What is Dumping?
Dumping occurs when a foreign producer sells a product in the United States at a price that is below that producer’s sales price in the country of origin (“home market”), or at a price that is lower than the cost of production. The difference between the price (or cost) in the foreign market and the price in the U.S. market is called the dumping margin. Unless the conduct falls within the legal definition of dumping as specified in U.S. law, a foreign producer selling imports at prices below those of American products is not necessarily dumping.
What is a Countervailable Subsidy?
Foreign governments subsidize industries when they provide financial assistance to benefit the production, manufacture, or exportation of goods. Subsidies can take many forms, such as direct cash payments, credits against taxes, and loans at terms that do not reflect market conditions. The statute and regulations establish standards for determining when an unfair subsidy has been conferred. The amount of the subsidies that the foreign producer receives from its government is the basis for the rate by which the subsidy is offset, or “countervailed,” through higher import duties.
What is an AD/CVD suspension agreement?
The exporters and producers or the foreign government agree to modify their behavior to eliminate dumping or subsidization or the injury caused thereby. Suspension agreements allow Commerce and interested parties to suspend AD or CVD investigations in favor of an agreement (undertaking) that provides for elimination of the unfair pricing or subsidies, or of the injury caused by the imports under investigation. Suspension agreements may be reached only in the investigation phase of an AD or CVD proceeding. Suspension agreements are very rare. There are currently only eight suspension agreements in effect. Under a suspension agreement, merchandise enters free of AD and CVD cash deposits and assessments, provided the parties meet the requirements of the agreement.
What are the requirements for filing an Antidumping or Countervailing Duty Petition?
A petition is filed by a domestic interested party, including a manufacturer, trade association, or a union within the domestic industry producing the product which competes with the imports for which an investigation has been requested in the petition. The statute requires the petition to have sufficient support of the domestic industry. The statute also requires the petition to contain certain information, including evidence of injury to the domestic industry„ as well as evidence of dumping or unfair subsidization.
Antidumping and countervailing duty trade remedies against unfairly trade imports have been successfully pursued by a variety of domestic industries, including producers of steel, industrial equipment, computer chips, agricultural products, textiles, chemicals, and consumer products. Both Enforcement and Compliance and the International Trade Commission have staff available to assist domestic industries in deciding whether there is sufficient evidence to file a petition for antidumping or countervailing duty investigations. The staff may also assist eligible small businesses with the filing process.
How do I submit a petition?
Petitions are filed simultaneously with the Department of Commerce and the International Trade Commission. Draft petitions should be shared with the Petition Counseling Office in Enforcement and Compliance’s Office of Policy. If you are interested in discussing a draft petition, please email us at Petition.Counseling@trade.gov or contact the hotline at 202-482-1255.
For even more questions, please visit the full FAQs list.
What is the role of the International Trade Commission?
The International Trade Commission determines whether the domestic industry is suffering material injury, or threatened with material injury because of imports of the dumped or subsidized products. For further information on the International Trade Commission’s injury investigation, see http://www.usitc.gov.
What relief can result from an Antidumping or Countervailing Duty Investigation?
If both Commerce and the International Trade Commission make affirmative final findings of dumping and injury, Commerce instructs U.S. Customs and Border Protection to assess duties against imports of that product into the United States. The duties are assessed as a percentage of the value of the imports and are equivalent to the dumping and subsidy margins, described above. For example, if Commerce finds a dumping margin of 35%, U.S. Customs and Border Protection will collect a 35% duty on the entered value of the product at the time of importation into the United States to offset the amount of dumping. Information on the U.S. Customs and Border Protection may be found at https://www.cbp.gov.
What role, if any, does politics play in AD and CVD proceedings?
