Antidumping law is extremely complex and practice in the area is changing constantly, the summary below provides a quick reference to the main issues. Because we have one of the largest trade remedies’ practices in the United States, we would be glad to answer any specific questions that you may have on these issues. Contact any Barnes/Richardson lawyer for further information.

1. How Cases Begin – Cases may be filed by a U.S. industry that can show that (a) prices of imports are unfairly low; and (b) the U.S. industry is being injured by these unfairly priced imports.

2. Deadlines – Cases have very strict and fast deadlines. The first hearing is 3 weeks after the filing of a petition. Final determinations are made within one year. Interim relief is generally granted within 160 days of the initial filing.

3. Agencies involved – Cases are heard at the U.S. Department of Commerce (regarding the level of dumping) and the U.S. International Trade Commission (regarding whether injury exists).

4. Type of Relief – Relief is in the form of additional duties.
   U.S. producers which are faced with low prices (often from Vietnam or China) like these cases since a successful case will effectively put a floor on prices.

5. Risks to Importers – Importers operating under a dumping order need to be very cautious since the dumping duty rates may change and the scope of the order may be modified.

6. What Is Dumping? – 2 main elements to dumping case: (1) Sales in the US at below “normal value” and (2) material injury or threat of such injury by reason of the dumped imports.

7. What is “Normal Value”? – “Normal value” is defined, in order of preference as:

   1. Home market prices,

   2. Third country prices if insufficient home market sales,

   3. A “constructed value” based on costs of manufacture plus SG&A expenses and “normal” profit, if insufficient home market and third country sales,

   4. Special rule for non-market economies such as China and Vietnam, based on actual inputs and “surrogate values” for those inputs. Surrogate values from India, the Philippines or similar countries.

8. What Dumping Is Not – Not simply underselling United States manufacturers. Not “illegal” or necessarily “wrong.” Similarly, antidumping duties are not supposed to be a “punishment” but to offset the amount of the “dumping.”

9. Retroactive Assessment – Importers deposit duties based on the last completed calculation of rates, but these are only estimates and not final rates. Once each year a review will be conducted for the prior year’s sales to determine what the antidumping duty margin is for entries during that year.

   For example, a company might deposit 10% dumping duties for January-December 2011. In January 2012 DOC begins to review those 2011 sales (review proceeding takes about one year). When a review is completed the actual duties are determined, which can be greater or less than the 10%. Importer gets refund or pays additional duties.
   
   The key point for exporter and importers is to plan ahead. Once the sales are made, it is too late to do as much to affect the outcome. Careful planning is needed before the sales are made, and before the review occurs.

   One effect of the review is the payment of the duties for the past period (so-called retrospective assessment). The other effect of the review is that the new rate will be applied as the new estimate of dumping until the next completed review

10. ITC Injury Determination – Even if the Commerce Department finds dumping, the dumping duty order will not go into effect unless the ITC also finds that the domestic industry is injured by reason of the dumped imports.

    The essential argument of importers and exporters at the ITC usually is that U.S. industry is not being harmed (or threatened), usually because of a lack of any causal connection between the imports and the condition of the U.S. industry . The substantive argument often is based on an alleged lack of linkage between dumped imports and condition of the US industry, differences in product segments leading to no real competition, other causes of the problems of the industry. Procedural steps include filing a notice of appearance, completing questionnaires, participating in staff conferences, and filing briefs with legal/factual arguments.

11. Non-Reimbursement of dumping duties – Exporter/manufacturer may not simply reimburse importer for antidumping duties. If they do, Customs is to collect the dumping duties again. The idea is that antidumping duties will have economic impact in United States market and the duties are not to be absorbed by the exporter/manufacturer.

12. The Administrative Review Process – This process only occurs at the Commerce Department only. The retrospective assessment system in the U.S. means that the final liability for antidumping duties are determined only after the opportunity for a review. A review establishes the actual liability an importer must bear , which leads to a lack of predictability, particularly with non-market economies such as China and Vietnam. The usual time frame for a review is 16-17 months.

