An antidumping investigation is unlike any other litigation that most companies will have experienced. The tight deadlines, unusual information requests, and particular data requirements are unique to this kind of proceeding.
The defense of antidumping and countervailing duty investigations involves substantial effort and expense; there are three investigations conducted by two U.S. government agencies, the U.S. Department of Commerce (“DOC”) and the U.S. International Trade Commission (“ITC). Both antidumping and countervailing duty investigations involve complicated calculations that required detailed information about a Chinese exporter’s U.S. sales and domestic production processes, and production input prices in third countries. The third investigation – into whether dumped or subsidized imports cause injury to the U.S. industry – involves an examination of myriad financial and economic data.
Defending these complex and unconventional investigations requires the assistance of US legal counsel familiar with the peculiarities of US antidumping, countervailing duty, and import injury law. Retaining U.S. legal counsel is imperative to achieving the best result possible.
DOC Antidumping & Countervailing Duty Investigations
In antidumping investigations of China, the DOC carries out a two-phase investigation to determine whether Chinese exporters have made sales at below “normal” value. This investigation involves comparing the pricing and sales practices of the exporter in the United States to the exporter’s pricing in a theoretical home market. The DOC requests a significant amount of information from two or three exporters, seeks comment by the US industry, and then establishes a preliminary dumping margin for each exporter. This margin is the percentage by which US prices are found to be lower than the normal value (a theoretical value for pricing in China).
In countervailing duty investigations, the DOC lists specific government subsidy programs (such as grants or subsidized loans), and asks both exporters and the Government of China whether the exporters have participated in any of the programs. The DOC calculates a preliminary countervailing duty margin for each exporter. From the time of the preliminary antidumping and countervailing duty calculations forward, all imports of the product under investigation are subject to antidumping and/or countervailing duty deposits.
The DOC next conducts on-site audits at the exporters’ home office and requests legal argument regarding the preliminary calculations, before calculating a final dumping or countervailing duty margin. All future entries are subject to a duty deposit at the rate found. The deposit rate may be adjusted in annual reviews (similar to the investigation), and excess deposits may be refunded.
- In DOC investigations, U.S. legal counsel assist in the following:
- Identify potentially important issues regarding product characteristics, selling practices, market differences, movement and sales expenses, and pricing;
- Establish and maintain open dialogue with the DOC investigators in order to ensure their understanding of the data and encourage favorable determination of discretionary issues;
- Prepare for and respond to the DOC’s information requests;
- Estimate the potential duty that can be anticipated under various scenarios;
- Prepare for and assist with on-site audit (verification) at the company’s home office, ensuring that submitted information is verifiable, organized, and presented as required;
- Prepare and submit legal briefs and participate in oral hearing in Washington, D.C.;
ITC Import Injury Investigation
The ITC determines whether imports into the United States cause injury to the US industry. The injury must be material (or threaten material injury), and the injury must be caused by the allegedly dumped or subsidized imports. The ITC performs its investigation in two stages: a preliminary stage, which begins immediately after a case is initiated, and a final stage, which takes place during and after the DOC has completed its investigation.
Frequently, several foreign respondents combine their resources to engage a single representative or to present a unified position because injury is determined for the whole country rather than for individual exporters. If at either the preliminary stage or at the final stage the ITC finds that the imports do not cause injury to the US industry, the entire investigation is ended and no additional import duties are imposed. The central tasks to be performed by a foreign company’s U.S. legal counsel in this phase of the proceeding include the following:
- Collect data regarding the levels of domestic production, consumption, and imports;
- Develop theories of the case to refute petitioners’ allegations that the US industry is materially injured by imports;
- Communicate with the ITC to influence what data it collects through questionnaires so that the data support a favorable view of the evidence;
- Assist the foreign producer and its importers in responding to ITC questionnaires;
- Evaluate data submitted by US producers and compare their responses with foreign producers’ data to further develop and support theories of case;
- Prepare presentation for ITC hearings, including coordinating with other respondents’ counsel, working with economists, and preparing witnesses to support theories; participate in the ITC hearings;
- Draft and file post-hearing briefs to the ITC, which may require preparation of affidavits of company officials, importers, and/or customers.