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U.S. DEPARTMENT OF COMMERCE International Trade Administration
U.S. law provides for the protection of American manufacturers from unfair foreign trade practices. If manufacturers believe that foreign competitors are dumping merchandise in the United States or are being subsidized by foreign governments, they may file for relief with the U.S. department of Commerce's International Trade Administration and the U.S. International Trade Commission. This pamphlet presents a general description of U.S. laws designed to combat dumping and subsidization.
Explanation of Terms
DUMPING generally is the selling of goods in the U.S. market at prices lower than the prices at which comparable goods are sold in the domestic market of the exporter. These sales must cause or threaten material injury to a competing U.S. industry. SUBSIDIES are direct and indirect government grants on the production or exportation of goods. They can take many forms, including direct cash payments, credits against taxes, and loans with artificially low interest rates.
Purposes of Antidumping/Countervailing Duty Legislation
Through its antidumping legislation, which levies duties on goods "dumped" on the U.S. market, the United States discourages the sale of merchandise in the United States at "less than fair value" if such sales cause or threaten "material injury" to a U.S. industry. By imposing similar duties, countervailing duty legislation checks the unfair competitive advantage foreign manufacturers and exporters receive from subsidies. In some instances, countervailing duties can be imposed without application of a material injury test.
Determination of Sales at Less Than Fair Value
To determine whether a product is being sold in the U.S. market at less than fair value, comparisons are made between U.S. prices of imported merchandise and, usually, home market prices (i.e., foreign manufacturer's domestic prices) of the goods in question. A home-market price can be expressed as an individual price or as a weighted average of the prices in the exporter's domestic market for a specific time period.
In general, merchandise is considered to have been sold at less than fair value when the U.S. price is less than the home-market price, after adjustments for differences in the merchandise, quantities purchased, and circumstances of sale.
Establishing Material Injury
Whether material injury results from subsidized or dumped merchandise depends upon an analysis of the effects that U.S. imports have on U.S. producers of like products. Injury may take the form of depressed prices; lost sales; a general decline in sales, market share, profits, productivity, return on investment; or underutilization of production capacity. Also relevant are the volume of imports and any negative effects on employment, inventories, wages, and the ability to raise capital.
Requirements for Filing an Antidumping or Countervailing Duty Petition Antidumping and countervailing duty investigations are carried out by the Department of Commerce's International Trade Administration (ITA) and by the U.S. International Trade Commission (ITC). The ITA determines the existence of sales at less than fair value or subsidy programs, and the ITC determines whether a U.S. industry is being or may be materially injured. Although the ITA has the authority to initiate its own investigations, an "interested party" usually starts an investigation by sending petitions simultaneously to the ITA and the ITC.
Who Can File a Petition?
Persons or groups eligible to file antidumping or countervailing duty petitions are designated as "interested parties." A petitioner may be:
- a producer in the United States of the like product or seller (other than a retailer) in the United States of the like product produced in the United States; or
- a certified or recognized union or group of workers which is representative of the industry or of sellers (other than retailers) in the United States of the like product produced in the United States; or
- a trade or business association, the majority of whose members are producers in the United States of the like product or sellers (other than retailers) in the United States of the like product produced in the United States; or
- an association, a majority of whose members is composed of interested parties from the above mentioned groups with respect to a like product produced in the United States.
What Should a Petition Include?
In filing petitions, interested parties must include the following data:
1.Information about the petitioner:
- name and address of the petitioner and whom the petitioner represents (interested parties and industries.)
2.Description of goods and exporters:
- description of the imported merchandise, including its technical characteristics, uses, and Harmonized Tariff Schedule of the U.S. classification numbers;
- names, addresses, and total value/volume of exports for the previous year of all known foreign firms believed to be producing or exporting the merchandise in question to the United States;
- name of country or countries from which the merchandise is being, or is likely to be, exported to the United States and, if the merchandise is produced in a country other than that from which it is exported, the name of the country in which it is produced.
3.Evidence of dumping or subsidization:
- data relevant to the price of the foreign merchandise in the U.S. market and in the appropriate home-market; if home-market price data are unavailable, evidence of an estimated price based on current U.S. producer's cost, adjusted for differences in the foreign country;
- if the goods are exported from a country with a state-controlled economy, evidence of the price of the foreign goods in the U.S. market; and any cost or price information from a country with a free-market- economy at a comparable level of economic development that manufactures or sells a similar product;
- names and addresses of U.S. firms that import or, if there were no importations, are likely to import the merchandise;
- evidence, if available, of the circumstances under which sales in the home market are made at less than the cost of production;
- names and address of U.S. firms that import the merchandise and that produce and sell similar merchandise (if responsible for a substantial percentage of domestic manufacture or sale).
- names and addresses of companies in foreign countries that are believed to be exporting subsidized merchandise to the United States;
- relevant facts about the subsidy, such as who authorizes it, how it is provided or paid, and its value to producers or sellers of the merchandise.
4.Evidence of material injury:
- volume and value of the imported merchandise over the last 3 years, both in absolute terms and relative to U.S. consumption or production;
- the effect of the imported merchandise in undercutting, depressing, or suppressing the price of like products in the United States;
- actual and potential decline in output, sales, market share, profits, productivity, return on investment, and utilization of capacity;
- actual and potential negative effects on cash flow, inventories, employment, wages, ability to raise capital, and investment;
- any other info that shows actual or potential injury or retardation to U.S. industry as a result of the dumped or subsidized merchandise.