None. The AD/CVD law provides U.S. businesses and workers with a transparent and internationally-accepted mechanism to seek relief from the market-distorting effects caused by injurious dumping and unfair subsidization, and thus to have an opportunity to compete on a level playing field. Investigations are conducted in accordance with U.S. law, and the decision to initiate an investigation is based solely on the record evidence. The United States administers arguably the most open and transparent trade remedy system in the world, and Commerce will conduct these investigations in a fully open and transparent manner in accordance with the applicable law, regulations, and administrative practice. All Commerce decisions are based on information and argument contained in the official record of the proceedings, and these decisions are subject to potential review by U.S. courts and the World Trade Organization dispute settlement system.
How long does it take for Antidumping or Countervailing Duty Orders to be issued?
If both the International Trade Commission and Enforcement and Compliance make affirmative preliminary determinations (within 190 days of initiation of the antidumping investigation, or 130 days for countervailing duty investigation) importers are required to post a bond or cash to cover an estimated amount for the duties which would be collected in the event that an AD or CVD order is issued upon the completion of the investigations. Typically, the final phases of the investigations by Enforcement and Compliance and the International Trade Commission are completed within 12 to 18 months of initiation.
Who can I contact at the Commerce Department if I have additional questions about an AD/CVD proceeding?
The Enforcement and Compliance Communications Office serves as the contact point for any general inquiries on AD/CVD proceedings. If you have questions about a specific investigation, the Communications Office will ensure that you are connected the right team within E&C. Please contact the Communications Office at 202-482-0063.
What is an administrative review (AR)?
Once a year, the Department of Commerce (Commerce) may conduct an Administrative Review (AR) of an existing antidumping or countervailing duty order administered by Enforcement and Compliance. An AR is a process that determines the amount of antidumping or countervailing duties that need to be paid on the entries of a particular product subject to an antidumping or countervailing duty order entered, or withdrawn from warehouse, for consumption during a given period. An administrative review also establishes a new cash-deposit rate for future entries made by each of the companies reviewed and any other companies. Cash deposit rates calculated in administrative reviews apply to entries of subject merchandise entered, or withdrawn from warehouse, for consumption on or after the date the final results of review are published in the Federal Register.
How long is an AR?
The preliminary results of an administrative review must be signed within 245 days after the last day of the anniversary month, i.e., the month that the order went into effect, in which the review was requested. The final results must be signed within 120 days after the day on which the preliminary results of the review are published in the Federal Register.
The 245-day preliminary results deadline may be extended to 365 days and the 120-day final results deadline to 180 days (or 300 days if the preliminary results were not extended) if it is not practicable to complete the review within the un-extended deadlines. Commerce will announce an extension on the administrative record, available on Enforcement and Compliance’s Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS).
Below is a sample timeline of an administrative review:
*This date may be extended to 265 days.
**This date may be extended to 180 days.
***This was recently changed in our customs instructions policy. To learn more, please read the Federal Register Notice (86 FR 884) published on January 15, 2021.
Who can request an AR?
Once a year after the order goes into effect, interested parties have an opportunity to request an administrative review. Parties that can request administrative reviews include domestic interested parties; certain foreign governments; most exporters and producers of merchandise covered by an order; and importers of merchandise covered by an order. These interested parties are defined in section 771(9) of the Tariff Act of 1930, as amended.
How to request an AR?
Interested parties must file their requests electronically in Enforcement and Compliance’s Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). A copy of each request must also be served on the petitioner and each exporter or producer specified in the request (Note: Commerce has temporarily modified certain of its requirements for serving documents containing business proprietary information, until further notice).
When do the new rates go into effect?
Once the final results of the administrative review are completed, Commerce sends cash deposit and liquidation instructions to Customs and Border Protection. However, where a party properly sues Commerce on an administrative review and obtains an injunction against the liquidation of certain entries, Commerce will not send liquidation instructions to Customs and Border Protection. These cash deposit rates are published in the Federal Register and go into effect on the date of publication of the final results. In other words, the decisions from the final results of an administrative review are the only decisions that impact the collection of duties; decisions from the preliminary results of an administrative review do not have an immediate impact on the collection of duties.
Where can I find more information?
For more information on a specific investigation, create an account and log into the Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). From there, you can search by case number or bar code to access all the associated public documents.
What is the difference between a tariff and a duty?
