Antidumping/Countervailing Duties

Earlier this month, the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) denied an appeal by Capella Sales & Services Ltd., an importer of aluminum extrusions from China, in which the company challenged the countervailing duty margin applied to its entries at liquidation, arguing that a lower rate should have been applied by U.S. Customs and Border Protection.

Capella did not participate in U.S. Department of Commerce’s (“Commerce”) 2011-2012 administrative review of aluminum extrusions from China.  As a result, its entries were subject to the 374.15% “all others” rate under the countervailing duty order.  In connection with other litigation, the 374.15% “all others” rate was reduced to 7.37% in October 2015 based on challenges brought by several other importers of aluminum extrusions. 
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On January 10, 2018, Canada circulated to WTO members a request for consultations challenging several aspects of the United States antidumping and countervailing proceedings. The request for consultation is available on the WTO’s website and can be found here.

In particular, Canada challenges:

  1. the way in which the U.S. Department of Commerce refunds cash deposits after adverse WTO determinations;
  2. the United States’ suspension of liquidation of cash deposit requirements when the U.S. Department of Commerce preliminarily determines critical circumstances exist;
  3. the U.S. Department of Commerce’s treatment of certain export measures by foreign governments in the agency’s countervailing duty proceedings;
  4. the U.S. Department of Commerce’s calculation of benefits involving the provision of goods for less than adequate remuneration in the agency’s countervailing duty proceedings; and
  5. the U.S. Department of Commerce’s procedures for collecting evidence in antidumping and countervailing duty investigations.


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Late last week, the Government of China announced that it would be removing export taxes on many steel products, including wire, rods, bars, billets, and stainless steel plate, as of January 1, 2018.  The move is part of a number of tax changes.  The steel export tax has not prohibited massive volumes of Chinese steel from being shipped to other markets in the face of overwhelming overcapacity at home.  But the absence of the export tax will make it even easier for Chinese steel producers to export steel products around the world.  Notably, China typically adjusts export tax levels on an annual basis as a policy measure to encourage or discourage certain exports.  Thus, this latest decision signals not only the Government of China’s continued active intervention in the market, but its support for even greater exports of Chinese steel, which the world can hardly absorb.
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Last week, the United States filed its first legal analysis of the China non-market economy issue in a dispute at the World Trade Organization brought by China against the European Union.

As we have reported here and here, the question of whether the United States would continue to treat China as an non-market economy (“NME”) for purposes of the Department of Commerce’s antidumping duty analysis was recently decided by the Administration.  In a 200-page memorandum issued at the end of October, Commerce announced that it would continue to apply alternative dumping methodologies with respect to China given the substantial evidence that China continues to be an NME.

That has not stopped China from initiating dispute settlement proceedings at the World Trade Organization (“WTO”) against the European Union (DS516) and the United States (DS515).  In each dispute, China is challenging the WTO member’s applied antidumping duty methodology with respect to imports from China, which China believes are prohibited under a provision of its 2001 Protocol of Accession to the WTO and inconsistent with provisions of the WTO Antidumping Duty Agreement and the General Agreement on Trade and Tariffs (“GATT 1994”). 
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The U.S. Department of Commerce self-initiated antidumping and countervailing investigations of common alloy aluminum sheet from China on November 28.  An accompanying fact sheet estimates dumping margins on the subject merchandise to be between 56.54 and 59.72 percent, and estimates a subsidy rate above de minimis.  Trade cases are typically initiated in response to petitions filed by a domestic industry alleging that dumped or unfairly subsidized goods are being exported to the U.S. market.  Self-initiation authority, however, can be exercised whenever the Secretary determines that a formal trade remedy investigation is warranted based on available information.

The Department’s use of self-initiation authority has been judicious and rare.  In an agency-issued press release Secretary Wilbur Ross stated, “{w}e are self-initiating the first trade case in over a quarter century, showing once again that we stand in constant vigilance in support of free, fair, and reciprocal trade.”  The Department further noted that it last self-initiated a countervailing duty investigation in 1991 on softwood lumber from Canada, and last self-initiated an antidumping duty investigation in 1985 on semiconductors from Japan. 
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On October 26, 2017, the Department of Commerce  announced the results of an investigation concluding that China is a non-market economy (“NME”) country for purposes of Commerce’s antidumping analysis.  Commerce’s decision continues the long-standing practice of the agency with respect to the antidumping methodology it applies to cases involving China.

Commerce was spurred to review its position on China’s NME status, last addressed in 2006, following the December 11, 2016 change in China’s Protocol of Accession to the World Trade Organization (“WTO”).  By way of background, the WTO Antidumping Agreement permits WTO member countries to impose duties on dumped imports.  Those duties are calculated as either the difference between the imported product’s export price and the comparable home market price, or the difference between the export price and a constructed value based on the product’s cost of production.  Sometimes, however, those home market prices or costs of production do not reflect market forces, particularly in NME countries.
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On Friday, October 27, 2017, the Department of Commerce announced its affirmative preliminary determination in the antidumping duty investigation on aluminum foil from China.  The Department calculated preliminary dumping margins of 96.81 and 162.24 percent for the two mandatory respondents under investigation.  Additionally, the Department set the rate for the PRC-wide entity at 162.24 percent and the rate all other companies found to be separate from the PRC-wide entity at 138.16 percent.
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On October 18, 2017, the U.S. Department of Commerce published its preliminary determination that two Indian bar producers, Viraj Profiles Ltd. (“Viraj”) and the Venus Group (Venus Wire Industries Pvt. Ltd. and its affiliates Hindustan Inox Ltd., Precision Metals and Sieve Manufacturers (India) Pvt. Ltd.), have resumed dumping stainless steel bar into the U.S. market and that both companies should be reinstated back under the existing antidumping duty order on stainless steel bar from India. 
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On September 19th, the Department of Commerce announced that they will impose preliminary countervailing duties (“CVD”) on Chinese and Indian exports of cold-drawn mechanical tubing of carbon and alloy steel.  See the fact sheet here.

Commerce determined that China and India received countervailable subsidies benefiting the production of mechanical steel tubing from their respective governments.  Previously, on June 2nd, the U.S. International Trade Commission (“ITC”) had unanimously determined that there is a reasonable indication that a U.S. industry is materially injured by reason of unfairly traded imports of cold-drawn mechanical tubing from China, Germany, India, Italy, Korea, and Switzerland that are allegedly sold in the United States at less than fair value and subsidized by the governments of China and India.
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On September 28, President Donald Trump announced his nomination of two Commissioners to the United States International Trade Commission.  Dennis M. Devaney of Michigan for the remainder of a nine-year term, expiring June 16, 2023 and Randolph J. Stayin of Virginia for the remainder of a nine-year term expiring June 16, 2026.

Mr. Devaney and Mr. Stayin were nominated to fill the Commissioner positions of Commissioners Kieff and Pinkert, who left the ITC earlier this year.  President Trump’s two nominations were made with the ITC operating with only four out of six Commissioners and experiencing a historically high Section 337 caseload.
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