Commerce May Reduce Duties on Off-the-Road Tire Imports

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By Brian Flood

U.S. anti-subsidy duties on imports of certain Sri Lankan tires may have to be reduced by the Commerce Department, the Court of International Trade ruled.

The ruling could cut the countervailing duty rate on imports of off-the-road tires from 2.18 percent to 1.23 percent, depending on how the Commerce Department responds. It was a mixed result for both the Justice Department, which backed the duties, and the government of Sri Lanka, which brought this lawsuit to challenge them.

The court upheld the Commerce Department’s decision to impose duties in response to certain tax concessions that the government of Sri Lanka provided to exporters of off-the-road tires, like co-plaintiff Camso Loadstar (Private) Ltd. But it held that Commerce hadn’t done enough to show that another alleged subsidy program justified countervailing duties.

That program set a guaranteed price for rubber sold by small farms and reimbursed manufacturers for the difference between the guaranteed price and the market price. The court said it wasn’t clear that the program actually benefited tire producers, and not just the farms. It ordered Commerce to take a closer look at this issue. The agency’s redetermination is due to the court by May 14, though it can ask for an extension.

Since this program accounts for nearly half of Commerce’s calculated rate, at 0.95 percent, if Commerce decides that this program doesn’t warrant countervailing duties, the duty rate would fall from 2.18 percent to 1.23 percent.

The U.S. imported about $66.6 million worth of new pneumatic off-the-road tires from Sri Lanka in 2015, before the duties were put in place, according to Commerce. These tires are designed for use in agricultural fields, forests, construction sites, factories and warehouses, airport tarmacs, ports and harbors, mines, quarries, gravel yards, and steel mills.

The case is Government of Sri Lanka v. United States , Ct. Int’l Trade, No. 17-00059, 4/17/18 .

To contact the reporter on this story: Brian Flood in Washington at bflood@bloomberglaw.comTo contact the editor on this story: Jerome Ashton at jashton@bloomberglaw.com

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