SANDLER, TRAVIS & ROSENBERG, P.A. An International Trade & Business Practice CCBFA Seminar Program The Impact of Antidumping and Countervailing Duties (AD/CVD) Monday, June 9, 2008 Donna L. Bade, Esq.

Upon completion, participants will be able to:  Discuss AD/CVD regulations  Describe the impact of antidumping and countervailing duties Learning Objectives 2

What is dumping? When a foreign company makes sales to the U.S. at “less than normal value,” which is generally considered to be at a price lower than what it is sold at within the exporting country or to third countries. Why do companies dump? To make inroads into a new market and/or to force local companies out of business. Lost profits on the new sales are made up on the domestic or 3 rd country sales. Trade Remedies - What does the ITC/ITA do? Review the details of the transactions, determine if a US industry is harmed and assess special antidumping duties equal to the difference between the export price and their “normal value” in the exporting country. Antidumping 3

Antidumping Process 4  Three Phases – Preliminary, Final, Administrative Review  Petitioner (U.S. Company) files petition with the International Trade Commission (ITC) and the International Trade Administration (ITA), Department of Commerce simultaneously alleging that they are being harmed by foreign manufacturers dumping on the US. ITA may also initiate on its own. [Tariff Act of CFR §§ (ITC); 19 CFR §§ (ITA)]  Both agencies are involved in the review.  The ITC determines if there is a material injury or a threat of a material injury or material retardation to the U.S. industry.  The ITA performs the economic and statistical analysis to determine whether the foreign company is dumping in the US and, if so, what the margin is between the sales price to the US and the ‘normal value’ (home market price).

Content ITA/ITC Timetable 5

Scope  Scope – who defines?   Description vs. Tariff Numbers  Scope Rulings –CBP determinations   Cash Deposit vs. Bonding  Administrative Reviews  New Shipper Reviews

 Liquidation Instructions from ITA to CBP – 6 months to liquidate.  Antidumping Reimbursement Certificate  Exporter/Reseller Rule – Effective Admin. Review after May 1, 2003  Cash Deposit Rates vs. Final Rates since Reseller Rule  Critical Circumstances  Court Cases – Appeal to CIT/CAFC Antidumping Issues 7

Countervailing Duties When foreign country subsidizes the manufacture of products for export which harms the domestic manufacturers because the subsidies allow for an economic advantage. [Tariff Act of 1930] Review Process is the same as Antidumping - Same time frames

WCO – Agreement on Subsidies and Countervailing Measures A subsidy shall be deemed to exist if: (a)(1) there is a financial contribution by a government or any public body within the territory of a Member (referred to in this Agreement as "government"), i.e. where: (i) a government practice involves a direct transfer of funds (e.g. grants, loans, and equity infusion), potential direct transfers of funds or liabilities (e.g. loan guarantees); (ii) government revenue that is otherwise due is foregone or not collected (e.g. fiscal incentives such as tax credits); (iii) a government provides goods or services other than general infrastructure, or purchases goods; (iv) a government makes payments to a funding mechanism, or entrusts or directs a private body to carry out one or more of the type of functions illustrated in (i) to (iii) above which would normally be vested in the government and the practice, in no real sense, differs from practices normally followed by governments; or (a)(2) there is any form of income or price support in the sense of Article XVI of GATT 1994; and (b) a benefit is thereby conferred. [Accenting added] What is a Subsidy? 9

Tax Subsidy – Grant a tax benefit to all exporters. (e.g. U.S. Foreign Sales Corporation Program) Labor Subsidy – Grant a tax relief for certain workers. Accelerated Depreciation of Manufacturing Equipment Direct Subsidies – Payment of Cash Energy Relief – non-payment of certain utilities such as electricity. Examples 10

 ITA –  ITC  Orders currently in effect: p_countervailing/index.htm  STR contact information: Helpful Web Sites 11

Thank You! 12