ITC Puts 337 Case on Imports of Steel on Hold

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On April 26, the United States Steel Corporation (U.S. Steel) filed a complaint with the International Trade Commission (ITC) alleging that certain unfair trade practices relating to the import of steel carbon and alloy steel products from China violate Section 337 of the Tariff Act of 1930. Specifically, U.S. Steel claims that the largest Chinese producers of steel products are engaged in the following illegal acts under Section 337: (1) a conspiracy to fix prices and control output and export volumes which violate the antitrust laws; (2) the theft and use of U.S. Steel’s trade secrets through cyber-attack; and (3) the false designation of origin or manufacturer of imports to avoid existing antidumping and countervailing duty orders. The relief sought by U.S. Steel is the total exclusion of Chinese-produced carbon and alloy steel imports from the United States market.

The ITC initiated a Section 337 investigation into U.S. Steel’s claims on May 26. The first step of this investigation is an initial evidentiary hearing and determination by an administrative law judge (ALJ), after which the ITC Commissioners will review the ALJ’s determination to make their own final determination. If the ITC Commissioners determine that Chinese steel producers have violated Section 337, the ITC will then report their findings to the President, who will decide either to affirm or reverse the Commission’s findings. If the ITC’s determination is affirmed, the President must decide what action to take against Chinese imports for the violation of U.S. trade laws, including whether to grant U.S. Steel’s request for a complete ban on imports of Chinese carbon and alloy steel products.

However, on July 6, Judge Dee Lord, the ALJ assigned to the matter, suspended the investigation. Judge Lord found that (1) U.S. Steel’s antitrust claims rely upon antidumping and countervailing duty determinations by the Commerce Department and (2) U.S. Steel’s false designation of origin claims are based on the “alleged evasion of antidumping and countervailing duty orders issued by the Commerce Department.” The relationship of U.S. Steel’s claims to the antidumping and countervailing duty laws triggered a requirement for the ITC to notify the Department of Commerce about the existence of the investigation. Judge Lord ultimately suspended the investigation not only for the Department of Commerce to be notified, but also anticipating that any response by the Department of Commerce or any other agency would help develop the record in the investigation.

The decision to suspend the investigation is currently under appeal to the ITC Commissioners. U.S. Steel argues that the ITC should reverse the suspension as the Commerce Department is “already aware” of the Section 337 investigation and that any antidumping or countervailing duty investigation by the Department relevant to the 337 investigation has already concluded. The Chinese producers have filed comments supporting the ALJ’s suspension order. If the ITC does not reverse Judge Lord’s order, the new target date for the ITC to complete the investigation and report to the President is October 2, 2017.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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