Antidumping and Countervailing Duties
Reciprocal Tariffs
Antidumping and countervailing duty (AD/CVD) rules are the first line of defense against what are determined to be unfair imports. These measures are undertaken on a product- and country-specific basis so they can be narrowly focused on exactly which imports are injuring the US industry. They can also be paired with other orders and other trade actions to broaden the remedy. Title VII of the Tariff Act of 1930, as amended, authorizes import duties to be imposed on foreign merchandise that is being, or is likely to be, sold in the United States at less than its fair value, which is calculated in accordance with a methodology set out in US Commerce Department (DOC) regulations; or the manufacture, production or export of which is being subsidized by a government. In both types of cases, there must also be a finding that a US industry is being materially injured or is threatened with material injury, or the establishment of a US industry is being materially impaired for duties to be imposed.
DOC is currently administering 763 standing AD/CVD orders and more than 100 new investigations on steel, chemicals, autos, solar and more. China is subject to the largest number of orders and investigations, representing a solid third of standing orders and new investigations. China is followed by India, South Korea, Taiwan and Turkey, rounding out the top five and comprising another 25 percent of all orders.
Process
Any interested party representing a US industry may file petitions simultaneously with DOC, which will examine the amount of dumping and/or subsidization, and the US International Trade Commission (ITC), which will examine the extent of the injury to the US domestic industry. If the requirements are met, investigations are generally initiated within 20 days. Petitions and investigations are product and country specific, which allows the remedy to be laser focused.
The ITC will issue a preliminary determination within 45 days from initiation. If the ITC determination is affirmative, the investigation will continue and the DOC will issue its preliminary determination within 65 (for subsidy investigations) to 140 (for dumping investigations) days and its final determination within 140 (for subsidy investigations) to 215 (for dumping investigations) days, both from initiation. If the DOC final determination is affirmative, the investigation will continue and the ITC will issue its final determination within 45 days of the DOC final determination. If affirmative, an order will be issued within 7 days from the date of the final ITC determination. All of these deadlines can be extended under certain circumstances.
Once an order is issued, it is eligible for review and adjustment annually by the DOC in a separate process with more extended deadlines. DOC can also consider “changed circumstances” about an order’s continued application in a separate process. Finally, under WTO rules and US law, both DOC and the ITC must review the order every five years to determine whether dumping or subsidies and injury would likely resume or continue if the order is revoked.
Remedy
DOC is authorized to impose duties in the amount of the “dumping” – i.e., the amount by which the price in the home market exceeds the price in the United States – or the amount of the subsidy. This can be determined on an average or transaction basis, depending on the circumstances. The complex methodology is spelled out in detailed regulations.
In addition to the imposition of duties, DOC is also authorized to suspend an antidumping or countervailing duty investigation by accepting a “suspension agreement,” under which the exporters and producers or the foreign government agree to modify their behavior so as to eliminate dumping or subsidization or the injury caused thereby. If accepted, DOC will continually monitor compliance with the agreement.
WTO Rules on Antidumping, Subsidies and Countervailing Duties
All WTO members are signatories to WTO agreements that set forth the rules members must follow in applying AD/CVD determinations. Members must adjust their laws and implementation of those laws so that they are compliant with WTO rules. The WTO Antidumping Agreement, formally called The Agreement on Implementation of Article VI of GATT 1994, sets forth very detailed rules for determining whether dumping has occurred and whether dumped imports have resulted in material injury or threat thereof to a domestic industry. The WTO Agreement on Subsidies and Countervailing Measures governs which kinds of subsidies are prohibited under the WTO and must be terminated or be subject to trade retaliation from the country harmed by the subsidy. It also delineates rules in countervailing duty cases for determining whether imports have been subsidized and whether they have resulted in material injury or threat thereof to a domestic industry. US law was changed to comply with these agreements by the Uruguay Round Agreements Act (URAA), which went into effect on January 1, 1995.
