September 23, 2023

Volume XIII, Number 266

Advertisement
Advertisement

September 22, 2023

Subscribe to Latest Legal News and Analysis

September 21, 2023

Subscribe to Latest Legal News and Analysis

September 20, 2023

Subscribe to Latest Legal News and Analysis
Advertisement

Trade Alert: US Action Against Certain Paper Shopping Bag Imports

On May 31, 2023, Novolex and union workers filed antidumping duty (AD) petitions against certain paper shopping bags imports claimed to be sold into the US at less than normal value (i.e., at unfairly low prices, such as below cost or home or third-country prices) and requested the imposition of AD import duties of:

  • Cambodia – 44.29% to 221.36%

  • China – 133.80% to 324.24%

  • Colombia – 65.04%

  • India – 88.56%

  • Malaysia – 173.38%

  • Portugal – 26.71% to 204.54%

  • Taiwan – 44.76% to 50.13%

  • Turkey – 12.51% to 45.29%

  • Vietnam – 63.67% to 128.81%

Offsetting US AD import duties are imposed if (a) the US Department of Commerce (DOC) finds that dumping is occurring based on responses to DOC questionnaires (and verification audit thereof) of the foreign exporters/producers, and (b) the US International Trade Commission (ITC) finds that there is material injury (or the threat thereof) by reason of the dumped imports to a US industry.

The petition also claimed that Indian and Chinese exporters receive unfair government subsidies (specific amounts not alleged), warranting offsetting countervailing (CVD) import duties. US CVD import duties are imposed if (a) DOC finds exporters are government subsidized based on their responses to DOC questionnaires (and verification audit thereof), and (b) (again) the ITC finds that there is material injury (or the threat thereof) by reason of the subsidized imports to a US industry.

The accused countries constitute about two-thirds of paper shopping bag imports and about US$750 million of trade.

The most immediate upcoming deadlines in this investigation are the ITC preliminary injury investigation, as follows:

  • June 14, 2023 – Questionnaire responses due (short extension possible). 

  • June 21, 2023 – ITC preliminary staff conference (witness testimony).

  • June 26, 2023 – Written comments to ITC.

  • July 14, 2023 – ITC preliminary injury decision deadline. Generally, the ITC finds sufficient indicia of injury at this stage to continue the investigation (not end it), where then the investigation moves to DOC. The reason is the low legal threshold for the ITC to so find at this stage. Even then, participation in ITC preliminary injury investigation can lay the factual foundation for a later (in about 12-14 months) final negative ITC injury decision, ending the case, which happens around 30%-50% of the time (varies over time). That said, it is critical not to make statements at the ITC preliminary injury stage that hurt at the final stage. The above said, at least based on the claimed facts of the public version of the petition here, there is some ambiguity as to what is said, raising the question of what the actual confidential aggregate industry figures show as to injury even at the preliminary stage. Still, the petition alleges a 74% increase in accused imports over the several year review period, and declining US industry performance indicia – classic petitioner injury claims.

The ITC website has the above dates plus the ITC questionnaires to answer.

The DOC preliminary CVD subsidy decision is August 24, 2023. However, this date is generally extended about 65 days (here to about October 30, 2023) if an investigated exporter satisfactorily participates at DOC by answering DOC questionnaires as to the extent (if any) of subsidies and (later) undergoes a verification audit thereof. Then the exporter gets a subsidy CVD import duty margin based on its actual extent of received subsidies (if any). In contrast, failure to so participate results in a prohibitively high, adverse DOC CVD import duty.

The DOC preliminary AD decision is November 7, 2023. This date too is generally extended about 50 days (here to December 27, 2023) if an investigated exporter satisfactorily participates at DOC, answering DOC questionnaires as to the extent (if any) of dumping and (later) undergoes verification audit thereof. And if the exporter so participates, it gets a dumping margin based on its actual extent of dumping (if any). In contrast, here too, exporter failure to so participate generally results in the highest above petitioner alleged dumping margin being imposed on its sales.

AD and CVD import duty liability generally begins as to imports at the time of the DOC preliminary decision. But it can be retroactive 90 days before then – i.e., retroactive to August 9, 2023 if the DOC preliminary AD decision is November 7, 2023; and June 20, 2023, for CVD if the DOC preliminary CVD decision is August 24, 2023 (retroactivity cannot be earlier than 20 days after petition filing). Retroactivity is to address certain import surges seeking to avoid AD/CVD, but all the conditions to so find are generally not found.

DOC generally issues dumping and subsidy questionnaires to the two largest US exporters from each accused country, to determine their AD/CVD margin. All other exporters from a particular country generally get an AD/CVD margin based on the DOC findings as to the two largest exporters from that country.

May 10, 2024, is the date of DOC final AD/CVD decisions, if all deadlines are fully postponed, where then June 24, 2024, is the date of the ITC final injury determination.

Our lawyers have successfully handled hundreds of AD/CVD cases throughout the world over more than four decades, and served in key positions at the DOC and ITC, as well as in key Congressional and US administration positions. Our lawyers participated in the 2010 related plastic bag AD/CVD action, successfully as to the particular client, though that action otherwise led to significant AD/CVD import duties. We are happy to discuss this further, if that would be of interest.

Addendum – Scope of the Investigation

Per the petition, the scope of these investigations covers paper shopping bags with handles of any type, regardless of whether there is any printing, regardless of how the top edges are finished (e.g., folded, serrated, or otherwise), and regardless of whether the tops can be sealed. Subject paper shopping bags have a width of at least 4.5 inches and depth of at least 2.5 inches.

Excluded from the scope are:

  • Multiwall sacks and bags

  • Paper sacks or bags that are of a one-sixth- or one-seventh-barrel size (i.e., 11.5-12.5 inches in width, 6.5-7.5 inches in depth, and 13.5-17.5 inches in height) with flat paper handles

  • Paper sacks or bags with die-cut handles, a standard basis paper weight of less than 38 pounds, and a height of less than 11.5 inches

  • Shopping bags (i) with non-paper handles made wholly of woven ribbon or other similar woven fabric and (ii) that are finished with folded tops, or for which tied knots or T-bar aglets (made of wood, metal, or plastic) are used to secure the handles to the bags

  • Gift bags marked for retail sale that are physically bundled into the saleable unit prior to importation such that each bundled unit is composed of no less than three individual bags and no more than 30 individual bags

Although not dispositive, the proposed in-scope paper bags are classified under US Harmonized Tariff Schedule subheadings 4819.30.0040 and 4819.40.0040.

© Copyright 2023 Squire Patton Boggs (US) LLPNational Law Review, Volume XIII, Number 157
Advertisement
Advertisement
Advertisement

About this Author

We employ a comprehensive approach when it comes to our International Trade practice. We focus on global import and export compliance, international trade policy and market access and trade remedies/defense. Our lawyers practice international trade law in almost every country where we have an office, and our full-time practitioners operate out of our Washington DC, London and Brussels offices.

We offer a “one-stop” service encompassing international trade compliance and policy acumen to make necessary judgments while operating effectively in a...

202-626-6234