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Oct 29, 2024

Information regarding the ADD and CVD petitions on Corrosion-Resistant Steel Products from ten countries | White & Case LLP

On September 5, 2024, Steel Dynamics, Inc, Nucor Corporation, United States Steel Corporation, Wheeling-Nippon Steel, Inc., and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy,

On September 5, 2024, Steel Dynamics, Inc, Nucor Corporation, United States Steel Corporation, Wheeling-Nippon Steel, Inc., and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC (collectively "Petitioners") filed an antidumping duty ("ADD") petition on imports of corrosion-resistant steel products ("CORE") from Australia, Brazil, Canada, Mexico, the Netherlands, South Africa, Taiwan, Turkey, the United Arab Emirates (the "UAE"), and the Socialist Republic of Vietnam ("Vietnam"), and a countervailing duty ("CVD") petition against CORE from Brazil, Canada, Mexico, and Vietnam. The ADD petition alleges that imports of CORE from Australia, Brazil, Canada, Mexico, the Netherlands, South Africa, Taiwan, Turkey, the UAE, and Vietnam are being sold in the United States at less than fair value (that is, "dumped"). The CVD petition alleges that the governments of Brazil, Canada, Mexico, and Vietnam are providing countervailable subsidies with respect to the manufacture, production, and/or export of CORE. Petitioners allege that the domestic industry has been materially injured and is threatened with further material injury by the subject imports.

The products covered are certain flat-rolled steel products, either clad, plated, or coated with corrosion-resistant metals such as zinc, aluminum, or zinc-, aluminum-, nickel- or iron-based alloys, whether or not corrugated or painted, varnished, laminated, or coated with plastics or other non-metallic substances in addition to the metallic coating. The products covered include coils that have a width of 12.7 mm or greater, regardless of form of coil (e.g., in successively superimposed layers, spirally oscillating, etc.). The products covered also include products not in coils (e.g., in straight lengths) of a thickness less than 4.75 mm and a width that is 12.7 mm or greater and that measures at least 10 times the thickness. The products covered also include products not in coils (e.g., in straight lengths) of a thickness of 4.75 mm or more and a width exceeding 150 mm and measuring at least twice the thickness. The products described above may be rectangular, square, circular, or other shape and include products of either rectangular or non-rectangular cross-section where such cross-section is achieved subsequent to the rolling process, i.e., products which have been "worked after rolling" (e.g., products which have been beveled or rounded at the edges).

For purposes of the width and thickness requirements referenced above:

(1) Where the nominal and actual measurements vary, a product is within the scope if application of either the nominal or actual measurement would place it within the scope based on the definitions set forth above, and

(2) where the width and thickness vary for a specific product (e.g., the thickness of certain products with non-rectangular cross-section, the width of certain products with non-rectangular shape, etc.), the measurement at its greatest width or thickness applies.

Steel products included in the scope of these investigations are products in which: (1) iron predominates, by weight, over each of the other contained elements; and (2) the carbon content is 2 percent or less, by weight.

Subject merchandise also includes corrosion-resistant steel that has been further processed in a third country, including but not limited to annealing, tempering, painting, varnishing, trimming, cutting, punching and/or slitting or any other processing that would not otherwise remove the merchandise from the scope of the investigations if performed in the country of manufacture of the in-scope corrosion resistant steel.

All products that meet the written physical description are within the scope of these investigations unless specifically excluded. The following products are outside of and/or specifically excluded from the scope of these investigations:

Also excluded from the scope of the antidumping duty investigation on corrosion-resistant steel from Taiwan are any products covered by the existing antidumping duty order on corrosion-resistant steel from Taiwan. See Certain Corrosion-Resistant Steel Products from India, Italy, the People's Republic of China, the Republic of Korea and Taiwan: Amended Final Affirmative Antidumping Determination for India and Taiwan, and Antidumping Duty Orders, 81 Fed. Reg. 48,390 (Dep't Commerce July 25, 2016).

