CAFC Decision Undermines Russian Uranium AD Suspension Agreement, Etc.
On March 5, 2008, a Commerce Department Assistant Secretary testified before the Senate on the effect of a Court of Appeals for the Federal Circuit decision, Eurodif, S.A., et al. v. U.S., on the recent amendment to the U.S.-Russia antidumping suspension agreement on low-enriched uranium (LEU).
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
CAFC Rules that LEU Sold Under SWU Contracts is Not Covered by AD Law
In this Eurodif decision, the U.S. Court of International Trade (CIT) ruled, and the CAFC agreed, that LEU produced abroad and imported into the U.S. is exempt from the AD law if it is imported pursuant to a separative work unit (SWU) contract. The CAFC found that there is, in fact, no transfer of ownership of the LEU, as such, from Eurodif to the U.S. utilities, but only a transfer of the "service" of enrichment.
Ruling Undermines U.S.-Russia Suspension Agreement on Uranium
The Assistant Secretary states that this decision undermines the recently amended Uranium AD Suspension Agreement on LEU with Russia, as it does not now limit sales by Russia to the U.S. under SWU contracts.
(On February 1, 2008, the U.S. and Russia signed an amendment to their AD duty suspension agreement intended to prevent Russian exports of LEU through normal commercial channels through 2010, with a new quota system beginning in 2011 that would permit certain exports of Russian uranium products to the U.S. through 2020. See ITT's Online Archives or 12/14/07 and 02/12/08 news, 07121440 and 08021299 6, for BP summaries of the ITA's comment request on the draft amendment to the suspension agreement and the signing of the amendment, respectively.)
Unlimited SWU Sales Would Threaten U.S. Market
According to the testimony, if Eurodif stands, Russia will be free to make unlimited commercial sales of LEU in the U.S. market pursuant to SWU contracts, notwithstanding the continued existence of the suspension agreement.
The testimony also states that by compromising the AD suspension agreement, Eurodif also compromises the HEU Agreement1, as competition from Russian commercial LEU, which is produced at a lower cost, is likely to substantially limit the U.S. Enrichment Corporation's (USEC's)2 ability to resell the down-blended LEU it is committed to purchase under the HEU Agreement, which will threaten USEC's ability to continue to make those purchases.
Eurodif Decision Also Threatens Viability of AD Law, Certain CV LEU Issues
The testimony also states that the Eurodif decision provides for circumvention and threatens the viability of AD duty law, as the production of virtually all merchandise involves processing that could be contracted for separately, as a service, in the same manner as SWU contracts.
While the implications for CV duty law are not as serious, foreign governments would be free to purchase LEU from their uranium enrichers for more than adequate remuneration without incurring any exposure under the CV duty law, provided they were to structure the purchase as a SWU contract.
Commerce Seeking Supreme Court Review of Eurodif Decision
Commerce has filed a petition for a writ of certiorari with the Supreme Court, asking it to review the CAFC's Eurodif decision. The Supreme Court should decide whether to hear the appeal this spring.
1The Agreement Concerning the Disposition of Highly Enriched Uranium Extracted from Nuclear Weapons, which expires at the end of 2013, permits Russia to export to the U.S. substantial quantities of LEU derived from the HEU in decommissioned nuclear weapons.
2USEC is the only U.S. producer of enriched uranium not subject to "peaceful use" limitations, and only USEC can supply the enriched uranium necessary for use in the Tennessee Valley Authority reactors that produce tritium for U.S. nuclear weapons.
(See ITT's Online Archives or 03/17/08 news, 08031799 10, for BP summary of Commerce's press release announcing this testimony.)
Transcript of Commerce Assistant Secretary Spooner's testimony (dated 03/05/08) available at http://www.trade.gov/press/speeches/spooner_030508.pdf
CAFC decision (2007-1005, -1006, revised 10/16/07) available at http://www.cafc.uscourts.gov/opinions/07-1005r.pdf
CAFC decision (04-1209, -1210, decided 03/03/05) available at http://www.cafc.uscourts.gov/opinions/04-1209.pdf
Original CIT decision (Slip Op. 04-5, dated 01/20/04) available at http://www.cit.uscourts.gov/slip_op/Slip_op04/slip%20op.%2004-5.pdf