A tariff is a direct tax placed on goods or services imported from or exported to a different country by a government. A duty is an indirect tax of an imported or domestic good on consumers. In the context of an antidumping and countervailing duty (AD/CVD) investigation, a duty rate is first calculated, then matching tariff is assigned.
How does Commerce decide what an AD/CVD duty rate is?
Over the course of an antidumping duty (AD) investigation, Commerce’s Enforcement and Compliance (E&C) unit calculates its rates by comparing the home market price of the product in the alleged dumping country, also known as the “normal value”, to the export price to the United States. This information is provided by specific companies and includes an analysis of production and sales data. Once a normal value for the product is calculated with this information, it is compared to the price of the good sold to the United States. If the company’s U.S. prices are below the normal value, then this company is dumping. The rate is the difference between the normal value and the U.S. price.
For example, if the normal value is $1.00 but the U.S. sales price is $0.90, then the amount of dumping is 10 cents. The company is then assigned an antidumping tariff at a duty rate that matches its average rate of dumping overall its sales of subject merchandise.
In a countervailing duty (CVD) investigation, if a subsidy meets the criteria to be considered “countervailable”, E&C determines the rate at which the company benefits from each applicable subsidy, and then sums these rates of benefit into a total subsidy rate. The company is then assigned a CVD tariff at a duty rate that equals its total subsidy rate.
Every year parties have an opportunity to have Commerce conduct an administrative review. At the end of the review, Commerce instructs U.S. Customs and Border Protection to assess AD or CVD duties and sets new estimated rates for cash deposits to be paid on entries of the goods going forward.
Can commerce remove a tariff whenever they want?
No, Commerce doesn’t have the authority to remove tariffs for AD/CVD duties. Tariffs are removed only under certain circumstances, such as when an AD/CVD order is revoked. This typically occurs at the request of the U.S. domestic industry, or through a 5-year sunset review where 1) domestic industry no longer has interest in continuing the order; 2) Commerce determines that dumping or subsidization is no longer occurring; or 3) the International Trade Commission issues a determination that the U.S. domestic industry is no longer injured by the dumping or subsidization.
Can Commerce remove or change a duty whenever they want?
No, Commerce doesn’t have the statutory authority to arbitrarily remove or change a duty. Duties can be removed completely if an AD/CVD order is revoked (for the reasons/under the circumstances above). Duties can be changed though an administrative review of the specific review period or of the specific producer/exporter, or both, and the rates can go up or down. If that is the case, duties may be re-imposed on the applicable entries during that specific period. Duties may be imposed, changed, or removed, throughout the life of an AD/CVD order as the result of reviews conducted by E&C. Duties also may be imposed, changed, or removed, as a result of domestic judicial review of Commerce’s AD/CVD determinations.
On September 20, 2021, the U.S. Department of Commerce (Commerce) announced modifications to its antidumping duty (AD) and countervailing duty (CVD) regulations, which will improve enforcement activities designed to defend U.S. companies from unfair and illegal trade practices. A summary of the modified regulations is below and the full text can be found in the September 2021 Federal Register notice and in the August 2020 Federal Register Notice.
Initiation Comment Period for Industry Support
The antidumping and countervailing duty provisions of the trade laws provide Commerce with 20 calendar days in which to determine whether the elements necessary for initiation of antidumping or countervailing duty investigations have been satisfied, including a determination of industry support for the petition. Commerce may extend the time for an additional 20 calendar days, for a maximum of 40 calendar days, solely to determine industry support for a petition.
Comments on industry support for a petition could be filed up to and including the scheduled date of the determination of whether to initiate the requested investigations.
Comments on industry support for a petition may now be filed no later than 5 business days before the scheduled date of the decision on initiation; and rebuttal comments or information to rebut, clarify, or correct such information on industry support may now be filed no later than 2 calendar days from the scheduled date for filing the original comments.
These changes apply to proceedings in which petitions for investigations are filed on or after October 20, 2021.
