(CN) – In its first ruling on antidumping law, the U.S. Supreme Court on Monday unanimously overturned a ruling that low-enriched uranium imported from Europe isn’t subject to U.S. trade laws.
The high court ruled for the U.S. government and uranium-enrichment company USEC, which runs the only uranium-enrichment facility in the United States.
USEC urged the Commerce Department to levy antidumping duties on French company Eurodif S.A., which supplies USEC with low-enriched uranium, a highly processed derivative of natural uranium used as nuclear fuel.
Under certain contracts, nuclear facilities pay cash to a third party for “feed uranium,” or unenriched uranium, and then give an enricher the feed uranium and additional cash in exchange for the final fuel product.
USEC claimed that European countries were dumping low-enriched uranium in the U.S. market. It sued Eurodif under the Tariff Act of 1930, which calls for antidumping duties on “foreign merchandise” sold in the United States at “less than fair market value.”
Eurodif argued that the contracts involve transactions for “uranium-enrichment services,” not goods subject to the Tariff Act. Both the Court of International Trade and the Federal Circuit agreed.
But the Supreme Court determined that the Commerce Department “may reasonably treat the transaction as a sale of a good.” Justice Souter reasoned that domestic nuclear facilities were essentially trading cash and an untracked, fungible commodity – the feed uranium – with a foreign contractor for a “substantially transformed version of the same commodity.”
Souter pointed out that any contract for goods could be split and restructured as a contract for services, thus exempting it from trade law.
“[C]ontracts for imported pasta would be replaced by separate contracts for wheat and wheat-processing services; sweater imports would give way to separate contracts for wool and knitting services; and antidumping duties would primarily chastise the uncreative,” Souter wrote. “The Commerce Department’s attempt to foreclose this absurd result by treating (separate work unit) transactions as sales of goods is eminently reasonable.”