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RILA recognizes the importance of provisions to combat unfair trade practices. At the same time, predictable and reliable global sourcing is fundamental to maintaining American economic competitiveness, and U.S. trade remedy laws should be updated to reflect this modern reality. Specifically, Congress should adopt a prospective system to assess U.S. antidumping and countervailing (AD/CV) duties and allow industrial users to fully participate in trade remedy proceedings. RILA believes that a prospective system would improve duty collections and enforcement, reduce administrative burdens, decrease supply chain uncertainty, and enhance American competitiveness.
In May 2011, the Senate Finance Subcommittee on International Trade, Customs, and Global Competitiveness held a hearing on enforcing America’s trade laws. RILA testified at that hearing on the need for Congress to consider switching to a prospective dumping system. The Ranking Member of the Subcommittee, John Thune (R-SD), also raised the issue of prospective dumping in his opening statement and asked questions regarding the benefits of a prospective dumping system.
In December 2011, the Commercial Operations Advisory Committee formally recommended that the United States adopt a prospective system to assess antidumping and countervailing duties (AD/CVD). COAC recommended that CBP work with the U.S. Department of Treasury and the Department of Commerce to jointly design a prospective AD/CVD duty assessment and collection system, and that the agencies consult with the appropriate Congressional committees of jurisdiction so that the legislation could be drafted to implement this system.
In the United States (unlike all other countries), AD/CV duties are collected under a “retrospective” system that is separate from normal duty collections and under which U.S. Customs and Border Protection (CBP) must suspend liquidation of entries subject to AD/CV duties and collect cash deposits based on the Department of Commerce’s (Commerce) estimate of the amount of AD/CV duties the importer will ultimately owe. Commerce does not determine final AD/CV duty liability until years later (on average 3 years later). CBP therefore is required to maintain a separate and unique duty collection system for AD/CV duties, and is routinely required to collect those AD/CV duties long after the goods have entered the United States. CBP leadership has repeatedly commented that the retrospective collection of AD/CV duties is fundamentally flawed and undermines enforcement and collections efforts.
The U.S. Government Accountability Office (GAO) has repeatedly recommended that the United States switch to a prospective system to collect AD/CV duties. These recommendations reflect the fact that the U.S. “retrospective” AD/CV duty assessment system is plagued by collection problems and is more complex, resource intensive and less predictable than the “prospective” systems used by all other countries.
U.S. companies are willing to pay fairly traded prices – they simply need to know what they are so that they can make informed business decisions. Under a “prospective normal value” system, Commerce would determine a fair trade price (i.e., “normal value”) and CBP would apply those results prospectively on a transaction-by-transaction basis. Thus, if subject merchandise were imported at a price below the normal value (i.e., at a “dumped price”), CBP would, at the time of import, immediately collect final AD duties equal to the amount of the price difference (the dumping margin). Zero duties would be assessed on non-dumped imports. The same system would apply for calculating and assessing CV duties.
Under such a system, therefore, injurious dumping or subsidization would be remedied immediately upon importation, and U.S. companies would know in advance what the actual fairly traded cost associated with each potential source is to make informed decisions regarding competitive strategies and sourcing.