Antidumping

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Antidumping law is extremely complex and practice in the area is changing constantly, the summary below provides a quick reference to the main issues. Because we have one of the largest trade remedies’ practices in the United States, we would be glad to answer any specific questions that you may have on these issues. Contact any Barnes/Richardson lawyer for further information.

How Cases Begin – Cases may be filed by a U.S. industry that can show that (a) prices of imports are unfairly low; and (b) the U.S. industry is being injured by these unfairly priced imports.
Deadlines – Cases have very strict and fast deadlines. The first hearing is 3 weeks after the filing of a petition. Final determinations are made within one year. Interim relief is generally granted within 160 days of the initial filing.
Agencies involved – Cases are heard at the U.S. Department of Commerce (regarding the level of dumping) and the U.S. International Trade Commission (regarding whether injury exists).
Type of Relief – Relief is in the form of additional duties.
U.S. producers which are faced with low prices (often from Vietnam or China) like these cases since a successful case will effectively put a floor on prices.
Risks to Importers – Importers operating under a dumping order need to be very cautious since the dumping duty rates may change and the scope of the order may be modified.
What Is Dumping? – 2 main elements to dumping case: (1) Sales in the US at below “normal value” and (2) material injury or threat of such injury by reason of the dumped imports.
What is “Normal Value”? – “Normal value” is defined, in order of preference as:
1. Home market prices,
2. Third country prices if insufficient home market sales,
3. A “constructed value” based on costs of manufacture plus SG&A expenses and “normal” profit, if insufficient home market and third country sales,
4. Special rule for non-market economies such as China and Vietnam, based on actual inputs and “surrogate values” for those inputs. Surrogate values from India, the Philippines or similar countries.
What Dumping Is Not – Not simply underselling United States manufacturers. Not “illegal” or necessarily “wrong.” Similarly, antidumping duties are not supposed to be a “punishment” but to offset the amount of the “dumping.”
Retroactive Assessment – Importers deposit duties based on the last completed calculation of rates, but these are only estimates and not final rates. Once each year a review will be conducted for the prior year’s sales to determine what the antidumping duty margin is for entries during that year.

For example, a company might deposit 10% dumping duties for January-December 2011. In January 2012 DOC begins to review those 2011 sales (review proceeding takes about one year). When a review is completed the actual duties are determined, which can be greater or less than the 10%. Importer gets refund or pays additional duties.

The key point for exporter and importers is to plan ahead. Once the sales are made, it is too late to do as much to affect the outcome. Careful planning is needed before the sales are made, and before the review occurs.
One effect of the review is the payment of the duties for the past period (so-called retrospective assessment). The other effect of the review is that the new rate will be applied as the new estimate of dumping until the next completed review
ITC Injury Determination – Even if the Commerce Department finds dumping, the dumping duty order will not go into effect unless the ITC also finds that the domestic industry is injured by reason of the dumped imports.
The essential argument of importers and exporters at the ITC usually is that U.S. industry is not being harmed (or threatened), usually because of a lack of any causal connection between the imports and the condition of the U.S. industry . The substantive argument often is based on an alleged lack of linkage between dumped imports and condition of the US industry, differences in product segments leading to no real competition, other causes of the problems of the industry. Procedural steps include filing a notice of appearance, completing questionnaires, participating in staff conferences, and filing briefs with legal/factual arguments.
Non-Reimbursement of dumping duties – Exporter/manufacturer may not simply reimburse importer for antidumping duties. If they do, Customs is to collect the dumping duties again. The idea is that antidumping duties will have economic impact in United States market and the duties are not to be absorbed by the exporter/manufacturer.
The Administrative Review Process – This process only occurs at the Commerce Department only. The retrospective assessment system in the U.S. means that the final liability for antidumping duties are determined only after the opportunity for a review. A review establishes the actual liability an importer must bear , which leads to a lack of predictability, particularly with non-market economies such as China and Vietnam. The usual time frame for a review is 16-17 months.
Importers may request reviews for their own imported goods. Either domestic parties or foreign manufacturer may request a review for a foreign company. If a company is to request a review itself, it should prepare in advance and know the risks of such a review, because the dumping duties paid as a result of the review could be lower, or higher, than the amounts deposited initially.
Scope Issues – Only “subject goods” are those that are described in the order.

Sometimes it is possible to “clarify” the order to have imports excluded from the case. If this is done, then the imports are simply not subject to the order. DOC conducts scope reviews.

Any interested party may request (including an importer). There is a two tier review process, depending on the case: (1) DOC decides whether the good is clearly outside of scope on face of scope, and (2) if not, then Commerce conducts a further inquiry.

In further inquiry cases, Commerce often examines 5 factors to assist it in determining if a product is in or out of the scope of the order.
The 5 factors are:
1. (a) Physical characteristics of the product
2. (b) Expectation of ultimate consumers
3. (c) Ultimate use of product
4. (d) Channels of trade of product, and
5. (e) Manner of advertising and display
Because BRC is experienced in both customs law and antidumping practice, it is in a strong position to help clients navigate the complex issues that arise in the scope context.
New Shipper Reviews – Subject exporters/manufacturers who have not been reviewed pay “all others” rate. The “all others rate” generally is very high. The new shipper companies are able to be reviewed and obtain their own rate for their shipments, which should be substantially lower. There are special rules for such reviews, which include the ability to ask for reviews twice a year rather than only annually.
Other Issues – Other issues that arise in dumping cases that we frequently work on include five year “sunset” reviews determining whether there still would be injury to the U.S. industry if the dumping order were lifted.
Circumvention Issues – Circumvention of dumping duties can have administrative effects under the dumping law, as well as penalties from U.S. Customs & Border Protection, and even criminal liability in certain instances. Circumvention issues regarding dumping order (particularly with regard to Chinese goods) have become increasingly common in recent years. BRC’s expertise with regard to both CBP and the Commerce Department puts us in the position to work through all aspects of the problem for clients and attain a just result.

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