November 11, 1999

One area of particular concern to many importers pertains to antidumping (AD) duties, which often are much greater than regular Customs duties. This memorandum will explore methods that the importer or foreign exporter can utilize to possibly lower the existing AD margin, or to exclude the particular imported product from the scope of the antidumping order.

1. Request For An Administrative Review:

Generally, the best method to reduce the AD duties is to file with Commerce a request for an "Administrative Review" of the AD margins for the product in issue. In general, this request can be filed only once a year during the "anniversary" month of the AD order. The AD anniversary month is determined by the date on which the original AD order was issued. For example, the AD order on Petroleum Wax Candles From The Peoples Republic of China was published in the Federal Register on August 28, 1986. Therefore, the anniversary month for this AD order is August. As such, the next opportunity to file a request for an Administrative Review on this AD order would be during the period of August 1-31, 2000. Should this opportunity be missed, the next opportunity will then be August 1, 2001.

These requests can be filed by U.S. importers, foreign exporters and manufacturers, as well as other interested parties. They must be specific and pertain only to the foreign manufacturers and exporters named in the request. Once the request is accepted by Commerce, an AD questionnaire will be sent by Commerce to the foreign manufacturer for completion.

Once the responses have been received and reviewed, Commerce will publish its preliminary determination of the new margin, based upon the responses to the questionnaire. After publication of the preliminary results, interested parties are typically given thirty days to submit comments, and after reviewing these, Commerce will publish its final results. If the AD margin has been lowered from a very high margin, for example, from 50% to 10%, then the 10% AD margin will be applied to all future entries, as well as to entries made during the twelve months prior to filing the request for Administrative Review. In our experience, the completion of the AD questionnaires plays a key and critical role in reducing antidumping duties.

2. Request For A "New Shipper" Administrative Review:

There is a relatively new procedure enacted into law as a result of the GATT negotiations which allows "new shippers" to file requests for Administrative Reviews at any time with the Department of Commerce. A new shipper is defined as a company that has exported to the United States within the past six months, but did not export to the United States during the initial AD investigation. Under the law, Commerce is to provide an accelerated review for requests received from new shippers. Commerce also permits importers to post a bond, rather than a cash deposit, until the review is completed and the new deposit rate is established.

3. Request For Review Of Scope Of The Antidumping Order:

Another avenue is to file a request for a scope determination with Commerce, asking that the particular product be excluded from the scope of the AD order. This request should include a full description of the facts and arguments as to why the product in issue falls outside the scope of the order. During the time the request is pending, the importer must continue to deposit AD duties at the appropriate rate. However, if the issue is subsequently resolved in the importer's favor, the AD duties will be refunded.

4. Determining Whose Margins Should Be Applied:

This situation would be applicable where a product is sold by the manufacturer to another company (exporter) in the foreign country who in turn sells and exports the product to customers in the U.S. If Commerce has established a separate lower rate for the exporter, and the exporter is the first company who has knowledge that the goods are destined for exportation to the U.S., then the margin of the exporter can be applied to the imported product. However, before this is done, the situation should be clarified with Commerce.

5. Redesigning The Exported Product:

Under certain circumstances, it may be possible to redesign a product in order to avoid antidumping duties. An example of a permissible redesign would involve petroleum wax candles from the PRC. Commerce has determined that if candles have less than 50% petroleum wax, they are not covered by the antidumping order. Thus, a manufacturer can design a candle to be 60% beeswax/40% petroleum wax so that it is outside the scope.

However, there are certain redesign methods under the category of "circumvention" which may not be permissible and may violate the antidumping statutes. For example, Commerce can find that antidumping duties apply where alterations are very minor or where final assembly operations have been moved to another country. Therefore, it is best to consult your antidumping expert about this issue.

6. Sunset Reviews:

Every five years, Commerce and the U.S. International Trade Commission (ITC) will conduct a "sunset review" to determine whether the antidumping order should be rescinded. Generally, it is difficult to rescind antidumping orders in a sunset review if the domestic industry objects to eliminating the order.

7. Revocation of The Antidumping Order:

A. Injury Revocation: If the importer believes that his particular product is no longer injuring the domestic industry, he can file a petition with the U.S. International Trade Commission (ITC) in Washington, D.C. based upon "changed circumstances." The importer would have to present evidence at an ITC hearing that his product is no longer materially injuring the domestic industry. Under this procedure the AD order can be revoked in whole or in part.

B. Revocation With Commerce: In addition, another avenue for the importer, providing that the facts exist, is to file a petition with Commerce under the "changed circumstances" provision, indicating that the particular product is no longer being sold at less than fair value. Normally, this can be done only if there has been three consecutive years of zero or de minimis margins. Again, if the importer provides the requisite proof, the AD order can be revoked in whole or in part.

8. Court Challenge:

If an importer is dissatisfied with a decision with Commerce or the ITC, an action can be filed in the U.S. Court of International Trade. However, this can be done only after Commerce and ITC have completed their reviews. Under the provisions in the NAFTA agreement, antidumping decisions by Commerce or the ITC involving Canada or Mexico cannot be contested in court. Rather, importers must appeal their grievances to NAFTA dispute resolution panels.

9. Summary:

Needless to say, the area of antidumping duties is a difficult and complicated one, and planning your strategy carefully and well in advance is essential. Professional advice should be sought with regard to pursuing any of the avenues outlined above regard for reducing or eliminating antidumping duties. If you have any questions on the issues raised in this newsletter, please contact Stephen Spraitzar at (415)-288-0427 or via email at sss@tuttlelaw.com.

Copyright © 2000 by Tuttle Law Offices.

All rights reserved. Information has been obtained from sources believed to be reliable. However, because of the possibility of human or mechanical error by our offices or by others, we do not guarantee the accuracy, adequacy, or completeness of any information and are not responsible for any errors, omissions, or for the results obtained from the use of such information.

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