Who Does This Affect:
The revised commenting period affects potential interested parties and members of the domestic industry.
‘New Shipper’ Reviews
The statute provides a procedure by which “new shippers” can obtain their own individual dumping margin or countervailable subsidy rate on an expedited basis. A new shipper is an exporter or producer that did not export to the United States, and is not affiliated with an exporter or producer that did export to the United States, during the period of investigation.
Commerce’s regulations allowed new shippers to obtain a new shipper review without submitting information pertaining to whether the sales at issue constitute bona fide sales. In addition, the requester was not required to submit any certification with respect to its unaffiliated purchaser’s information and participation.
Commerce is making conforming amendments to the new shipper regulation to require cash deposit of duties, instead of allowing the issuance of bonds, during the new shipper review, consistent with a change to the statute. The regulation also clarifies the circumstances under which it will grant a new shipper review and establishes that additional information and certifications will be required to obtain a new shipper review. In addition, Commerce is establishing factors to consider in determining whether the sales at issue constitute bona fide sales for purposes of the antidumping and countervailing duty laws. Lastly, the regulation establishes that Commerce may rescind the new shipper review if necessary information pertaining to the bona fide sale issue is not on the record, or if the exporter or producer failed to demonstrate the existence of a bona fide sale to an unaffiliated customer.
These changes apply to new shipper reviews in which the request for review is filed on or after October 20, 2021.
Who Does This Affect:
Foreign producers or exporters interested in requesting a new shipper review of an established antidumping or countervailing duty order.
When Commerce publishes antidumping and countervailing duty orders it provides a general description of the merchandise covered by the order (i.e., the “scope” of the order). Questions sometimes arise as to whether a particular product is covered by the scope of the order.
Commerce’s current regulations allow for parties to seek scope rulings from Commerce by submitting a scope ruling request. Commerce issues its scope rulings based on the information contained in the scope ruling request (i.e., an “informal scope inquiry”), or, if further inquiry is warranted, it initiates a formal scope inquiry and then issues a scope ruling. Commerce may also self-initiate a formal scope inquiry. Since the scope regulations were issued in 1997, Commerce has established methodologies to determine a product’s country of origin, crafted remedies on a case-by-case basis to clarify whether a product is covered by the scope of an order, and frequently had to issue multiple supplemental questionnaires to get the information necessary to make a scope ruling determination. Commerce’s regulations also establish various procedures and standards for conducting a scope inquiry and issuing a scope ruling, as well as ordering the suspension of liquidation of entries of products subject to a scope inquiry. Lastly, although circumvention inquiries are considered an entirely different area of trade law, Commerce’s conduct of circumvention inquiries fell under the scope regulations.
Commerce adopted numerous procedural and substantive changes to its new scope regulations. The procedural changes include:
- Eliminating “informal inquiry” proceedings;
- Adopting a standardized scope ruling application (which explicitly lists the types of information needed, thereby reducing the need for multiple supplemental questionnaires);
- Streamlining initiation, notice, service, and other procedures; and adopting new regulatory deadlines. Of note, parties filing a scope application must now serve a copy of it on the newly established Annual Inquiry Service List for the relevant order or suspended investigation. Commerce will allow interested parties to submit an entry of appearance to be added to the Annual Inquiry Service List for those cases where they qualify as an interested party, and then update the lists on an annual basis.
In addition, Commerce will now have 30 days to accept or reject a scope ruling application; applications that are not rejected are deemed accepted and a scope inquiry will be initiated. Scope inquiries must be completed within 120 days or, if extended, within 300 days. The new regulations also provide Commerce with the flexibility to address scope matters in other segments of the proceeding (including circumvention inquiries, covered merchandise inquiries, and administrative reviews) or to align scope deadlines with other segments of the proceeding. Commerce’s new regulations also separate the conduct of circumvention inquiries into a different set of regulations. Further, Commerce has amended and restructured its regulations governing the substantive standards and analysis Commerce employs in issuing a scope ruling, including:
- Codifying its country of origin/substantial transformation analysis to determine the origin of a product that is the subject of a scope inquiry;
- Formally adopting its “mixed-media” analysis dealing with mixed component products;
- Codifying its practice of issuing either company-specific or country-wide scope rulings;
- Strengthening its suspension of liquidation regulations to deter abuse of scope procedures by ensuring that antidumping and countervailing duties apply to products determined to be within the scope of the orders, regardless of when a scope ruling is requested, as appropriate.
