If domestic producers believe that foreign competitors are dumping merchandise in their market, a home firm or a coalition of firms can initiate an AD case. Each country has its own procedures regarding AD cases. The WTO guidelines leave room for considerable latitude in the design of domestic AD institutions and procedures and member states apply the guidelines in their own way. There are some key similarities and differences among the members’ arrangements for dealing with dumping (Blonigen and Prusa, 2001). The US investigation procedure is the focus of this section.
The two US governmental organizations responsible for carrying out AD cases are the US Department of Commerce’s International Trade Administration (ITA) and US International Trade Commission (ITC). ITA determines whether there are sales at less than fair value, while ITC determines whether a US industry is or might be materially injured. Fair value is expressed by the foreign firm’s domestic price after adjustments for differences in the products, purchased quantities or the sale circumstances that are taken into account. When there is no domestic market for the exported good, the price of the product in a third market would be considered and, finally, in absence of domestic and third market sales, a constructed value is used, which is calculated as the cost plus profit – an approximation of average total cost. Injury can take the form of depressed prices; lost sales; decline in sales, reduced market share, lower profits, reduced productivity, lower than expected return on investment; decreased production capacity; increased imports from the specific exporter; decreased employment, falling wages, mounting inventories and constraints in the ability to raise capital (ITA).
In the US, a petition can be filed on behalf of the industry if “(i) the domestic producers or workers who support the petition account for at least 25 percent of the total production of the domestic like product, and (ii) the domestic producers or workers who support the petition account for more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for or opposition to the petition.” (US International Trade Commission, “Antidumping and Countervailing Duty Handbook”, 2005a, pp.16). Thus, the number of firms that participate in a petition plays
an important role in reaching a conclusion, (i.e. that the domestic industry is harmed) and ultimately whether to impose an AD duty against foreign exporters or not.
According to ITC, the investigation process has five steps: (1) initiation of the investigation by ITA; (2) the preliminary phase of the ITC’s investigation; (3) the preliminary phase of the ITA’s investigation; (4) the final phase of the ITA’s
investigation; and (5) the final phase of the ITC’s investigation. Except for stage 3, a negative determination by either organization leads to termination of the proceedings. The interested party should file a petition with both the ITA and the ITC. In stage 1, the ITA should determine in 20 days if the case contains the elements and information necessary for the imposition of a duty. In stage 2, within 45 days, the ITC should make a material injury determination. The preliminary phase of ITC determination can be broken into six stages: (1) institution of the investigation and scheduling of the preliminary phase; (2) questionnaires; (3) staff conference and briefs; (4) staff report and memoranda; (5) briefing and vote; and (6) determination and views of the Commission. In stage 3, within 160 days after the petition was submitted, the ITA makes a preliminary
determination whether there is reasonable information to believe that imports are being sold at less than fair value. If the evaluation of the ITA is affirmative, after publishing the notice of determination in Federal Register, all the subjected imports are liquidated and the importers are required to post a cash deposit or a bond on the estimated weighted dumping margin. Within 235 days after the date the petition was filed, in Stage 4, the ITA is required to make a final determination whether or not the imports are sold at less than fair value. In stage 5, within 280 days after the date of filing the petition, the ITC
should determine whether or not the US industry is materially injured by the respective imports. The final phase of the Commission’s investigation may be broken down into eight stages: (1) scheduling of the final phase; (2) questionnaires; (3) pre-hearing staff report; (4) hearing and briefs; (5) final staff report and memoranda; (6) closing of the record and final comments by parties; (7) briefing and vote; and (8) determination and views of the Commission. The statutory timetable for an AD investigation is presented in Figure 3.6.
Figure 3.6: Statutory timetable for antidumping investigations (in days)
After a maximum of five years from the publication of a decision regarding an
antidumping investigation, the two commissions, ITA and ITC, conduct a review, called a “sunset review”, to determine whether the annulment of an AD order would lead to the continuation or repetition of dumping and of material injury. Again, the ITA determines if the dumping will continue or recur and the ITC would determine if the material injury would continue or recur. If both agencies reach affirmative answers, the order is
continued for another five years, otherwise the order is revoked. The timetable for the sunset review is presented in Table 3.2.
Table 3.2 Timetable for five-year reviews
ACTION/EVENT DAY Notice of institution published in the Federal Register 0
Entries of appearance/APO applications 21
Responses to notice of institution 50
Comments on appropriateness of expedited review 75
Notice of expedited or full review 95
Source: US International Trade Commission (USITC) (1998)
In case the interested parties do not respond or they give inadequate responses to the notice of initiation, the ITA and ITC take a final decision in a short time. These reviews are named “expedited” reviews (Table 3.3).
Table 3.3 Expedited Review
ACTION/EVENT DAY
Commerce expedited determination (if issued) 120
Staff report to Commission and parties 122
Written submission on merits by parties 127
Commission vote 140
Commission determination and views transmitted to Commerce 150 Source: US International Trade Commission (USITC) (1998)
In cases where the interested parties respond adequately to the notice of initiation, both commissions will conduct reviews that are called “full” reviews (Table 3.4).
Table 3.4 Full Review
ACTION/EVENT DAY
New entries of appearance/APO applications 180
Draft questionnaires to parties for comment 190
Party comments on draft questionnaires 205
Questionnaires mail date 225
Commerce subsidy/dumping determination 240
Questionnaires return date 255
Prehearing report to Commission and parties 285
Prehearing briefs 295
Hearing 305
Posthearing briefs 315
Staff report to Commission and parties 330
Final party comments 340
Commission vote 348
Commission determination and views transmitted to Commerce 360 Source: US International Trade Commission (USITC)(1998)
Sunset reviews were introduced in the antidumping and countervailing duty laws in the Uruguay Round Agreements Act approved in late 1994. All the antidumping and
countervailing duty orders issued after January 1, 1995 are reviewed five years after they became effective. All antidumping and countervailing duties orders issued before 1995
reviews for the pre-1995 orders are known as “transition” reviews. Out of 309 cases of transition reviews, 53% were not revoked, while 47% of cases were cancelled by either one of the commissions. Regarding the non-transition reviews, there are a total number of 114 cases, with 71% not being revoked, 28% cancelled by either commission and 1% terminated (Figure 3.7).
Figure 3.7 Five-year review investigations, outcomes by number of cases, fiscal years 1998-2004 121 79 245 1 0 50 100 150 200 250
ITA revoke ITC revoke Not revoke Terminated
Source: US International Trade Commission (2005b)
In the US, any AD duties collected are deposited in the General Fund of the US Treasury. However, according to a new bill titled “The Continued Dumping and Subsidy Offset Act” (CDSOA), which was enacted in 2000, the AD duties are shared among the AD petitioners. This bill, which is also known as “Byrd Amendment”, is outlined in the next section.