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FAQ

FAQs on Importing Issues
Antidumping FAQs
Countervailing FAQs
ANTIDUMPING DUTIES FAQS

What is dumping?

Dumping occurs when a foreign producer sells a product in the United States at a price that is below that producer's sales price in its home market, or at a price that is lower than its cost of production. If the Department of Commerce finds that an imported product is dumped and the ITC finds that a U.S. industry producing a like product is materially injured or threatened with material injury, an antidumping duty order will be imposed.

Who can file an antidumping petition?

An antidumping petition must be filed on behalf of an industry. This means that “(i) the domestic producers or workers who support the petition account for at least 25 percent of the total production of the domestic like product, and (ii) the domestic producers or workers who support the petition account for more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for or opposition to the petition.” If the petition does not establish support of domestic producers or workers accounting for more than 50 percent of the total production of the domestic like product, the Department of Commerce polls the industry or uses other information to determine if the required level of support for the petition exists. It is common practice for various producers to file as co-petitioners (either as separate entities or collectively as in the form of an ad hoc committee); or for producers to file as co-petitioners with unions or trade associations; or for petitioners to obtain letters of support from non-petitioning members of the domestic industry, from unions, or from trade associations.

What is the process for an antidumping petition?

After an interested party files an antidumping petition, the investigation goes through the following stages:

  1. Initiation (completed within 20 days of the filing of the petition): Commerce determines whether the petition alleges the elements necessary for the imposition of a duty and contains information reasonably available to the petitioner supporting the allegations. If the determination is affirmative, Commerce initiates an investigation to determine whether dumping exists; if negative, it dismisses the petition and terminates the proceeding.
  2. Preliminary Determination by the Commission (completed within 45 days of the filing of the petition): the Commission makes a determination, based upon the best information available to it at the time, of whether there is a reasonable indication that an industry in the United States is materially injured or is threatened with material injury, or the establishment of an industry in the United States is materially retarded, by reason of imports of the merchandise which is the subject of the investigation. The preliminary investigation is conducted by a six-person team consisting of an investigator, economist, accountant/auditor, industry analyst, attorney, and supervisory investigator. This determination is based on questionnaires sent to producers and importers, a public conference where the parties present their viewpoints, a staff report compiled by the investigative team, and other information. A publication containing the determination and the public version of the views and the staff report is served on all parties to the investigation.
  3. Preliminary Determination by Commerce Department (completed within 115 days of the Commission’s Preliminary Determination): Commerce makes a preliminary determination, based upon the best information available to it at the time, of whether there is a reasonable basis to believe or suspect that the subject imported merchandise is being sold or is likely to be sold at less than fair value (LTFV), or whether a countervailable subsidy is being provided with respect to the subject merchandise. If Commerce’s preliminary determination is affirmative, it orders the suspension of liquidation of all entries of the subject imports that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of the notice of determination in the Federal Register. Importers are then required to post a cash deposit or bond for each entry of the subject merchandise in an amount based on the estimated weighted average dumping margin, or the estimated countervailable subsidy rate. If the determination is negative, Commerce nevertheless conducts the final phase of its investigation, although there is no requirement that importers post a cash deposit or bond.
  4. Final Determination by Commerce (completed within 75 days of Commerce’s Preliminary Determination): Commerce makes a final determination of whether the subject imported merchandise is being sold or is likely to be sold at LTFV, or whether a countervailable subsidy is being provided with respect to the subject merchandise.
  5. Final Determination by the Commission (completed within 120 days after Commerce’s Preliminary Determination or 45 days after its Final Determination, whichever is sooner): the Commission makes a final determination of whether an industry in the United States is materially injured or is threatened with material injury, or the establishment of an industry in the United States is materially retarded, by reason of imports of the merchandise which is the subject of the investigation. The determination is based on questionnaires sent to producers, importers and purchasers; the Commission’s staff report; and a public hearing. A publication containing the determination and the public version of the views and the staff report is served on all parties to the investigation.
How does the Commission collect information using questionnaires?

