1993 Export Legal and Tax Notebooks

The anti-dumping law constitutes an important element of the legal arsenal available to American industrial companies, to protect themselves from foreign competition which sells on the American market at a price considered as not reflecting the fair value of the product (" prices below fair value ”).

The law provides that an "anti-dumping" tax will be added to normal customs duties, if two conditions are met:
1. that the goods are sold in the United States below their 'fair value'
2. that an industry in the United States is suffering, or is threatened with, real injury as a result of its imports.

Dumping cases therefore have two aspects:
A determination by the Department of Commerce (hereinafter DOC) as to whether
sales take place in the United States below the "fair value" of the product and a
determination of the existence of damage suffered by the complainant by the Commission of
Commerce International (hereinafter ITC).

A) DETERMINING THE DOC ON THE EXISTENCE OF SALES BELOW THE FAIR VALUE OF THE PRODUCT: "SALES AT LESS THAN FAIR VALUE"

The law defines 'fair value' as being, in order of preference:
1. the selling price on the producer's national market, or goods,
2. the selling price on third country markets, or goods,
3. the reconstituted value.
If there are sufficient sales in the home market, the DOC will not address the
sales in third countries. On the other hand, if sales in the home market or in countries
third parties prove to be below the cost of production, the DOC will use the reconstructed value
which is equal to the cost of production plus a minimum of 10 % for overheads and 8 %
of profit.

In general, for sales in the United States, the DOC takes into account the price made by
the exporter to the American importer, There are however special rules when the
sales are made by the exporter to US affiliates.

To establish its basis for comparing sales prices, DOC details all the elements of the
price such as transport, insurance, packaging, etc., in order to obtain an ex
facto for each market consistently.

To this end, the DOC obtains the information it needs by sending a
detailed questionnaire to the main exporters in the designated country. Essentially, the
exporters must describe all their sales in the United States and overseas markets
appointed over a period of time which is generally six months. This list should
be established invoice by invoice and each item of each invoice is individualized on the list.

The exporter is required to submit this information in hard copy and on a
IT support, according to the software model established by DOC.

When DOC requires cost of production information, the exporter must
give details of its costs for each type or model of product under investigation.

In addition, the exporter must allow members of a DOC Board of Inquiry to
visit their offices and factories to verify the accuracy of information
communicated.

If a foreign company does not respond to the DOC questionnaire, or if a response cannot be
not be verified, the DOC will then use the criterion of the best available information
("Best information available") to calculate the dumping margin. This better information
available almost always corresponds to the figures alleged in the complaint.

Knowing this, the complaining companies always report the highest credible margin,
so that if the foreign exporter does not cooperate, the customs penalty will be very high.

B) THE DETERMINATION OF INJURY BY THE ITC (INTERNATIONAL TRADE COMMISSION)

The ITC is an administrative agency separate from DOC, which is responsible for deciding whether a
American industry is affected by the discriminatory practice.

The law defines material damage as damage which is not negligible.

To establish the existence of material damage, the Commission analyzes the volume of
imports, the effect of these imports on prices, lost sales, market share,
profits and productivity of national companies, profitability, capacity of use,
employment, stocks ...

If a complaint is filed against two or more countries, the Commission will determine the volume and
the effect of these imports cumulatively.

C) THE PROCEDURE

The law and regulations provide for very strict and very short procedures and deadlines for
each phase of the procedure.

It is therefore essential that the defendant company prepare its answers as quickly as possible.
and as completely as possible, because failure to meet deadlines can be fatal.

When a dumping proceeding is initiated, the investigation covers specific products in
from a specific country. The national character of the dumping proceeding is
consequence that all producers and exporters in this country are affected by this
procedure, whether or not they are named in the complaint. If a dumping decision is
finally made, it will apply to all companies in the country concerned, whether they have or
not participated in the information.

1. Opening of information by DOC

Within 20 days of filing the complaint, the DOC must decide whether to
opening of information. If so, the information is opened on the 20th day.

2. Prior determination of ITC

The ITC must complete its preliminary injury determination within 45 days of
follow the filing of the complaint. In order to meet this deadline, the Commission sets the first date
public hearing practically immediately after the opening of the information, in
general on the 21st or 22nd day after filing the complaint.

Due to this very short delay, the foreign industry must decide, before the information is
be open, if it intends to participate in this hearing. If so, she must take
immediately counsel, gather the evidence and prepare his defense.

Indeed, if it waits for the information to be effectively opened, it will not have the
time needed to prepare for this hearing.

The Commission having to examine the injury suffered by the American industry, it is the market
of the United States which will be the object of its main attention. Companies that import and sell
product in the US market can be of great help in this regard as they
know the market much better than the foreign producer. Their participation as well
that that of their client is therefore very important at this stage of the procedure.

Within 45 days of filing the complaint, the Commission must decide whether there is a
reasonable indication of material damage, based on the best information available to the
Commission at that time. If the ITC decides in the affirmative then, the investigation procedure
of DOC begins. In the event that the Commission's preliminary determination is
negative, the case is closed.

3. Preliminary determination of the DOC

Within 160 days of filing the complaint, if the ITC has issued an affirmative opinion on the
prejudice, the DOC must make a “preliminary determination” as to whether the
products are sold below their "fair value".

