Let’s Talk Trade Case (Part 2): How Anti-Dumping Works

In Tuesday evening’s issue of SMU we used information received from two trade attorneys: Lewis Leibowitz (consumer) and Roger Schagrin (producing mills). Today we are working with information received from former president of the American Institute for International Steel (AIIS), David Phelps. As Phelps explained the process to Steel Market Update he reminded us that we are dealing with government entities and things are not always “simple” when working with the government.

Here is his attempt to explain how Anti-Dumping (AD) works:

1.   Suspension of liquidation is the key issue.  What “liquidated” means is that Customs finalizes the entry and as a transaction, the deal is over.  That is a “liquidated” entry and one cannot owe Customs any more money unless it is determined that there is fraud involved in the entry.  If Customs “suspends liquidation” it is because they need more information — in this case, the final determination of the DOC as to what the anti-dumping duty is.  

2.   Commerce sets the date of the suspension of liquidation when it makes the preliminary determination of anti-dumping margins.  That follows, as I said previously, at the 45 day mark when the ITC determines preliminarily whether there is injury to the domestic industry.  The chances of importers winning at the ITC in the preliminary round are slim, but it does happen.

3.   As to what happens to steel that is on order or on the ship on the actual date that DOC determines is the suspension of liquidation date, the answer is tough.  If the product has been entered, it does not owe the duty, if it is on the ship or on order, tough luck.  You owe the preliminary margin deposit.  Importers do lots of things to make this happen before the earliest date, changing port of entry, or canceling the order.  The risks are far too high.  They also look for new suppliers of course, not covered by the case or the old cases.  

4.   70 days after the date of the filing is the earliest date because DOC, at the 160 date mark for its preliminary margin announcement for anti-dumping, can decide that “critical circumstances” applies and move the date of suspension of liquidation back 90 days.  DOC makes the decision to announce critical circumstances often, but the ITC has the final say at the very end of the case.  The ITC has always said no on steel, which would mean that the imports caught up in the time frame of 70-160 days would get their money back.  If you get the impression that the DOC is the domestic industry’s lap dog on this issue — and the whole thing too — you would be right.  Sometimes the DOC makes its preliminary margin determination at the later210 day date and the 90 day critical circumstances back-dating can apply to that date too.  [Critical Circumstances is a determination that imports “surged” after the filing of the case, and if DOC finds it so, they back date the suspension of liquidation by 90 days — subject to the final determination of the ITC.  Of course, when a case is filed, importers with steel on order have decisions to make.  Can I get my steel in right away, or should I cancel the order?  Those who can get it in, usually with the 70 day mark in mind, do so.  That really is not a surge truthfully, since the steel was already on order, but, that “surge” gives the DOC the right to claim it and back date the suspension of liquidation.]  

To clear up another misunderstanding, the process goes like this:

 –  The domestics file the case
 – The DOC initiates the case — an automatic administrative action after 21 days.
 – The ITC makes the preliminary injury determination at 45 days. If no injury, then, the case ends. That determination is made on a country by country basis, not the whole case one way or another.  
 – The DOC makes its preliminary margin determination at 160 days or 210.  Case does not end if no margins are found.
 – The DOC makes its final margin determination.  If no margins, case ends.  Happened once in 30+ years for steel.
 – The ITC makes its final injury determination.  this can happened more than a year after the initial filing.  The ITC does terminate some cases.  

The actual timing is confusing, based on the early or later date of the DOC preliminary and an early or late date for the final DOC determinations…  

Finally, if a Countervailing Duty Case is filed, the whole thing gets even more complicated.  That can be addressed once the cases are filed and if the domestics actually allege subsidies.