During the preliminary investigation, the Commission sends questionnaires to U.S. producers, U.S. importers, and foreign producers to solicit the information required by the Commission in order to make its determination. Questionnaires are sent to all U.S. producers except in cases involving an unusually large number of firms; in such cases, they may be sent to the largest producers in the industry or to a representative sample of firms. Similarly, questionnaires generally are mailed to all importers of the product in question, particularly all those importing from the countries subject to investigation. If the number of importers is unusually large, questionnaires may be sent only to the largest importers or to a representative sample. Foreign producer questionnaires are sent only to producers from the subject countries. U.S. producers and importers are required to respond to questionnaires; failure to reply as directed can result in a subpoena or other order to compel a response. Foreign producers are not required to respond to questionnaires; however, failure to respond may result in an adverse inference by the Commission.

Producer questionnaires generally consist of four parts. The first part asks a number of general questions relating to the organization and activities of the firm and whether it supports or opposes the petition, and why. The second part requests data on capacity, production, inventories, commercial shipments, export shipments, internal consumption, company transfers, employment, hours worked, wages paid, and purchases. Part three of the questionnaire involves financial data, including income-and-loss data on the product in question; data on capital expenditures, research and development expenses, and asset valuation; and questions regarding the impact of imports on capital and investment. The fourth and final part of the producer questionnaire requests sales prices18 and other price-related information and solicits allegations of lost revenues and lost sales attributable to the subject imports (petitioners are required to provide this information in the petition rather than the questionnaire).

Importer questionnaires generally consist of three parts. As in the producer questionnaire, the first part relates to the organization and activities of the firm. The second part requests data on imports of the product in question; the quantity and value of commercial shipments, export shipments, internal consumption, and company transfers of such imports; and inventories of imports. The third part of the importer questionnaire solicits data on sales prices for subject imported merchandise and other price-related information similar to that requested in the producer questionnaire.

Foreign producer questionnaires are composed of three parts. The first two parts consist of general questions about the firm’s operations in the country in question and in the United States. The third part requests data on the firm’s capacity, production, home-market shipments, exports to the United States and other markets, and inventories of the subject merchandise.

During the Commission’s final investigation, questionnaires are sent to U.S. purchasers as well as U.S. and foreign producers and U.S. importers. Purchaser questionnaires are sent to all significant purchasers of the product. In cases involving an unusually large number of consumers, the mailing list may be limited to the largest purchasers, or if virtually all of the consumers are small, a representative sample may be taken. Purchaser questionnaires generally consist of at least four parts. As in the producer and importer questionnaires, the first part relates to the organization and activities of the firm. The second part requests data on the quantity and/or value of purchases of the product manufactured in the United States, in each of the subject countries, and in the nonsubject countries as a group. Part three asks a number of questions about the characteristics of the market for the product in question and the firm’s purchasing practices. The fourth part consists of a series of questions related to competition between the domestic product and both subject and nonsubject imports, and product comparisons in terms of price, quality, service, delivery, and other factors of sale. In some cases a fifth part requests actual purchase prices for specific types of domestic and subject imported products.

What happens if an antidumping order is published?

If notified by the Commission of an affirmative final determination of material injury or threat of material injury to a domestic industry, or material retardation of the establishment of a domestic industry, then Commerce is required by law to publish in the Federal Register an antidumping or countervailing duty order within seven days. Importers are then required to post a cash deposit equal to the amount of the estimated antidumping or countervailing duties pending liquidation of entries of the merchandise.

