SEPARATE RATES PRIMER

In U.S. antidumping investigations or reviews involving non-market economies (NME) such as Vietnam or the People's Republic of China, exporters must each participate in a separate rate test to receive a rate that is separate from the NME-wide rate.  Any exporters that fail to demonstrate that they are separate from the government entity are assigned the NME-wide rate under the involved antidumping duty order, which is invariably the highest possible rate, and which, as often as not, effectively bars the involved exporter from the U.S. market.

Exporters are awarded separate, company-specific duty rates if they can demonstrate an absence of government control, both in law and in fact, over export activities.  Evidence supporting a finding of de jure absence of government control includes: 1) an absence of restrictive stipulations associated with an individual exporter’s business and export licenses; 2) any legislative enactments decentralizing control of companies; and 3) any other formal measures by the central and/or local government decentralizing control of companies.

With respect to de facto government control, the U.S. Department of Commerce (the Department) considers four factors:  (1) whether export prices are set by, or subject to the approval of, a governmental authority; (2) whether a respondent has authority to negotiate and sign contracts and other agreements; (3) whether a respondent has autonomy from the government in making decisions regarding the selection of management; and (4) whether a respondent retains the proceeds of its export sales and makes independent decisions regarding the disposition of profits or financing of losses.

All NME exporters wishing to obtain a separate rate in an antidumping investigation or administrative review must complete a separate rate application form.  However, only those NME exporters selected as mandatory respondents are required to respond to the full antidumping questionnaire.  In other words, NME exporters wishing to obtain a separate rate do not necessarily need to participate in a full investigation or review proceeding, unless otherwise required to do so by the Department.  Consequently, an NME exporter may do much to secure or improve its access and competitive position with respect to the U.S. market by taking the simple step of applying for a separate rate.

U.S. DEPARTMENT OF COMMERCE LAUNCHES INVESTIGATION OF CHINESE DRILL PIPE MANUFACTURER FOR ALLEGED EVASION OF ANTIDUMPING DUTY ORDER

As previously noted on this web site, there are many indicators that the United States is stepping up its efforts to combat circumvention of its antidumping, countervailing duty, and general customs laws.  Such circumvention has been drawing unprecedented attention on Capitol Hill.  As a result of the consequent political pressure, federal agencies have noticeably increased the number of active enforcement actions related to antidumping and countervailing duty orders. 

Most recently, on August 12, 2011, the U.S. Department of Commerce reported the initiation on an investigation into whether Chinese drill pipe and tool joint manufacturer Hilong Group, Ltd. is evading a U.S. antidumping duty order by finishing its product assembly, via friction welding, in the United Arab Emirates, prior to shipping its products to the United States.  The Department of Commerce will determine whether or not the involved Chinese-manufactured drill pipe and tool joint products are, for purposes of U.S. antidumping law, to be considered of Chinese origin, despite the fact that they are being friction welded together in the United Arab Emirates.  Such products from China are currently subject to an antidumping duty rate of nearly 430 percent. 

Firms involved in international trade face ever-growing risks for attempting to circumvent U.S. antidumping and countervailing duty laws.  Such criminal activities invite the seizure of shipments, fines, indictment and imprisonment of U.S.-based personnel, and tremendous loss of money.  To avoid such consequences, companies trading in goods subject to antidumping or countervailing duty investigations and orders can elect to participate in the involved antidumping investigation and administrative review proceedings of the U.S. Department of Commerce and U.S. International Trade Commission.  In so doing, manufacturers and exporters may obtain company-specific or separate duty rates, thereby securing their access to the U.S. market, in full compliance with U.S. fair trade law.