Commerce Department finalizes new currency manipulation rules

The US Department of Commerce has finalized new rules to impose countervailing duties, or CVD, on countries found to be undervaluing their currencies, a move that could lead to further duties on steel imports.

The new currency rule, released late Monday, clarifies how the department of Commerce will apply CVD to subsidies that result from currency undervaluation. Under the rule, it can determine that a countervailable subsidy exists if there is multilateral undervaluation and any corresponding bilateral undervaluation relative to the dollar. Additionally, CVD duties may be assigned if a government action of the exchange rate contributes to undervaluation, or if there is predominant or disproportionate use of the currency subsidy by the traded goods sector, according to the Commerce Department.

The department of Commerce will seek and generally defer to the Treasury Department's expertise in currency matters. However, the department of Commerce will retain ultimate decision-making authority in CVD proceedings, it said.

The department of Commerce currently maintains 516 antidumping and countervailing duty orders, with many of the orders affecting steel products, as US mills have been successful in pursuing trade remedies.

US law defines a countervailable subsidy as a financial contribution from a government or public entity that is specific and that provides a benefit to a foreign producer or exporter.