Dumping: An Overview

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Dumping An Overview
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Overview

• Unfairly priced imports (dumping) can distort
  trade and injure American business in the global
  marketplace
• The international trade remedy laws provide legal
  protection against unfairly traded imports
• Vigorous enforcement of these laws
• Maintains the competitive strength of American
  industry
• Strengthens American manufacturing
• Preserves American jobs

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The Trade Remedy Laws

• Global trade in goods is regulated by the
  antidumping (AD) laws
• These laws permit duties to be imposed on dumped
  imports that cause material injury or a threat of
  material injury to a U.S. industry
• Two government agencies enforce these laws
• The U.S. Department of Commerce determines
  whether imports are being dumped
• The International Trade Commission (ITC)
  determines whether the domestic industry is
  materially injured or threatened with material
  injury by dumped imports

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The International Rules

• Dumping has been recognized internationally as a
  harmful practice
• The WTO Antidumping Code sets the conditions
  under which WTO members, including the United
  States, can impose antidumping duties
• U.S. AD laws are drafted to conform with the
  international rules

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Dumping

• Dumping occurs when a foreign producer sells a
  product in the United States at prices below the
  products normal value
• Normal value is either
• The foreign producers sales price in its home
  market
• The sales prices in a third country or
• The foreign producers cost of production plus
  profit
• For non-market economies like China, the factors
  of production (raw materials, energy, etc.) are
  valued using prices in a market economy at a
  similar stage of development

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The Dumping Margin

• The difference between the price in the foreign
  market and the price in the U.S. market is called
  the dumping margin
• Example of a dumping margin
• Merchandise is sold in the United States at 50
• The products normal value is 75
• The dumping margin 50

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Antidumping Duties

• If the Department of Commerce finds dumping, and
  the ITC finds injury or threat of injury, the
  United States will impose an antidumping duty on
  the imported merchandise equal to the dumping
  margin
• Antidumping duties are expressed as a percentage
  of the imported products value
• Example of antidumping duty
• Import price in the United States 50
• Normal value 75
• Dumping margin 50
• Antidumping duty 25

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Injury

• Antidumping can be imposed only if the ITC finds
  that unfairly traded imports
• Are injuring the domestic industry, or
• Threaten to injure the domestic industry
• Material injury is harm that is more than
  inconsequential, immaterial, or unimportant
• Evidence of material injury
• Declining profits
• Falling market share
• Lower employment
• Lower prices

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Imposition of Duties

• If Commerce and the ITC make affirmative findings
  of both dumping and injury, Commerce instructs
  Customs and Border Protection (CBP) to assess
  duties against imports of that product into the
  United States.
• The duties are assessed on an ad valorem basis
  (as a percentage of the value of the imports) and
  are equivalent to the dumping margin
• E.g., if Commerce finds a dumping margin of 35,
  CPB will collect an additional 35 duty on the
  product at the time of importation into the
  United States.

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AD Investigations Filing a Petition

• If a U.S. industry believes that it is being
  injured by unfair competition from dumped
  imports, it may file a petition requesting
  Commerce and the ITC to investigate imports from
  the specified country
• A petition may allege both dumping and subsidies
  in regard to the same merchandise
• One investigation can cover multiple countries

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Petition Requirements

• Petitioners must be domestic interested parties
• A manufacturer or producer producing the product
  which competes with the imports to be
  investigated
• A union within the domestic industry that
  produces the product
• A trade association of domestic producers
• Petitioners must represent at least 25 of
  domestic production.
• The petition must contain information
• Identifying exactly what product is subject to
  the request for an investigation
• Showing dumping
• Showing possible injury or threat of injury to
  the domestic industry

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AD Investigations

• Commerce must determine within 20 days of filing
  whether the petition is adequate (i.e., that it
  alleges injury, that it has been filed by or on
  behalf of the domestic industry, etc.).
• If the determination is negative, the proceedings
  end.
• If affirmative, Commerce initiates an
  investigation to determine whether there is a
  subsidy and/or dumping.
• AD investigations are conducted on parallel
  tracks before Commerce and the ITC
• Investigations generally take from 10 to 12
  months to complete.

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Preliminary Determinations

• Within 45 days after a petition is filed, the ITC
  makes its preliminary determination whether there
  is a reasonable indication of material injury or
  threat
• If the determination is negative, the proceedings
  end
• If the ITCs preliminary determination is
  affirmative, Commerce makes its preliminary
  determination regarding dumping, usually within
  160 days of the petition being filed
• If Commerce makes an affirmative preliminary
  determination, it
• estimates a dumping margin
• orders suspension of liquidation of import duties
• requires importers to post a bond or cash to
  cover the estimated duties

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Final Determinations

• Within 75 days (or 135 days if requested) of its
  preliminary determination, Commerce makes a final
  determination on the existence of dumping
• If negative, suspension of liquidation is
  terminated and deposits are refunded
• If affirmative, suspension of liquidation is
  ordered
• The ITC then makes its final injury
  determination, usually within 235 days of its
  preliminary determination
• If the final determination is affirmative,
  Commerce issues an order imposing antidumping
  duties

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Annual Administrative Review

• If the petitioner, a foreign producer, or an
  importer requests, Commerce must conduct an
  administrative review to determine the amount of
  the dumping margin for merchandise under an
  existing AD order.
• The purpose of an administrative review is to
  update respondents margins of dumping and for
  assessing current margins
• Administrative reviews can occur as often as
  every 12 months

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Administrative Reviews

• New Shippers that had not previously shipped
  subject merchandise prior to the review can
  request a new shipper review
• If requested, or at its own initiative, Commerce
  or the ITC may review certain determinations for
  changed circumstances
• Based upon a review, Commerce may revoke an AD
  order in whole or in part

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Sunset Reviews

• WTO rules require that Commerce and the ITC
  conduct sunset reviews of AD orders every 5
  years to determine if the orders should be
  continued
• If Commerce and the ITC find that both dumping
  and material injury are likely to continue or
  recur if the orders are terminated, the orders
  will be continued for another 5 years
• The ITC usually will complete sunset reviews
  within 360 days of initiation, though it may make
  an expedited determination within 150 days in
  certain circumstances

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Judicial Review

• An interested party adversely affected by a
  determination by Commerce or the ITC may appeal
  the determination to the U.S. Court of
  International Trade (CIT) in New York City
• Review is upon the agency record, so no
  discovery, etc.
• Presumption of correctness of the agency decision
• A party may appeal a final CIT decision to the
  U.S. Court of Appeals for the Federal Circuit

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WTO Review

• Foreign governments may also request a WTO
  dispute settlement panel to determine whether a
  U.S. AD determination is consistent with WTO
  rules
• Adverse decisions can be appealed to an Appellate
  Board
• If the dispute panel finds against the United
  States, the United States may be required to
  revise the determination or even amend its law
• If the United States fails to do so, the affected
  foreign country can retaliate by imposing import
  duties or quotas on U.S. products

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Conclusion

• Trade remedy laws are often the most effective
  means of ensuring a level playing field for U.S.
  businesses
• AD cases can
• Provide a domestic industry with relief from
  dumped imports
• reshape the competitive environment in the
  industry
• have profound effects on the companies involved