Over the past few years, determining the most accurate manner in which to assess trade remedies such as anti-dumping and countervailing duties (AD/CVD) has been a persistent source of debate. Trade remedies are trade laws designed to counter the effects of unfair pricing or government subsidization of foreign goods. Much ink has been spilled in academic reports, trade conferences, and even arguments submitted to Congress, over the advantages and disadvantages of the retrospective nature of U.S. AD/CVD law.
AD/CVD Investigations. When an AD/CVD case is petitioned by U.S. domestic industries, a dual-track investigation takes place. The U.S Department of Commerce’s International Trade Administration (ITA) investigates whether unfair trade practices actually occurred while the United States International Trade Commission (USITC) determines whether domestic industry suffered material injury. The process typically lasts 12 to 18 months. If the ITA determines dumping or foreign government subsidization has occurred, and USITC determines material injury has occurred, U.S. importers will have to pay the AD/CVD duties estimated based on the previous year’s sales data. More information on the basics of AD/CVD duties and investigations can be found in ITA’s Overview of Trade Remedies.
Application of AD/CVD Duties. After estimating the additional duties to be assessed on foreign goods being dumped or receiving government subsidies, the ITA sends the new duty rates to the U.S. Customs and Border Control (CBP). The word estimate is stressed above because the AD/CVD duties that U.S. companies pay to CBP are actually cash deposits, not customs bonds, that the importer of record must pay in advance to CBP. The ITA then conducts an administrative review which revises the initial estimate using more current sales data and determines the final amount the importer will ultimately have to pay. This means that the initial payment was over, under, or equal to the amount that needs to paid, and the importer will be debited or credited depending on the final AD/CVD duty determined. Payment issues facing importers and other issues are addressed in the CBP’s Frequently Asked Questions.
Impact on SME Importers. Unfortunately, within the complex remedies system of AD/CVDs, any company acting as the importer of record faces uncertainty in determining their final import duty costs. This can take an even greater toll on smaller sized companies, especially when a large amount of a cash deposit is required. To help minimize the impact, U.S. domestic companies have the ability to inquire whether or not their specific imports are subject to the countervailing duties that are applied. If an importer believes that the duties to which they have been subjected are unfairly high, they can request an administrative review of their imports from the ITA. Additionally, if the company does not believe that its imported goods fall within the scope of an AD/CVD order applied to their imports, the company can submit an application for a scope ruling from the ITA. It is possible that the CBP misapplied the scope of the AD/CVD order, in which case the company can file a protest directly to CBP. Over the longer term, SMEs must also weigh the pros and cons of acting as the importer of record products that may
Despite the complexity of the AD/CVD duty collection system in place, SMEs must continue to stay informed of AD/CVD orders in place and those under investigation, as well as the tools available to counter unfair application of these trade remedies. Search for orders in place using CBP’s ADD-CVD Search Tool, and track current AD/CVD investigations at the USITC’s website.
If you have questions on AD/CVD duties and possible impact to your SME imports, feel free to contact TradeMoves LLC.
Tyson Smith TradeMoves@TradeMoves.net
Shawn Marie Jarosz SJarosz@TradeMoves.net 202.415.4016