From bearings to tires to chemicals, automotive parts and products
are often the subject of antidumping and countervailing duty investigations.
Auto Care Association members who sell or buy imported products need to be
aware of the existence of any antidumping or countervailing duty investigations
or outstanding orders affecting their imported products. How do these
investigations work? Who is involved? And what is the association’s role in
these investigations? We provide basic guidance on these questions below.
What are Antidumping
and Countervailing Duties?
Antidumping and countervailing duties are types of remedial duties
used to offset the effects of two types of trade practices that are determined
by U.S. federal agencies to give imports an unfair advantage over domestic U.S.
competitors. The antidumping law provides for the assessment of duties on
imported merchandise that is sold to purchasers in the U.S. at a price less
than its fair market value. Fair market value of merchandise is the price at
which it is normally sold in the foreign manufacturer’s home market. The
antidumping duty is assessed in an amount equal to the amount by which the
manufacturer’s home market value of the merchandise exceeds the export price to
the U.S. purchaser.
The countervailing duty law provides for the assessment of
countervailing duties on imported merchandise that is sold to purchasers in the
U.S. if the government of a country is providing a subsidy with respect to its
manufacture, production or export. The countervailing duty is assessed in an
amount equal to the net countervailable subsidy.
Both laws require an agency determination that an industry in the
United States is materially injured, or is threatened with material injury, by
reason of imports of such merchandise.
Agencies Involved in
Investigations and Enforcement
Three government agencies enforce the antidumping and
countervailing duty laws. First is the International Trade Administration
(ITA), an agency of the Department of Commerce. Through its Import
Administration business unit, the ITA has the responsibility to investigate
foreign producers and governments to determine (i) whether dumping or
subsidizing has occurred and (ii) if so, the margin of dumping or amount of the
Second, the International Trade Commission (ITC) determines
whether the relevant U.S. industry is suffering material injury or the threat
of material injury caused by the subject imports.
Third, U.S. Customs and Border Protection (CBP) is the enforcer.
Once the ITA and the ITC have made the necessary determinations, ITA instructs
CBP to assess the duties on importers. The duties are normally assessed as a
percentage of the value of the imports of the dumped or subsidized product.
How Long Does it Take
for Antidumping or Countervailing Duty Orders to Be Issued?
Once a petition is filed, if both the ITC and ITA make affirmative
preliminary determinations (within 190 days of initiation of the antidumping
investigation, or 130 days for a countervailing duty investigation), importers
are required to post a bond or cash deposit to cover an estimated amount for
the duties which would be collected in the event that an antidumping or
countervailing duty order is issued upon the completion of the investigations.
Typically, the final phases of the investigations by the ITA and ITC are
completed within 12 to 18 months of initiation.
What is the
Association’s Role in an AD/CVD Investigation?
Antidumping and countervailing duty investigations are legal
proceedings to determine whether foreign producers and exporters are breaking
U.S. law by dumping or by benefiting from illegal government subsidies. These
investigations are highly fact- and data-intensive, involving several rounds of
questionnaires and briefs, and focusing on confidential sales and cost data, or
confidential subsidy information in the case of a countervailing duty
investigation. Unlike regulatory matters, an association cannot intervene to
“lobby” on behalf of an industry to make the case go away. Instead, “interested
parties” (namely, foreign and domestic manufacturers, exporters and importers
of subject merchandise) must present evidence to substantiate or rebut the
dumping and/or subsidy allegations.
Associations sometimes get involved and testify or file briefs in
these cases supporting or opposing the imposition of duties by discussing the
“injury” side of the investigation, providing information on the overall health
of the industry and whether or not relief is needed. However, in order to
participate as an “interested party” in one of these cases, the majority of an
association’s members must be producers, importers or exporters of the subject
merchandise. In most cases, the Auto Care Association’s role has been to keep
our members informed of developments and their options and answer any questions
we can to help make sense of this complicated process.
These are very complicated
and technical investigations. Auto Care Association members who may be impacted
by one of these investigations should consult with experienced international
trade counsel to determine their potential liability and understand their
options. The ITA and ITC websites provide
additional information and resources for these investigations. Be sure to also
review a comprehensive list of resources for importers and exporters on the
Auto Care Association’s website here.