Anti-dumping

Anti-dumping Actions by the EU and the US

The United States - Brief Outline of the Anti-dumping Proceedings¹

General

The United States (US) AD law is laid down in the Tariff Act of 1930 to protect the US domestic industry against injurious price discrimination in international (import) trade. It imposes a duty on imports equal to the difference between the price at which the goods are sold in the US and their "normal value" (generally, prices in the home market of the foreign producer/exporter).

Two aspects of an AD investigation are handled by two different US government agencies:

The Department of Commerce (DOC) investigates the existence of dumping and the measure of the dumping margins.
The International Trade Commission (ITC) investigates material injury or threat of material injury to the domestic industry caused by the imports.

Initiation of Proceedings

Filing of Petitions

While an AD proceeding can be initiated by the DOC itself, with rare exception, AD cases start with petitions by the US domestic industry. To initiate an AD investigation, any US producer, wholesaler, trade union or trade association may file a petition simultaneously with the DOC and the ITC. A petition should normally contain, inter alia, the name of the country in which the subject merchandise is manufactured and, if the merchandise is imported from a country other than the country of manufacture or production, the name of any intermediate country from which the merchandise is imported; the names and addresses of each person the petitioner believes sells the subject merchandise at less than fair value and the proportion of total exports to the US that each person accounted for during the most recent 12-month period; and for the merchandise found to be from a non-market economy country, factual information relevant to the calculation of normal value. The petition must be supported by domestic producers or workers accounting for at least 25% of the total production of the domestic like products and at least 50% of the production represented by those members of the domestic industry who express either support or opposition to the petition.

The petition would allege that:

a class, or a kind of foreign merchandise is being, or is likely to be, sold in the US at less than its fair value; and
an industry in the US is materially injured, or is threatened with material injury, or the establishment of an industry in the US is materially retarded by reason of imports of that merchandise or by reason of sales (or the likelihood of sales) of that merchandise for importation.

The petition must be accompanied by information reasonably available to the petitioner supporting these allegations.

As soon as an investigation is initiated, the public version of the petition will be delivered to all known exporters or a trade association of the exporters. Alternatively, the DOC may deliver a public version of the petition to the government of the exporting country.

Time Limit for Decision of Rejection or Acceptance of Petitions

The DOC must decide whether to initiate an investigation within 20 days after a petition is filed. The deadline can be extended an additional 20 days if the DOC has questions as to the extent of domestic industry supporting for the petition. If the DOC deems the petition legally sufficient, it publishes a notice of initiation of investigation in the Federal Register (FR) (https://www.gpo.gov/fdsys/browse/collection.action?collectionCode=FR). On the other hand if the DOC considers the petition insufficient, it will dismiss the petition, terminate the proceeding, notify the petitioner in writing of the reasons for the determination, and publish a notice of dismissal of petition in the FR.

Investigation

Initiation

The DOC's notice of initiation contains, inter alia, the identification of the petitioner, the scope and period of investigation, and a list of economies subject to investigation. Separately, the ITC also publishes an FR notice of initiation. They serve as notices to all parties concerned. Relevant parties wishing to participate in the investigation must file an application by a time specified in the notices.

Preliminary Phase Investigation

Injury Investigation

Within 45 days after the filing of the petition, the ITC must issue a preliminary determination on whether there is a "reasonable indication" that the US industry is materially injured or threatened with material injury by the imports of the subject merchandise.

At the preliminary phase of investigation, the ITC sends questionnaires to US producers, US importers and producers from the subject economy (foreign producers) of the subject merchandise identified in the petition to solicit information required by the ITC in order to make its determination. If the number of such entities is large, the ITC may send questionnaires only to the largest entities of each type. The foreign producer questionnaires are sent to the foreign producers identified in the petition. The identification of those relevant producers depends on the scope proposed by the petitioner and ITC industry research. In the case of products subject to multi-country production, ultimately the Department of Commerce has the final say on what process is origin-conferring.

Foreign producer questionnaires are composed of three parts. The first two parts consist of general questions about the company's operations in the subject economy and in the US. The third part requests data on the company's capacity, production, home-market shipments, exports to the US and other markets, and inventories of the subject merchandise. Although it is not a mandatory requirement for foreign producers to respond to questionnaires, failure to do so may result in an adverse inference by the ITC. Typically, a deadline of 10 to 14 days is provided for responding to the questionnaire.

Apart from questionnaires, the ITC also holds a staff conference at this stage, where parties in support of and in opposition to the petition present their case. Interested parties may also submit written briefs containing information and arguments pertinent to the petition. An entry of appearance in the conference must be filed and briefs must be submitted by a time specified by the ITC.

With the information collected, the ITC makes a preliminary determination. The ITC rarely makes a negative preliminary determination since the "reasonable indication" standard is low, and the short deadline allows little time for respondents to assemble information and organize a strong defense.