The products subject to the investigations are currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under item numbers: 7210.30.0030, 7210.30.0060, 7210.41.0000, 7210.49.0030, 7210.49.0040, 7210.49.0045, 7210.49.0091, 7210.49.0095, 7210.61.0000, 7210.69.0000, 7210.70.6030, 7210.70.6060, 7210.70.6090, 7210.90.6000, 7210.90.9000, 7212.20.0000, 7212.30.1030, 7212.30.1090, 7212.30.3000, 7212.30.5000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7212.60.0000, 7225.91.0000, 7225.92.0000, 7226.99.0110, and 7226.99.0130.

The products subject to the investigations may also enter under the following HTSUS item numbers: 7210.90.1000, 7215.90.1000, 7215.90.3000, 7215.90.5000, 7217.20.1500, 7217.30.1530, 7217.30.1560, 7217.90.1000, 7217.90.5030, 7217.90.5060, 7217.90.5090, 7225.99.0090, 7226.99.0180, 7228.60.6000, 7228.60.8000, and 7229.90.1000.

The HTSUS subheadings above are provided for convenience and customs purposes only. The written description of the scope of the investigations is dispositive.

There are two phases – preliminary and final – of ADD and CVD investigations. The Department of Commerce ("DOC") will determine whether imports of CORE from the subject countries were dumped in the United States and establish the rates of ADD that will be imposed. It will also determine whether the governments of Brazil, Canada, Mexico, and Vietnam subsidized exports of CORE to the United States and establish the rates of CVD that will be imposed. The International Trade Commission ("ITC") will determine whether imports of the subject merchandise are materially injuring, or threaten to materially injure, the domestic industry.

In order for final ADD and CVD to be imposed, both agencies must issue "affirmative" findings. We discuss below the steps involved in reaching such findings.

By September 25, 2024, DOC must decide whether the ADD petition contains the legally required information regarding Petitioners' standing, dumping, and injury to warrant initiating an investigation. The standard for initiation is low, requiring only that the petition contains information that is "reasonably available" to Petitioners. Consequently, we expect DOC will initiate the investigation by the September 25 deadline.

DOC will issue a questionnaire to, and calculate a dumping rate for, one or more producers in each of the subject countries. These producers are referred to as "mandatory respondents." The decision of which producers will receive the questionnaire will be based on export volumes. DOC could choose only one producer from each subject country to respond to the questionnaire if it is possible to account for 80%-85% of exports with just one producer. If not, DOC will choose two or more producers from each subject country.

The companies that are selected as mandatory respondents will receive dumping rates based on their actual data. If a company refuses to respond to the questionnaire, it will be assigned a dumping rate based on "adverse facts available," which is a punitive rate, typically based on the dumping rate calculated in the petition. The dumping rates alleged in the ADD petition vary by country, as follows:

Because DOC considers Vietnam to be a "non-market economy" ("NME"), DOC begins its investigation under the assumption that all exporters are part of a single, government-operated "Vietnam-wide entity" which will be subject to a "Vietnam-wide" ADD margin. This margin is often based on "adverse facts available," making it punitively high. Companies that demonstrate sufficient independence from the Government of Vietnam may receive a separate dumping rate based on their actual data.

All other producers from each country (other than those that are issued the questionnaire) will be subject to each country's "All Others" rate, which normally is calculated as the weighted average of the rates assigned to the mandatory respondents in each country.

The ADD questionnaire will request detailed information regarding US sales and home-market sales of CORE (transaction-specific prices, direct selling expenses, movement expenses, etc.) and production costs during the period of investigation ("POI"), which will be July 1, 2023, through June 30, 2024, for Australia, Brazil, Canada, Mexico, the Netherlands, South Africa, Taiwan, Turkey, and the UAE, and January 1, 2024, through June 30, 2024 for Vietnam. DOC will also issue multiple supplemental questionnaires to clarify information reported in the initial questionnaire responses. The burden of responding to the questionnaires is significantly increased if: (1) companies affiliated with the mandatory respondent also produce and/or sell the subject merchandise in the subject countries; and/or (2) key materials used to produce the subject merchandise are purchased from affiliated suppliers.

