U.S. Commerce Department Issues Second Ruling Highlighting Currency Devaluation
On November 24, right before the U.S. Thanksgiving holiday, U.S. Secretary of Commerce Wilbur Ross announced the results of another trade case alleging currency devaluation. While the case involves a non-metal product – in this case, twist ties from China – the allegation of a deliberately undervalued currency could have important implications for future trade cases.
As The American Journal of Transportation noted, this case is the second time that the Commerce Department has countervailed a foreign currency with a unitary exchange rate. It is the first time a case has been directed against the Chinese currency. These decisions could suggest an increasing willingness by the U.S. government, or at least the outgoing Trump administration, to address currency manipulation.
Commerce Secretary Ross said the decision “reaffirms the Trump Administration’s commitment to free, fair, and reciprocal trade” and promised his agency “will continue to use the legal tools at our disposal to aggressively counter currency undervaluation and other unfair subsidies, further ensuring a level playing field for American businesses and workers.”
Specifically, the Commerce Department preliminarily determined that exporters/producers from China received countervailable subsidies at a rate of 122.5 percent. As a result of the decision, the agency will instruct U.S. Customs and Border Protection to collect cash deposits from importers of twist ties from China based on the preliminary rate of 122.5 percent.
The Commerce Department will announce its final determination in this case on or about February 17, 2021, but that deadline could be extended. Notably, that date will occur after President-elect Joe Biden will take office. President-elect Biden’s approach to these matters still is not fully clear.
Since the beginning of the Trump administration, the Commerce Department has initiated 306 new AD and CVD investigations, a 283 percent increase from the comparable period in the previous administration. If the Commerce Department makes an affirmative final determination in this case, the U.S. International Trade Commission (ITC) will be scheduled to make its final injury determination on or about April 2, 2021.
If the Commerce Department makes an affirmative final determination in this investigation and the ITC makes an affirmative final injury determination, Commerce will issue a CVD order. If the Commerce Department makes a negative final determination or the ITC makes a negative final determination of injury, the investigation will be terminated and no order will be issued.