Antidumping and Countervailing Duties Where to Begin

1
Antidumping (and Countervailing) Duties Where
to Begin

• 34th NCBFAA Conference Workshop
• Lake Buena Vista, Florida
• April 10, 2008
• presented by Myra Reynolds
• John S. James Co.
• and
• Brenda Jacobs
• Sidley Austin LLP

2
The AD Law

• First U.S. legislation was the Antidumping Act of
  1916
• modeled on antitrust
• created private right of action.
• In 1921 Congress passed AD law regulating imports
  
• price discrimination.
• The present version was enacted in 1979 and
  amended in 1995 by the Uruguay Round Agreements
  Act, which established the WTO.

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The CVD Law

• The first U.S. laws addressing foreign government
  subsidies were enacted in 1890 (sugar) and in
  1897 (all goods).
• In 1979 it was changed to conform with the Tokyo
  Round of Multilateral Trade Negotiations under
  the GATT.
• The present version was amended in 1995 by the
  Uruguay Round Agreements Act, which established
  the WTO.

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Whats the difference?

• Dumping occurs when a foreign producer sells a
  product in the United States at a price that is
  below that producers sales price in its home
  market, or at a price that is lower than its cost
  of production (less than fair value).
• Subsidizing occurs when a foreign government
  provides financial assistance to benefit the
  production, manufacture, or exportation of a
  good.
• Both are actionable, provided there is resulting
  injury to domestic producer.

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AD, CVD, Whats The Difference?

• Antidumping and countervailing duty
  investigations have many similarities
• Both allege an unfair trade practice and injury
  caused to a domestic industry as a result.
• AD products sold in the import market at less
  than fair value
• CVD government in producing country provides
  subsidies for the manufacture, production or
  export of the products

6
AD, CVD, Whats The Difference?

• Both involve the Commerce Department (DOC) and
  the U.S. International Trade Commission (ITC).
• Bifurcated process means
• DOC is responsible for identifying if there are
  sales at less than fair value or countervailable
  subsidies and, if so, calculating same.
• U.S. International Trade Commission is
  responsible for determining if there is material
  injury or a threat of material injury to a
  domestic industry producing a like product by
  reason of the subject imports.

7
AD, CVD, Whats The Difference?

• Both involve a five part process
• Initiation by the DOC
• Preliminary Injury Determination by the ITC
• Preliminary Dumping or Subsidy Determination by
  DOC
• Final Dumping/Subsidy Determination by DOC
• Final Injury Determination by the ITC
• CVD has shorter investigation schedule
• Although it can be extended, and aligned with a
  concurrent AD investigation

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AD, CVD, Whats The Difference?
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Basics of Injury Determination

• Legal standard is whether an industry in the
  United States is materially injured, or is
  threatened with material injury . . . by reason
  of imports of the dumped merchandise
• Definition of material injury Harm which is
  not inconsequential, immaterial, or unimportant
• Not a rigorous standard
• Even if industry conditions are stable or
  improving, injury may still be found

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Threat of Material Injury

• Even if U.S. industry is currently healthy, an
  antidumping order may issue if the industry is
  threatened with material injury
• Further dumped imports must be imminent
• ITC may not make a threat determination on the
  basis of mere conjecture or supposition

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Key Differences Between ME NME Cases
Different periods of investigation (POI) Market
economy dumping investigations cover a one year
period (the four quarters before a petition is
filed) NME investigations cover a six month
period (the two quarters before a petition is
filed) Different data Market economy
investigations determine the normal value based
upon home market or third country market sales,
or constructed from actual costs incurred by the
producer NME investigations rely upon surrogate
values for the factors of production to determine
the normal value
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Key Differences Between ME NME Cases

• Different treatment of non-mandatory respondents
• Market economy producers that do not have their
  own dumping margins determined are assigned a
  margin equal to the average of the margins
  calculated for the mandatory respondents
• NME non-mandatory respondents get the average
  margin of the mandatory respondents only if they
  establish that they are independent of government
  control (separate rates test), meeting all
  necessary deadlines
• Other NME respondents get the country-wide
  rate, which generally applies to those that are
  not cooperative

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Decisions 2002-2006 ADD
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Decisions 2002-2006 CVD
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When Is Liquidation Suspended?