The ITC will publish its determination in the FR. If the determination is affirmative, the ITC will include with its determination a notice of commencement of the final phase of the ITC investigation. If the determination is negative, or if the ITC finds that the volume of imports are negligible, proceedings by both agencies are terminated.

Sales at Less than Fair Value Investigation
Within 140 days (may be extended to 190 days) after initiation, the DOC must issue its preliminary determination of dumping margins.

The DOC obtains most of its factual information in AD proceedings from submissions made by interested parties during the courses of the proceedings. During this phase, the DOC sends out Quantity & Value questionnaires (Q&V) to identify those companies that exported the subject merchandise during the period of investigation and to determine the quantity and value of their sales to unaffiliated customers in the US. The DOC generally selects the largest-volume exporters as mandatory respondents. AD questionnaires are then sent to the mandatory respondents. The deadline for Q&V questionnaire responses is set by the DOC when it issues the questionnaire, which typically is approximately two weeks from when the questionnaire is issued.

If there are multiple foreign producers/exporters, the DOC normally requests responses from mandatory respondents only. However, voluntary respondents may also be accepted if these responses are timely filed and the number of respondents is not so large as to make the analysis of the voluntary responses unduly burdensome for the DOC. These companies are furnished with an AD questionnaire and are accorded the same treatment as all mandatory respondents in the investigations. Untimely and improperly filed submissions are not considered. A request for extension of deadline, with the reasons for the request, may be made in writing. Should a need for further information arise anytime in the investigation process, the DOC may issue supplemental questionnaires.

Responses to Q&V questionnaires may include only sales exported by the responding company directly to the US. However, if the responding company made sales to third-countries which it knows ultimately were destined for the US, the company must separately identify those sales quantities and the intermediate countries to which those sales were made. In a Mainland China case, there may be instances in which an affiliated trading company is based in Hong Kong and the Chinese manufacturer sells to the Hong Kong affiliate and then the Hong Kong affiliate will sell the merchandise to the US. In that instance, it is still the manufacturer of goods sold in the US that should respond to the Q&V questionnaire.

If the DOC finds that an interested party fails to cooperate by not acting to the best of its ability to comply with a request for information, the DOC may use an inference that is adverse to the interests of that party in selecting from among the "facts otherwise available", such as the petition, secondary information, determinations in previous investigations or reviews, or other records. This would likely lead to the party being assigned the highest AD duty rate established in the investigation.

Having collected and reviewed the information received, the DOC determines an estimated weighted average dumping margin for each respondent individually investigated. For all others not individually investigated, the DOC determines an estimated all-other rates for them, which shall be an amount equal to the weighted average dumping margins established for respondents individually investigated, excluding any zero and de minimis margins, and any margins determined entirely on the basis of the facts available. (Please refer to the section on "Calculation of Dumping Margins" in "The US Anti-dumping Proceedings - Important Points to Note" for the methodology for determination of AD rates.)

The DOC's preliminary determination is published in the FR and the investigation proceeds to the final phase. If the preliminary determination is affirmative, provisional measures are imposed, i.e., the US Customs and Border Protection suspends liquidation of entries of the subject merchandise. Importers must then make cash deposits, at the ad valorem dumping margin rate calculated by the DOC, on all subsequent entries of the subject merchandise.

Final Phase Investigation

Sales at Less than Fair Value Investigation
Within 75 days (may be extended to 135 days) after its preliminary determination, the DOC must issue its final determination of dumping margins.

The DOC conducts verification of the information it relies upon (including questionnaire responses) in making its final determination in the investigation. The purpose of verification is to establish the accuracy of the data submitted in the responses and that relevant data was not omitted from the responses. Verification is conducted in a specified process at the respondent's offices and plants. Entities subject to verification may include producers, exporters, importers, persons affiliated with the above persons, or where applicable, unaffiliated purchasers.

As part of the verification procedure, the DOC notifies the government of the affected economy that the DOC employees will visit the above persons in order to verify the accuracy and completeness of submitted factual information. If the person or government objects to verification, the DOC will not conduct verification and may disregard any or all information submitted by the person in favor of the use of facts available. Verification typically lasts for a week, during which the DOC requests access to all files, records, and personnel the DOC considers relevant to submitted factual information of the entities subject to verification.

At this stage, the parties may request a public hearing to present their views. Case briefs and rebuttal briefs may also be submitted. Case briefs must contain all arguments which parties still believe are relevant so that the DOC has the opportunity to address these issues in the final determination. Rebuttal briefs may only address issues raised in the case briefs.
Injury Investigation
Within 45 days after the DOC's final determination, the ITC must issue its final injury determination.

