As a US importer or a foreign exporter to the US, you may not have thought Antidumping (“AD”) or Countervailing duties (“CVD”) apply to your products. Think again. The following trends indicate that, while such extraordinary duties apply to a minority of US import shipments, such duties are becoming more prevalent and if they do apply, you can have a much more expensive import regime than you ever imagined.
First, the “traditional” product coverage of AD or CVD involved products such as ball bearings, steel, aluminum and other metals. When a recession impacted these industries in the US, importers were more likely to face petitions filed by domestic manufacturers of competing products with the Commerce Department and International Trade Commission seeking the imposition of such duties. Given Communist China as the low-cost producer, there is now a much wider variety of products that have been targeted for AD/CVD, and not just from China. Natural bristle paint brushes from China, anyone?;
Second, about four percent of imported products entered into the US are now subject to AD/CVD; doesn’t sound like a huge percentage but if you are importing one of these items, the impact can be profound. Often, both AD and CVD cases are brought and the combined duties in some cases can range in multiples of the imported product’s value;
Third, with the variance in product coverage has come the doubling of AD/CVD cases brought in the past two years;
Fourth, there is a new section in the Customs Regulations, 19 CFR Part 165, which is aimed at AD/CVD duty payment evasion. Such cases are often initiated through information provided by other importers or competitors; once such a complaint is made, CBP must investigate its veracity;
Fifth, note that there are four places on your entry summary (CBP Form 7501) where you have to indicate if the import shipment contains items subject to AD/CVD. These include the Entry Code (03), the AD/CVD case number, the applicable AD/CVD duty rate and the Fee Codes for AD/CVD duties applying to the entry (Fee Codes 012 and 013, respectively).
Sixth, for the first time in more than 20 years, the Administration has initiated cases on its own – covering aluminum sheet from China;
Seventh, remember that you are not absolved from paying AD/CVD fees even though your product qualifies as “originating” under a US Free Trade Agreement and is thereby eligible for duty-free status. FTA qualifying status makes no difference as to whether you are liable for AD/CVD duties or the amount of them payable.
Best AD/CVD Practices for a US Importer or an Exporter to the US . . .
- Periodically and customarily review the AD/CVD lists published by the Commerce Department and ITC for existing cases and those that have just been initiated for both “new” products you may buy overseas and/or for your existing import product line;
- If you are uncertain as to whether your product is covered by an AD/CVD case or order, consider requesting a Product Scope ruling which will be determinative;
- If your product is subject to AD/CVD duties and you have imported these items, you must pay calculated duty deposits. You CANNOT be reimbursed for AD/CVD duties by the foreign supplier and you must file a certificate with CBP confirming that you have NOT been so reimbursed by the provider of the imported product. There is no obligation to continue to order or import such items under federal law but if they have been entered, you must pay the applicable AD/CVD duties;
- If you discover that an AD/CVD case has been concluded or is underway, consider changing suppliers to a third country which is not the target of the case and which third-country supplier is not owned or controlled by the supplier in the country subject to AD/CVD;
- Under no circumstances fail to indicate the AD/CVD information required for the entry summary. If you find it has been omitted, consider filing a Prior Disclosure with CBP;
- Insert provisions in your contract of sale, purchase order or other transactional document with your foreign supplier mandating that they inform you of any AD/CVD cases involving their products that have been concluded or initiated;
- If directed to a third country supplier by the foreign manufacturer in the country targeted by the AD/CVD case or petition, ensure to the degree possible that they are not taking transshipped products from the subject country, making minor if any modifications to them, and illicitly claiming the third nation as the country of origin of the product at issue.
Robin W Grover