    Importers may request reviews for their own imported goods. Either domestic parties or foreign manufacturer may request a review for a foreign company. If a company is to request a review itself, it should prepare in advance and know the risks of such a review, because the dumping duties paid as a result of the review could be lower, or higher, than the amounts deposited initially.

13. Scope Issues – Only “subject goods” are those that are described in the order.

    Sometimes it is possible to “clarify” the order to have imports excluded from the case. If this is done, then the imports are simply not subject to the order. DOC conducts scope reviews.
    
    Any interested party may request (including an importer). There is a two tier review process, depending on the case: (1) DOC decides whether the good is clearly outside of scope on face of scope, and (2) if not, then Commerce conducts a further inquiry.

    In further inquiry cases, Commerce often examines 5 factors to assist it in determining if a product is in or out of the scope of the order.
    The 5 factors are:

    1. (a) Physical characteristics of the product

    2. (b) Expectation of ultimate consumers

    3. (c) Ultimate use of product

    4. (d) Channels of trade of product, and

    5. (e) Manner of advertising and display

    Because BRC is experienced in both customs law and antidumping practice, it is in a strong position to help clients navigate the complex issues that arise in the scope context.

14. New Shipper Reviews – Subject exporters/manufacturers who have not been reviewed pay “all others” rate. The “all others rate” generally is very high. The new shipper companies are able to be reviewed and obtain their own rate for their shipments, which should be substantially lower. There are special rules for such reviews, which include the ability to ask for reviews twice a year rather than only annually.

15. Other Issues – Other issues that arise in dumping cases that we frequently work on include five year “sunset” reviews determining whether there still would be injury to the U.S. industry if the dumping order were lifted.

16. Circumvention Issues – Circumvention of dumping duties can have administrative effects under the dumping law, as well as penalties from U.S. Customs & Border Protection, and even criminal liability in certain instances. Circumvention issues regarding dumping order (particularly with regard to Chinese goods) have become increasingly common in recent years. BRC’s expertise with regard to both CBP and the Commerce Department puts us in the position to work through all aspects of the problem for clients and attain a just result.

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While the law is extremely complex and practice in the area is changing constantly, the summary below provides a quick reference to the main issues. Because we have one of the largest trade remedies’ practices in the United States, we would be glad to answer any specific questions that you may have on these issues. Call Jeff Neeley or Matt McGrath in the Washington, D.C. office at 202-483-0070 for further information.

1.    How Cases Begin—Cases may be filed by a U.S. industry that can show that (a) imports are subsidized; and (b) the U.S. industry is being injured by these subsidized imports.

2.     Deadlines—Cases have very strict and fast deadlines. The first hearing is three weeks after the filing of a petition. Final determinations are made within one year. Interim relief is generally granted within 160 days of the initial filing.

3.     Agencies involved—Cases are heard at the U.S. Department of Commerce (regarding the level of subsidies) and the U.S. International Trade Commission (regarding whether injury exists).

4. Type of Relief—Relief is in the form of additional duties. U.S. producers that are faced with subsidized imports like these cases because a successful case will effectively offset such subsidies.

5. Risks to Importers—Importers operating under a subsidy order need to be very cautious because the subsidy rates may change and the scope of the order may be modified.

6. What Is A Subsidy?—Subsidies may be such things as export subsidies, special tax zones for exporters, government loans at below market rates, preferential tax benefits for exporters, preferential tax benefits for certain industries, equity infusions in non-equity worthy companies.

7. Retroactive Assessment—Importers deposit duties based on the last completed calculation of rates, but these are only estimates and not final rates. Once each year a review will be conducted for the prior year’s sales to determine what the subsidy margin is for entries during that year.

 For example, a company might deposit 10% subsidy duties for January-December 2011. In January 2012, the DOC begins to review those 2011 sales (review proceeding takes about one year). When a review is completed the actual duties are determined, which can be greater or less than the 10%. Importer gets refund or pays additional duties.

8. ITC Injury Determination—Even if the Commerce Department finds subsidies, the CVD order will not go into effect unless the ITC also finds that the domestic industry is injured by reason of the subsidized imports. 