• Key event is DOCs preliminary determination
• If affirmative, this is the date on which
  liquidation is suspended and potential duty
  liability commences
• After this date, importers must post bonds or
  cash deposits at the time of entry of the subject
  merchandise
• If negative, no suspension of liquidation, but
  investigation continues

16
Post-Order Proceedings

• Upon publication of AD/CVD order in the Federal
  Register, importers must pay cash deposits of the
  estimated duties on subsequent entries at the
  margin rate for the individual foreign
  producer/exporter
• Foreign producer/exporter cannot reimburse the
  importers AD/CVD liability

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Annual Reviews

• AD/CVD duties are adjusted retroactively, as a
  result of annual reviews
• In the 12th month following the publication of an
  AD/CVD order, any party may request DOC to
  conduct an annual review

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Annual Reviews (cont.)

• If requested, DOC calculates AD/CVD margins on
  respondents U.S. entries of the subject
  merchandise since liquidation was first suspended
• In following years, reviews can be requested
  annually as long as the AD/CVD order remains in
  effect
• DOC annual review process generally the same as
  in investigations
• DOC takes 12-18 months to complete an annual
  review

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Annual Reviews (cont.)

• Upon publication of the final results of an
  annual review in the Federal Register, the new
  margin becomes the assessment rate for the prior
  imports of the merchandise that had entered
  subject to bond or cash deposits
• If the margin calculated in the review is lower
  than the deposit rate for the reviewed entries,
  the importer will receive a refund of the
  difference, plus interest

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Annual Reviews (cont.)

• If the margin calculated in the review is higher
  than the deposit rate for the reviewed entries,
  the importer will be liable for the difference,
  plus interest
• The new margin also becomes the deposit rate for
  imports after the date of publication of the
  results of the review

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Sunset Reviews

• Every 5 years, DOC and ITC must review AD/CVD
  orders to determine if revocation would result in
  a recurrence of dumping/ subsidies and injury
• If neither dumping/subsidies nor injury is likely
  to recur, the AD/CVD order must be revoked

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Working with ADD/CVD

• Detailed descriptions should be provided by the
  importer, in order to determine if an article is
  within the scope of the investigation.
• Where the details of an investigation are not
  clear, the administrator or manager should review
  the case, which can now be accessed from the
  Customs website http//addcvd.cbp.gov/index.asp

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Scope Issues

• Description in AD/CVD Order is controlling, not
  HTSUS classification.
• CBP can opine on scope, but only DOC can provide
  binding interpretation.
• Scope Ruling Requests to DOC.
• Reasonable Care concerns.

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Guidance for Certificates of Reimbursement

• Time requirements for providing Reimbursement
  Certificate
• For entries made from February 5, 1980 to April
  26, 1989, certificates must be filed within 30
  days after the earlier of
• Publication of the order or any administrative
  review or
• Importation of the merchandise in a district
  where not previously imported
• For entries on or after April 27, 1989, the
  current regulation requires the certificate to be
  filed prior to liquidation.

25
Changes by the Department of Commerce

• As of 1992, DOC changed language in Preliminary
  and Final results of annual AD reviews.
• Importers have responsibility to file certificate
  prior to liquidation
• Failure to comply could result in DOC presumption
  that reimbursement of AD duties occurred and the
  subsequent assessment of double AD duties.
• Results
• Responsibility to provide the reimbursement
  certificate has shifted to importer
• CBP field offices will no longer request the
  certificate
• If not filed by the time of liquidation, CBP will
  issue a CF 29 (Notice of Action Taken) informing
  the importer of the doubling of AD duties

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Certificates of Reimbursement
They must be signed by a competent officer of the
Importer of Record. (DOC does not interpret its
regulations to allow a CHB to sign) DOC
recognizes two types of acceptable
Certificates Individual Certificates Blanket
Certificates
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Individual Certificates
Individual certificates will contain the
following language I hereby certify that (I
HAVE) (HAVE NOT) entered into any agreement or
understanding for the payment or for the
refunding to me, by the manufacturer, producer,
seller, or exporter, of all or any part of
the antidumping duties assessed upon the
following importations of (COMMODITY) from
(COUNTRY) (LIST ENTRY NUMBERS) which have been
purchased on or after (date of publication of
antidumping notice suspending liquidation in
the Federal Register) or purchased before (SAME
DATE) but exported on or after (DATE OF FINAL
DETERMINATION OF SALES AT LESS THAN FAIR VALUE)
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Blanket Certificates

• Must provide specific antidumping case numbers,
  shipper and review period covered.
• Time period is longer of either 12 months or
  review period.
• Must be on file in port where entry is made.
• Following statement should be on the form
• This blanket certification is being submitted in
  accordance with 19CFR 351.402(F)(2). Future
  entries will be marked with the following
  statement Reimbursement Certificate on file.
• In the COMMENT section of your 7501 type
• REIMBURSEMENT CERTIFICATE ON FILE IN THIS PORT