These changes apply to scope inquiries for which a scope ruling application is filed, as well as any scope inquiry self-initiated by Commerce, on or after November 4, 2021.
Who Does This Affect:
Interested parties, such as foreign and domestic producers, importers, and exporters, interested in seeking a scope ruling or participating in a scope inquiry to determine whether a particular product is covered by the scope of an antidumping or countervailing duty order.
The antidumping and countervailing duty statute identifies four types of merchandise originating from a country with an existing antidumping and countervailing duty order that, in certain instances, may be found circumventing the order(s): (1) merchandise that is completed or assembled in the United States after importation; (2) merchandise completed or assembled in a third country before exportation to the United States; (3) merchandise that has undergone minor alterations; and (4) merchandise that was later-developed after the order was established. If Commerce reaches an affirmative final determination, such merchandise will be covered by the scope of the order(s).
Commerce’s conduct of circumvention inquiries was generally governed by Commerce’s scope regulations and its interpretation of the statute on a case-by-case basis.
Commerce has now established new standalone regulations governing the conduct of circumvention inquiries and the issuance of circumvention determinations. These regulations incorporate much of the practice that Commerce has implemented over decades of administering and applying the circumvention law. Of note, these regulations provide that Commerce may conduct a circumvention inquiry at the request of an interested party or self-initiate a circumvention inquiry. These regulations also detail the required content of a circumvention request, and clarify notice, service, and other procedures. For instance, parties filing a circumvention request must also serve a copy of it on the newly established Annual Inquiry Service List for the relevant order, as described above in the “Scope” section. In addition, these regulations establish specific deadlines for ensuring the timely completion of circumvention inquiries, requiring that Commerce determine within 30 days, or, if extended, within 45 days, whether to accept and initiate a circumvention request. Commerce must issue its final determination within 300 days, or, if extended, within 365 days. The regulations also allow for Commerce to address a scope matter or covered merchandise referral within a circumvention inquiry, defer a circumvention inquiry to first consider a scope matter, or align its deadlines with other segments of the proceeding.
On substance, these regulations codify much of Commerce’s existing practice in reaching circumvention determinations that was simply not present in the previous scope regulations. For example, the regulations codify the legislative history criteria used in minor alterations inquiries and Commerce’s long-standing “commercial availability” test applied in later-developed merchandise inquiries. In addition, the regulations codify Commerce’s ability to apply circumvention determinations on a country-wide basis to both products which are similar and to products which are the same as those subject to inquiry, and to impose a certification requirement. Commerce has also overhauled its regulations to adopt a case-specific analysis of whether it is appropriate to extend the suspension of liquidation to certain entries that pre-date the initiation of the circumvention inquiry.
These changes apply to circumvention inquiries for which a circumvention request is filed, as well as any circumvention inquiry self-initiated by Commerce, on or after November 4, 2021.
Who Does This Affect:
Interested parties such as importers, exporters, and domestic producers, interested in seeking a circumvention determination or participating in an inquiry to determine whether a particular product is circumventing the scope of an antidumping or countervailing duty order.
Covered Merchandise Referrals
In 2016, the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) (Pub. L. No. 114-125, 130 Stat. 122) was signed into law, which contains title IV – Prevention of Evasion of Antidumping and Countervailing Duty Orders (short title “Enforce and Protect Act of 2015” or “EAPA”). Section 421 of the EAPA (codified as section 517 of the Act) establishes a formal process for CBP to conduct investigations of potential duty evasion of antidumping and countervailing duty orders. Pursuant to section 517 of the Act, CBP may make a referral to Commerce to determine whether the product at issue is covered by the scope of the order(s) (i.e., a covered merchandise referral/inquiry).
