By George W. Thompson
Importers of merchandise covered by anti-dumping and/or countervailing duty orders probably realize that their transactions are subject to annual review by the Commerce Department. Entries that are “subject” to an order have their liquidation automatically suspended by U.S. Customs and Border Protection. AD/CVDs deposited at the time of entry are mere estimates of the final liability, however; the final assessed duties may be very different.
The Administrative Review Process May Result in Changed Duty Margins
Every year, in advance of the anniversary month of an order’s imposition, Commerce publishes a Federal Register notice of the opportunity to request a review. Importers, exporters, and producers of the domestic like product may file such a request, and are required to serve it on the other affected parties pursuant to 19 C.F.R. §351.303(f)(3)(ii). If any such requests are filed, Commerce will initiate a review and publish notice in the Federal Register, including the identities of the exporters covered.
Commerce will then evaluate whether the margins of dumping or extent of subsidization for the exporters covered by a review has changed over the one-year review period. If they have, the entries will be liquidated at the new rate. If, however, no review is requested, suspension is lifted and the entries will liquidate at the rate and amount of duties asserted by the importer at the time of entry.
An exporter covered by a review request is expected to participate in the review; not doing so is likely to result in imposition of an adverse duty margin. To participate, of course, the named party must know about its coverage in the first place. Commerce’s initiation notice lists the covered parties, but since there are very few of us who read the Federal Register for fun, this listing may be overlooked. The domestic producer is required to serve its request as well, but what happens if it either fails to send the requisite notification or the foreign company does not get receipt?
Constructive Notice of a Review Is Sufficient
The Court of International Trade just answered that question in Suntec Industries, Inc. v. United States, see here. The domestic industry had admittedly failed to notify Suntec, a Chinese exporter, that it was named in a review request for the AD order on Steel Nails. The first time Suntec learned of its coverage was when the final review results were issued and a much higher AD imposed against it. At that point, was too late to participate.
Suntec filed a case in the CIT, seeking to have the review results declared inapplicable to it. Its argument was that the notice of initiation was contrary to regulation because the domestic industry had not provided the requisite proof of service. The CIT had provided Suntec with the opportunity to demonstrate that it was prejudiced due to the lack of proper notice. In this most recent decision, the court ruled that it failed to meet that burden, meaning that Suntec was covered by the outcome of a proceeding that it didn’t know was taking place.
The CIT reasoned that Suntec received constructive – that is, legally sufficient — notice of the review’s coverage because it was named in the Federal Register initiation notice. Once constructive notice was issued, Suntec had every opportunity to take part in the review. The fact that it did not read the Federal Register notice was no defense.
Thus, even though “Commerce improperly initiated the review against Suntec . . . it properly notified all parties in the timely published Notice of Initiation which specified the date of commencement of the review and gave constructive notice to the interested parties.” Since there was no Commerce Department activity in the 34-day period between the review request and Federal Register notice of initiation, neither could Suntec demonstrate prejudice arose from not knowing its status during that time.
Yet Another Reason to Read the Federal Register
The Suntec decision follows the mainstream rule that publication in the Federal Register is generally sufficient to notify a party that it is covered by an administrative proceeding. Of course, the notice has to suffice to convey that information, as my old Transcom case held. If a party is named in an initiation notice, it is considered to have been told about its coverage as a matter of law. Whether or not it actually knows this fact is pretty much irrelevant.
There is a very important lesson here for exporters of merchandise covered by AD/CVD orders and the importers that buy from them. Failing to participate in a review is likely to have adverse consequences. Importers will face retroactive duty increases, while exporters with higher margins are relatively less competitive in the U.S. market. The only way to ensure against such an unpleasant surprise is to monitor the Federal Register for the annual notice that a review has been initiated and checking who’s on the list of covered exporters. This process is about as enjoyable as taking castor oil, but is a necessary precaution to help avoid potential jeopardy.
