Combating Unfair Trade Practices: Antidumping and Countervailing Duty Petitions

May 20, 2016
Commerce Department briefing at WMP meeting
Commerce Briefing at WMP
WASHINGTON, DC -- California rice farmer and chairman of USA Rice’s Asian Trade Policy subcommittee Michael Rue once famously told regulators he feels like he’s not just competing with rice farmers in other countries, but rather with rice farmers and their entire governments.  Unfair trade practices litter the global trade landscape.  So what is a U.S. rice farmer to do?  

One option available to the U.S. rice industry is to file a petition for an antidumping (AD) and/or countervailing duty (CVD) investigation conducted by the Department of Commerce and the U.S. International Trade Commission (ITC) in an effort to ameliorate unfair trade practices by foreign countries.

Dumping occurs when a foreign producer or exporter sells a product in the United States at a price that is less than “normal value,” which is the price it is sold for in its own domestic market, or the cost of production.  A countervailable subsidy involves government assistance to an industry to benefit the production or exportation of goods.

During this week’s World Market Price meeting, representatives from the Department of Commerce presented a procedural overview on how to initiate antidumping and counterveiling duty investigations if the industry decides to pursue this course of action.  An industry can choose to file joint AD and CVD petitions, or can file one or the other based on the circumstances affecting the industry.

There are a few crucial elements that comprise AD and CVD petitions:  a detailed definition of the foreign product in question, a definition of the product manufactured in the U.S. that is most similar to the foreign product, a dumping and/or subsidy allegation, and proof of material injury.

After examining the evidence presented in the petition, ITC and Commerce independently determine the degree to which an industry has suffered injury in the form of declining domestic prices, declining net sales and market share, declining profitability, etc. and will then issue an order based on their findings.

If injury is found, an additional U.S. import duty is applied to the product which represents the value of the foreign subsidy or dumping level.

“We’ve been saying for a long time that we don’t believe all of our trading partners are living up to their WTO commitments, so as we look at possible remedies, it was good to hear about these options available to our industry,” said Keith Glover, CEO of Producers Rice Mill and chairman of the World Market Price Subcommittee.  “It’s worth noting, however, that AD/CVD cases are not a sure thing, they are costly, and they could force a retaliation from a government that you name.  It’s a lot to think about.”

As evidenced by last year’s ITC study, “Rice: Global Competitiveness of the U.S. Industry,” foreign government intervention in rice imports and exports has significantly impacted trade and price trends in the world rice market.  With a larger than normal projected crop harvest for 2016, it is imperative that the global playing field is leveled and all trading partners are playing by the same set of rules to ensure U.S. rice farmers are allowed fair market access.