If Commerce makes an affirmative final determination regarding the existence of critical circumstances, and the Commission makes an affirmative final determination of material injury (as opposed to merely threat of material injury) to a domestic industry, the Commission must make an additional determination as to whether the imports subject to Commerce’s affirmative determination of critical circumstances are likely to undermine seriously the remedial effect of the antidumping or countervailing duty order to be issued. If the Commission’s determination with respect to this issue is affirmative, duties are applied retroactively to unliquidated entries of imported merchandise entered, or withdrawn from warehouse, for consumption on or after the date which is 90 days prior to the date the duties would normally be levied.

What is “material injury”?

“Material injury” is “harm which is not inconsequential, immaterial, or unimportant.” The Commission determines whether material injury U.S. producers has occurred by considering (1) the volume of imports of the subject merchandise, (2) the effect of imports of that merchandise on prices in the United States for domestic like products, and (3) the impact of imports of such merchandise on domestic producers of domestic like products in the context of production operations within the United States. In determining the impact of imports on domestic producers, the Commission considers factors such as (1) actual and potential declines in output, sales, market share, profits, productivity, return on investments, and utilization of capacity; (2) factors affecting domestic prices; (3) actual and potential negative effects on cash flow, inventories, employment, wages, growth, ability to raise capital, and investment; (4) actual and potential negative effects on the existing development and production efforts of the domestic industry, including efforts to develop a derivative or more advanced version of the domestic like product; and (5) in antidumping investigations, the magnitude of the margin of dumping.

What is “threat of material injury”?

This is the likelihood that material injury to U.S. producers will occur in the future. The Commission determine whether there is a threat of material injury based on factors such as:

  • Information on the nature of the subsidy and whether imports of the subject merchandise are likely to increase;
  • Any existing unused production capacity or imminent, substantial increase in production capacity in the exporting country indicating the likelihood of substantially increased imports of the subject merchandise into the United States;
  • A significant rate of increase of the volume or market penetration of imports;
  • Whether imports of the subject merchandise are entering at prices that are likely to have a significant depressing or suppressing effect on domestic prices, and are likely to increase demand for further imports;
  • Inventories of the subject merchandise;
  • The potential for product-shifting if production facilities in the foreign country, which can be used to produce the subject merchandise, are currently being used to produce other products;
  • The actual and potential negative effects on the existing development and production efforts of the domestic industry.
What is “material retardation”?

Petitioners may allege that the establishment of an industry in the United States is materially retarded by reason of imports, or sales (or the likelihood of sales) for importation, of the subject merchandise. If U.S. producers have commenced production of the product, the industry is considered to be established if U.S. producers have “stabilized” their operations. In making this assessment, the Commission has examined the following factors: (1) when the U.S. industry began production; (2) whether the production has been steady or start-and-stop; (3) the size of domestic production compared to the size of the domestic market as a whole; (4) whether the U.S. industry has reached a reasonable “break-even point;” and (5) whether the activities are truly a new industry or merely a new product line of an established firm. If the industry is not established, the Commission considers whether the performance of the industry reflects normal start-up difficulties or whether the imports of the subject merchandise have materially retarded the establishment of the industry.

How does the Commission determine what is a “domestic like product”?

In defining the domestic like product, the Commission generally considers a number of factors, including: (1) physical characteristics and uses; (2) interchangeability; (3) channels of distribution; (4) common manufacturing facilities, production processes, and production employees; (5) customer and producer perceptions; and, when appropriate, (6) price.

How long do antidumping orders last?

Commerce and the ITC review each outstanding antidumping duty order every five years (“sunset review”) to determine whether revocation of the order would be likely to lead to continuation or recurrence of dumping and of material injury within a reasonably foreseeable time. If both agencies make affirmative determinations, the order is continued for another five years; if not, the order is revoked. The determination is based on (1) the Commission’s prior injury determinations, including the volume, price effect, and impact of imports of the subject merchandise on the industry before the order was issued or the suspension agreement was accepted, (2) whether any improvement in the state of the industry is related to the order or the suspension agreement, (3) whether the industry is vulnerable to material injury if the order is revoked or the suspension agreement is terminated, and (4) in an antidumping proceeding, Commerce’s findings regarding duty absorption.

