SEMA eNews Vol. 13, No. 35, September 2, 2010

Federal Government Pursues Unfair Trade Practices

The U.S. Department of Commerce unveiled 14 proposals to strengthen the enforcement of U.S. trade laws. The measures would focus on illegal import practices from non-market economies by tightening U.S. rules governing antidumping (AD) and countervailing duties (CVD). “Dumping” is when a manufacturer(s) in one country exports a product to another country at a price that is below its production costs or the price charged in its home market. "Countervailing duties” are imposed when an investigation finds that a foreign country is subsidizing its exports and injuring the importing country’s domestic producers. The Commerce Department initiated 34 AD/CVD investigations in 2009 compared to 19 the previous year. 

Non-market economies such as China could face higher duties as a result of some of the Commerce Department’s proposed changes. A number of practices to calculate production costs would be tightened or clarified. Individual companies from a foreign country would not be excused from AD/CVD duties if they demonstrate that they were not dumping or receiving subsidies for three consecutive years. Rather, they would still receive a zero dumping rate but remain within the country-wide order until that is removed.

Additionally, the Commerce Department would require importers to post cash deposits rather than bonds for imports that fall within the scope of an AD/CVD investigation, beginning with the issuance of a preliminary determination. For more information, contact Stuart Gosswein at stuartg@sema.org.

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