U.S. Department of Commerce Self-Initiates AD/CVD Investigations on Aluminum Sheet From China
International Trade Update
Date: November 29, 2017
On November 28, 2017, the U.S. Department of Commerce (Commerce) took the rare step of self-initiating antidumping duty (AD) and countervailing duty (CVD) investigations of imports of common alloy aluminum sheet from the People’s Republic of China (PRC or China). These investigations were self-initiated pursuant to the Tariff Act of 1930, which provides the secretary of Commerce with the authority to self-initiate cases. This authority, however, has rarely been exercised. Typically, AD and CVD investigations are initiated upon the filing of a petition by the domestic industry alleging injury and dumping or subsidization. The benefit of the government’s self-initiation for the domestic industry is that it removes the burden of preparing the petition itself. Before this announcement, it had been more than 25 years since Commerce self-initiated a trade remedy action. In announcing the investigations, Commerce Secretary Wilbur Ross stated, “President Trump made it clear from day one that unfair trade practices will not be tolerated under this administration, and today we take one more step in fulfilling that promise … showing once again that we stand in constant vigilance in support of free, fair, and reciprocal trade.”
Both the AD and CVD laws provide a remedy to unfairly traded injurious imports. AD investigations involve “dumping,” or selling at less than fair value, of a foreign company’s product in the United States. CVD investigations determine whether a foreign government is providing countervailable subsidies, usually in the form of financial assistance, to a foreign company that benefits the production of goods exported to the United States. In both instances, duties can be imposed only if the unfair trade practice is found to be materially injuring or threatening material injury to the U.S. industry. Commerce self-initiated these investigations due to evidence that imports of common alloy sheet from the PRC may be materially injuring, or threatening material injury to, the domestic industry producing common alloy sheet in the United States. In 2016, imports of common alloy sheet from the PRC were valued at an estimated $603.6 million.
If successful, this action will result in additional duties – which are likely to be significant – on imports of this product. While a successful action would help the U.S. aluminum sheet industry, downstream users of this product would likely experience supply disruptions in the near future.
Scope of the Aluminum Sheet Product Covered by the Investigations
The merchandise subject to investigation is common alloy aluminum sheet, which is a flat-rolled aluminum product having a thickness of 6.3 mm or less, but greater than 0.2 mm, in coils or cut-to-length, regardless of width. Common alloy aluminum sheet within the scope of these investigations includes both not clad aluminum sheet, as well as multi-alloy, clad aluminum sheet. Such aluminum sheet is typically used in building and construction, transportation, basic electrical applications, appliances, etc., where its strength, relatively light weight, formability and resistance to corrosion are required.
With respect to not clad aluminum sheet, common alloy sheet is manufactured from a 1XXX-, 3XXX-, or 5XXX-series alloy as designated by the Aluminum Association. With respect to multi-alloy, clad aluminum sheet, common alloy sheet is produced from a 3XXX-series core, to which cladding layers are applied to either one or both sides of the core. Common alloy sheet may be made to ASTM specification B209-14, but can also be made to other specifications.
While the focus is alloy aluminum sheet from China, Commerce has made clear that these investigations will also include common alloy sheet 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.
Common alloy sheet is currently classifiable under the Harmonized Tariff Schedule of the United States (HTSUS) subheadings 7606.11.3060, 7606.11.6000, 7606.12.3090, 7606.12.6000, 7606.91.3090, 7606.91.6080, 7606.92.3090 and 7606.92.6080. Further, aluminum sheeting product that falls within the scope of these investigations may also be entered into the United States under HTSUS subheadings 7606.11.3030, 7606.12.3030, 7606.91.3060, 7606.91.6040, 7606.92.3060, 7606.92.6040 and 7607.11.9090.
Specifically excluded from the investigations is aluminum can stock, which is suitable for use in the manufacture of aluminum beverage cans, lids of such cans or tabs used to open such cans. Aluminum can stock is classified under HTSUS subheadings 7606.12.3045 and 7606.12.3055.
Although these investigations were self-initiated by the Trump administration, the investigations will now proceed on a normal schedule for AD/CVD investigations. The U.S. International Trade Commission (ITC) will make its preliminary determination on injury to the domestic industry within 45 days, approximately by January 16, 2018. If the ITC preliminarily determines that there is injury or threat of injury, then Commerce will issue its preliminary CVD determination on or about February 1, 2018, and its preliminary AD determination around April 17, 2018; these dates may be extended.If Commerce preliminarily determines that dumping or unfair subsidization is occurring, it will instruct U.S. Customs and Border Protection (CBP) to begin collecting cash deposits from all U.S. companies importing the subject aluminum sheet from China. Commerce has estimated a dumping margin of between 56.54 to 59.72 percent for these imports from China and a subsidy rate above de minimis for them. The investigations will continue into a final phase with final determinations issued by Commerce in April 2018 for the CVD investigation and July 2018 for the AD investigation. If Commerce issues final affirmative determinations, then the ITC will consider and issue its final determinations on injury in June 2018 for the CVD investigation, and in August 2018 for the AD investigation. If the ITC, however, makes a negative preliminary determination of injury, the investigations will be terminated at that juncture.
FOR MORE INFORMATION
David M. Schwartz
Partner, International Trade
Partner, International Trade
William L. Matthews
Senior Manager of International Trade
Not licensed to practice law
Scott E. Diamond
Senior Legislative & Regulatory Policy Advisor
Not licensed to practice law
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