An Overview of Trade Remedies
The United States, like many of its trading partners, has established procedures by which additional duties can be imposed on imports that are “unfairly” traded and cause “material injury” to the competing domestic industry.
The most commonly used of these trade remedies is called antidumping. Rather simply stated, “dumping” occurs when imported merchandise from a specified country is sold at a lower price in the United States than in its home market. To make this calculation, the Commerce Department looks to the prices for the first unrelated sales in both markets, then adjusts to make them comparable at an “ex-factory” level. In cases involving Chinese products, the sale price to the U.S. is compared not with the sale price in China, but instead with the cost of production there. That number is calculated using “market economy” prices for the materials, labor, utilities and other factors used in producing the goods. The “dumping margin” is the difference between the home market price, or the cost of production, and the U.S. price. If antidumping duties are imposed, the amount of such duties is reflects the amount of that difference.
Another remedy involves imposition of countervailing duties on merchandise that has benefited from government subsidies. The amount of the subsidies is expressed as a percentage of the value of the merchandise benefiting from them, with additional duties imposed to offset them
Before antidumping or countervailing duties may be imposed, the United States International Trade Commission (USITC) must determine that the imports are causing, or threatening to cause, “material injury” to a competing domestic industry. This determination requires the USITC to analyze such factors as import volume and percentage, price undercutting and the profitability of the domestic industry.
If both the Commerce Department and USITC make affirmative determinations, an antidumping duty order or countervailing duty order will be imposed and additional duties collected on imports covered by the order. U.S. law permits the Commerce Department to review the extent of dumping or subsidization annually, and change the rates of antidumping or countervailing duties with retroactive effect. This means that an importer may get an additional duty bill (or a duty refund) long after having entered merchandise. Whether the antidumping or countervailing duty order remains necessary is reconsidered every five years by both agencies, in “sunset reviews.”
One chronic issue with antidumping and countervailing duty orders is whether particular merchandise is described within their scope. It’s often the case that orders are written with generalized language that may not specifically describe an imported item. In such cases, the Commerce Department has authority to determine the item’s coverage. Importers that fail to consider whether their products may be covered can face an unpleasant surprise if U.S. Customs and Border Protection (CBP), the agency enforcing orders at the time of importation, concludes that they are.
Another recurring issue is identifying the exporter of merchandise for purposes of identifying the applicable duty rate. This is particularly important in antidumping cases, where the party identified as the seller in CBP entry documents may not qualify as the exporter for duty assessment purposes. The rules for this determination are arcane, subject to interpretation by both the Commerce Department and CBP and differ when Chinese merchandise is involved rather than goods from a “market economy” country.
Legal Assistance with Trade Remedies
I have lengthy experience assisting domestic producers, importers and foreign exporters in antidumping and countervailing duty cases, covering the full range of practice in this area. I have filed petitions on behalf of domestic producers facing injurious import competition as well as represented importers and exporters defending themselves against charges that their goods are dumped or subsidized and cause material injury. In addition, I have participated in numerous judicial appeals following agency action. My experience includes five years at the USITC’s Office of General Counsel, where I provided advice in dozens of antidumping and countervailing duty investigations and was counsel of record in numerous appeals.
A significant part of my practice involves assisting domestic producers, importers and exporters with advice regarding scope coverage, representation in related proceedings before the Commerce Department and liaising with CBP to ensure proper enforcement of orders. I also assist importers in properly identifying the foreign party whose margin of dumping or countervailing duty rate will apply to their entries and establishing procedures to ensure that they meet Commerce Department and CBP requirements.
If you need guidance on trade remedies, contact me using the form below or call my office at 202-772-2039.