November 4, 2004
In early October, 2004, the National Candle Association ("NCA"), which represents the U.S. manufacturers of candles, petitioned the U.S. Department of Commerce to determine that candles made primarily of palm oil and vegetable-based wax are within the scope of the antidumping order on petroleum wax candles from China. Candles made of petroleum wax covered by this antidumping order are subject to the antidumping duty rate of 108.3%.
Potential Retroactive Cash Deposit Of Antidumping Duties If Preliminary Determination Is Affirmative
Commerce has 45 days from the date of the filing of the petitions, or by November 22 and 26, 20041, to determine whether to initiate a scope investigation. If Commerce decides to initiate, Commerce will allow interested parties to file written comments. In addition, it will probably issue questionnaires to Chinese suppliers and U.S. importers to obtain various types of data. After reviewing the comments and information received, Commerce will publish a preliminary determination as to whether the candles in issue are within the scope of the order.
If the preliminary determination is affirmative - that the palm oil and vegetable-based wax candles are within the scope - then Commerce will instruct Customs to suspend liquidations of candle entries and to require a cash deposit of estimated dumping duties for each unliquidated entry of candles entered on or after the date of initiation of the scope inquiry, which would be shortly after November 26, 2004. The cash deposit rate would be 108.3% for almost all imports.
Unless instructed to withhold liquidation, Customs will normally liquidate entries within 314 days after the date of entry. Hence, importers of candles should carefully monitor the liquidation of their entries.
Before issuing the preliminary determination, Commerce may verify the responses of the Chinese suppliers to the questionnaires. Under the Commerce regulations, Commerce must issue a final scope determination within 300 days after initiation of the investigation.
Basis Of The Requests For Circumvention Inquiries
The two petitions, which included allegations of widespread fraud on the part of Chinese producers and U.S. importers, were filed under the "circumvention" provisions of the dumping laws.
One petition filed by the NCA alleges that Chinese suppliers are circumventing the antidumping order based upon allegations of "minor alterations" to merchandise, and that the petroleum wax content is reduced to below 50% due to the addition of palm oil or vegetable-based waxes.
The other petition is based on "later-developed merchandise" allegations. The NCA claims that palm oil and vegetable-based wax candles were developed after the original antidumping order was issued. It should be noted that in 2002, Commerce issued a number of scope determinations excluding candles made from palm oil or vegetable wax from the scope of the antidumping order on candles. The NCA included an argument that these types of candles should be considered "later-developed merchandise" and, therefore, were within the scope of the order. Commerce specifically indicated that Commerce was not making a determination as to whether the palm oil candles were "later-developed merchandise". Thus, Commerce left the door open for this issue to be raised at a later date.
Anticipated Action of Commerce
We believe there is a likelihood that, based upon its prior circumvention determinations, Commerce will initiate scope circumvention investigations in the two candle petitions filed by the NCA.
At the time of issuing its notice of initiation, Commerce will provide for an opportunity for all interested parties to submit comments, rebuttal briefs, and the presentation of oral arguments at a Commerce hearing. We anticipate that Commerce will also issue questionnaires to U.S. importers and Chinese suppliers.
Unless extended, interested parties will have 20 days from the date of the publication of the initiation of the investigations to submit comments, and 10 days thereafter in which to submit rebuttal comments.
The Law Office of George R. Tuttle is actively working to create a coalition of interested parties to fight these petitions. If you wish to join this coalition or have any question with regard to these two cases, please contact Steve Spraitzar at email@example.com or 415-288-0427, at the Law Offices of George R. Tuttle.
Stephen Spraitzar is an attorney with the Law Offices of George R. Tuttle in San Francisco. The information in this article is general in nature, and is not intended to constitute legal advice or to create an attorney-client relationship with respect to any event or occurrence, and may not be considered as such.
1 One petition, seeking inclusion in the scope of "later developed" products, was filed on October 8, 2004, and the other, seeking inclusion of products that are the result of "minor alterations" to the production process, on October 12, 2004.
© 2005 by Tuttle Law Offices.
rights reserved. Information has been obtained from sources believed
to be reliable. However, because of the possibility of human or
mechanical error by our offices or by others, we do not guarantee
the accuracy, adequacy, or completeness of any information and are
not responsible for any errors, omissions, or for the results obtained
from the use of such information.