Anti-dumping and Countervailing Duties – What the Heck Are They?

I remember hearing in the news earlier this year that China wanted to retaliate against the U.S. for an anti-dumping duty imposed on tire imports from China. I also remember seeing a Customs entry with the duty amount included on the Entry Summary for an importation of certain tires, and the conference call wherein the client was, well, freaked out as the hefty amount of the anti-dumping duty was more than double the invoice price of the tires themselves.

In case what I've written above doesn't make any sense, in everyday language, this means that once this antidumping duty was added onto the cost of the merchandise plus freight, etc., the tires would have (presumably) been cheaper to have just bought them from a manufacturer here in the U.S.

“Combating” this type of commercial behavior on the part of foreign markets is precisely what these anti-dumping duties (ADD) and countervailing duties (CVD) are intended to prevent. They're essentially a tax that makes an imported product more expensive.

Let me provide some definitions. Anti-dumping occurs when a foreign company sells a product in the U.S. at less than fair value. Hence, ADD are intended to offset the lower prices.

Countervailing duties address the receipt of government subsidies that benefit those parties involved in the production of, manufacture, or exportation of goods.

When a domestic producer believes that its market here in the U.S. is being harmed by a flood of lower priced imports of the same product from other countries, it can petition the Dept. of Commerce (DOC) to impose an ADD, a CVD, or both.

DOC makes an ADD or CVD determination after a lengthy investigatory process that includes collecting data, by way of questionnaires, from domestic and foreign manufacturers, and foreign exporters of the product. Foreign manufacturers or foreign exporters may request a “separate rate,” in order to receive a lower ADD or CVD rate. For those who do not make this request, imports by these foreign manufacturers or foreign exporters are subject to the “All Others” rate.

I had an interesting conversation with Sam Zengotitabengoa (love his last name) from the DOC's International Trade Administration office recently regarding the preliminary determinations made for an ADD and CVD on ribbon. Specifically, it was on “Narrow Woven Ribbons with Woven Selvedge from the People's Republic of China and Taiwan” affecting HTSUS subheadings 5806.32.1020, 5806.32.1030, 5806.32.1050, and 5806.32.1060, with other “catch all” language to bring in other types of ribbon.

Preliminary Determination:
ADD “All Others” Cash Deposit Rate: 231.40%
CVD “All Others” Cash Deposit Rate: 59.49%

When a preliminary determination is made, DOC notifies US Customs with instructions on what “cash deposit” to collect. It can either be made in the form of a cash deposit or a bond in the amount of the ADD or CVD owed. (As an aside, from what I've heard, it sounds like surety companies are not really on board with issuing a bond for ADD or CVD cash deposits, which has been demonstrated in part by all the hoops that need to be jumped through in order to obtain one for ADD/CVD purposes.)

Since no notice with respect to the ADD case was made regarding the cash deposit despite publication in the Federal Register that it would be instructing US Customs about it (at least none had been at the time I started writing this post), I had no choice but to put a call in to the DOC (Sam). After all, how can I advise clients as to cash deposits if there are no public instructions explaining what to do? And, how does the importing community know how to be compliant – and US Customs for that matter – if the DOC never instructed us on what to do?

US Customs has a web page that is supposed to inform the importing community what DOC instructions are. Sam and I looked together to confirm that no public notice had been published by Customs on its website even though DOC had issued the “message” (message no. 0070303) on March 11, 2010. He therefore, emailed me the message which I thought was quite kind of him.

Some important upcoming time frames are:

24-Jun-10
To file entry of appearance with the Secretary of the Commission [USITC Rules § 201.11(b)(3)]
7-Jul-10
To file pre-hearing brief (mandatory ) [USITC Rules § 207.23]
8-Jul-10
Requests to appear at hearing in connection with the Final Phase
9-Jul-10
9:30 a.m. Prehearing conference for those desiring to appear at hearing and make oral presentation
11-Jul-10
To file written testimony in connection with your presentation at the hearing [ USITC Rules § 207.24]
15-Jul-10
Hearing in connection with the Final Phase
22-Jul-10
To file post-hearing briefs [USITC Rules § 207.25]
22-Jul-10
For a non-party to file a written statement in support or opposition to the petition
6-Aug-10
USITC to provide parties all info. on which no opportunity to comment had been given
10-Aug-10
Final comments due - must not contain new factual info.

FYI - Message no. 0070303 is on the Customs ADD/CVD website.

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