Mish, my explanation of anti-dumping duty, while essentially correct, was probably not complex enough to satisfy this bureaucrat's need to make his work on these cases in the 80's relevant. Here's a legal publication with a more comprehensive explanation of how things are done, which says basically the same thing I did, but in more complex ways. One thing I would like to point out is that the number of anti-dumping rulings has skyrocketed in the past few years since so many products are being sourced from China, so the burden of proof to get a dumping ruling is very low relative to what it was in the 1980's due to the very low costs associated with China sourcing:
§ 41:3 Antidumping duty law
The antidumping duty law generally targets international
profit discrimination by seeking to force foreign sellers to earn the same profit, or return, on export sales as on domestic sales.
In the United States, the antidumping duty law permits U.S.
industries to petition the U.S. government for relief from
imports sold in the United States at less than fair value
(“dumped”). The antidumping duty law provides that an
antidumping duty shall be imposed, in addition to any other
duty, if two conditions are met:
1. The U.S. Department of Commerce (DOC) determines that
“a class or kind of foreign merchandise is being, or is likely
to be, sold in the United States at less than its fair value.”1
(This determination is based on a comparison of “normal
value” (i.e., the home market or third country export
prices) with the “export price” (i.e., the U.S. price), each
adjusted to an ex-factory basis.2)
2. The U.S. International Trade Commission (ITC) determines
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 that
merchandise.”3
If there is a finding of dumping, but no material injury, there
is no remedy from the dumping. Similarly, if there is a finding
of material injury, but no dumping, there is no remedy. Both
[Section 41:3]
119 U.S.C.A. § 1673(1).
219 U.S.C.A. § 1677(a), (b).
319 U.S.C.A. § 1673(2).
Guide to United States Trade Laws § 41:3
3
elements must exist before the U.S. industry will get a remedy
via the addition of an extra duty—an antidumping duty—applied
at the border to imports of applicable products.
4 The antidumping duty is supposed to level the playing field; it is supposed to bring the price of the goods up from their unfair value to their fair value. An antidumping duty thus is not supposed to stop the importation of the products into the United States; it is just supposed to make sure that the imported products in question are sold at fair value.
§ 41:4 Antidumping duty law—Initiation of an
antidumping duty investigation
All antidumping duties result from an initial investigation.
This investigation may be self-initiated by the DOC,1 but in
almost all cases, it is initiated by a petition filed by any of the following interested parties on behalf of the elected U.S. industry: a manufacturer, producer, or wholesaler in the
United States; a certified or recognized union or group of workers representative of the affected industry; a trade or business association with a majority of members producing a like product; or various relevant coalitions.2 Petitions are filed simultaneously with both the DOC and the ITC,3 and the DOC must decide within 20 days after the ling of a petition whether or not it is legally sufficient to commence an antidumping investigation.4 As part of that initiation process, the petitioner must
demonstrate:
1. The domestic producers or workers who support the petition
account for at least 25% of the total production of the
applicable like product; and
2. The domestic producers or workers who support the petition
account for more than 50% of the production of the
domestic like product produced by that portion of the
419 U.S.C.A. § 1673d(c).
[Section 41:4]
119 U.S.C.A. § 1673a(a).
219 U.S.C.A. § 1673a(b).
319 U.S.C.A. § 1673a(b)(2).
419 U.S.C.A. § 1673a(c)(1)(A).
§ 41:3
4
industry expressing support for or opposition to the
petition.5
If the petitioner fails to demonstrate either criteria, then the DOC will reject the petition and decline to initiate an antidumping investigation.6
§ 41:5 Antidumping duty law—Proceedings leading to
a possible antidumping duty order
Each antidumping investigation has at least have distinct
phases. An antidumping investigation generally begins when a
petitioner files a petition on behalf of a U.S. industry that
requests the initiation of an antidumping investigation regarding importation of such-and-such merchandise (and parts
thereof) from X, Y, and Z countries.1 Both the DOC and the
ITC then spring into action. Stage 1 involves a decision by the
DOC whether to initiate an antidumping investigation. Usually
the DOC decides to proceed with initiation, because a
petitioner has already made certain before it filed the petition that it meets the domestic industry threshold.2 Stage 1 normally concludes 20 days after the petition is filed.
