Under U.S. international trade law, 19 U.S.C. § 1673, the Commerce Department may levy antidumping duties when “a class or kind of foreign merchandise is . . . Sold in the United States at less than its fair value.” The purpose of this statute is to protect domestic industry against unfair foreign competition.
In this case, a U.S. utility provided raw materials (unenriched uranium) to foreign uranium enrichers which, in turn, processed those materials for a fee and delivered them in their new form (low-enriched uranium) back to the U.S. utility. After an investigation, the Commerce Department determined that the foreign companies were selling low-enriched uranium, a component in nuclear power generation, at a price below fair value. However, this was material that had been supplied by the U.S. utility merely to be transformed.
The Federal Circuit rejected the Commerce Department’s view, holding that this transaction equated to the sale of a service, not the sale of goods. Thus, because the antidumping law does not cover the sale of services, no antidumping duties could be levied on these imports.
On 1/26/09, the Supreme Court reversed, unanimously holding that the Commerce Department acted within its authority in considering the business practice of having material toll manufactured overseas and repatriated to be the sale of foreign goods against which antidumping duties can be imposed. The Court ratified the Commerce Department's "eminently reasonable" approach under the principles of Chevron U.S. A. Inc. v. Natural Resource Defense Counsel, Inc., 467 U.S. 837 (1984), since its determination neither contradicted unambiguous statutory language nor represented an unreasonable resolution of ambiguous language.
We believe that imposition of antidumping duties in this case will discourage American companies from sending goods abroad for further processing or transformation, but will protect other domestic manufacturers who can perform processing functions at home.