Dept. of Commerce Makes Preliminary Countervailing Duty Finding on Plastic Grocery Bags Out of Vietnam

When a U.S. industry believes that its market share in the U.S. is being injured due to a cheaper version of the same article - as a result of a subsidy provided to foreign manufacturers from its own government - a petition may be filed on behalf of the U.S. industry’s interests for a determination of the existence of foreign subsidies, and hence, the imposition of a countervailing duty.

A countervailing duty is basically an additional tax, derived from the Dept. of Commerce and imposed by U.S. Customs, on a particular product. The effect is intended to cause the foreign import to be more expensive and therefore, more competitive with U.S. manufactured goods.

In this case, polyethylene retail carrier bags (“PRCBs”), commonly known as plastic grocery bags, among other kinds, from Vietnam, Indonesia, and Taiwan are at issue (though this blog post focuses only on Vietnam). For more information on the nature and progress of the investigation covering all of the countries, click here.

The U.S. agencies that work together towards a determination as to the existence of the foreign subsidization of a particular product are the U.S. International Trade Commission and the Dept. of Commerce. Each conducts certain fact finding investigations, which includes activities such as the completion of questionnaires by affected parties as well as receiving live testimony at hearings.

On March 31, 2009, petitions were filed by two U.S. makers of PRCBs, namely, Hilex Poly Co., LLC, of Hartsville, SC, and Superbag Corporation of Houston, TX, in order to have an investigation commenced into the subsidization of PRCBs by the Vietnamese and other governments with the goal being the imposition of countervailing duties in the event of an affirmative finding.

With the Dept. of Commerce’s preliminary report (signed on Monday 8/31/09) stating that a finding of countervailing subsidies was made, the International Trade Administration of the Dept. of Commerce’s publicly announced in its "Fact Sheet" a finding of subsidization by the Vietnamese government ranging from 0.20% de minimus to 4.24% in counteravailable subsidies.

In everyday language, this means that the range of subsidies provided to this industry by the Vietnamese government ranged from 0.20%, which is perceived as being insignificant or “de minimus,” because it is so small of an amount as to essentially not be worth the effort to address, to 4.24%.

Having made a preliminary finding, by this Friday (9/4/09), or shortly thereafter, there will be a publication in the Federal Register of the Dept. of Commerce’s preliminary report (Report). Part of this publication will include information about the additional duties that are to be collected by Customs as of the date of publication of the Report, from both specific Vietnamese manufacturers of PRCBs, as well as all others. The countervailing duty rates will be as follows:

Manufacturer Name Duty Rate (i.e., extra duty amount to be paid)

Advanced Polybag (none b/c de minimus)

Chin Sheng Company, Ltd. 1.69%

Fotai Vietnam Enterprise Corp. 4.24%

All other producers/exporters from Vietnam 2.97%

Of course these are just the preliminary determination figures. Once the final determination is published, those new countervailing duty rates established by the Dept. of Commerce will then be collected by Customs, effective from that date of publication. Stay tuned to the International Trade Commissions' website for additional publications affecting this countervailing duty investigation.

Questions or comments? Email me at clark.deanna@gmail.com