Import Administration Can Seek Relief for
Firms from Unfairly Traded Imports
(First Published in Business
America, August 1998)
By Andrew Stephens
Office of Policy Import Administration and
Lauren Baker Office of Public Affairs, International Trade Administration
Imagine owning and operating a widget company in Small Town,
USA. For years you have run a tight ship, you track your costs
with a keen eye, and consider your company the most efficient
manufacturer of widgets - bar none - either in the US or worldwide.
However, despite your efficient operations and fair prices, you
find that you are consistently being under-priced by a foreign
competitor. Knowing the market as you do, you know that your competitor
is charging far less than it costs to produce the item, is charging
more for it in its home market, and is receiving financial assistance
from their government to compete in the US What do you do?
The Commerce Department's efforts to help US firms to develop
new export markets and maintain equal access to those markets
are well known to many U.S. companies. However, firms may not
realize that the Commerce Department also enables them to take
an active part in addressing unfair import competition.
In today's global marketplace, the lack of a level playing field
can make it difficult for American businesses to compete. Unfair
foreign pricing and government subsidies distort the free flow
of goods and adversely affect American business. Import Administration,
within the International Trade Administration of the Department
of Commerce, enforces laws and international agreements to protect
U.S. businesses from unfair competition within the U.S. resulting
from unfair pricing by foreign companies and trade distorting
subsidies to foreign companies by their governments.
This article provides a brief overview
of how Import Administration provides a way for firms to seek
relief from unfairly traded imports by filing a petition seeking
the imposition of antidumping duties or countervailing duties
on imports of the unfairly traded merchandise. Antidumping duties
counter unfair pricing practices while countervailing duties offset
the effect of unfair subsidies. Antidumping and countervailing
duty trade remedies 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.
If your business is facing unfair
foreign competition, you may wish to assess whether the filing
of an antidumping or countervailing duty petition is appropriate
for your industry. Import Administration can provide
information about the antidumping and countervailing duty
laws and the process by which a case is initiated. Import Administration
may also assist eligible small businesses with the filing process
by identifying sources of information, explaining the dumping
calculation process, and by reviewing a draft petition before
it is formally submitted for filing.
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. Essentially,
when firms engage in dumping, they are maximizing their profits
through price discrimination - charging different prices for the
same product in two different markets. 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.
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 amount of subsidies the foreign producer
receives from the government is the basis for the rate by which
the subsidy is offset, or "countervailed," through higher import
duties. While governments can take many actions which could be
said to confer benefits on their producers, not all of these actions
are viewed as countervailable subsidies. Generally, the benefit
must be limited to a specific group of firms or industries or
to a firm's export activities in order to be a countervailable
subsidy. The U.S. statute and regulations establish standards
for determining when an unfair subsidy has been conferred.
is Dumping or Subsidization Remedied?
If a U.S. industry believes that it is being injured by unfair
competition through dumping or subsidization of a foreign product,
it may request the imposition of antidumping or countervailing
duties by filing a petition with both Import Administration and
the United States International Trade Commission (ITC). While
Import Administration determines whether and to what extent dumping
or unfair subsidization is occurring, the ITC determines whether
the domestic industry is suffering material injury as a result
of the imports of the dumped or subsidized products. The ITC considers
all relevant economic factors, including the domestic industry's
output, sales, market share, employment, and profits. Both the
ITC and Commerce must make affirmative preliminary determinations
for an investigation to go forward.
Long Does it Take for Antidumping or
Duty Orders to be Issued?
The investigation begun by a petition proceeds as follows. Import
Administration will review the petition and determine within 20
days of the date of filing whether the petition meets the statutory
requirements for initiating an investigation. If
the petition is accepted, within 45 days of the date the
petition was filed the ITC will make a preliminary determination
of whether there is a reasonable indication that the domestic
industry is injured or threatened with injury by reason of unfairly
traded imports. If the ITC believes
there is no indication of injury, the investigation is terminated.