During this phase, questionnaires to collect information necessary for the final determination are sent to all US producers, foreign producers, and US importers that reported production or imports of the subject merchandise in the preliminary phase of the investigation, as well as to any additional companies that the ITC believes may be producing or importing. The basic structure of these questionnaires is essentially the same as that of the questionnaires used in the preliminary phase, with modifications as appropriate. Another questionnaire is sent to US purchasers asking for information on their purchases and on US market conditions.

A hearing is held to afford the interested parties an opportunity to express their views and to permit the ITC to ask questions and solicit information useful for it to reach a determination. Parties are encouraged to file prehearing and posthearing briefs to assert their arguments and present information revealed during the hearing accordingly. Nonparties, with permission, may also present a brief statement of their position at the hearing and file a written submission on information pertinent to the investigation.

The ITC then makes the final determination on whether the subject imports have caused, or threaten to cause, material injury to the domestic industry, or the establishment of an industry in the US is materially retarded, and that the material injury or threat is caused "by reason of the dumped imports". The legal standard is higher than in the preliminary phase, as it is not just limited to a "reasonable indication" consideration. If the ITC finds that there is no material injury or threat of material injury by reason of the subject imports, or if the DOC finds the final dumping margin to be "de minimis" (2% or less), the investigation is terminated.

Time Limit for Investigation

The whole process, from filing of petition to the ITC's final determination, takes 280 days - 420 days, depending on whether any extension of time limit applies.

Determinations

There are three possible outcomes of an AD investigation: termination of investigation, suspension of investigation, or issuance of an AD order.

Termination of Investigation

Situations leading to termination of an investigation without the imposition of AD measures include:

the ITC's preliminary determination is negative;
either the ITC or the DOCs' final determination is negative;
the DOC finds the final dumping margin to be "de minimis" (2% or less); or
the petitioner withdraws the petition.

Suspension of Investigation

An investigation may be suspended if the exporters of the subject merchandise who account for substantially all of the imports of that merchandise agree:

to cease exports of the merchandise to the US within 6 months after the date on which the investigation is suspended and to not increase exports during the interim period before suspension takes effect;
to revise prices to eliminate completely any amount by which the normal value of the subject merchandise exceeds the export price or constructed export price of that merchandise; or
if "extraordinary circumstances" are present, to revise prices to eliminate completely the injurious effect of exports, subject to the conditions that adverse price-effects are eliminated and that the dumping margin for each exporter's entries will not exceed 15 percent of its weighted-average margin found in the investigation.

However, such agreements must be in the public interest and effective monitoring of the agreements by the US must be practicable. Such agreements are also subject to reviews and the investigation may resume if the US is not satisfied with the implementation of the agreement.

Special rules apply for a suspension agreement with a country designated as a non-market economy (NME) country, such as Mainland China. The DOC may suspend an investigation upon the acceptance of an agreement with the NME country to restrict the volume of imports, and on finding that such an agreement is in the public interest and that it will prevent the suppression or undercutting of price levels of domestic products by imports of the merchandise under investigation.

Issuance of AD Order

If both the ITC and DOC reach affirmative final determinations, the DOC publishes an AD order in the FR listing the dumping margins for the individual respondents. Following publication of an AD order, parties have the right to appeal the DOC's and the ITC's decisions to the US Court of International Trade.

AD Duties

Upon publication of an AD order in the FR, importers must pay cash deposits of the estimated duties on subsequent entries at the ad valorem dumping margin rate (listed in the order) on the value of the imports for the individual foreign producer/exporter or all-other rates, whichever is appropriate, at the time of importation into the US. This deposit rate remains in effect until the completion of an administrative review or the order is revoked.

Reviews

Administrative Reviews

In the 12th month following the publication of an AD order, any party, including the petitioner, may ask the DOC to conduct an administrative review on the AD duty rates. The AD duty rate that applies to an exporter's goods is the rate first determined for that exporter, e.g., in the investigation, unless and until that exporter is subject to an administrative review giving rise to a different AD duty rate. If an exporter decides not to seek a review, this will not affect its right to seek a review of its AD rate in subsequent annual reviews. If a review is requested, liquidation¹ of the exporter's entries of the subject merchandise into the US (i.e., the final computation of duties) for the review period will be suspended until the DOC calculates the dumping margins and issues instructions to US Customs to liquidate the entries in accordance with its determination.

The DOC conducts its administrative reviews in generally the same manner as investigations, comparing US prices to normal value to calculate margins. It takes approximately 12-18 months to complete an administrative review. However, unlike in an investigation, under a newly established methodology, the DOC may now use sampling to select respondents for review. If, among other things, the top 3 exporters by volume do not account for 50 percent or more of exports subject to a review, the DOC may divide those exporters into three tiers by their export volumes and select one company from each tier. The chance of selection within a tier would be proportional to a company's exports. When sampling is used, the all-others rate will be based on rates of the companies selected by sampling. If sampling is applied, it will result in the selection of one or more companies that are not among the top two companies in export volume.

