When U.S. Industries have suspicion that specific commodities from certain countries are being imported and sold below fair market value, they may petition the U.S. Government to impose special duties on imports of these goods. These duties are referred to as antidumping duties (ADD).
Similarly, when U.S. Industries have suspicion that there are specific commodities from certain countries that are benefiting from foreign governments subsidies, they may petition the U.S. Government to impose special duties on imports of these goods. These duties are referred to as countervailing duties (CVD).
When ADD/CVD are suspected, the U.S. Department of Commerce will undertake a preliminary investigation to determine if such importation of these commodities are harmful to domestic producers of these goods. If such a determination is made, the U.S. Government will impose ADD/ CVD on these imports. Once goods are imported subject to these duties, a “place holder” duty rate on the goods subject to the ADD/CVD case is applied. Then, the government will begin a lengthy review process of the ADD/CVD case. This review process can take many years and involve multiple government agencies, such as the Department of Commerce, to determine what the appropriate ADD/CVD rate should have been and to collect the difference.
Due to the involvement of other government agencies to determine the correct duty rates, the entry liquidation of the subject entries is suspended until a final duty determination is made, therefore extending the surety’s liability risks.
ADD and CVD can be a very confusing and complex process. In our October 2016 newsletter we ran an article explaining the process for ADD/CVD and the additional liability these duties create.