Proposal To License All Antidumping And Countervailing Duty Agency Practitioners To Better Ensure Competency And Ethical Behavior

As published in BNA's International Trade Reporter Vol. 28, No. 10, dated March 10, 2011

Kenneth Pierce is a partner and Department Head of the International Trade Remedies and Customs Group at Hughes Hubbard & Reed LLP in Washington, D.C. Alexandra Hess is an associate in the International Trade Department of Hughes Hubbard & Reed LLP in Washington, D.C. Victor Mroczka, a counsel at Hughes Hubbard & Reed LLP, assisted in the preparation of this article.

Introduction1 With unfortunate frequency it appears that fraud2 is on the rise before United States trade agencies to the serious detriment of the entire international trade bar. In light of this disturbing trend, there is a need to assess the ability to provide accountability for those who represent others before these trade agencies.3 As it stands, the agencies do not have any regulatory provisions to monitor and police the ethical behavior of the practitioners before them—whether they are barred attorneys, foreign attorneys, or lay persons. Due to this lack of regulation, the District of Columbia Court of Appeals ("D.C. Court of Appeals") has jurisdiction to receive complaints and investigate and sanction abuses of its rules, including ethical canons. This article delves into the interplay of those canons and the D.C. Court of Appeals' Rule 49 (the "Unauthorized Practice of Law,") in the context of regulating the accountability of all trade practitioners.

Our view is that while the conduct of attorneys practicing before these trade agencies already has a regulatory mechanism in the rules of the D.C. Court of Appeals for attorney misbehavior, it appears to be unused and ineffective. Moreover, there is no such apparatus in place governing a nonlawyer's actions before these agencies. Either the trade agencies need to develop such a regulatory structure for lawyers and nonlawyers, or the D.C. Court of Appeals needs to enforce its rules—both with respect to barred attorneys and to prohibit the unauthorized practice of law by nonlawyers practicing before the trade agencies. We favor a new regulatory structure in the form of an agency-developed and agency-administered licensing system applicable to all those practicing before the trade agencies (attorneys and non-attorneys alike) to better ensure substantive competence and ethical behavior. The intention of this paper is to engage a debate and not to answer all of the questions that actual implementation of such a licensing system would entail. If a licensing system is to be considered, such details would require time and broad discussion to identify and resolve.

The first section of this article provides a pertinent summary of U.S. trade law practice before the Department of Commerce and the International Trade Commission and highlights the need for regulation of the practice. The second section defines the practice of law and delineates why representing clients before the U.S. trade agencies is engaging in the practice of law. The final section addresses why the government agency exception to the unauthorized practice of law rule is not applicable and urges the agencies to promulgate appropriate regulations. These regulations, in the form of a licensing system, would bring the agencies within the exception. In the event the agencies do not create a system to come within the exception, however, the D.C. Court of Appeals should start enforcing its ethical canons and Rule 49 and otherwise carry out its mandate to protect the public from incompetent and unethical representation.

Background

1. U.S. International Trade Practice

   The practice of international trade law in the United States is extremely complex and multifaceted. This article assumes a certain level of knowledge by the reader and focuses on only one area—the regulation and implementation of federal antidumping and countervailing duty ("AD/CVD") statutes. Generally, the United States regards it as "unfair" for a foreign producer to sell its product at a lower price in the U.S. market than that for which it sells the product in its home market, or to receive subsidies from its government thereby enabling lower pricing of its sales to the United States. This low pricing can be injurious to competing U.S. producers of the same product. When this injurious unfair trade occurs, the United States may assess duties on the product at the border with the goal of bringing about higher prices to eliminate injury caused by such unfair pricing.4 The International Trade Commission ("ITC") and the Department of Commerce's International Trade Administration ("Commerce" or "ITA") jointly conduct AD/CVD investigations to determine whether it is appropriate to assess duties on the goods entering the United States.