As a result of an administrative review, the antidumping duties applicable to the entries during the period reviewed is finalized, allowing the suspension of liquidation to be terminated (unless the results of the review are the subject an appeal to the US courts). At liquidation, the US importer may owe additional dumping duties, plus interest, or may be entitled to a refund of dumping duties, plus interest, on the entries during the period that was reviewed, depending upon whether the margin calculated under the review is higher or lower than the originally calculated rate. Further, the newly calculated margin will serve as the cash deposit rate for entries thereafter.

In subsequent years, administrative reviews can be requested on an annual basis as long as the AD order remains in effect.

New Shipper Reviews

New shippers can receive an expedited new shipper administrative review if they did not:

export the merchandise subject to an AD order to the US during the period of investigation; or
if they are not affiliate with any exporter or producer who exported the merchandise subject to an AD order to the US during the period of investigation.

The request for review must be made within one year of the date of sale or exportation of the merchandise. If the above criteria are met, the DOC can commence a new shipper review. When the DOC initiates a new shipper review, the US Bureau of Customs and Border Protection suspends liquidation of unliquidated entries of the subject merchandise from the relevant exporter or producer, and to allow, at the option of the importer, the posting, until the completion of the review, of a bond or security in lieu of a cash deposit for each entry of the subject merchandise. It takes approximately 9-15 months to complete a new shipper review. A company that meets these requirements gets the benefit of an individual dumping margin at the completion of the review. As with regular administrative reviews, the results of new shipper reviews serve as the basis for assessment for merchandise entered during the review period and for prospective cash deposits.

Changed Circumstances Reviews

A changed circumstances review may not be initiated less than 24 months after the date of publication of notice of a final injury/sales at less than fair value determinations or suspension, unless good cause exists. Basis for a changed circumstances review at the DOC include:

A lack of interest in continuing the order (in whole or with respect to certain subject merchandise) by a sufficient share of the domestic industry
A change of name for an exporter related to a corporate reorganization or change of ownership and there is a question of whether the "new" company should succeed the previous company with respect to the applicable duty rate
The use of information in a prior proceeding newly-discovered to be inaccurate or fraudulently submitted.

An interested party can request a changed circumstances review of an AD order. The ITC may also institute a changed circumstances review on its own initiative. The DOC or ITC determines on a case-by-case basis whether changed circumstances sufficient to warrant a review exist. Such a review will be initiated only if the factors underlying its initial determination have changed sufficiently to warrant a review. For example, the ITC may grant a changed circumstance review based on an alleged change in market conditions related to an extreme event such as a natural disaster or when the basis of the ITC's original determination is fundamentally altered in a way that could lead to a different outcome upon review.

A changed circumstances review must be completed within 270 days after initiation. An AD order may be revoked in whole or in part through a changed circumstances review.

Expiry of AD Orders

Five-Year (Sunset) Reviews

Five year after the publication of an AD order or a five-year (sunset) review, the DOC and ITC initiate a review to determine whether revocation of an AD order would be likely lead to continuation or recurrence of dumping. Interested parties may participate in the review and submit relevant information. Unless the DOC and ITC determine that expiration would be likely to lead to a recurrence of dumping and injury to the US industry, an AD order will be revoked after the review. If, within 15 days of the initiation of the review, no domestic party files a statement with the DOC that it will participate in the review, the review will be terminated and the related order will be revoked.

Note:

1. While every effort is made to ensure the accuracy of the above information, the Department cannot guarantee this to be so and will not be held liable for any reliance placed on the same. Please refer to the US Tariff Act of 1930 (https://enforcement.trade.gov/regs/title7.pdf), 19 CFR Ch. II Part 207 and 19 CFR Ch. III Part 351 of the US Code of Federal Regulations (https://www.govinfo.gov/content/pkg/CFR-2014-title19-vol3/pdf/CFR-2014-title19-vol3.pdf) or seek legal advice for clarification of the US antidumping proceedings whenever necessary.

¹Liquidation means the final computation of duties on goods entered into the US. Upon the resolution of an antidumping action or review, the Department of Commerce will issue instructions to Customs to liquidate entries subject to a related antidumping order in accordance with its determination of antidumping duties. Such liquidation is not reversible by appeal to the Department of Commerce. Suspension of liquidation is a postponement of this final step in the process of calculating the duties owed. A suspension of liquidation applies so long as the Department of Commerce does not issue liquidation instructions to Customs after a determination, due to other legal or administrative proceedings. For example, liquidation will be suspended if there is a court decision in a pending legal proceeding inconsistent with a Commerce antidumping determination or if a court enjoins liquidation.

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