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Responding to an Antidumping Investigation

Law Offices of Yu & Associates

An antidumping investigation is a rather complex and technical case. Every stage has its own significance, and the objectives to aim for are also different in each stage. In order to successfully fend off an antidumping investigation, a secure grasp of tactics and a thorough understanding of the goals of each stage are necessary.

Response Tactics

There are two agencies that undertakeantidumping investigations: the US International Trade Commission (USITC) and the Department of Commerce (Commerce). The USITC determines whether the US industry corresponding to the imported goods will be injured or threatened by the imports. Commerce determines whether the imported goods are being sold at less than fair value ("dumped") and if so, the amount of the dumping margin (the difference between the fair value and the US sales price of the products in question) will be calculated.

US industries usually petition for imports from countries like China to be fined antidumping duties of 200 to 300%. If this sort of petition is successful, of course, it effectively prevents the foreign product from being able to enter the US market. Overseas companies faced with an antidumping investigation must decide whether exporting to the US and entering the US market are worth the trouble of fending off the investigation, or whether it's better to simply abandon any plans of entering the US market.

At the same time, overseas companies should recognize that an antidumping investigation may also provide an opportunity. If a company is fined an antidumping duty of zero or a lower duty than its competitors, this will give the company an advantage. The competition between overseas companies for a favorable antidumping duty means that each company should have its own legal counsel to fight for its interests during the antidumping investigation.

Five Phases of an Antidumping Investigation and How to Respond

First Phase: Initiation

Once an antidumping petition is submitted, Commerce has 20 days to determine whether the petition is valid and whether there is a basis for continuing investigation. This is a critical stage, because if you can convince Commerce that the petition is invalid, then you can avoid the whole investigation. The main tasks of this phase are reviewing the petition, surveying the US industry, and perhaps drafting a response to Commerce explaining why the company under investigation believes there is no basis for the petition.

Second Phase: Preliminary determination by USITC

USITC must issue a preliminary determination within 45 days of the filing of the petition. During USITC's preliminary investigation, the attorney representing the foreign company can bring the case to court. In general, it's very rare for USITC to determine that there is no injury during the preliminary investigation. Therefore, the goal during the second phase is to try to convince USITC that the foreign company's products do not harm the US industry, and to prepare for the hearing in the fifth phase. Sometimes, companies that are under investigation do not take action during the second phase, but these companies usually realize afterward that this was a mistake.

During the second phase, the overseas company must provide detailed information on its products and its knowledge of the US industry. The respondent company should contact your importer and important clients and ask for their support. The attorney will prepare a response to the petition and take part in the hearing before the USITC.

Responding together with other companies is a good strategy during the second phase, because at this point, everyone's goal is the same, that is, to show that the foreign products do not harm the US industry. Based on the progression of the third and fourth phases, however, various companies' goals and interests may differ. If one company receives an antidumping duty that is much lower than the others, then this company may not want to enter the fifth stage, because of the competitive advantage of the lower duty.

Third Phase: Preliminary determination by Commerce

This phase is also very important and calls for spending a lot of resources and energy. The goal is to achieve the lowest possible antidumping duty, lower than other companies or even zero. In this phase, you should provide as many materials as possible to Commerce to convince them to issue a lower antidumping duty or determine there is no dumping. The Department of Commerce will issue a questionnaire asking for the foreign company's financial information relating to product sales in the US and production costs abroad. The US attorney will help the respondent company answer the questionnaire.

In the case of antidumping investigations against companies from non-market economy countries such as China, the Department of Commerce will use data from a comparable market economy country, such as India, in determining the amount of antidumping duty. The attorneys will evaluate whether these statistics accurately reflect the respondent company's situation and if necessary, search for data from other countries that are more reflective of the companyí»s actual situation and could lower the antidumping duty.

Fourth phase: Final determination by Commerce

During this phase, the respondent companyí»s sales in the US will be affected, as the respondent company's importer will be required to make a deposit for your product sales in the US based on the dumping margin determined during the preliminary investigation.

After the foreign company returns the questionnaire, Commerce will verify the data. The expenses as well as the time spent will be the greatest during this phase. Commerce will send two or more officials to the overseas company to check documents and see whether the company's actual situation matches the answers on the questionnaire. The attorneys should arrive at the overseas office ahead of time to help you prepare for the on-site verification. This verification is of first importance in Commerce's final determination. There have been cases where, because the foreign company did not properly accompany Commerce officials during the verification, Commerce believed the company was concealing information and imposed a very heavy antidumping duty on them.

After the verification, you will need to send in two more responses to Commerce and participate in a hearing. Only an experienced US lawyer will be able to successfully handle this process. IfCommerce imposes an antidumping duty of 2% or less, then the investigation can be considered over, but if the duty is more than this, then the company under investigation will enter the fifth phase.

Fifth phase: Final determination by the USITC

Just as in the second stage, the goal of this stage is to show that the US industry has not been injured by the foreign company's imports. In this stage, it is advantageous for the foreign companies to cooperate and respond as a group; the attorney representing them will submit the responses to the USITC and take part in the hearing. During the hearing, the respondent company can call witnesses to testify on its behalf; the attorney and companies under investigation should work together to select appropriate US importers and purchasers to call as witnesses. The USITC will issue questionnaires to the companies under investigation, but these questionnaires are much easier than the ones given by Commerce. In addition, the responses at this stage will require the participation of an economist to provide an economic analysis to show that US industry will not suffer injury because of the foreign company's imports.

A determination of no injury ends the whole investigation, but if the USITC finds there is injury to the US industry, then Commerce will issue an antidumping order requiring the foreign company to pay an antidumping duty. The antidumping order is effective for five years, unless the foreign company is able to defeat it in court. During the annual administrative review, you may also have the chance to have the amount of antidumping duty changed and to settle your accounts.

The above is a general introduction to immigration policies, and should not be construed as individual legal advice. For specific legal questions, please contact the Law Offices of Yu & Associates. Attorney Xiaohui (Sharon) Yu is a graduate of New York University School of Law, one of the top five law schools in the US, and has practiced law at some of the top firms in the US, UK and China.

Tel: 301-838-8986, Fax: 202-595-1918; E-mail:, Address: 110 N. Washington St., Suite 328E, Rockville, MD 20850. (All rights reserved.)

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