There is no current regulation governing Commerce’s receipt of a covered merchandise referral from CBP; Commerce’s practice has developed on a case-by-case basis.
Commerce has established new regulations governing its receipt of covered merchandise referrals from CBP and providing a new type of inquiry – a covered merchandise inquiry. Of note, these regulations provide that, after receiving a sufficient covered merchandise referral from CBP, Commerce has 20 days to determine whether to initiate a covered merchandise inquiry or to address the referral in an ongoing segment of the proceeding. In addition, these regulations establish specific deadlines for ensuring the timely completion of covered merchandise inquiries, requiring that Commerce reach a final determination within 120 days, or, if extended, within 150 days. Commerce may also align its deadlines with other segments of the proceeding. These regulations also adopt specific notice, service, and other procedures.
On substance, these regulations allow for Commerce to use the standards and analysis from its scope and circumvention regulations in determining whether a product is covered by the scope of the order. In other words, these regulations allow Commerce to conduct a scope or circumvention analysis within the expedited timelines of a covered merchandise inquiry to ensure a determination is promptly transmitted to CBP consistent with the statute. These regulations also allow Commerce flexibility to ensure that entries subject to an EAPA investigation remain properly subject to suspension of liquidation during the conduct of Commerce’s covered merchandise inquiry.
These changes apply to covered merchandise inquiries for which a sufficient covered merchandise referral is received on or after November 4, 2021.
Who Does This Affect:
Parties to a CBP EAPA investigation, as well as any interested party seeking to participate in a covered merchandise inquiry.
In various situations, including circumvention inquiries, Commerce may require certifications by importers, exporters, and other interested parties as to whether merchandise is subject to an AD/CVD order.
There is no current regulation governing Commerce’s certification practice.
Commerce has established new regulations codifying and enhancing Commerce’s existing authority and practice to require certifications by importers, exporters, and other interested parties as to whether merchandise is subject to an AD/CVD order. The regulations set forth procedures for complying with certification requirements and consequences for a party’s failure to satisfy certification requirements.
These changes are applicable on or after October 20, 2021.
Who Does This Affect:
Interested parties such as foreign and domestic producers, importers, and exporters.
Importer Reimbursement Certification
Under current regulation, importers must certify whether they have or have not entered into an agreement for the payment or reimbursement of antidumping and countervailing duties by the exporter or producer.
Commerce’s existing regulation sets forth requirements for the importer reimbursement certification.
Commerce revised the regulation to no longer require a specific format for the certification and to allow for either electronic or paper filing in accordance with CBP’s procedures. The revisions also clarify that certifications are required prior to liquidation but allow for CBP to accept certifications in accordance with its protest procedures.
These changes are applicable on or after October 20, 2021.
Who Does This Affect:
Importers of goods subject to antidumping and countervailing duty orders.
Other Procedural Amendments
To implement the substantive changes to the scope, circumvention, and covered merchandise referral regulations, Commerce has adopted amendments to two of its procedural regulations.
Commerce’s existing regulations set forth requirements for entries of appearance and procedures for access to business proprietary information under an administrative protective order (APO). The regulations include a requirement that a legal representative of an importer applying for APO access in a scope segment provide documentary evidence of importation or that the importer has taken steps to import the merchandise subject to the inquiry.
Commerce revised its regulations to provide that an interested party filing a scope ruling application or a circumvention request, as well as any publicly identified parties in a covered merchandise referral from CBP, need not file an entry of appearance to be placed on the segment-specific service list for that inquiry. Commerce also revised its regulations to provide that a legal representative applying for APO access who represents an importer in a circumvention inquiry must also submit documentary evidence of importation, similar to that required in a scope inquiry. However, the revisions provide that legal representatives of importers identified in a CBP covered merchandise referral are exempt from such a requirement.
Who Does This Affect:
Interested parties filing a scope ruling application or a circumvention request, parties to a CBP EAPA investigation, and importers.