ANTIDUMPING AND COUNTERVAILING DUTIES
Antidumping (ADD) and countervailing (CVD) duties are additional duties that may be assessed on imported goods intended for sale in the United States at abnormally low prices. These low prices are the result of unfair foreign trade practices that give some imports an unearned advantage over competing U.S. goods.
Dumping is the practice of trying to sell products in the United States at lower prices than those same products would bring in the producer’s home market. Dumping also includes trying to sell a product in the United States at a price lower than it cost to manufacture that item. Subsidizing is the practice by some governments of providing financial assistance to reduce manufacturers costs in producing, manufacturing or exporting particular commodities. Countervailing duties may be assessed to “level the playing field” between domestic and subsidized imported goods. However, to meet the criteria for assessing antidumping or countervailing duties, the imported merchandise must, in addition to being subsidized or sold at less than fair value, also injure a U.S. industry.
The Department of Commerce, the International Trade Commission (ITC), and U.S. Customs and Border Protection each have a role in administering and enforcing antidumping and countervailing duty laws.
The Commerce Department is responsible for the general administration of these laws. Commerce determines whether the merchandise is being sold at less than fair value, whether it has been subsidized, and what percentage rate of duty will be assessed. The ITC determines whether the product poses an injury to a particular U.S. industry. CBP assesses the actual duties based upon the rate set by the Commerce Department once the ITC has determined that the import injures a particular industry.
In general, the following processes must be completed before ADD or CVD duties are established.
Antidumping and countervailing duty investigations are usually initiated by the Commerce Department through the petition process. A domestic industry or another interested party such as a trade union or industry association petitions the department, although occasionally the Commerce Department may also initiate an investigation. If the party seeking the investigation also wants the ITC to test for injury, that party must simultaneously file the petition with both the Commerce Department and with the ITC.
If the petition contains the necessary elements, the Commerce Department and the ITC will initiate separate investigations that will yield preliminary and final determinations. If appropriate, the Department of Commerce will issue either an antidumping or countervailing duty order and will assess whatever ADD or CVD duties the investigation determines are appropriate.
If a test is required for injury to a domestic industry, the ITC will make the first, preliminary determination concerning the likelihood of injury. If that determination is negative, there will be no further investigation or action by the ITC. If it is affirmative, however, the Commerce Department will issue its preliminary determination regarding sales (antidumping) or subsidy (countervailing duty) issues.
After additional review by the Commerce Department and analysis of public comments received in the case, Commerce will issue its final duty determinations. If either determination (AD or CVD) is affirmative, Commerce will direct CBP to suspend liquidation of entries for the merchandise subject to the investigation and to require cash deposits or bonds equal to the amount of the estimated dumping margin (the differential between the fair market value and the U.S. price) or the net subsidy.
After this step, the ITC follows with its final injury determination. If this determination is also affirmative, Commerce will issue an antidumping or countervailing duty order. At that time, Commerce will also direct CBP to collect, with a very limited exception for new shippers, cash deposits of estimated duties.
A negative final determination either by Commerce or the ITC would terminate the investigations, and that termination would remain final for this particular inquiry. Both agencies announce their determinations, including orders and the results of the administration reviews, in the Federal Register.
Each year during the anniversary month of the ADD or CVD order, interested parties may review the order with respect to the individual producers or resellers it covers. This review generally looks at the 12 months preceding the anniversary month, but the first review can also include any period for which the suspension of liquidations was directed prior to the normal 12-month period.
If no annual review is requested, Commerce will direct CBP to continue collecting deposits and assessing duties on the subject merchandise at the cash or bond rate in effect on the date of entry, and to continue requiring deposits at that rate for future entries of such merchandise. If a review is requested, Commerce will conduct a review similar to its original investigation, issue revised rates for duty assessment and deposits, and instruct CBP to collect duties and liquidate entries according to the results of its latest review.
The following sites are a great place to start reviewing whether your imported products may be subject to antidumping or countervailing duties.