Commerce Outlines 14 Proposals to Strengthen Enforcement of Trade Remedy Laws that Could Result in Higher ADD/CVD Penalties

August 26, 2010

The Department of Commerce has outlined 14 new proposals designed to strengthen the enforcement of U.S. trade remedy laws as part of President Obama’s National Export Initiative (NEI). Roughly half of the measures relate to Commerce’s antidumping and countervailing duty (ADD/CVD) investigations for nom-market economies (NME) such as China. Notably, none of the proposed changes would require Commerce to consider currency manipulation in trade remedy cases.

Nonetheless, the proposed changes, if implemented, could result in increased AD and CVD margins in trade remedy cases and improve penalty duty collection. To improve duty collection, Commerce is considering requiring importers to post cash deposits once a preliminary AD or CVD determination is made. Under current practice, since importers are only required to post surety bonds and they often disappear once an unfavorable determination is made resulting in unpaid duties.

Another substantial change would prohibit individual companies from being removed from an AD or CVD order by demonstrating that they have not dumped goods in the U.S. or received government subsidies for a certain period of time. Although specific companies could still qualify for zero percent AD/CVD rates, those companies would remain subject to potential duties until the entire order expires.

Commerce is also considering changes to the methodology used to calculate dumping margins for NME’s that could result in higher margins. Most significantly, it is proposing adopting a new methodology for calculating wage rates by using surrogate wage rates that “fully capture all labor costs, including benefits and taxes paid to workers by their employers in the NME country.” Another proposal would tighten the rules in NME cases for determining when the price of production inputs purchased from market economies will be substituted for Commerce’s standard valuation for such inputs.

According to the Deputy Assistant Secretary for Import Administration Ron Lorentzen, Commerce expects to finalize these proposals and submit them to the normal public consultation process in the near future. More information will be posted about the Department’s proposals to www.barnesrichardson.com as it becomes available.