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pfonline.com/experts 44 JANUARY 2016 — pfonline.com p f o n l i n e . c o m / e x p e r t s LEGAL & POLICY C L I N I C BETH GOTTHELF / Attorney legalclinic@pfonline.com Antidumping Q. We find ourselves in the unusual position of competing with foreign governments for our automotive parts. What can we do about it? A. Antidumping and countervailing duty petitions are a powerful weapon for U.S. industries that find themselves materially injured by dumped or subsidized imports. This was illustrated most recently on Aug. 10, 2015, when the U.S. Department of Commerce issued a final order imposing countervailing duties on certain Passenger Vehicle and Light Truck Tires (PVLT Tires) imported from China. Several other significant antidumping and coun- tervailing petitions have since been filed. Domestic producers of corrosion-resistant steel products, cold- rolled steel, hot-rolled steel, certain welded carbon steel pipes and of several chemical products have filed for trade relief against imports from countries including Australia, China, India, Japan, Korea, Mexico, the Netherlands, Turkey and the United Kingdom, among others. Among these, China is the most frequent target, as overcapacity in a number of Chinese industries has led to numerous exports that underprice U.S. production. The recent depreciation of the Chinese currency can only be expected to exacerbate the trend. Historically, the unique supplier relationships and specialized product design elements of the automotive parts industry have tended to reduce trade cases in this sector. The PVLT Tires outcome, however, suggests that there may be opportunities for such actions, especially in areas where products are sufficiently generic, Chinese market share is increasing and U.S. producers are in difficult straits. For those auto parts-producers that are unable themselves to move to China or Mexico, restric- tions on the sale of dumped or subsidized substitutes may be the only remaining path to survival for their U.S. operations. The process for pursuing antidumping and counter- vailing duty claims, and the determination of remedies if the claim is upheld, is summarized below: Principal Features of the U.S. Antidumping Law The Antidumping Law provides a mechanism for U.S. producers that are injured by certain unfairly traded imports to petition the U.S. Government for rapid, effec- tive tariff relief. The tariff is the difference between the fair price of the goods (normal value) and the dumped selling price in the United States. To win an antidumping case a U.S. producer or group of producers comprising more than half of U.S. production must demonstrate that: 1. it produces a product "like" the imported product; 2. there are less than normal value ("dumped") sales of the import product in the United States; and 3. the U.S. industry producing the like product is suffering or is threat- ened with "material injury" because of the dumped imports. A like product is a product which is identical to the imported product. If, however, there are no identical products, it is the product most similar in character- istics and uses. Material injury is measured by declining sales, market share, profits, capacity utilization, employment and so on. There is no set formula; each case is examined on its own merits by an indepen- dent U.S. Government agency, the U.S. International Trade Commission (ITC). Material injury is determined with reference to the aggregate U.S. company segments producing the goods in question, not the performance of the overall companies. Dumped imports need not be the most important cause of injury, only not an unimportant, immaterial or insignificant cause. It is also possible to demonstrate a real and imminent threat of material injury. Dumped sales are calculated by a different govern- ment agency: the U.S. Department of Commerce (DOC). DOC compares the net ex-factory prices of the foreign producers' U.S. and home market sales of the subject merchandise. This is accomplished by subtracting from the sales prices to unrelated customers in each market appli- cable expenses such as freight, brokerage, commissions, customs duties and so on. Adjustments are also made for differences in the merchandise to arrive at normal value. Most simply stated, there is dumping if the net return on sales is lower than the average return on home market sales of the subject merchandise. In addition, there is a special way to calculate normal value for non-market economy countries like China. Because Chinese home market prices do not reflect market forces, DOC takes the production inputs in China (materials, labor, energy), assigns to them the prices for comparable inputs in a market economy country such as India, and then adds up these input costs. This methodology is usually quite favor- able for petitioners. Procedurally, an antidumping case takes less than one year. An investigation is initiated upon the filing of a petition by the domestic industry. The ITC determines whether there is a reasonable indication of material injury