- The Washington Times - Tuesday, April 22, 2008

The Supreme Court decided yesterday to hear a case that could determine whether a European company violated federal anti-dumping laws by selling subsidized uranium in the United States.

The ruling could redefine which products are subject to tariffs and which services are exempt from them.

The U.S. government accuses Eurodif — a consortium of government-subsidized companies that enrich uranium for use in nuclear reactors — of sidestepping U.S. law by classifying the enrichment process as a service that is exempt from tariffs and then selling the nuclear material at reduced prices in the United States.

Foreign government subsidies of “merchandise” sold in the United States are forbidden under federal anti-dumping laws, but that ban does not apply to subsidies for services.

Subsidies could help foreign suppliers dominate U.S. markets by underpricing domestic suppliers, potentially eliminating them as competitors.

The Supreme Court agreed to decide the case after a federal appeals court ruled in September that Eurodif’s nuclear imports did not violate anti-dumping laws. The U.S. Commerce Department opposed the ruling by the U.S. Court of Appeals for the Federal Circuit.

U.S. corporations have sued foreign competitors for receiving unfair subsidies, but the Eurodif case is the first time that the U.S. has brought an anti-dumping issue before the Supreme Court. It gives the court an opportunity to make a ruling with potentially broad impact on other foreign subsidies.

The solicitor general’s lawsuit before the Supreme Court is joined in a separate appeal by a group of U.S. energy corporations. They include Bethesda-based USEC, the nation’s leading supplier of uranium fuel for nuclear power plants; Dominion Resources, the Virginia electrical utility; and the utilities Duke Energy, Entergy and PPL Corp.

USEC said the appellate court decision in favor of Eurodif exposed a “gap in the coverage of U.S. anti-dumping law” that “undermines the ability of the U.S. government to prevent unfairly traded imports.”

If the energy companies lose this case, USEC said it would hurt the company’s ability to continue funding its American Centrifuge Plant at Piketon, Ohio, and its gaseous diffusion plant at Paducah, Ky. Company officials said they also would have more difficulty competing in international markets.

The United States has imposed punitive tariffs in recent years on subsidized steel, furniture and shrimp from China, Vietnam and other countries with low production costs.

The tariffs can sometimes double the price to consumers.

Eurodif contends that the uranium it enriches is produced by U.S. utilities, sent to plants in Europe for processing and returned back to the utilities. Eurodif argues that it is not importing any product, merely providing a service to U.S. companies.

In 2002, the U.S. Commerce Department defined nuclear enrichment as a product “manufacturing process” and imposed a 20 percent tariff on Eurodif’s imported uranium.

“They feel it’s important to protect the U.S. energy industry,” USEC spokeswoman Elizabeth Stuckle said of the government’s support in the company’s dispute with Eurodif.

The solicitor general’s office — the lawyers who represent the administration in court cases — said the lower-court ruling in favor of Eurodif “opened a potentially gaping loophole in the nation’s trade laws that will encourage domestic buyers and foreign producers to structure their transactions as contracts for services” to avoid paying tariffs on products.

The Supreme Court scheduled arguments in the case for its next term, which begins in October. A ruling is likely in late 2008 or early 2009.

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