U.S. International Trade Commission AD & CVD Investigations

Catherine DeFilippo

Director, Office of Operations

ITC Role in Import Injury Investigations

The Commission determines whether the U.S. industry making products comparable to the dumped or subsidized imports is materially injured by reason of the dumped or subsidized imports.

ITC Preliminary Phase (AD/CVD)

45 days from the filing of the petition to conduct preliminary injury investigation

“Reasonable Indication” standard: Allows negative preliminary determination if: (1) record as a whole contain clear and convincing evidence

that there is no material injury or threat of material injury by reason of the subject imports, AND

(2) no likelihood exists that contrary evidence will arise in a final investigation.

ITC negative preliminary determination terminates the entire investigation

ITC Final Phase (AD/CVD)

Determination follows Commerce’s final affirmative determination

Possible ITC determinations:Affirmative present material injuryAffirmative threat of material injuryAffirmative material retardation of

establishment of an industryNegative determination

Multi-disciplinary team approach

Investigation teamSupervisory Investigator InvestigatorEconomistAuditor Industry AnalystAttorneyStatistician

Gathering of information

Questionnaires are sent to-- All U.S. producers of subject merchandise All U.S. importers of product from subject countries Major importers of product from non-subject

countries Major U.S. purchasers (normally only in final

phase) All producers/exporters in subject countries

Gathering of information (cont.)

Timing of questionnaires At the beginning of the preliminary phase and at

the beginning of the final phase Responses are due back in 10-14 days in

preliminary phase, 4-5 weeks in final phase

U.S. companies are required by law to respond to questionnaires

Subpoenas may be issued to compel the submission of records or information

Gathering of information (cont.) Information collected through questionnaires

From U.S. producers—Trade data, employment data, financial data, price data, lost sales and lost revenue allegations, other non-quantitative information

From U.S. importers—Trade data, price data, other non-quantitative information

From U.S. purchasers—Purchase data, price data, other non-quantitative information

From foreign producers/exporters—Trade data, other non-quantitative information

Gathering of information (cont.)Time period for questionnaire data: generally

most recent three calendar years and year-to-date periods of the current and preceding year

Financial data are collected from U.S. producers on a fiscal year basis

Projected data are collected from foreign producers and exporters for the current year and the following year

Purchasers are also contacted to verify producers’ lost sales/lost revenue allegations

Gathering of information (cont.) Information from public sources

U.S. government import statistics, if relevant U.S. government statistics in investigations involving

agricultural products

Information submitted by parties in briefsTestimony at preliminary phase conferences

and final phase hearingsAll information gathered becomes part of the

administrative record of the investigation

Submission of Information/ Arguments in ITC Investigations

Parties may submit arguments in the following documents:Post-conference briefs in preliminary phasePre-hearing briefs in final phasePost-hearing briefs in final phaseFinal comments in final phase

Submission of Information/ Arguments in ITC Investigations

Parties may provide oral testimony in the following fora:Conferences in preliminary phase

Each side gets one hour for direct testimony and additional time for opening and closing statements

Witnesses are questioned by staff Chaired by Director of Investigations Transcribed by court reporter

Submission of Information/ Arguments in ITC Investigations

Hearings in final phase Each side gets one hour for direct testimony and

rebuttal, and additional time for opening statements

Witnesses are questioned by Commissioners, staff, and parties

Chaired by Chairman of Commission Transcribed by court reporter

VerificationsConducted by ITC auditors (CPAs)When?

Prior to hearing in final phase

Which firms get verified? Normally U.S. producers Occasionally U.S. importers or foreign producers

Where? Full verifications on site Some verifications take place in Washington

Submission of Information by interested parties

Parties may submit arguments in the following documents: Post-conference briefs in preliminary phase Pre-hearing briefs in final phase Post-hearing briefs in final phase Final comments in final phase

Hearings/Staff conferences Interested parties also have the opportunity to appear before the

Commission to present oral testimony in support of their position (Staff conference run by Dir., INV for preliminaries and Commission hearings for finals

Access to and Protection of Information in ITC Injury Investigations

Authorized representatives of interested parties may obtain confidential information under an Administrative Protective Order (APO) These representatives are usually attorneys or economic

consultants specializing in international trade (must be independent (i.e., not in-house company official)).