The essential argument of importers and exporters at the ITC usually is that U.S. industry is not being harmed (or threatened), usually because of a lack of any causal connection between the imports and the condition of the U.S. industry. The substantive argument often is based on an alleged lack of linkage between subsidized imports and condition of the US industry, differences in product segments leading to no real competition, other causes of the problems of the industry. Procedural steps include filing a notice of appearance, completing questionnaires, participating in staff conferences, and filing briefs with legal/factual arguments.

9. The Administrative Review Process—This process only occurs at the Commerce Department.    The retrospective assessment system in the U.S. means that the final liability for subsidies is determined only after the opportunity for a review. The usual time frame for a review is 16-17 months.

Importers may request reviews for their own imported goods. Either domestic parties or foreign manufacturer may request a review for a foreign company.   If a company is to request a review itself, it should prepare in advance and know the risks of such a review, because the CVD paid as a result of the review could be lower, or higher, than the amounts deposited initially.

10. Scope Issues—Only “subject goods” are those that are described in the order.

Sometimes it is possible to “clarify” the order to have imports excluded from the case. If this is done, then the imports are simply not subject to the order.

DOC conducts scope reviews. Any interested party (including an importer) may request a clarification. There is a two tier review process, depending on the case: (1) DOC decides whether the good is clearly outside of scope on face of the order, and (2) if not, then Commerce conducts a further inquiry.

In further inquiry cases, Commerce often examines five factors to assist it in determining if a product is in or out of the scope of the order. The factors are:

1. Physical characteristics of the product
2. Expectation of ultimate consumers
3. Ultimate use of product
4. Channels of trade of product, and
5. Manner of advertising and display

 Because BRC is experienced in both customs law and antidumping/CVD practice, it is in a strong position to help clients navigate the complex issues that arise in the scope context.

11. Other Issues—Other issues that arise in CVD cases, which we frequently address, include five year “sunset” reviews determining whether there still would be injury to the U.S. industry if the CVD order were lifted,

12. Circumvention Issues—Circumvention of CVD orders can have administrative effects under the CVD law, as well as penalties from U.S. Customs & Border Protection, and even criminal liability in certain instances. Circumvention issues regarding the CVD order (particularly with regard to Chinese goods) have become increasingly common in recent years. BRC’s expertise with regard to both CBP and the Commerce Department puts us in the position to work through all aspects of the problem for clients and attain a just result.     

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The United States, regulates the export, reexport, and in-country transfers of items, software, and technology that are considered “dual-use.” Dual-use items are items that have both commercial and military or “proliferation” applications. Proliferation refers to the spread or growth of weapons of mass destruction. Exports of these dual-use items are governed by the Export Administration Regulations (EAR) administered by the Bureau of Industry and Security (BIS), part of the Department of Commerce.

Because the scope of the EAR is wide, commercial items that have no obvious military use may be governed by the EAR. This does not mean that export of the item is forbidden. It means that to export the item or share technology with a foreign national, a license might be needed. Whether a license is required depends both upon the product and the destination country. It can also depend on the intended end use or end user.

In addition to exports, the EAR regulates “reexports,” a shipment between two foreign countries of items that originated in the U.S. and restricts the transfer of controlled technology to foreign nationals (a so-called “deemed export”). Technology is “deemed exported” when “it is available to foreign nationals for visual inspection (such as reading technical specifications, plans, blueprints, etc.); when technology is exchanged orally; or when technology is made available by practice or application under the guidance of persons with knowledge of the technology.” 

Attorneys at Barnes, Richardson have hands-on experience fashioning export compliance programs to deal with EAR and BIS compliance. Whether it be counseling on issues involving a deemed export or assisting a client procure a BIS license, our lawyers understand the complexity of the EAR and can provide guidance to companies looking for help meeting their export regulatory requirements.

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Defense-related articles and services are subject to special export controls contained in the Arms Export Control Act, and its implementing regulations, the International Traffic in Arms Regulations (ITAR). ITAR contains the United States Munitions List (USML), which defines defense articles and or services. While it contains many different types of items, from guns to nuclear weapons to toxicological agents, the USML is constantly evolving.  If you are not sure that the article you are exporting qualifies as a defense article, you can submit a Commodity Jurisdiction Request (CJR) and DDTC will tell you.