As the DOC considers the question of initiation, the ITC
starts Stage 2, which is its preliminary injury investigation. It really has no choice but to begin immediately (i.e., before initiation), because the ITC must make a preliminary injury determination no later than 45 days after the petition is led.3 Assuming the DOC initiates the investigation and the ITC makes an affirmative preliminary injury determination, the case continues. If the DOC does not initiate the investigation, or the ITC makes a negative preliminary injury determination, the case ends.4
If the ITC reaches an affirmative preliminary determination,
the attention shifts to the DOC to conduct rst its preliminary
(Stage 3), then nal dumping investigation (Stage 4). Whether
the DOC’s preliminary dumping determination is negative or
519 U.S.C.A. § 1673a(c)(4)(A).
619 U.S.C.A. § 1673a(c)(3).
[Section 41:5]
119 U.S.C.A. § 1673a(b).
219 U.S.C.A. § 1673a(c)(2).
319 U.S.C.A. § 1673b(a).
419 U.S.C.A. §§ 1673a(c)(3), 1673b(a)(1).
Guide to United States Trade Laws § 41:5
5
affirmative, the investigation still proceeds to a final DOC
determination.5 Sometime after the DOC’s preliminary dumping
determination, the ITC begins its final injury investigation
(Stage 6). The DOC makes its final determination first: if it is negative, the case ends; if it is affirmative, the case continues.
The same holds true for the ITC final determination: if it is
negative, the case ends; if it is affirmative, the DOC will publish an antidumping duty order.6
There is one large difference as to the negative/affirmative
nature of a DOC versus an ITC determination. In the DOC
dumping realm, determinations are company specic. It is thus
possible for there to be a negative dumping determination with
respect to company A and an affirmative determination with
respect to company B. In this case, company A is not subject to
the subsequent antidumping duty order (assuming ITC reaches
an affirmative determination).7 Company B, however, and all
other companies for which there is a nding of dumping, will
be subject to the antidumping duty order. In contrast, ITC’s
decision is country specific as opposed to company specific. If
ITC votes negative, the case is over and there will be no
antidumping duty order for anyone exporting from that
country.8 If ITC votes affirmative, the DOC will impose an
antidumping duty order for everyone except those companies
for which the DOC found no or de minimis dumping.
Assuming both the DOC and the ITC reach armative decisions,
the DOC will publish an antidumping duty order soon
after it receives ocial notication from the ITC of its decision.
The order will set the antidumping duties that must be
deposited by importers of the foreign product until such time
as there may be a DOC administrative review.9 The order will
remain in place in effect until: (1) it is revoked due to a lack of interest on the part of the domestic industry (something which is extremely rare),10 or (2) it is revoked under a five-year sunset
519 U.S.C.A. § 1673d(a)(1).
619 U.S.C.A. § 1673d(c).
719 U.S.C.A. § 1673d(a)(4).
819 U.S.C.A. § 1673d(b)(1).
919 U.S.C.A. § 1673e(a).
1019 U.S.C.A. § 1675(d)(1).
§ 41:5
6
review procedure.11 Additionally, an individual company may
escape the effect of an order under a process called revocation.12
§ 41:6 Antidumping duty law—Proceedings after the
imposition of an antidumping duty order
The United States uses a retrospective assessment system
under which final liability for antidumping duties is determined after merchandise is imported. As such, when both the DOC and the ITC make final armative determinations, the DOC will issue an antidumping duty order that instructs the U.S. customs authority to require a cash deposit of estimated
antidumping duties at the rates stipulated in the DOC’s final
determination.1 The issuance of an antidumping duty order
ends the initial investigation but it does not end the case. To
the contrary, the amount of actual antidumping duties to be
eventually assessed is determined in a separate proceeding
known as an administrative review.2
If a review is not requested (i.e., it never takes place), duties are assessed at the cash deposit rate applicable at the time the imported merchandise was entered.3 If a review is requested, the DOC will review the entries made during the time period subject to the review to determine the rate at which the entries were dumped.4 The key to administrative reviews is that they take place after an antidumping duty order is in place and can repeat year after year (until the antidumping duty order is terminated). While investigations get all the notoriety, reviews are where the real work gets done and where the dumping penalties get levied.
In other words, antidumping investigations determine
whether dumping injures a domestic industry. If the investigation finding is affirmative, the DOC establishes an antidumping duty order, which instructs the U.S. customs authority to collect a cash deposit on entries of the merchandise subject to the antidumping duty order. The key points here are: (1) this
1119 U.S.C.A. § 1675(d)(2).
1219 C.F.R. § 351.222(b)(2).
[Section 41:6]
119 U.S.C.A. § 1673e(a), (b).
219 U.S.C.A. § 1675.
319 C.F.R. § 351.212(c).
419 U.S.C.A. § 1675(a)(2).
Guide to United States Trade Laws § 41:6
7
is just a cash deposit; and (2) the cash deposit is collected on entries for which a determination of dumping has not yet been made. The role of the administrative review is to look at entries for which a cash deposit has been collected, determine whether those entries have actually been dumped, collect the actual dumping for these entries (assuming they are dumped), and set a new cash deposit for future entries.