Within 140 days after the ADD investigation is initiated (we estimate by February 12, 2025), DOC must make a preliminary determination of whether dumping exists and, if so, the estimated dumping margin for each company investigated (DOC can, and often does, postpone the preliminary determination for an additional 50 days). If DOC makes an affirmative preliminary determination, Customs and Border Protection ("CBP") will suspend liquidation of entries of CORE from the subject countries and require importers to provide ADD cash deposits equal to the preliminary dumping margin calculated for the exporter multiplied by the entered value of the merchandise. Normally, the suspension of liquidation begins on the date DOC's preliminary determination is published in the Federal Register. However, if there are "critical circumstances," the suspension can apply retroactively to imports made 90 days before the preliminary determination is published.

DOC personnel normally visit the mandatory respondents' offices to verify the accuracy of the information provided in the questionnaire responses. This is normally done after the preliminary determination. If the questionnaire responses are incomplete or their accuracy cannot be verified, DOC will calculate dumping margins based on "adverse facts available," which normally means accepting the dumping margins calculated by Petitioners. The verification is one of the most difficult aspects of the investigation.

To verify a respondent's reported information, DOC will send a team of verifiers and require access to confidential information, including the mandatory respondents' accounting records, sales and cost systems, and other sensitive information. If DOC determines that it cannot conduct an on-site, in-person verification due to travel or safety concerns, it may conduct a "virtual verification" through an online platform (e.g., Webex/Teams) as an alternative.

Within 75 days after the preliminary determination, DOC will issue a final ADD determination. As with the preliminary determination, DOC can, and often does, postpone this deadline for an additional 60 days. DOC's final decision is based on the verified information, public hearings, and briefs submitted by counsel involved in the case. If a zero-dumping finding is made, or only "de minimis" levels (i.e., less than 2.00%) of dumping margin are found, the investigation ends. If DOC's final ADD determination is affirmative, the case proceeds to ITC for a final injury determination. DOC will also instruct CBP to continue to suspend liquidation of entries of CORE from the subject countries and require ADD cash deposits at the final dumping margins determined for each exporter. Individual companies receiving zero or de minimis rates are excluded from the ADD order (if issued).

As with the dumping investigation, DOC must decide whether the CVD petition contains the legally required information regarding Petitioners' standing, subsidies, and injury to warrant initiating an investigation by September 25, 2024.

DOC will then issue CVD questionnaires to the Brazilian, Canadian, Mexican, and Vietnamese companies selected for investigation, as well as to the governments of Brazil, Canada, Mexico, and Vietnam. Typically, DOC chooses the two or three largest foreign exporters from each country to respond to the questionnaire. Again, these are referred to as "mandatory respondents." The CVD questionnaire will seek information about the alleged subsidies for the POI (the most recently completed fiscal year – that is, 2023), as well as for prior years. DOC will likely issue one or more supplemental questionnaires seeking clarification or additional information.

Within 65 days after the CVD investigation is initiated (we estimate by November 29, 2024), DOC must make a preliminary determination of whether subsidization exists and, if so, the estimated CVD rate for each company investigated (DOC can, and often does, postpone the preliminary determination for an additional 65 days). If DOC makes an affirmative preliminary determination, CBP will (as in the dumping investigation) suspend liquidation of entries of CORE from Brazil, Canada, Mexico, and Vietnam and require importers to provide cash deposits equal to the preliminary CVD rate calculated for the exporter multiplied by the entered value of the merchandise. Normally, the suspension of liquidation begins on the date DOC's preliminary determination is published in the Federal Register. However, if there are "critical circumstances," the suspension can apply retroactively to imports made 90 days before the preliminary determination is published.

DOC personnel will visit the mandatory respondents' offices to verify the accuracy of the information provided in the CVD questionnaire responses. DOC will also conduct on-site verifications of the information reported by the governments of Brazil, Canada, Mexico, and Vietnam. As in the dumping context above, DOC may conduct a "virtual verification" as an alternative to an on-site, in-person verification.

Within 75 days after the preliminary determination, DOC will issue a final CVD determination. DOC's final decision is based on the verified information, public hearings, and briefs submitted by counsel involved in the case. If a zero-subsidy finding is made, or only "de minimis" levels of subsidies (i.e., less than 1.00%) are found, the investigation ends. If DOC's final determination is affirmative, the case proceeds to ITC for a final injury determination. DOC will also instruct CBP to continue to suspend liquidation of entries of CORE from Brazil, Canada, Mexico, and Vietnam, and require CVD cash deposits at the final subsidy rates determined for each exporter. Individual companies receiving zero or de minimis subsidy rates are excluded from the CVD order (if issued).

ITC is currently scheduled to make a preliminary determination (that is, the Commissioners will vote) no later than October 21, 2024. The preliminary investigation will move very quickly. The legal standard that ITC must apply in reaching its preliminary determination is very low. Essentially, ITC must issue an affirmative preliminary injury determination unless it is clear that the US industry is not being injured or is not threatened with injury. Any doubt requires ITC to continue the investigation. Because this standard is so low, it is difficult to terminate an investigation at the preliminary stage. In the final injury investigation, ITC has considerably more time to conduct its investigation and consider the facts and arguments presented by the parties. The legal standard is also higher in the final phase. Therefore, foreign producers are more likely to succeed at the final stage of ITC's investigation than at the preliminary stage. Nevertheless, it can be advantageous for foreign producers and importers to participate in the preliminary phase of the investigation so they can frame themes and issues for ITC's consideration in the final phase.

ITC will base its preliminary injury determination primarily on information received in responses to the questionnaires sent to US producers, US importers, and foreign producers. Typically, the ITC circulates these questionnaires to parties within two to three business days of the filing of the petition (i.e., on or around September 9, 2024); and sets the deadline for them a week before the Staff Conference discussed below (i.e., on or around September 19, 2024). It is important that foreign producers timely submit responses. Otherwise, ITC likely will accept Petitioners' allegations, resulting in an affirmative preliminary injury determination.

ITC Staff will conduct a conference on or around September 26, 2024. At the conference, interested parties will have an opportunity to present oral testimony and answer ITC Staff's questions. Afterwards, parties will have an opportunity to present written arguments (and supporting exhibits) in post-conference briefs, which likely will be due on or around October 1.

In the final phase, which will occur in Summer 2025, the ITC will conduct a more thorough investigation, with a much higher standard of injury. For the final phase, the ITC crafts more detailed questionnaires for issuance to US producers, US importers, and foreign producers, as well as (unlike in the preliminary phase) for issuance to US purchasers. Before issuing the questionnaires, ITC Staff circulates draft questionnaires for the parties' comments, which is an important opportunity to ensure the questionnaires solicit information needed to support the defense. After issuing and receiving responses to the questionnaires, ITC Staff prepares a report summarizing and discussing the information and data reported in the questionnaire responses, as well as information compiled from the preliminary phase of the investigation and ITC Staff's independent research. The ITC Staff's report is important because it is a key document relied upon by the Commissioners in evaluating whether the US industry is materially injured or threatened with material injury because of the cumulated subject imports. After issuance of the ITC Staff report, parties have approximately one week to submit briefs ("prehearing briefs") presenting their arguments supporting or opposing an affirmative determination of material injury (or threat thereof). Normally one week after the deadline for prehearing briefs, ITC holds a public hearing at which the Commissioners (i.e., the decision makers) preside. During the hearing, both sides – Petitioners in support of ADD/CVD and the foreign producers and US importers/purchasers opposed to ADD/CVD – will each have one hour to make an affirmative presentation, followed by a question-and-answer session with the Commissioners. For the defense, in particular, it is critical that industry witnesses (such as importers and US purchasers) opposed to the imposition of ADD/CVD participate and testify at the ITC hearing. After the hearing, the parties have approximately one week to prepare "posthearing" briefs, which typically focus on rebutting the other side's arguments and answering specific questions raised by the Commissioners at the hearing. Several days before the date of the ITC's scheduled vote, parties have one last opportunity to submit final comments in the case. Unlike the preliminary phase, which takes place over the course of approximately six weeks, the final phase normally takes place over the course of approximately four months.

The table below provides key deadlines* for the DOC and ITC ADD proceedings. These dates assume full extensions of the statutory deadlines and "alignment" of the final ADD and CVD determinations.

* Please note dates are approximate. To the extent a deadline falls on a weekend or holiday, the event will usually occur the preceding or next business day.

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