A federal appeals court ruling that would prevent the U.S. Commerce Department from applying duties on imports subsidized by foreign governments is causing an uproar among U.S. manufacturers.

The case is being followed closely locally as it would directly affect Wheatland Tube Co. The pipe and tube maker was part of a trade case which won such a judgment against Chinese subsidized pipes.

In December the Court of Appeals for the Federal Circuit found that U.S. law prohibits the Commerce Department from applying countervailing duties against products from non-market economies, which includes China. There are currently two dozen trade cases which allow duties to be imposed on subsidized products.  

The ruling does not affect dumping cases. Dumping is when a company sells a product for less than it cost to produce.

December’s ruling was made by three members of the court, but a motion for a rehearing by all 12 judges is expected to be made on Monday. The court allowed collection of duties to continue while the rehearing is sought.

“If this ruling prevails the American government could be forced to refund billions of dollars for Chinese imports,’’ said Roger Schagrin, an attorney for the Committee on Pipe and Tube Imports. Schagrin represented Wheatland Tube in its trade case.

Even though China is now the world’s second largest economy and had a $295 billion trade surplus with the U.S. last year, it’s still considered a non-market economy under American regulations because the country meets certain criteria, including that it doesn’t allow its currency to float on the open market.

Should the full appellate court reject American manufacturers’ arguments to overturn the previous decision, lawyers will have to ask the same court for a stay to prevent the duties from being refunded, Schagrin said.

While an appeal to the U.S. Supreme Court could certainly happen, Schagrin said, there is another fallback position.

Congress, along with the Obama administration, is now working on a bill that would allow the Commerce Department to continue applying duties in these cases. If the measure passed Congress and was signed into law by President Obama, its backers said that would prevent court intervention in the matter.

“In the end, I’m very hopeful to get Congressional reversal of the court decision,’’ Schagrin said.

He expected to get a final decisiion by the full appelate court in a few weeks.

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