Antidumping and Countervailing Duty Proceedings

Antidumping (AD) and countervailing duty (CVD) investigations are conducted either on the basis of a petition filed with the Department of Commerce (Commerce) through the In­ternational Trade Administration (ITA) and the International Trade Commission on behalf of a domestic industry or by Commerce upon its own initiative. In the latter case, Commerce must notify the ITC. In a countervailing duty investigation, the ITC plays an active role only when the foreign government conferring the subsidies has entered a trade agreement such as the Subsidies Code or a similar arrangement with the United States (USITC, 2008). The procedural steps of a typical investigation are described in Table 19.1.

1. Initiation of Investigation by Commerce

Once a petition is filed or an investigation started at the initiative of Commerce (ITA), the ITC begins to investigate the material injury or the threat of material injury to the domestic industry. In the case of a petition, Commerce determines within twenty days whether to initiate or terminate the investigation on the basis of whether the petition adequately alleges material injury or threat thereof with sufficient information supporting the allegations and whether the petition has been filed by or on behalf of the industry (domestic producers or workers support­ing the petition must account for at least 25 percent of total production and more than 50 per­cent of production of those supporting or opposing the petition). If the 50 percent requirement is not met, Commerce must poll the industry or rely on other information to determine if the required level of support for the petition exists. In order to establish a standing to file a petition on behalf of an industry, it is common practice for various producers to file as co-petitioners or as co-petitioners with unions or trade associations; petitioners can also secure letters or support from nonpetitioning members of the domestic industry, unions, or trade associations.

If Commerce (ITA) decides to initiate an investigation, it will begin to establish whether there is a subsidy or dumping in the U.S market, and the commission will continue its inves­tigation on injury to domestic industry.

2. Preliminary Phase of the ITC’s Investigation

Within forty-five days after a petition is filed or an investigation is begun by Commerce, the ITC makes its preliminary determination, that is, whether there is a reasonable indication of injury to domestic industry. If the determination is negative or the imports subject to the investigation are negligible, the proceedings terminate.

3. Preliminary Phase of Commerce’s Investigation

If the ITC’s determination is affirmative, Commerce makes its preliminary determination on the basis of the information available at the time as to whether there is a reasonable basis to believe or suspect that a countervailable subsidy or sales at less than fair market value exists.

If commerce finds a reasonable basis, it estimates the dumping or subsidy margin within 140 and 65 days, respectively, of initiating an investigation. However, such deadlines can be extended at the petitioner’s request or if the case is extraordinarily complicated.

If Commerce’s preliminary determination is affirmative, Commerce (1) suspends liqui­dation of the investigated merchandise subsequently entered into the United States or with­drawn from warehouse; (2) requires that bonds or cash deposits be posted for each entry of the merchandise in an amount equal to the estimated net subsidy or dumping margin; and (3) continues the investigation. In addition, the ITC institutes a final investigation con­cerning injury, threat, or retardation. If Commerce’s preliminary determination is negative, Commerce’s investigation simply continues (USITC, 2006).

4. Final Phase of Commerce’s Investigation

Within seventy-five days after its preliminary determination, Commerce makes a final deter­mination as to whether a subsidy is being provided or sales at less than fair value are being made. If the final determination is negative, the proceedings end, and any suspension of liquidation is terminated, bonds or other security released, and deposits refunded. Any party to the proceedings can request a hearing before final determination by Commerce. If the final determination by Commerce is affirmative, the ITC then makes its determination on injury.

5. Final Phase of the ITC’s Investigation

The ITC makes its final determination with respect to material injury, threat of material injury, or retardation of domestic industry as a result of sales at less than market value or sub­sidies. The investigations must be completed within 120 days after Commerce’s affirmative preliminary determination (if Commerce’s preliminary determination is affirmative) or within seventy-five days after Commerce’s affirmative final determination (if Commerce’s preliminary determination is negative).

6. Issuance of an Order

If the final determination of the ITC is affirmative, Commerce issues an antidumping or countervailing duty order, usually within a week of the ITC’s determination. The order re­quires the deposit of estimated antidumping or countervailing duties at the same time as other estimated customs duties pending calculation of the final AD or CV duties. If the final determination by the ITC is negative, no AD or CVD duties are imposed, and any suspension of liquidation is terminated, bonds released, and deposits refunded (USITC, 2006). If the petitioner alleges in an investigation the existence of a critical circumstance, that is, massive entry of subsidized imports or imports sold at less than fair value in a relatively short period, Commerce’s final determination, if affirmative, will include a retroactive suspension of liq­uidation for all unliquidated entries of merchandise entered into the United States, including those withdrawn from the warehouse.

7. Suspension of Investigation

An investigation can be suspended prior to a final determination by Commerce if the par­ties (exporting or subsidizing government) involved agree to cease exports or eliminate the dumping margin or subsidy within a few months after suspension of the investigation. At the same time that it suspends a proceeding, Commerce must issue an affirmative preliminary determination. Suspensions are reviewed by the ITC to ensure that the injurious effect of imports is eliminated by the agreement. If the ITC determines that the injurious effect is not eliminated, the investigation, if not yet completed, will resume.

8. Appeal of Determinations

Any interested party adversely affected by a determination by Commerce or the ITC may ap­peal to the U.S. Court of International Trade. In the case of NAFTA members, an interested party may appeal for a review by a binational panel set up under the agreement (Tables 19.2 and 19.3).

Source: Seyoum Belay (2014), Export-import theory, practices, and procedures, Routledge; 3rd edition.