They are prohibited from disclosing the information to unauthorized individuals; severe sanctions are imposed in the event of a breach of the APO

They must follow strict rules regarding the handling of such information

Access to and Protection of Information in ITC Injury Investigations

What is considered confidential information? Any individual company information that is not otherwise

available to the public (questionnaire responses are treated as confidential in their entirety)

Aggregate (total) industry data if— Only one or two companies are included in the total, or If the total includes three or more companies and one firm

accounts for at least 75 percent of the total or two firms account for at least 90 percent of the total

Notwithstanding the above, trends in statistical information are not treated as confidential

Dissemination of Information in ITC Injury Investigations

All confidential information in the record of an investigation is released to qualified representatives of parties under an Administrative Protective Order, including—Questionnaire responsesParty briefs and submissionsStaff notes and worksheetsStaff reportsCommissioner opinions

Analysis of Import Volume

Whether the volume of subject imports, or any increase in that volume, is significant in either absolute terms or relative to production or consumption in the United States

Only subject imports are considered. Imports found by DOC not to be dumped or subsidized are excluded from the volume of subject imports calculation

Analysis of Price Effects

Statute requires ITC to considerwhether there has been significant price

underselling by the subject imports as compared with the domestic like products, and

whether the effect of subject imports is to depress prices to a significant degree or to prevent price increases which otherwise would have occurred to a significant degree

Analysis of Impact on Industry Commission must evaluate all relevant economic factors which have

a bearing on the state of the industry in the United States, including, but not limited to— actual and potential decline in output, sales, market share,

profits, productivity, return on investments, and utilization of capacity

factors affecting domestic prices actual and potential negative effects on cash flow, inventories,

employment, wages, growth, ability to raise capital, and investment

actual potential and negative effects on the existing development and production efforts of the domestic industry; and

the magnitude of the margin of dumping ITC considers these factors in “context of the business cycle and

conditions of competition that are distinctive to the industry”

Threat of Material Injury

Under statute, ITC may find that a domestic industry is threatened with material injury by reason of the subject imports

Generally, the Commission only addresses threat if it has reached a determination that there is no current material injury by reason of subject imports

A threat determination may not be made on the basis of mere conjecture or supposition

Threat Factors Existing unused production capacity, or imminent

substantial increases in production capacity in the exporting country, indicating the likelihood of substantially increased imports of subject merchandise into the United States Take into account other export markets

Significant rate of increase of the volume or market penetration of subject imports indicating the likelihood of substantially increased imports

Whether subject imports are entering at prices that are likely to have a significant depressing or suppressing effect on domestic prices, and are likely to increase demand for further imports

Inventories of the subject merchandise

(Continued)

Threat Factors, continued

Potential for product shifting if production facilities in subject country currently being used to produce other products can be used to produce the subject merchandise

Actual or potential negative effects on the existing development and production efforts of the domestic industry

Other demonstrable adverse trends that indicate the probability that there is likely to be material injury by reason of subject imports

Nature of subsidy, in countervailing duty cases Product shifting between raw and processed agricultural

products, where pertinent

Post-Investigation Review

Judicial Review NAFTA panel review (limited) WTO panel review

Sunset or Five-Year Reviews

Statute requires review of existing AD/CVD orders no later than five years after order is put in place or continued (by a previous review)

Reviews by the Commission can be expedited or full Expedited = completed within 150 days of the

publication of the ITC’s Notice of Institution Full = completed within 360 days of the publication of

the ITC’s Notice of Institution

Sunset or Five-Year Reviews

Commission determines whether revocation of the AD and/or CVD order would be likely to lead to continuation or recurrence of material injury

Commission is directed (by law) to consider the likely volume, price effect and the impact of imports of subject merchandise on the industry if the order is revoked.