Dumping is most often described as price discrimination between national markets. The antidumping provisions of Title VII of the Tariff Act of 1930, as amended, are intended to prevent such price discrimination or below-cost pricing.
The two critical elements in antidumping proceedings involve separate, but simultaneous investigations by the Department of Commerce (Commerce or DOC) and the U.S. International Trade Commission (Commission or ITC). Commerce is responsible for determining whether dumping exists or, more specifically, whether the foreign merchandise is or is likely to be sold in the United States at "less than fair value" and the extent of dumping. The Commission determines whether a U.S. industry has suffered or is threatened with material injury by the dumped imports. Affirmative findings by both Commerce and the Commission result in the imposition of antidumping duties. The final duty imposed equals the "dumping margin"—the amount by which the "normal value" exceeds the U.S. price for the merchandise.
Procedural Calendar of Investigation
An antidumping proceeding typically begins with the simultaneous filing of a petition with Commerce and the Commission on behalf of a U.S. industry producing the domestic counterpart of the allegedly dumped product. Once the petition is filed, both agencies are required to complete their respective investigations in accordance with strict statutory deadlines, which may be extended under certain circumstances. The order of each agency's determinations and the standard statutory deadlines are as follows:
Commerce decision to initiate investigation: 20 days after the petition is filed.
Commission preliminary injury determination: 45 days after the petition is filed.
Commerce preliminary dumping determination: 160 days after the petition is filed.
Commerce final dumping determination: 235 days after the petition is filed.
Commission final injury determination: 280 days after the petition is filed.
The initial decision by Commerce whether to initiate an investigation is largely a formality. At this stage, Commerce determines whether the petition (1) properly alleges the basis for an action; (2) contains information reasonably available to the petitioner in support of the action; and (3) is filed by or on behalf of a U.S. industry.
If Commerce initiates the investigation, the Commission must then determine, based on information it collects from the U.S. industry, importers, and foreign producers, whether there is a reasonable indication that the U.S. industry has been materially injured or is threatened with material injury by the allegedly dumped imports. A negative ITC determination terminates the case in its entirety.
If the Commission's determination is affirmative, Commerce must make its preliminary determination regarding dumping within 160 days after the petition was filed. The preliminary determination is based on information collected from all parties, particularly questionnaire responses from foreign manufacturers relating to the pricing of their goods in the U.S. and foreign markets. In non-market economy (NME) country cases -- China is considered an NME country -- a different calculation is made by Commerce than in market economy (ME) country cases. The factors of production used by a Chinese producer of the product under investigation are valued at prices of those factors in an ME country of a comparable level of economic development and in which the product is produced.
Commerce calculates dumping margins on sales during the period of investigation, calculates a preliminary weighted-average dumping margin for each respondent, and publishes the results in the Federal Register. If an exporter responds inadequately, Commerce makes adverse inferences using the "facts otherwise available" to determine the dumping margin for that particular exporter. Foreign manufacturers, importers and U.S. producers have the right to comment on Commerce's preliminary determination through written briefs and by oral presentations at a hearing.
If Commerce's preliminary determination is affirmative, Commerce will continue its investigation and direct the Customs Service to "suspend liquidation" of all subsequent imports of the product in question and collect a cash deposit or bond equal to the preliminary margin. Commerce will also continue its investigation if its preliminary determination is negative, but Customs will not suspend liquidation of subsequent shipments.
Within 75 days after its preliminary determination, Commerce makes a final determination of whether dumping exists. Before making a final determination, Commerce personnel conduct on-site verifications at the foreign manufacturer's facility to examine company books and records to verify the accuracy of the information provided to Commerce in response to the questionnaires. If Commerce's final determination is negative, the proceedings are terminated in their entirety. At that time, all estimated antidumping duties are refunded and all bonds or other securities are released.
If Commerce's final determination is affirmative (following an affirmative preliminary determination), within 45 days the Commission must make a final determination of whether a domestic industry is being materially injured or threatened with material injury by reason of dumped imports. In a case where Commerce's preliminary determination is negative, the Commission's final determination on material injury must be made within 75 days after Commerce's final affirmative determination of dumping. To make its final determination, the Commission will issue additional questionnaires to the domestic manufacturers, importers, purchasers and foreign producers. The Commission also considers the interested parties' comments submitted during a briefing and hearing process.
A negative final injury determination terminates the investigation. If the final determination of the Commission is affirmative, however, Commerce issues an antidumping order imposing antidumping duties on the merchandise from the country under investigation equal to the amount of the dumping margin. This order must be issued within seven days of notification of the Commission's determination. Customs will then collect cash deposits in the amount of the final antidumping margin. The actual dumping duty owed on particular entries is determined during subsequent administrative reviews conducted annually by Commerce, as described below.
Once an antidumping order is issued, importers of merchandise subject to that order must deposit with the U.S. Customs Service, at the time of entry, cash equal to the estimated antidumping duties on the merchandise. One year after publication of an antidumping order in the Federal Register (and during each subsequent year), interested parties may request that Commerce conduct a review of the previous year's imports to (1) calculate and assess the exact amount by which the normal value exceeded the U.S. price of entries during that year; and (2) recalculate the estimated duty rate for deposit on future entries. If no interested party files a request for review, the amount deposited as the estimated duty is retained by the government as the appropriate amount due.
An administrative review, which consists of essentially the same elements as Commerce's initial antidumping investigation, must be completed within one year. Utilizing a questionnaire similar to that issued in the original investigation, Commerce collects pricing data from each foreign manufacturer for which it has received a review request. Commerce calculates preliminary and final margins and instructs Customs to assess antidumping duties on entries covered by the review.
Depending on the new margin calculation, an importer receives a refund (plus interest) if the estimated duty was too high or pays an additional sum (plus interest) if the estimated duty was too low. The new final margins are published in the Federal Register and establish the cash deposit rate for future entries.
The antidumping order remains in effect until there are three consecutive years of non-dumped sales as determined by annual reviews conducted by the DOC. Additionally, after the order has been in effect for five years, the order automatically expires unless the petitioner demonstrates that injury and dumping would likely recur if the order were revoked.
Finally, an antidumping petitioner or other interested parties in support of a petition may receive antidumping duties collected on the product at issue in an amount equal to eligible expenditures for the production of that product submitted to Customs.
The duty liability created by affirmative agency determinations at various stages of an antidumping proceeding is set forth below:
ACTION EFFECT ON ENTRIES
ITC preliminary injury determination: None
DOC preliminary dumping determination: Bond required
DOC final dumping determination: Bond required
ITC final injury determination: Bond required
DOC antidumping order issues: Cash deposit required
DOC final review results: Actual duties are collected; new cash deposit rates are set