The Problem of “Double Remedies” in International Trade Disputes and the Economics of Pass-Through

Abstract

In 2007, the United States reversed its long-standing policy prohibiting the simultaneous
imposition of antidumping (AD) and countervailing duties (CVDs) against nonmarket economies
(NMEs). Both the U.S. courts and the World Trade Organization have found the United States
Department of Commerce’s (Commerce) continued use of its NME methodology in the AD
investigation while simultaneously applying CVDs to offset domestic subsidies to violate domestic
and international legal norms. The United States Congress recently changed U.S. law, authorizing
such double remedies, but also called for an offset of the AD margin to reflect any duplicative
remedy for the same alleged unfairness. We review how this double remedies issue is addressed
under the new CVD legislation, how Commerce has addressed this issue in the past and is
addressing it now, and how the large body of economics literature on “pass-through” can shed
helpful light on these issues. Private parties making arguments to agencies, agencies making
decisions, and tribunals reviewing these agency decisions will likely be struggling with these new
issues for some time.