   These trade investigations are extremely fact intensive, both with respect to the domestic industry's claims for AD/CVD duties to be imposed due to injury caused by the targeted imports, and concerning the information required from foreign producers for the agencies to assess whether dumping and subsidization are occurring. It is in the provision of these facts that fraud issues have arisen, whether concerning petitioners5 (i.e., the domestic industry) or respondents6 (i.e., the foreign producers). Factual submissions by foreign producers are much more extensive and subject to far greater agency scrutiny than those from petitioners, and it is with respect to on-site verification of respondents' information where the most frequent cases of fraud have been reported. Additionally, most trade proceedings (particularly new petitions) of late have involved foreign producers in China and this is where the reports of fraud tend to center, although not exclusively.7

2. Increasing Unethical Conduct

   Petitioners and respondents in trade proceedings normally are represented by U.S. counsel. Often these counsel are assisted by lay persons serving as U.S. consultants or from foreign law firms and foreign consultants. There is no requirement that such assistance be disclosed publicly or otherwise to the trade agencies. Sometimes consultants and foreign law firms represent petitioners and respondents alone without barred U.S. counsel, and occasionally either side may participate in a proceeding pro se. The D.C. Court of Appeals' ethics rules regulate the behavior of U.S. counsel in these proceedings. There are no such ethical strictures, however, governing the activities of lay person consultants and foreign law firms in these proceedings.

   It has become increasingly clear over the last few years that the incidence of fraud in the practice of international trade law before U.S. agencies is on the rise. The relatively recent cases of Crawfish,8 Magnesium,9 Oil Country Tubular Goods,10 Activated Carbon,11 and Ironing Tables,12 provide particularly colorful and egregious examples, but are by no means exhaustive. We do not recount here the sordid details of the on-site exporter verifications and fraudulent questionnaire responses in these cases, as many are already well known to members of the trade bar. In each of these cases, Commerce applied adverse facts available against the exporters (i.e., high penalty duty rates were imposed on their U.S. exports) because of the inaccurate information reported and the inability to confirm its veracity.13

   No known agency or D.C. Court of Appeals action has been taken against counsel or the consultants for the respondents. It is not always clear to what extent, if any, U.S. counsel knew about the producers' actions, nor does this appear to have been investigated. Some of the same U.S. counsel and firms appear to be involved in more than one of these cases. Verification reports confirm that foreign counsel and consultants were involved in at least some of these incidents and it is widely believed that some U.S. counsel provide little oversight of the activities of the consultants and foreign firms working with them in these representations. If it were found to be true that U.S. counsel was engaged in unethical conduct, the behavior could be sanctioned by the appropriate bar. Many presume, however, that there is no possible direct formal recourse for victims of ethics violations by lay consultants and foreign lawyers that do not fall under an American bar association. This presumption is erroneous. Representing another before the ITA and ITC constitutes the practice of law and accordingly should be regulated by the respective agencies. Unless and until these agencies regulate the practice of law before them by attorneys and nonlawyers, the D.C. Court of Appeals has the right, and maybe even the duty, to pursue those in violation of its ethics rules and the rule against the unauthorized practice of law.

   2. The Practice of Law Before the ITA and ITC

1. Defining the Practice of Law

   Since the colonial era there have been limitations on who is permitted to practice law in the United States 14 The purpose of limiting the practice of law to trained legal professionals has always been to protect the clients and the integrity of the legal practice—to ensure that clients are not exploited and that the administration of justice is carried out in a competent manner.15 For this reason, states generally limit the practice of law to admitted and active members of the local bar.16

   The "practice of law," however, has not had a single or clearly delineated definition. The American Bar Association Model Code of Professional Responsibility ("ABA Model Code") states that "[i]t is neither necessary nor desirable to attempt the formulation of a single, specific definition of what constitutes the practice of law."17 Consequently, its scope has vacillated with national trends toward professionalization or de-professionalization, or the recognized need to provide inexpensive representation to low-income clients.18 In its current form, the ABA Model Code states that:

   [f]unctionally, the practice of law relates to the rendition of services for others that call...