All U.S. manufacturers, exporters, and brokers of defense articles, defense services, or related technical data, as defined on the USML, are required to register with U.S. Department of State, which has jurisdiction over defense exports.  The sub-agency within the Department of State which deals with defense-related export is known as the Directorate of Defense Trade Controls (DDTC).  Registration does not confer any export rights or privileges but provides the Department of State with information and is a precondition for the issuance of any license or other approval for export.

One of the most significant issues for ITAR compliance is what is sometimes referred to as a “deemed export”, i.e., an export taking place by the transfer of  defense information to a foreign national.  Thus, merely showing or describing controlled technology to a foreign national is an export under the ITAR.  The Department of State takes these “deemed exports” very seriously and there have been some high-profile prosecutions of academic personnel in recent years for sharing information with foreign students without proper authorization from DDTC. 

There are several types of export authorization.  The most typical is a DSP-5 (Department of State Publication No. 5), export license which authorizes the temporary or permanent export of defense articles and/or technical data to a foreign person (but not technical assistance or defense services).  During the review process, DDTC will screen all parties to the proposed transaction against a watch list of known or suspected export violators, and a hit on this list will mean a full compliance review before any license will be issued.  In about 30% of cases, DDTC will also refer applications to other agencies such as the Department of Defense for their comments and recommendations.

Because any license granted is conditional upon the purported end-user and end-use, DDTC will perform end-use checks on exports after they have been delivered to the foreign end user. Therefore, the responsibility of a U.S. exporter does not end at export; rather the exporter should be taking steps to ensure that the articles arrive at the licensed end-user rather than being diverted.

The Department of State has the option of asking the Department of Justice to prosecute criminally requesting fines and/or imprisonment or going for civil penalties of up to $500,000 per violation.  As part of the enforcement process, DDTC may impose a mandatory compliance improvement program requiring the exporter to spend funds on compliance measures and may also require the party to submit to external audit. In serious cases, a party may be debarred from future exporting for a period of time.

Attorneys at Barnes, Richardson are experienced in dealing with ITAR issues.  Whether you need counseling on dealing with a deemed export that may already have taken place, procuring a DSP-5 license, or creating a compliance program, our lawyers understand the complexity of the ITAR and can provide guidance to companies looking for help meeting their export regulatory requirements.

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The Department of Treasury’s Office of Foreign Asset Controls (“OFAC”) administers financial and economic sanctions against specific countries in response to some form of wrongdoing. OFAC sanctions are targeted broadly against 1) foreign governments and political entities, 2) individuals and groups ranging from terrorists and drug cartels to banks and other financial institutes that support those types of activities, 3) entities such as charities linked to terrorism, and 4) certain activities such as those that would lead to nuclear proliferation or otherwise violation U.S. policy interests.

Well-known sanctions programs include complete embargoes or more limited restrictions on trade with Cuba, Iran, Syria, and North Korea. Other programs include more targeted sanctions on the property of specified people from countries including Russia, Venezuela, Belarus, the Congo, and elsewhere. Collectively, such individuals and companies are called "Specially Designated Nationals" or "SDNs." Their assets are blocked, and U.S. persons are prohibited from dealing with them. Both the sanctions programs and the SDN List are constantly changing and companies that do business internationally, particularly in political ‘hot spots’ are well advised to constantly monitor OFAC developments. 

OFAC’s sanctions apply to all U.S. citizens and permanent residents wherever they are located. It also applies to any person who is physically in the United States regardless of his citizenship. U.S. companies and all branches of U.S. organizations throughout the world remain subject to OFAC. Likewise, U.S. branches or offices (physically located in the U.S.) of foreign corporations are subject to OFAC. 

Attorneys at Barnes, Richardson are well versed in sanction law and can provide guidance on how to tailor transactions, including financial transactions, so they remain complaint with the OFAC law. Barnes, Richardson attorneys assist companies in all areas of OFAC compliance, including building and auditing robust OFAC compliance programs, preparing and submitting voluntary disclosures to OFAC, and engaging in other representations before that agency. 

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