury test in artificial pricing investigations and therefore could be interpreted to mean no injury tests will be required in such investigations. S. 958 also stipulates that artificial pricing cases will in many respects conform to the provisions of existing countervailing duty law. This would provide greater flexibility to suspend artificial pricing investigations than does U.S. antidumping law. GAO found the methods provided in the antidumping law to be very difficult to apply in nonmarket economy cases and, consequently, GAO supports changes that would improve the Administration's ability to suspend investigations. S. 958 would repeal the existing market disruption provision of the Trade Act. However, essentially the same protection is available through other means.