The Importance of AD/CVD Cases to Protecting Trade

In today’s high stakes global marketplace, international trade has become increasingly complex and more subject to regulations and laws designed to promote competition and economic stability. Two such regulations involve Anti-dumping and Countervailing Duties (AD/CVD).

Dumping is the process where global manufacturers attempt to sell goods in another country at less than fair market value, to the detriment of the country where the goods are sold. This often involves foreign governments providing assistance and subsidies, such as tax breaks to manufacturers that export goods to the U.S. As a result, some businesses are able to sell goods at a lesser cost than domestic manufacturers. Countervailing duties are trade import taxes imposed by the U.S. to remedy the negative effects of the subsidies.

Under the Tariff Act of 1930, U.S. industries can petition the government for relief from imports suspected to have been “dumped” or that benefit from subsidies provided by foreign government programs. Under the law, the U.S. Department of Commerce (DOC) determines whether the dumping or subsidizing exists and to what extent. In turn, the U.S. International Trade Commission (USITC) determines the potential ramifications this may have on the economy as a result. For industries not yet established, the USITC may be required to assess whether their formation is hampered because of the dumped or subsidized imports.

Anti-dumping and countervailing duty investigations are conducted under title VII of the law. The Department of Commerce sets AD/CVD rates and the Customs and Border Protection Bureau (CBP) enforces these decisions and collects the duties on imported goods.

AD/CVD Cases - An Historical Perspective

U.S. AD/CVD laws have changed considerably since their inception at the start of the 20th century. The original Anti-Dumping Act of 1916 focused primarily on predatory pricing — the intentional selling of a product at a loss in order to eliminate competition or create barriers to entry for potential new competitors — making the market more vulnerable to monopoly.

These laws were further fortified, restricting trade through the enactment of the Smoot-Hawley Act of 1930. The global community adopted the General Agreement on Tariffs and Trade (GATT) Act, which was the first multilateral trade treaty. GATT is still in effect today and operates through the World Trade Organization (WTO) to establish international trade standards. In tandem with this regulatory framework, the U.S. maintains separate bi-lateral and multilateral treaties with other nations, such as the North American Free Trade Agreement (NAFTA), each with their own set of regulations.

All of these treaties and regulations, combined with such factors as the state of national and foreign economies, world governments and currencies, and advances in manufacturing and technology, create an extraordinarily complex environment for any U.S.-based company with even a small exposure to the international economy.

Customs Authorization Bill

The Trade Facilitation and Trade Enforcement Act has now been signed into law. The bill marked the first reauthorization of CBP since the creation of the Department of Homeland Security (DHS) in 2003. The bill modernizes CBP programs and institutionalizes others the agency has launched on its own in recent years.

In particular, the bill calls for strengthened revenue collection and AD/CVD duty enforcement; the formal establishment of the Centers of Excellence and Expertise (CEE), responsible for more efficiently processing entry summaries by industry category; reform of the duty drawback refund process by 2018 (the refund of certain duties, taxes and fees collected upon the importation of goods); and authorization of continued funding for the Automated Commercial Environment (ACE), the new IT platform and system-of-record for import and export transactions.

Software Designed to Help Businesses Better Demonstrate Reasonable Care

The prospect of managing large and complex global trade databases and staying current with continually shifting regulations may prove challenging to corporations looking to manage global supply chains and grow their business. Descartes CustomsInfo™ Manager is a powerful, collaborative and customizable Software as a Service (SaaS) solution to manage compliance and unite various business components together on one common platform:

  • Data engine is continually populated with continuously updated trade information as reviewed by Descartes’ staff of world-class compliance professionals
  • Provides information on AD/CVD cases, duty rates, trade agreements and more
  • Electronic audit trail provides automatic recordkeeping of each step in the workflow process for every global business unit
  • Helps organizations manage both large and small classification projects across geographically dispersed operations
  • Helps fulfill the industry’s need for flexibility with configurable workflows, tables, fields, dropdown menus, languages and many other options
  • Integrates with leading GTM and ERP systems

With better processes in place, companies can ensure a more successful trade content management strategy and better demonstrate reasonable care.