Anti-Dumping (AD) and Countervailing Duties (CVD)
For today's session of Bob's Briefs we are going to be talking about anti-dumping and countervailing duty. So the first thing people ask is what is dumping and countervailing duty?
Dumping occurs when a foreign manufacturer sells goods to importers in the U.S. or Canada at prices that are lower than the selling price of comparable goods in the country of export or when goods are sold at unprofitable prices and the U.S. causing injury to U.S. or Canada industry.
Countervailing duties are established when a foreign government provides assistance and subsidies enabling manufacturers to sell goods cheaper than domestic manufacturers. Examples of subsidies include loans at preferential rates, grants and tax incentives.
A Canadian producer of goods that are similar to competing imports can file a written complaint with the CBSA if it suspects that the imported goods are being dumped or subsidized and are causing injury to Canadian industry. Similarly a U.S. producer of goods can file their written complaints to the international trade commission. Many times importers in both Canada and the U.S. will file their complaints through an association on behalf of its members. This is a benefit as it allows sharing of the costs and the more people on board the better your chances for success.
The written complaints must include information on the Canadian or U.S. produced goods, the competing imports, the domestic industry and conditions in the Canadian or U.S. markets. It must also provide evidence relating to the dumping or subsidizing of the imported goods and the resulting injury to Canadian or U.S. industry.
In Canada the CITT is responsible for establishing if the dumping or subsidizing is causing injury to Canadian industry. in the U.S. and if the ITC finds evidence of injury to U.S. industry the doc does an investigation and if the results are positive the CBP withholds liquidation of entries and collects AD/CVD duties. the entries are not liquidated until the doc instructs CBP headquarters to do so.
Some critical factors in establishing injury to industry include reduced prices, lost sales, lost market share and decreased profits.
The CBSA and CBP investigation process includes both a preliminary and final decision. following a preliminary decision of injury both CBP and CBSA can impose provisional duties. This is intended to protect Canadian and U.S. producers until the CITT in Canada and the doc in the U.S. make its final decisions.
One of the more interesting cases, one of our clients is currently experiencing involves quartz surface products from China that is imported into the U.S. The investigation covers slabs and other surfaces of all size typically sold as rectangular slabs with a total surface area of approx. 45 to 60 square feet and a nominal thickness one to 3 cm.
One of our clients has a contract with a U.S. hotel chain to manufacture tables. To save some money in freight costs they had the China supplier send the tops directly to the hotels from China. They were classified under one of the tariffs subject to the investigation and were imported during the investigation period so CBP identified them as a importer and asked for information. They in turn sent the tables from Winnipeg to the hotel and all they had to do was attach them to the tops. What is interesting is that if the tops were sent to Canada first they would have shipped indicating origin as Canada and most likely would have entered duty free and unless they had a description to indicate the tops were quartz and from China would have flown under the radar.
However this is a bit of a unique case where the dumping also covers any product with a quartz top of China origin. So even if origin is Canada and free under NAFTA the value of the top would need to be identified and declared for dumping purposes.
So for todays quiz:
The Canada-U.S. softwood lumber dispute is one of the largest and most enduring trade disputes between both nations. The conflict arose in 1982 and its effects are still seen today, what is the heart of the dispute?
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