Commerce Issues Proposed Rule to Require Importers to Post Cash Deposits in Antidumping and Countervailing Duty Investigations Instead of Bonds

International Alert
04.27.11

In a notice published on April 26, 2011 in the Federal Register, the U.S. Department of Commerce (DOC) has proposed to require importers to pay all estimated antidumping (AD) and countervailing (CV) duties with cash deposits. This change from current practice would substantially increase the price of importing goods that DOC determines are sold at less than fair value or subsidized. Interested parties have until May 26, 2011 to comment on this proposed change to DOC regulations.

Currently, DOC regulations allow importers to post bonds for estimated AD/CV duties during an AD/CV duty investigation. Such bonds cover entries of goods between the preliminary determination in an investigation (in certain circumstances, up to 90 days before this date) and the publication of the International Trade Commission’s injury determination for the same product, a period which usually lasts about six months. Bonds, which require importers to pay a bonding company a percentage fee of the total duties due, generally are less expensive than cash deposits, which require importers to deposit the entire estimated duty amount with U.S. Customs and Border Protection (CBP) at the time the product enters the United States. The difference between the amount paid to a bonding company and to CBP can be drastic, ultimately having a substantial affect on an importer’s business.

The bond period provides an important window that can allow importers to adjust to paying additional import duties or to find alternative suppliers in the United States or abroad. Importers may be unaware of an AD/CV duty investigation until CBP first requires the payment of a bond for estimated AD/CV duties. Even when they become aware of an investigation, importers have no certainty regarding the potential AD/CV duties they may owe before the preliminary decisions are issued by DOC. Accordingly, importers cannot determine whether a higher-priced, but fairly-valued, product from an alternative supplier would be less expensive overall. Importers may also require several months of reviewing different suppliers’ products to find other merchandise that satisfies their requirements.

The DOC’s proposed modification would eliminate the bonding system for estimated AD/CV duties during the investigative phase in most cases, and thus may have adverse consequences on importers’ abilities to adjust business plans during that time frame. Any importers who wish to comment on this proposed change may submit comments to DOC via the Federal eRulemaking Portal at http://www.regulations.gov, Docket No. ITA–2011–0005.

For more information, please contact:

Claire Rickard Palmer, cpalmer@milchev.com, 202-626-1575

Daniel Patrick Wendt, dwendt@milchev.com, 202-626-5898

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