A closer examination shows that the Georgetown Steel outcome, both at the agency level and in court, was driven largely by the practical difficulties impeding CVD analysis in an NME environment. The US Federal Circuit reasoned that CVD remedies had to be inapplicable in such a situation—that the US Congress must have intended to exclude NMEs from the law’s coverage—because of the practical difficulty involved in determining the amount of the unfair advantage given to an investigated firm by its government. The primary issue, for the US Federal Circuit and for the DoC, was the inability to identify benchmarks in the distorted environment of a NME. In the underlying 1984 agency decision Carbon Steel Wire Rod from Czechoslovakia the DoC stated, “subsidies in market economy systems are exceptional events. They can be discerned from the background provided by the market system. No such background exists in an NME. ... In such a situation, we could not disaggregate government actions in such a way as to identify the exceptional action that is a subsidy.” The benchmarks regularly needed in CVD analysis include, for example, market-determined prices against which the DoC can compare the price charged to the recipient of a government-provided input, and market-determined interest rates which the DoC can use to capture the “time value of money” element of large non-recurring subsidies whose benefits must be spread out over a period of years.

In a thoroughly distorted NME environment—before the transition to market economy status has begun, or even early in that transition—these market-determined comparison points may indeed be difficult to find. While some subsidies (for example, a per-unit export bounty whose calculation requires no benchmark) could arguably be identified and measured in even the most distorted NME environment, an overall assessment of a given enterprise’s level of subsidization probably cannot be made with sufficient confidence in such an environment. Georgetown Steel can be read as holding that such practical difficulties can be substantial enough to override what is otherwise a clear statutory mandate to countervail bounties and grants.

But in an economy that has for many years been in transition, as Hungary had been by 1997, valid benchmarks may well be available, especially for certain types of subsidies. In Sulfanilic Acid, the only benchmark the DoC needed to identify in order to countervail the November 1997 grant was a “discount rate” reflective of Nitrokemia’s alternative (commercially determined) cost of borrowing during 1997. Certainly, the DoC could have done this with tolerable accuracy. Among other things the IMF's annual International Financial Statistics compendium—one of the standard sources the DOC relies upon to find commercial lending rates for use in CVD cases—published information on commercial interest rates prevailing in Hungary during 1997. Moreover, the DoC had no troubling finding a discount rate to use in valuing infusions bestowed on Nitrokemia just a few months later, in May 1998. However the DoC made no attempt to locate a decent discount rate. Nor did it even use the “no benchmark” approach of countervailing just an allocated share of the principal amount of the grant—applying the favorable assumption (to Nitrokemia) that the company could have borrowed at zero interest funds equal to the amount granted. Instead, the DoC took a theological approach, insisting that a cash grant bestowed before graduation was not a subsidy at all. Yet, such a grant certainly meets the statutory definition of a subsidy—a government financial contribution conferring a benefit.

Whether or not Georgetown Steel was, as suggested above, fundamentally a practical rather than a theological decision, it does not compel the DoC’s new rule regarding pre-graduation subsidies. Even in the part of the decision that contained broad dicta, the Federal Circuit’s rationale was that subsidization within a NME does not “create the kind of unfair competitive advantage over American firms against which the countervailing duty act was directed.” The US Federal Circuit reasoned that the subsidization of goods exported from an NME could not harm competing US producers. But in Sulfanilic Acid, the exports at issue were not NME exports. Hungary had graduated before 2000, and there is no room to argue that the subsidization of the goods exported during 2000 was incapable of injuring competing US producers. The only question—not even broached by Georgetown Steel—was what universe of subsidies could properly be considered in a CVD investigation focusing on the 2000 POI.

A more provocative question, particularly given the current China-related political pressures noted above, is whether, even on the topic it did directly address, Georgetown Steel is still good law. In view of subsequent statutory changes, could a CVD case be filed directly against NME exports today? The CVD law interpreted in Georgetown Steel was repealed in 1994 through the Uruguay Round Agreements Act, and the surviving CVD law (which had paralleled section 303 apart from the inclusion of an injury test) was substantially amended—most notably through the long-awaited insertion of a definition of the term “subsidy.” Prior to 1994, a rather imprecise working definition had emerged through agency and judicial case law. The new statutory definition copies almost verbatim Article 1 of the WTO Agreement on Subsidies and Countervailing Measures (ASCM), and its basic elements are a “financial contribution” and the conferral of a “benefit.” This definition is certainly not confined to activities engaged in by governments holding power in market-oriented economies. On the contrary, WTO members, including the United States, have made it clear that an NME government can bestow a “subsidy” according to the ASCM definition, including, for example, in the detailed negotiation with China during its WTO accession process about its right, after accession, to benefit from the various special “developing country” rules in ASCM Article 27. None of those negotiations would have been necessary had China been considered incapable of carrying out the actions described in ASCM Article 1. In addition, the post-Uruguay Round CVD laws of other major jurisdictions, such as Canada and the European Union, apply in principle (although they have not yet been applied in an actual case) to NME products.

The 1994 statutory changes would therefore present a court with an interesting question were an US industry to file a CVD petition against imports from an NME country today. To be sure, the DoC has already indicated its likely (negative) response to such a petition. But would the courts agree? The US Congress, while legislating in 1994 against the backdrop of existing case law, certainly did not enact an explicit exemption from the CVD law for transitional economies or NMEs. The current US Congress has seen several bills pass that would expressly remove NME exemption, legislatively overruling Georgetown Steel. In view of history noted above, however, such US Congressional action is probably unnecessary. A well-explained determination by the DoC, applying the existing CVD law to NME exports, might will survive judicial review.