Nonmarket Economy Overcapacity Reform Act

To amend the Tariff Act of 1930 to provide for consideration of the effect of excess production capacity in nonmarket economy countries to determine threat of material injury to United States industry in countervailing duty and antidumping duty investigations under title VII of that Act. 1. Short title This Act may be cited as the Nonmarket Economy Overcapacity Reform Act 2. Effect of excess production capacity in nonmarket economy countries to determine threat of material injury to United States industry (a) In general Section 771(7)(F) of the Tariff Act of 1930 ( 19 U.S.C. 1677(7)(F) (iv) Effect of excess production capacity in nonmarket economy countries (I) In general In addition to consideration of the relevant economic factors set forth in clauses (i), (ii), and (iii), in making a determination of whether an industry in the United States is threatened with material injury by reason of imports (or sales for importation) of subject merchandise from a nonmarket economy country due to excess production capacity, the Commission shall consider— (aa) the actual or potential market effects of the excess production capacity and the excess production capacity in the country; and (bb) whether the excess production capacity— (AA) is currently causing or is likely in the foreseeable future to contribute to adverse price effects in the United States market; (BB) is likely in the foreseeable future to contribute to rapid and significant increases in the volume of imports of the subject merchandise in the United States market at prices at which the normal value of the subject merchandise exceeds the export price or that are subsidized; or (CC) otherwise threatens to cause material injury to the United States domestic industry. (II) Additional factors As part of its consideration of the factors set forth in items (aa) and (bb) of subclause (I), the Commission shall consider the following: (aa) Whether the excess production capacity is related to a lack of effective market disciplines that have contributed to increases in such capacity. (bb) Whether the excess production capacity exceeds or, upon completion of projects under construction to expand such capacity, is projected to imminently exceed 25 percent of the excess production capacity of the subject merchandise. (cc) Whether producers in the country have demonstrated an ability to increase exports of the subject merchandise, as evidenced by— (AA) an increase in exports of the subject merchandise or related products to third country markets; (BB) an annual increase in the volume of exports of the subject merchandise or related products that is greater than 10 percent of the volume of exports of the subject merchandise or related products in the preceding calendar year; or (CC) other factors demonstrating an ability of the country to increase exports of the subject merchandise or related products globally, including to the United States. (dd) Whether the excess production capacity currently or in the future would likely contribute to— (AA) a significant increase in exports of the subject merchandise or related products globally, including to the United States; (BB) depression or suppression of prices of the subject merchandise sold globally, including in the United States; (CC) reductions in United States investment or research and development in products of the same class or kind as the subject merchandise; or (DD) a significant increase in the United States market share of the subject merchandise as compared to the average share held by producers of the subject merchandise in the country during the 3-year period preceding the date of the determination under clause (i). (ee) Whether any or all of the factors described in items (aa), (bb), (cc), or (dd) are likely in the imminent future, given the size and extent of the current or projected excess production capacity and taking into account current and future levels of demand globally, including in the United States. (ff) The standards of threat of material injury applied by the administering authorities of the country to imports of United States products. (III) Additional factors with respect to excess production capacity As part of its consideration of the factors set forth in items (aa) and (bb) of subclause (I) with respect to whether the excess production capacity is real and imminent, the Commission shall consider the following: (aa) Whether current or projected excess production capacity of the subject merchandise significantly exceeds global demand, particularly if the excess production capacity results in whole or in part from increases in the excess production capacity in the country and thus creates an increased risk the subject merchandise will be imported into the United States market. (bb) The likelihood that the excess production capacity, including excess production capacity under construction in the country, would be halted, temporarily shut down, or permanently closed in accordance with market conditions in order to prevent the negative effects described in subclauses (I) and (II), or whether such actions would be impractical given the levels of investment, financial commitments, employment costs, or government policies involved. (cc) Whether the excess production capacity in the country is planned as part of a government industrial plan, policy, or directive, or benefits from significant government subsidies, and therefore is not subject to market disciplines that would restrain production or exports. (dd) Whether— (AA) related products are subject to a countervailing duty investigation or order under subtitle A or an antidumping duty investigation or order under subtitle B; or (BB) related products are subject to a countervailing duty investigation or order or an antidumping duty investigation or order in third countries that could lead to the imposition of duties on such products and result in diversion of increased exports of such products to the United States or other countries. (ee) Whether, taking into account the type of product, technology, United States production facilities, levels of United States investment, research and development costs, product life cycle, and price sensitivities, the United States domestic industry is especially vulnerable to increased imports of the subject merchandise so that injury caused by prices of the dumped or subsidized imports of the subject merchandise likely would occur imminently upon entry into the United States. (IV) Definitions In this clause: (aa) Excess production capacity The term excess production capacity (bb) Related product The term related product (AA) any like or directly related product within the scope of an investigation relating to the subject merchandise under this title; (BB) any upstream product used in the production of the subject merchandise and that could be used for purposes of exports of any like or directly related product; or (CC) any downstream product manufactured used in the production of the subject merchandise that could lead to excess production capacity and used for purposes of exports of any like or directly related product. . (b) Effective date The amendments made by subsection (a) take effect on the date of the enactment of this Act and apply with respect to investigations initiated under title VII of the Tariff Act of 1930 on or after such date of enactment.

Summary: Nonmarket Economy Overcapacity Reform Act This bill requires the U.S. International Trade Commission (USITC) to consider additional factors in determining whether an industry in the United States is threatened with material injury by reason of imports or sales for importation of subject merchandise. In particular, the USITC must consider the effects of excess production capacity of subject merchandise from nonmarket economy countries.