Procedures and Timetable for Investigations
The ITA and ITC follow different procedures for investigating petitions concerning dumping and subsidization. As mentioned above, the ITA will examine claims of the existence of sales at less than fair value and of subsidization, while the ITC will examine claims of material injury. Appendix A shows the timetable for these investigations.
DUMPING The interested party must submit petitions simultaneously to the ITA and the ITC. The ITA must judge the sufficiency of a petition within 20 days of receiving it. If the contents of a petition are insufficient to justify further investigation, the ITA will dismiss the case. If the ITA initiates and investigation, the ITC must determine within 45 days of receipt whether there is a reasonable indication of material injury. If the ITC finds no such indication, it terminates the investigation.
Normally, the ITA has 160 days after the petition's filing to make a preliminary determination of whether sales at less than fair value exist or are likely to exist. If the preliminary determination is affirmative, the ITA will require a cash deposit of estimated duties or the posting of a bond or other security for all merchandise subsequently imported to ensure the payment of antidumping duties that may be assessed as the result of an antidumping duty order. Even if its preliminary determination is negative, the ITA continues the investigation and makes a final determination, usually within 235 days of the petition's filing.
A final ITA determination that sales have been made at less than fair value, coupled with an ITC affirmative determination of material injury, or threat of material injury, will result in the issuance of an antidumping duty order. A final decision that sales were not made at less than fair value or that material injury, or threat of material injury, does not exist will terminate the case. The ITC usually makes its final injury determination within 280 days after the petition is filed. An investigation may be suspended if the exporters who account for substantially all the imports of the merchandise agree to cease exporting the merchandise to the United States within 180 days after suspension, or completely eliminate sales at less than foreign market value with respect to the merchandise.
The ITA may agree to suspend an investigation if it is satisfied that such a suspension is in the public interest and that effective monitoring of the agreement is practical.
As with dumping, the interested party must submit a petition to the ITA. If the contents of a petition are insufficient to justify further investigation, the ITA will dismiss the case within 20 days of receiving it. Where the ITC is required to make a material injury determination, the interested party must simultaneously submit a copy of the petition to the ITC.
Normally, within 85 days of receiving the petition, the ITA must preliminarily determine whether the imports benefit from a net subsidy. If its determination is positive, the ITA will require a cash deposit of estimated duties or posting of a bond or other security for all subsequently imported merchandise to ensure the payment of countervailing duties that may be assessed as the result of a countervailing duty order. It will make its final determination within 75 days of its preliminary determination.
If the alleged subsidy practice originates in a country that has either signed or assumed obligations similar to those embodied in the "Agreement on Subsidies and Countervailing Measures," the ITC must make a material injury determination before the ITA can assess a countervailing duty. Merchandise that is free of normal duty is also subject to a material injury test where required by U.S. international obligations. In such cases, the ITC must determine 45 days after the petition is filed whether a reasonable indication of material injury exists, and must make a final determination of material injury, usually within 205 days.
If a country not included in a category described above provides a subsidy, and if the merchandise is dutiable, no determination of material injury is necessary. An investigation may be suspended if the foreign government or the exporters who account for substantially all the imports of the merchandise agree to eliminate the subsidy, to offset completely the amount of net subsidy, or to cease exporting that merchandise to the United States.
Review of Antidumping or Countervailing Duties
Upon issuing an antidumping or a countervailing duty order, the ITA directs the U.S. Customs Service to require at the time new customs entries are made a cash deposit of estimated antidumping or countervailing duties, pending the assessment of final duties.
Each year after publishing an antidumping or countervailing duty order, or after the suspension of an investigation, the ITA will conduct, upon request by interested party, an administrative review of the order or suspended investigation. Based upon an examination of information updated since the last determination, the ITA determines the amount of antidumping or countervailing duties to be assessed on customs entries of the merchandise during the period reviewed (or the status of any agreement that resulted in the suspension of an investigation).
If no review is requested, the ITA will direct the Customs Service to assess duties equal to the cash deposit of estimated antidumping or countervailing duties required at the time of entry of the merchandise.
Right to Contest Determinations
Any party to a proceeding may contest in the U.S. Court of International Trade any factual findings or legal conclusions that are the basis for final determinations by the ITA or ITC, or negative preliminary determinations by the ITC. They may also contest decisions to suspend an investigation and decisions not to initiate an investigation, and the final results of administrative reviews.
If you are interested in filing a petition for an antidumping or a countervailing duty investigation or in obtaining more information, contact:
Deputy Assistant Secretary for Investigations
Room 3099 International Trade Administration
U.S. Department of Commerce
Washington, DC 20230 (202) 482-5403
Office of Investigations
Room 615 U.S. International Trade Commission
500 E Street, S.W. Washington, D.C. 20436 (202) 205-3160
FLOW CHART FOR NORMAL 1 ANTIDUMPING (AD) OR COUNTERVAILING DUTY (CVD) INVESTIGATIONS
0 Petition Filed
20 Decision on Initiation
45 Preliminary Injury Determination by ITC 2 3
AD 160 Preliminary
CVD 85 Determination by ITA
AD 235 Final
CVD 160 Determination by ITA 2
AD 280 Final Injury
CVD 205 Determination by ITC 2 3
AD 287 Publication of
CVD 212 Order
1 A "normal" investigation has no extensions or suspensions and the preliminary ITA determination is affirmative.
2 If the determination is negative, the investigation is terminated.
3 Not required in all CVD cases.
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