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Court Affirms Constitutionality of Law Allowing CV Duties on NME Goods

Friday, March 20, 2015
Sandler, Travis & Rosenberg Trade Report

The Court of Appeals for the Federal Circuit issued March 13 a decision in GPX International Tire Corporation et al. v. U.S. et al. upholding the constitutionality of a 2012 law that explicitly allows the federal government to impose countervailing duties on goods imported from non-market economy countries like China and Vietnam.

The so-called GPX law includes a provision allowing CV duties to be imposed on NME goods, which was retroactive to Nov. 20, 2006, as well as a provision prohibiting the concurrent imposition of AD and CV duties on the same product from an NME country (i.e., double counting), which only applied to proceedings initiated on or after March 13, 2012 (the date the law was enacted). GPX brought this case to argue that these provisions violate the Ex Post Facto Clause of the Constitution by effectively penalizing certain importers for past conduct as well as the Fifth Amendment’s due process guarantees by retrospectively altering legitimate expectations of the level of duties that would be imposed on imports.

The CAFC states that while the appeal from the Court of International Trade’s 2013 decision in this case was pending it ruled in Guangdong Wireking Housewares & Hardware Co. v. U.S., using a framework set forth by the Supreme Court in 2003, that the GPX law was remedial rather than punitive and thus did not violate the Ex Post Facto Clause. The analysis in that ruling was not fact-specific, the court states, and is therefore not altered by GPX’s argument here that “the long period of retroactivity makes the retroactive duties especially punitive and thus unconstitutional.”

The court also rejected the claim that the GPX law violates the Due Process Clause. Federal courts have established that due process is satisfied “simply by showing that the retroactive application of the legislation is itself justified by a rational legislative purpose,” the court states, and the few cases where the Supreme Court has invalidated retroactive laws under this clause involved the retroactive creation of a wholly new statute, a prolonged period of retroactivity and a total lack of notice at the time of the conduct being regulated or taxed. None of those factors are present in this case, and the CAFC thus “cannot say that the new law does not rationally relate to the government’s interest in retroactively remedying the damage from unfair foreign trade practices.”

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