Under the Enforce and Protect Act of 2015 (“EAPA”), U.S. Customs and Border Protection (“CBP”) is authorized to determine whether covered merchandise has entered the United States through evasion, resulting in the reduction or elimination of otherwise applicable antidumping (“AD”) or countervailing duties (“CVD”) on the merchandise.  19 U.S.C. § 1517.  Under the statute, if CBP “is unable to determine whether the merchandise at issue is covered merchandise,” i.e., subject to an AD or CVD order, CBP may “refer the matter to the {U.S. Department of Commerce (“Commerce”)} to determine whether the merchandise is covered merchandise” pursuant to Commerce’s authority to make AD/CVD scope determinations.  In Commerce’s new regulations, the agency establishes procedures that will govern its handling of these covered merchandise referrals from CBP.  19 C.F.R. § 351.227.  In doing so, Commerce formalizes what has been an ad hoc approach to these covered merchandise referrals under its existing regulations and establishes covered merchandise inquiries as a distinct proceeding segment alongside scope and anti-circumvention inquiries, which seek to answer similar questions regarding coverage of AD/CVD orders.

As relevant background, CBP’s EAPA investigations focus on the specific question of whether certain imports by particular companies are unlawfully evading applicable ADs and/or CVDs.  These investigations follow allegations of evasion (e.g., fraudulent country of origin markings, misclassification, transshipment, etc.) by interested parties (e.g., other U.S. importers of the covered merchandise, a U.S. producer of the domestic like product, or a trade association) and can result in the imposition of various remedies by CBP.  For example, if CBP determines that there is reasonable suspicion that covered merchandise entered the United States through evasion, it may impose “interim measures” including the suspension of liquidation of unliquidated entries, extension of the period for liquidating unliquidated entries, and an array of other measures (e.g., requiring a single transaction bond or the posting of cash deposits).  Continuation of these remedies is available to CBP following a final determination as to evasion, and CBP may also pursue other recourse (e.g., penalty actions) against the companies subject to investigation.


Continue Reading Revisions to the Department of Commerce’s Antidumping / Countervailing Duty Regulations: Covered Merchandise Referrals

The Final Rule published by the Department of Commerce (“Department”) on Monday, September 20, 2021, makes certain modifications to the Department’s regulations on new shipper reviews of antidumping and countervailing duty order. Among other changes, the new regulations increase the burden for parties requesting new shipper reviews by requiring more documentation supporting the sales under review and by requiring certifications from unaffiliated customers.  These changes are intended to enhance the Department’s ability to assess whether new shipper review requests are based on “bona fide” sales.  Several of the more burdensome requirements contained in the proposed version of the rule, issued last August, did not ultimately survive the notice and comment process.  Even so, the additional requirements imposed by this regulatory amendment will likely make it more difficult for parties to seek and obtain new shipper reviews, and could give the Department greater leeway in rejecting such requests.

Provided for by Section 751(a)(2)(B) of the Act, a new shipper review allows a foreign exporter or producer that did not export subject merchandise to the United States during the period of the original antidumping (AD) or countervailing duty (CVD) investigation, and is not affiliated with an exporter or producer that did export, an opportunity to obtain its own dumping or countervailing duty margin after it makes its first U.S. sale on an expedited basis.  Regulations for new shipper reviews are outlined in 19 CFR Section 351.214.


Continue Reading Revisions to the Department of Commerce’s Antidumping / Countervailing Duty Regulations: New Shipper Reviews

On May 27, 2021, the U.S. Department of Commerce (Commerce) issued its affirmative final determination in the countervailing duty (CVD) investigation of Passenger Vehicle and Light Truck Tires (PVLT) from Vietnam, in which it concluded that the Vietnamese Dong (VND) was undervalued, and that this undervaluation constituted a countervailable subsidy under U.S. trade law. This is only the second CVD investigation in which currency undervaluation, as a form of countervailable subsidy, has been at issue (the other case being certain twist ties from China, see here), and is the first instance where Commerce made a final substantive decision as to the currency undervaluation issue.  For that reason, PVLT from Vietnam establishes new law in several important areas, and is likely to be used as a template for future Commerce decisions in this area.

Continue Reading Currency Undervaluation as a Countervailable Subsidy: The United States Takes Its First Step

On November 24, 2020, the U.S. Department of Commerce (“Commerce”) issued a preliminary affirmative determination in the countervailing duty (“CVD”) investigation of twist ties from China. What is particularly noteworthy about this preliminary determination is Commerce’s decision to countervail the undervaluation of China’s currency, the Renminbi (“RMB”). This marks only the second occasion – following the investigation of Passenger Vehicle and Light Truck (“PVLT”) Tires from Vietnam earlier this year – that Commerce has countervailed a country’s undervalued currency, and the first time it has done so against China. As discussed further below, Commerce’s determination relied on an analysis of the RMB from the U.S. Department of the Treasury (“Treasury”) which differed in meaningful respects from Treasury’s analysis of the Vietnamese Dong (“Dong”) in the investigation of PVLT Tires from Vietnam, suggesting that a less objective, more qualitative analysis may be applied against the RMB in future cases.

Under U.S. law, a subsidy program is countervailable when it meets three criteria. Specifically, the program must constitute (a) a financial contribution provided by a government authority or public body, (b) to a specific firm or industry, that (c) yielded a benefit to the recipient.

The currency undervaluation allegations examined in the PVLT Tires from Vietnam and Twist Ties from China investigations were based on regulations issued by Commerce earlier this year to interpret these terms in the context of currency undervaluation. Regarding the requirement of specificity, Commerce’s new rule provides that enterprises that buy or sell goods internationally (i.e., enterprises in the traded goods sector) may comprise a “group” of enterprises for specificity purposes.


Continue Reading Commerce Takes Action Against Allegedly Undervalued Currencies