If the ITC's preliminary determination is affirmative, Import
Administration will make its preliminary determination of whether
dumping or unfair subsidization is occurring by analyzing sales
information provided by foreign producers and exporters in response
to detailed questionnaires that Import Administration sends to
If both the ITC and IA make affirmative preliminary determinations
(within 190 days of an initiation of the antidumping investigation,
or 130 days for a countervailing duty investigation) importers
are required to post a bond or cash deposit with the U.S. Customs
Service to cover an estimated amount of duties which will be collected
if an antidumping or countervailing duty order is issued upon
the completion of the investigation.
After the preliminary determination,
the investigation proceeds with on-site verification of the data
submitted by the foreign party doing the dumping and/or subsidizing.
A final determination is announced within 75 days of the preliminary
ruling. If the finding is negative the investigation is terminated.
If it is affirmative, the investigation continues. The ITC typically
makes its final determination on injury within 45 days
of Import Administration's final ruling. Typically, the
final phases of the investigations by Import Administration and
the International Trade Commission are completed within 12 to
18 months of initiation.
Relief is the End Result of an Antidumping
Countervailing Duty Investigation?
If both Import Administration and the ITC make affirmative findings
of dumping and injury, Import Administration instructs the U.S.
Customs Service 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 25%, the U.S. Customs Service will collect
a 25% duty on the product at the time of importation into the
United States in order to offset the amount of dumping.
are Dumping Margins and Subsidy Rates Calculated?
Dumping margins are calculated using information collected from
the foreign producers and exporters of the subject merchandise.
Based on the transactions of a firm, Import Administration makes
a price comparison measuring the difference between the U.S. price
of the allegedly dumped imports and the "Normal Value" to which
it is being compared. Generally, Normal Value is defined as the
price of the merchandise in the firm's home market or its cost
of production. Adjustments are made to account for physical differences
in merchandise and differences in levels of trade between the
Normal Value and the imports, to ensure that the comparison is
made on an "apples to apples" basis. Therefore, to make certain
that the comparison is not distorted by factors extraneous to
the central issue of price discrimination between markets, Import
Administration adjusts the "starting" price of the product in
each market to account for any differences in prices resulting
from verified differences in physical characteristics, quantities
sold, levels of trade, circumstances of sale, applicable taxes
and duties, and packing and delivery costs.
The comparison between Normal Value and the U.S. price is normally
done by creating a computer program that compares model-specific
weighted-average prices. The difference in the two prices is the
dumping margin which is calculated and applied on company-specific
terms for all firms investigated. A weighted-average of these
margins is calculated and applied as an "all others rate" to firms
which were not investigated. Exporters continue to receive the
"all others rate" until a review is requested for that company
during an annual review process. In an annual review, Import Administration
examines the transactions of each company for which a review is
requested to determine whether and to what degree dumping is continuing.
If the results of the annual review indicate that the dumping
margin has changed, the amount of duties collected on those entries
will be revised, and a new cash deposit rate for future entries
will be established.
Subsidy rates are calculated by determining the value of the benefit
provided by subsidies for the manufacture or export of the subject
merchandise. Import Administration calculates the value of the
benefits on a company-specific basis using the information obtained
from the companies and the government in response to Import Administration's
questionnaires and from other sources. Subsidy rates may also
be revised in an annual review process.
are the Requirements for Filing an Antidumping or Countervailing
Petitions may be filed by a domestic interested party, including
a manufacturer or a union within the domestic industry producing
the product which competes with the imports to be investigated.
To ensure there is sufficient support by domestic industry for
the investigation, the law requires that the petitioners must
represent at least 25% of the domestic production of the
product that competes with the imports to be investigated.
The statute requires the petition to contain certain information,
including data about conditions of the U.S. market and the domestic
industry, as well as evidence of dumping or unfair subsidization.
Can I Learn More about Filing a Petition?
Contact the Import Administration,
Office of Policy at (202) 482-4412 or by e-mail at ImportPolicy_Support@ITA.DOC.GOV
Additional information can also be
the Import Administration web site: