Anti-Dumping Duties and Countervailing Duties are risks to be avoided in international trade. The topic can be confusing so here is a quick summary of ADD/CVD. Consult the CBP website for details.
Anti-dumping (ADD) and Countervailing duties (CVD) are
intended to protect the US manufacturing industry from foreign manufacturers
flooding the market at artificially reduced prices. Dumping occurs when foreign companies sell
goods in the US at less than fair value.
Countervailing situations are when a foreign government gives their companies tax breaks and
subsidies allowing them to sell goods cheaply in the US. ADD and CVD lead to
foreign undercutting of US manufacturers prices.
Anti-dumping
duties are calculated at a company-specific level, where the duty amount
makes up for the difference between the foreign manufacturer’s price and fair
market value. In these cases, certain companies have been identified,
investigated, and additional duties have been charged on their products.
Countervailing
duties are determined on a country-specific level, and the duty rates
counteract the subsidy or tax breaks given to the foreign manufacturer by their
government with the intent of leveling the playing field.
When either of these situations occur, petitions for relief may be filed by U.S. manufacturers or businesses with the Department of Commerce (DOC) which, along with the US International Trade Commission (USITC), opens an investigation. If the results are positive, U.S. Customs and Border Protection (CBP) withholds liquidation of entries and collects ADD/CVD duties. The entries are not liquidated until the DOC instructs CBP headquarters to do so.
CBP procedures
affecting US importers
A positive result; an
investigation which finds evidence of injury to the US industry, triggers CBP
procedures which affect US importers. For an Anti-dumping (ADD) case CBP issues
a case number beginning with (A), Case # A…. for a particular manufacturer.
Importers and/or customs brokers then must report the case number on every
entry (CBP form 7501, block 29) pertaining to this manufacturer. CBP will also
look for evidence of bond during their investigation. If determined guilty, CBP
will set the penalty and retroactively collect additional duties through the
bond. These additional duties are determined by ITC and DOC with CBP as the
enforcing agency.
Procedures for countervailing
duties (CVD) are similar to those for anti-dumping duties (ADD): Investigation,
case number beginning with (C), retroactive penalties. The difference is that
under CVD the foreign manufacturer is subsidized by their government.
How to determine
if a commodity falls under ADD/CVD
Your customs broker should be able to help you
determine if a commodity falls under ADD/CVD. Further, you can review the scope
of ADD/CVD orders to determine whether the merchandise falls under the scope of
an order. The scope of AD/CVD orders can be found in several places:
ADD/CVD is a highly technical
aspect of trade and requires due diligence on the part of importers. It is
imperative to engage the services of a reputable and knowledgeable customs
broker. While the importer of record (IOR) bears primary responsibility for following
the law, the broker’s role is to guide their client and make sure that proper
procedures are followed.
