The US and China may be signing a Phase One trade agreement next week, but the antidumping and countervailing duty claims against Chinese products are not missing a beat.
This January 8, 2020, filing against wood mouldings and millwork products is just another in a long line of anti-dumping/countervailing duty cases brought against Chinese products in an effort to increase the duties on those products when they enter the United States. The media is so focused on the tariffs being imposed against China that it tends to ignore the side wars being waged against Chinese products via the AD/CVD mechanism and via out and out restrictions. These duties just keep coming and if and when the United States and China ever do reach a comprehensive trade deal these duties will likely be so prevalent and so high as to neutralize the economic effect of any such deal.
Truth is that with all the trade issues involving China and bipartisan anti-China sentiment prevalent in the United States, now is a great time to bring such actions. The international trade lawyers at my firm mostly defend against antidumping and countervailing duty claims instead of bringing them — we represent mostly the overseas producers and exporters and the US-based importers — so I say this not to encourage more such actions, but as a factual statement. If you are importing products from China, you need to assess and know the trade risks of your imports and you need to consider whether sourcing from another country makes sense or not. See Has Sourcing Product From China Become TOO Risky? and China Manufacturing: ”Elvis Has Left the Building”.
One of the chief US foreign policy goals is to drive business from China back to the United States and, failing that, to more friendly countries like Mexico (note how quickly President Trump’s mini-tariff war with Mexico was resolved), Vietnam, Thailand, the Philippines, Taiwan, and Indonesia, among others. The price of products coming from China to the United States will continue rising and other countries will look increasingly attractive. For a dollop of practical information on moving your manufacturing from China elsewhere, check out How NOT to Lose Your Shirt When Having Your Product Made Overseas.
But I digress. Back to the Wood Mouldings and Millwork products case.
On January 8, 2020, the Coalition of American Millwork Producers (Petitioner), consisting of seven companies, filed antidumping (AD) and countervailing duty (CVD) petitions against Wood Mouldings and Millwork Products from Brazil and China.
Under U.S. trade laws, a domestic industry can petition the U.S. Department of Commerce (“DOC”) and U.S. International Trade Commission (“ITC”) to investigate whether the named subject imports are being sold to the United States at less than fair value (“dumping”) or benefit from unfair government subsidies. For AD/CVD duties to be imposed, the U.S. government must determine not only that dumping or subsidization is occurring, but also that the subject imports are causing “material injury” or “threat of material injury” to the domestic industry.
These AD/CVD petitions are not related to any action directly taken by President Trump or the U.S. Trade Representative (i.e., not related to any Section 301 China tariff action). Rather, these petitions are the latest actions taken by U.S. industries involved with wood products (e.g., hardwood plywood, softwood lumber, multilayered wood flooring, wooden bedroom furniture, wooden cabinets) to use U.S. trade remedy laws to try to protect their industries from unfair import competition. The domestic industries seek relief from the government in the form of AD/CVD duties imposed on imports from the targeted countries.
Brazil was the source of the largest U.S. import volumes. The significant weakening of the Brazilian real relative to the U.S. dollar gave Brazilian exports a significant pricing advantage over U.S. producers.
China substantially expanded their wood moulding and millwork industries, primarily targeting their own increasing domestic demand. Chinese housing demand, however, recently slowed and excess capacity appears to have been directed towards exports to the United States and other markets.
The petition identifies the merchandise to be covered by this AD/CVD investigation as “wood mouldings and millwork products.” Examples of the millwork building materials subject to this AD/CVD petition include interior and exterior door frames, casing, base mouldings, hand rails, crown moulding, and panel moulding.
Excluded from the scope of this investigation are exterior fencing, exterior decking and exterior siding products, finished and unfinished doors, flooring, and parts of stair steps.
Also excluded are all products already covered by the scope of the antidumping and countervailing duty orders on Hardwood Plywood from China and Multilayered Wood Flooring From China.
See the proposed scope for a complete description of the physical characteristics of the covered merchandise, and the HTS numbers that may be used to import the subject merchandise.
Alleged AD/ CVD Margins.
Petitioner calculated estimated dumping margins ranging between 289.70% and 361.83% for China and 268.74% for Brazil.
Although Petitioner alleged numerous government subsidy programs that benefitted the Chinese wood moulding and millwork products industries, Petitioner did not allege specific subsidy rates.
Named Exporters/ Producers
Petitioner included a list of companies it believes are producers and exporters of the subject merchandise. See attached list here.
Named U.S. Importers
Petitioner included a list of companies that it believes are U.S. importers of the subject merchandise. See attached list here.
Estimated Schedule of Investigations.
January 8, 2020 – Petitions filed
January 28, 2020 – DOC initiates investigation
January 29, 2020 – ITC Staff Conference
February 24, 2020 – ITC preliminary determination
June 8, 2020 – DOC CVD preliminary determination (assuming extended deadline) (4/2/20 – unextended)
August 5, 2020 – DOC AD preliminary determination (assuming extended deadline) (6/16/20 – unextended)
December 18, 2020 – DOC final determination (extended and AD/CVD aligned)
February 1, 2021 – ITC final determination (extended)
February 8, 2021 – DOC AD/CVD orders issued (extended)