|August 25, 2004
Commerce Amends Preliminary Margins for Certain China Exports
On August 5, 2004, Commerce amended its list of Section A respondents following a review of allegations of ministerial errors. In so doing, it added 20 new Chinese suppliers to the Section A list, who will now receive the 10.92% deposit rate, as opposed to the China-wide rate of 198.02%. A list of these 20 new suppliers can be found on Commerce's Fact Sheet at: http://ia.ita.doc.gov/download/
Importers and Chinese suppliers of wooden bedroom furniture should be clear that the Section A respondent rate of 10.92% is only a deposit rate, and not the final rate. Commerce's Final Determination, which is due November 5, 2004, will publish the final Section A rate, which can vary slightly from the preliminary deposit rate.
Assessment Of Antidumping Duty Rates Free-Standing
Wall Mirrors, Occasional Tables, TV Set Cabinets, Hall Chests,
Bombé Chests, Lingerie Chests And High Boys
Since the preliminary determination went into effect, some importers of accent and occasional furniture products have found that they are being assessed with antidumping duties based on the position by U.S. Customs that their products are within the scope of the wooden bedroom furniture dumping investigation.
Several companies of accent and occasional products were surprised to learn that they are required to pay antidumping duties of up to 198.08%. Such products include: free-standing wall mirrors, occasional tables, TV set cabinets, hall chests, bombé chests, lingerie chests and high boys. In particular, dresser-mirror combinations present a problem due to the broad scope of the antidumping order, which covers "framed glass mirrors that are attached to, incorporated in, sit on, or hang over the dresser." Unfortunately, this scope language would appear to cover most large, framed mirrors. Particular problems include the cheval mirrors (large mirrors in their own floor frame). The same problem exists for chests and armoires used as television cabinets that may have one or two small drawers. Some Customs ports take the position that the presence of even one drawer that is large enough to hold clothes places the entire armoire into the scope.
Importers who cannot resolve their problem with Customs should consult counsel experienced in antidumping matters to explain to Customs why the articles are outside the scope of the investigation.
Annual Reviews: Defending Your Section "A" Rate
If an antidumping order goes into effect in January 2005, the U.S. domestic industry will, in January 2006, have an opportunity to request an Administrative Review of all China exporters receiving the Section A rate (Section A respondents). We anticipate that U.S. domestic industry will request such a review. Should this happen, all of the import entries relating to these Section A respondents, as well as other companies named by the U.S. domestic industry, will remain open and unliquidated for at least a year and a half after the review is requested. The review period would cover import entries between June 24, 2004 and December 2005.
What Section A companies named in the first administrative review will be required to do is not clear at this time. Some of the Section A companies may be required to respond to a full antidumping questionnaire. The failure to respond to this questionnaire would result in the China-wide rate being applied to that Section A company. It also means that importers who purchase from that Section A company will be assessed retroactive antidumping duties for the period of June 24, 2004, through December 2005 at the 198.02% rate.
There is also the possibility that Section A companies may be required to respond to another mini-Section A questionnaire. The failure to adequately respond to these questionnaires would probably also result in that company receiving the China-wide rate. Thus, the final assessed rate for current furniture entries (made on or after June 24, 2004) may not be known for at least two and one-half years.
Customs' Scrutiny Of Furniture Imports Is Expected To Be High
We anticipate that U.S. Customs and Border Protection ("Customs") will closely scrutinize importations of furniture articles to determine whether the furniture items fall within the scope of this antidumping order. In addition, we anticipate that Customs may give close scrutiny to imports that are entered at the 10.92% Section A rate, based upon the amount of fraud that has taken place with regard to certain antidumping investigations involving agricultural products from China.
In particular, Customs has been unable to collect approximately $85 Million in antidumping duties on Chinese crawfish tail meat, due to fraudulent schemes committed both by Chinese exporters and U.S. importers. In these transactions, the importers would deposit antidumping duties at a low rate instead of the very high China-wide rate, pending the outcome of Commerce's Final Determination. Once the Final Determination had been published, it was determined that these companies were not entitled to a low antidumping rate, and thus were assessed the very high China-wide rate. Customs was unable to collect the retroactive antidumping duties because the Chinese suppliers and importers went out of business, or simply disappeared.
This has hit particularly hard on insurance and bonding companies, who have been left holding the bag, and liable for the additional retroactive antidumping duties. As a result, bonding companies are conducting more audits, and are tightening up their underwriting criteria, particularly when it involves China and antidumping. We understand that many sureties are requiring the importers to deposit the full cash amount for antidumping duties and, in some cases, sureties are seeking some type of collateral, such as a letter of credit, to protect themselves in advance. Although the crawfish case didn't specifically involve Section A companies, the concern by Customs on collecting antidumping duties will likely carry over to the furniture case.
Prior History & Background Information
For those interested in learning more about this case, the following links are provided:
If you have any questions on any of the issues raised in this newsletter, please contact Stephen Spraitzar at (415) 288-0427 or via email at firstname.lastname@example.org.
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.
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