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Example of Blanket Certificate
BLANKET STATEMENT OF NON-REIMBURSEMENT DATE______
_____________ IMPORTER___________________ MANUFAC
TURER________________ ANTIDUMPING CASE
NUMBER___________________ I hereby certify that
I have not entered into any agreement or
understanding for the payment or for the
refunding to me, by the manufacturer, producer,
seller, or exporter of all or any part of the
antidumping duties upon all shipments
of COMMODITY ___________________________________
__________ FROM COUNTRY ____________________
____________________________ Which have been
and/or will be exported by this company. This
blanket applies to importations on or after
MMDDCCYY through MMDDCCYY.1 I further certify
that the Bureau of Customs and Border Protection
will be notified if there is any reimbursement of
antidumping duties by the manufacturer, producer,
seller, or exporter to the importing company at
any time in the future. INFORMATION REGARDING
ANY REFUND OF ANTIDUMPING DUTIES MUST BE SENT
IMMEDIATELY TO PORT DIRECTOR (ADDRESS) FAILURE
TO FILE THIS CERTIFICATE PRIOR TO LIQUIDATION
WILL RESULT IN THE PRESUMPTION OF REIMBURSEMENT
AND THE ASSESSMENT OF DOUBLE ANTIDUMPING
DUTIES. _________________________________________
SIGNATURE OF COMPANY OFFICIAL ____________________
______________________ PRINTED OR TYPED NAME OF
ABOVE OFFICIAL ___________________________________
_______ TITLE OF COMPANY OFFICIAL NOTE AN
OFFICER OF THE IMPORTING COMPANY MUST SIGN THIS
CERTIFICATE. IT MAY NOT BE SIGNED BY A
CUSTOMHOUSE BROKER ON BEHALF OF THE
CLIENT. 1 The time period for a blanket
certificate of reimbursement is either 12 months
or the administrative review period, whichever
is longer. This blanket certification is being
submitted in accordance with 19CFR 351.402(F)(2)
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ADD Queries through ABI
Antidumping Case Inquiry Case Number
A570980138 ISO Code CN Related Case NO Status
Order (Next Slide) Date 01-04-05 Bond/Cash
Cash Manufacturer IS Der Cheng Wooden Works of
Factory Description of Case WOODEN BEDROOM
FURNITURE Rate Deposit Effective Indicator
Rate 1 Entry Date Rates
Given 35.78 11/07/07 Rates Given
35.78 08/22/07 Rates Given
198.08 11/20/06 Rates Given
198.08 01/04/05 Rates Given
198.08 11/17/04 Rates Given
198.08 06/24/04 Tariff Numbers 7009.92.5000,
9403.50.90490, 9403.50.9080, 9403.0.8080,
9304.90.7000
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Valid Case Status Codes
I Initiation An investigation has been
initiated and suspension of liquidation has been
ordered. Still an 01 entry type at this
point. P Preliminary A negative
determination has been issued. Entries are not
reported as entry type 03. You can usually post
bond during this period O Order It is a
current case. These entries are subject to ADD
under entry type 03. If the rate is showing as
0.00, you still file an 03 type entry but with a
zero deposit rate. R Revocation This means
the case was revoked by order and entry can now
be filed as an entry type code 01 with no
estimated dumping duties. E Excluded Not
subject to ADD or filing as an 03 type Entry.
Caution needs to be exercised if you suspect
your cargo is subject to ADD and the rate is
returned as zero. Some ADD Cases (Cement from
Mexico, as an example) are paid at a specific
rate of ADD. Due to limitations of the current
ABI system, these cannot be transmitted and the
ABI system does not edit for specific rates.
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Post-Liquidation

• Protest options limited
• Cannot challenge underlying DOC findings
• Can challenge Customs errors (e.g., failure to
  follow liquidation instructions)
• Special rules for Deemed Liquidations
• Per decision in Koyo case, importer can protest
  deemed liquidation at deposit rate when it is
  higher than final assessment rate.
• Koyo Corporation of U.S.A. v. United States,
  497 F.3d 1231 (Fed. Cir. 2007).

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Questions?
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QUESTIONS?

• Brenda A. Jacobs Sidley Austin
  LLP 1501 K Street, NW
  Washington, D.C. 20005 202-736-8149
  direct 202-736-8711 fax
  email bjacobs_at_sidley.com
• Myra Reynolds John S.
  James Co. 6002 Commerce
  Blvd/115 Savannah, GA 31408 (912)
  963-2960 direct [phone]
  fax myra.reynolds_at_johnsjames.
  com