As soon as it receives the green light from the ITC, the DOC sends a questionnaire to all the principal
producers in the country under investigation. Each producer has 30 days to respond and can,
in general, obtain an additional 15 days. These questionnaires require a
considerable amount of general information about each company and further request
that a detailed list be drawn up of all sales made one by one in the United States and
in the foreign market during the period under investigation. It is usually
a period that covers the 5 months preceding the filing of the complaint. Responses to
questionnaire must be given on a computer diskette in the format proposed by
the DOC. Most of the time, the computerized responses to this sales questionnaire will
several hundred pages long and will have several thousand lines of
information.

In a case concerning the cost of production and the reconstructed value, the questionnaire
DOC will also request information regarding the cost of production of each
sample of product model or type under investigation. This information is
usually required in chronological order for a full year, divided into
quarter, plus information for the period running up to the month in which the
complaint. For example, If a complaint is filed in July 1987, information on the
costs will likely be required for each quarter of 1986 plus the first two
quarters of 1987.

If the DOC receives the responses to the questionnaires in a timely manner, it will base its determination
preliminary on these answers. Otherwise, it will use its "best source of information
available ”.

4. Effects of the DOC's Prior Determination

If this prior determination is affirmative and the DOC considers that there are margins
of dumping, the determination will say what percentage of the US price is exceeded by the
price of the foreign product.

This preliminary determination has two consequences:
a) DOC orders the suspension of liquidation of any pending imports for
products subject to this determination and require importers to deposit an amount
equal to the said margin for any new importation.
b) ITC begins its final injury investigation.

5. Final determination of the DOC

Within 75 days of its preliminary determination, DOC must issue its decision
definitive, determining whether the sales took place below fair value.

Before making this final decision, the DOC teams will visit the offices or factories of all the companies that replied to the questionnaires to verify the accuracy of their responses. Any response that has not been verified will be rejected and the DOC will generally rely on the margins alleged in the complaint as the best source of information available.

If the final determination is affirmative, the DOC will maintain the stay of the liquidation
rights and will modify the margin initially estimated, in accordance with its final result.

If DOC's final determination is negative (zero margin), the investigation will be terminated and the
sums deposited will be refunded. A negative final determination is a victory
for the country of export. However, it happens that one or more countries subject to investigations
receive a negative final decision from DOC and others receive an affirmative decision. In this
case, the first companies are then no longer concerned by the case which continues against the
other.

It is also important to note that DOC does not have an obligation to investigate and issue its
questionnaire only for companies which represent a quantity of substantial exports for the
product concerned in each country involved.

According to DOC's interpretation, this applies to companies responsible for at least 60 % of
these exports. If a company does not receive a questionnaire, it will however be subject to
a dumping rate corresponding to the average of the rates applied against the companies which have
received the questionnaire.

Accordingly, it is important to determine in advance what the particular margin of a
company is likely to be, and, If low or non-existent, to ensure that the company in
question receives a questionnaire from DOC. This will allow this company to get its own
rate (hopefully zero) and thus protect against the consequences of the average rate
which is likely to be much superior to that which would concern it. If the current rate of this company is
equal to zero, it will be exempt from the consequences of the subsequent dumping decision.

6. Retroactive application of dumping rates

In addition to the above, it is possible that dumping duties may be imposed retroactively up to 90 days before the date of the decision ordering the suspension of the assessment of the duties. This happens If the DOC determines that there are "critical circumstances". Such a decision requires:
I) - a history of dumping of this goods in the United States or elsewhere or that the importer knew that the goods were sold below their fair value and
II) - that there was a massive importation of this commodity during a short period. If these two conditions are met. dumping duties can be imposed retroactively.

7. Final determination of ITC

If the DOC issues a final determination of dumping, the ITC will have to issue a
final determination of damage. The timeframes for this depend on what the
DOC's prior determination was affirmative or negative. In this decision
final, the Commission decides whether the domestic industry has, in fact, suffered material injury
or If threatened by material injury as a result of the dumped imports.

If the ITC's final determination is affirmative, USDOC will issue an order of
dumping. From that moment the importer will have to enter the estimated amount of duty
in the amount of the margin when the goods will be imported.

These rights are then subject to liquidation during the following annual verifications, which
can take place at the request of an importer, exporter or producer
national.

If the ITC's final determination is negative (no prejudice). The case is closed. A
such a decision clearly constitutes a complete victory for the exporting party.

CONCLUSION

Usually, a dumping case is completed within 1 month from the filing of
the complaint. The time available to the foreign party to submit the required information
is very short just a few days in the initial phase to prepare for the hearing of the
Commission and only 30 to 45 days to respond to the DOC questionnaire.

Therefore, it is in the interest of the country under investigation to begin
preparing his defense as soon as possible. This means that decisions regarding the
how to proceed should be taken soon after the complaint is filed and well before
that the information be open. This advance preparation concerns both the audience of
ITC that the preparation of the information necessary for the response to the
DOC. Companies that will be able to ensure 4 to 6 weeks of preparation
more by preparing their answers in advance will have the best chance of success
in the final issue.

On the other hand, for the reasons explained above, each exporter has an interest in protecting his
own position by taking action as soon as possible after a complaint has been
filed against a company in his country, or even before, if he is informed that such a complaint
is about to be filed.