§ 41:7 Antidumping duty law—Calculation of an
antidumping duty
Antidumping focuses on the calculation of two values: the
export price or constructed export price1 and the normal value.2 The two values are then compared to determine whether the imported product is being, or is likely to be, sold at less than fair value (where the normal value stands as the “fair value” surrogate).3
It is at this point that the antidumping law baffles most
participants because of the complexity in calculating these two
values. It is simplest to think of the “export price” or “constructed export price” as the U.S. price for the imported product and the normal value as the foreign price. The object then is to compare the U.S. price and the foreign price at the same point in the chain of commerce. The point chosen by the antidumping law is right outside the factory door. If, after adjustments have been made, the ex-factory U.S. price is less than the ex-factory foreign price, then the imported product is considered to have been sold at less than its fair value (i.e., dumped) in the United States. If the ex-factory U.S. price is greater than, or equal to, the ex-factory foreign price, the imported price is considered to have been sold at fair value (i.e., not dumped).
§ 41:8 Antidumping duty law—Calculation of export
price or constructed export price
The U.S. price begins with the price at which the imported
product is sold to an unaffiliated purchaser. The export price
essentially starts with the gross price at which the imported
[Section 41:7]
119 U.S.C.A. § 1677a.
219 U.S.C.A. § 1677b.
319 U.S.C.A. § 1677f-1(d).
§ 41:6
8
product is first sold to that unaffiliated purchaser outside the United States,1 while the constructed export price starts with the gross price at which the imported product is rst sold to that unaffiliated purchaser inside the United States.2
The distinction in the starting price for each calculation is critical, because the subsequent adjustments made to the starting prices dier dramatically. That is, the price used to establish both the export price and the constructed export price is adjusted to include packing costs “incident to placing the merchandise in condition packed ready for shipment to the United States,” import duties, and countervailing duties for export subsidies and to exclude movement charges, export taxes, and reimbursed antidumping duties.3 The price used to establish constructed export price, however, is then additionally adjusted to exclude expenses generally incurred by or for the account of the producer or exporter in the United States in selling the merchandise, any increased further manufacturing value, and the prot allocated to these expenses.4
§ 41:9 Antidumping duty law—Calculation of normal
value The foreign price, or what is officially termed “normal value”, generally begins with the price at which a product identical or similar to the imported product is sold in the exporting country (or home market).1 There may be circumstances in which that price is unavailable. In that case, the normal value will be calculated based on the price at which an identical or similar product is sold to a third country,2 or constructed based on costs associated with the production of the product.3 There may be other circumstances in which that price is inappropriate because it is sold at less than the costs of production. In that case, the normal value will be calculated based on remaining [Section 41:8]
119 U.S.C.A. § 1677a(a).
219 U.S.C.A. § 1677a(b).
319 U.S.C.A. § 1677a(c).
419 U.S.C.A. § 1677a(d).
[Section 41:9]
119 U.S.C.A. § 1677b(a)(1)(B)(i).
219 U.S.C.A. § 1677b(a)(1)(B)(ii).
319 U.S.C.A. § 1677b(a)(4).
Guide to United States Trade Laws § 41:9
9
sales, or where no such sales exist, constructed based on costs
associated with production.4 As with the calculation of the
export price or constructed export price, there are adjustments
designed to arrive at an ex-factory “fair” value that will be
compared to the U.S.-bound, ex-factory value.
There are a number of situations, however, where the foreign
price calculation does not begin with the price at which a product identical or similar to the imported product is sold in the exporting country. The most well-known example involves
subject merchandise manufactured in a non-market economy
country,5 where a nonmarket economy country is dened as a
foreign country that the DOC “determines does not operate on
market principles of cost or pricing structures, so that sales of merchandise in such country do not reect the fair value of the merchandise.”6 Currently, the most notable nonmarket
economy country is China. In this situation, the foreign price is based on the factors of production, which are then assessed
values based on the price or cost of those factors in a comparable market economy country (i.e., surrogate values).7
§ 41:10 Antidumping duty law—Calculation of the
antidumping margin
After the DOC calculates the U.S. price and the foreign price
that it plans to use in its dumping calculation, it then compares these two values in one of three ways. For an antidumping investigation, the DOC normally compares the weighted average of the normal values to the weighted average of the export price (or constructed export price) for comparable merchandise.1
The DOC also has the option of comparing the normal values
of individual transactions to the export price or constructed
export price of individual transactions for comparable merchandise, but it seldom does so in practice.2 For an antidumping review, the DOC normally compares the weighted average normal values to the export price (or constructed export price)
419 U.S.C.A. § 1677b(b).
519 U.S.C.A. § 1677b(c).
619 U.S.C.A. § 1677(18)(a).
719 U.S.C.A. § 1677b(c).
[Section 41:10]
119 U.S.C.A. § 1677f-1(d)(1)(A).
219 U.S.C.A. § 1677f-1(d)(1)(B).
§ 41:9
10
for comparable merchandise.3 Each of these comparison
methodology can result in a dierent determination so it is
important for interested parties to understand which methodology is applicable when they get involved in an antidumping proceeding. |