How are sunset reviews conducted?

Not later than 30 days before the fifth anniversary of the date of publication of an antidumping or countervailing duty order or the suspension of an investigation, Commerce will publish in the Federal Register a notice of initiation of a review and request that interested parties submit (1) a statement expressing their willingness to participate in the review by providing information requested by Commerce and the Commission, (2) a statement regarding the likely effects of revocation of the order or termination of the suspended investigation, and (3) such other information or industry data as Commerce or the Commission may specify. Persons wishing to participate in the review as parties must file an entry of appearance with the Secretary to the Commission no later than 21 days after publication of the notice. If no interested party responds to the notice of initiation, Commerce will issue a final determination, within 90 days after initiation of the review, revoking the order or terminating the suspended investigation.

If interested party responses to the notice of initiation are adequate, both agencies will conduct “full” reviews. Under normal circumstances Commerce will make its final determination in a full review within 240 days after initiation of the review and, if that determination is affirmative, the Commission under normal circumstances will make its final determination within another 120 days (i.e., not later than 360 days after initiation of the review).

For a full review, a six-person team consisting of an investigator, economist, accountant/auditor, industry analyst, attorney, and supervisory investigator is assigned to each full review. Once the team is assembled, the staff drafts questionnaires to collect information pertinent to the Commission’s determination from U.S. and foreign producers, U.S. importers, and U.S. purchasers of the product under review. The draft questionnaires are circulated to the parties for written comment before a prescribed deadline. Once approved, the questionnaires are sent to all U.S. and foreign producers and U.S. importers of the product under review, as well as to major U.S. purchasers of the product. In addition, the questionnaires solicit information concerning the effects of the original antidumping or countervailing duty order on the domestic industry and the likely effects of a revocation of such order.

What is an expedited review?

If interested parties provide inadequate responses to a notice of initiation, Commerce, within 120 days after initiation of the review, or the Commission, within 150 days after such initiation, may issue without further investigation a final determination based on the facts available. These reviews are known as “expedited” reviews. Also, after the Commission has received party responses and closed the factual record, interested parties that are parties to the review and that responded to the notice of institution and other parties to the review are then given an opportunity to comment on whether the Commission should conduct an expedited review based on the facts available, including comments on the adequacy of the various interested party responses to the notice. If the Commission decides to conduct an expedited review, they will invite parties to the review to file, before a prescribed deadline, written comments on what determination the Commission should reach in the review. At this point, staff are assigned to prepare a report to the Commission based on available information in the record. The business proprietary version of the staff report is served on parties on the APO service list and shortly thereafter a public version is served on parties on the public service list. Parties have a chance to submit comments, and then the Commission holds a public briefing and vote approximately two weeks after the deadline for filing written comments and seven business days before the statutory deadline for completion of the expedited review. After the briefing and vote, the Commission prepares its written views, explaining the basis for its determination. The determination, views, and the public version of the staff report are transmitted to the Secretary of Commerce within 150 days after initiation of the review.

What is done with the duties that are collected?

Antidumping duties collected are distributed annually to affected domestic producers (those producers who publicly expressed support for the petition during the investigation) for qualifying expenditures incurred. The producers submit certifications to Customs of qualifying expenditures in order to receive a pro rata share of the annual distribution of duties collected.

What are “critical circumstances”?

If massive imports of merchandise happen over a relatively short period of time before the imposition of duties, undermining the effectiveness of relief provided by the duties, the petitioner may allege “critical circumstances,” which may lead to retroactive imposition of duties (ie. duties must be paid on goods imported before the duty order).

The above is intended as a general introduction and should not be construed as legal advice or legal opinion for your particular case. Please contact the Law Offices of Yu & Associates with any specific questions. Tel: (301) 838-8986, Email: syu@yulegal.com, Address: 110 N Washington Street, Suite 328E, Rockville, MD 20850.






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