What are Anti-dumping and Countervailing Duties?
Domestic U.S. industries have the right to petition with the U.S. government for relief from imports of products that they believe to be dumped (imported at less than “fair value”) and/or benefiting from foreign government subsidies. The U.S. government has the ability to impose Anti-dumping and/or Countervailing duties respectively against such imports if they do find sufficient evidence.
How does an importer know if their product is subject to Anti-dumping or Countervailing Duties?
1. Consult with a licensed Customs Broker. Cargocentric offers free import consultations of imports. We’re happy to review your product with you to discuss potential AD / CVD issues.
2. Read the scope of the AD/CVD investigation carefully. The scope of the investigation can help you determine whether your product falls inside or outside the realm of AD and CVD duties. The scope usually, but not always, mentions specific exclusions to the investigation.
What does an importer of products subject to AD/CVD duties need to be concerned with?
1. Retroactive duties – Entries subject to AD / CVD duties pay a corresponding AD/CVD duty at the time of entry that is based on a listed rate associated with their country, factory, and/or supplier. This rate is not a finalized rate. The rate is based on investigation by the DOC using data provided by the manufacturer for previous years imports. A few years after entry, the DOC will review that specific year’s rates to confirm if the rates should be increased, decreased, or remain the same. If the DOC determines that rates should be increased, the importer will have to retroactively pay additional duties + interest on products entered for the year being reviewed. Customs typically liquidates ordinary formal entries after 310 days from the date of entry. However Customs is usually unable to liquidate AD/CVD entries in the same time span. The DOC AD and CVD entries are suspended from liquidation.
2. Bond collateral requirements – Because of the risk of retroactive duty assessment, the sureties that underwrite the Customs Bond will likely ask that you provide full collateral on your bond. Collateral is required again for each year that the bond is renewed, leading to what we call “stacking liability.” For example, assuming you have a minimum $50,000 bond, you may give the surety $50,000 in the first year, another $50,000 in the second year, and another $50,000 in the third year of imports. After three years, the surety will hold $150,000 of your money in collateral. This liability will continue to stack up until you either stop importing product subject to antidumping or unless the Department of Commerce completes a review of entries entered in a previous year.
3. Increased scrutiny by Customs – Customs pays extra attention to products that may be subject to antidumping duties. When hiring a Customs broker, instruct them to talk to the Customs CEE (Center for Expertise and Excellence) that focuses on the commodity. The importer should also consider opening up a direct account with the CEE. By doing so, you are essentially coming forward and trying to make yourself known to Customs. By being proactive in working with the CEE, you MAY be able to pre-empt a lot of questioning and possible delays on shipments.
Time Frame For Completing an AD/CVD Investigation
The U.S. Government will conduct parallel investigations (DOC and ITC) to determine if relief should be granted.
|Department of Commerce (DOC)||International Trade Commission (ITC)|
|The DOC investigates whether dumping and/or subsidies exist.
If they make a positive finding, they will also determine the margin of dumping or amount of subsidy.
|The ITC determines whether