Court to rule on trade law allowing tariffs on cheap imports

The Supreme Court said Monday it will rule on a case that could make it harder for U.S. companies to obtain protective tariffs on low-priced foreign goods.

The dispute centers on whether uranium that U.S. utilities send to France for enrichment and then import for use in nuclear power plants qualifies as a "good" or "service."

The question is critical because only manufactured goods, not services, are subject to U.S. laws that can add punitive tariffs to cheap imports. Exporting goods at prices below levels charged in the producer's home market is known as "dumping," and the goods can be subject to "antidumping" duties.

Such duties have been slapped on a wide range of goods in recent years, particularly imports from China, Vietnam and other low-cost producers. Imports of steel, shrimp, furniture and lumber have been hit with duties that can sometimes double the cost of the goods.

In the case accepted by the court, a French uranium enrichment company, Eurodif SA, and a group of U.S. utilities argue that only the service of uranium enrichment is being imported, because the raw uranium was provided by the utilities. As a result, the enriched uranium shouldn't be subject to antidumping duties, they say.

The utilities include subsidiaries of Dominion Resources Inc., Duke Energy Corp., Entergy Corp. and PPL Corp. The companies provide the majority of U.S. nuclear power.

The Commerce Department, however, decided in 2002 that enriching uranium is a "manufacturing process" and not a service, and imposed a 20 percent antidumping duty on imports from Eurodif.

But the U.S. Court of Appeals for the Federal Circuit overruled Commerce in March 2005. After additional litigation in lower courts, the Bush administration and USEC Inc., a Bethesda, Md.-based company that is the sole U.S. uranium enricher, appealed to the Supreme Court.

The Justice Department's Solicitor General, the administration's lawyer, said the appeals court's ruling "has opened a potentially gaping loophole in the nation's trade laws" by encouraging U.S. importers and foreign companies "to structure their transactions as contracts for 'services'" rather than for goods in order to avoid punitive duties.

Oral argument will be scheduled for the court's next term, which begins in October. The dispute consists of two cases, U.S. v. Eurodif, 07-1059, and USEC v. Eurodif and the Ad Hoc Utilities Group, 07-1078.