Anti Dumping Duties are assessed on products that are determined by the International Trade Commission to have been sold in the US market at a price below fair market value.
Countervailing Duties are assessed against products determined to be subsidized by a foreign government to lower the exporter’s costs and make them more competitive in the US market place.
Cases are initiated with the International Trade Commission (ITC) by a party or parties in the US who feel they have been damaged by the Dumping or Subsidies that are occurring.
The ITC announces a case or commencement of an investigation. After they have gathered enough information, they will make a Preliminary Ruling on the Case.
If the Ruling is positive, an additional duty deposit will be set and collected on subject merchandise by Customs. The rate is set at an amount estimated to be equal to the amount of damage to domestic parties.
Ultimately, a Final Decision will be made and a permanent ADD or CVD rate will be set. If the Final Determination sets a level that is less than the Preliminary Ruling, the difference will be refunded.
If the Final Determination is more, the importer must pay the difference. This is the big risk of importing affected merchandise.
You never know what the final amount owed will be until the determination is made.
Cases can stretch out for months or years and by the time a Final Determination is made the additional amount owed can be huge. More than one company has received a bill at Final Determination that was so great it put them out of business.
It is very important to make sure your product is not the Subject of an ADD or CVD case you are unaware of. You don’t want to suddenly find out you have been importing a product for a long
time that falls within the scope of a case and is subject to back duties and interest that are many times the amount originally paid.
This has been a grim story so far.
The good news is that there are actions you can take to mitigate risk.
First, monitor trade news and make sure you put in place a system to alert your company as soon as any case that could be related to your product is initiated. If you identify a potential case, setup a contingency plan.
Second, if you are willfully importing merchandise subject to an ADD or CVD, pay very close attention to all details of the case. You may not be able to predict the Final Determination Amount, but with good research you can come up with an estimate that is close and be able to budget accordingly.
If you need more information on Anti Dumping or Countervailing Duties, please contact Los Angeles Customs Brokers.