Anti-dumping (AD) and Countervailing Duty (CVD) Petition Requirements

1. Anti-dumping (AD) and Countervailing Duty (CVD) Petition Requirements United States Department of CommerceInternational Trade Administration Import Administration Petition Counseling and Analysis Unit Unofficial Document – For Presentation Purposes Only

2. AD and CVD Petitions and Initiation • Dumping and Countervailable Subsidies • U.S. Administrative Framework • Pre-Petition Counseling • Petitions • Case Study: Drawn Stainless Steel Sinks

3. A. Dumping and Countervailable Subsidies • What is dumping? - Dumping occurs when a foreign producer or exporter sells a product in the U.S. at a price that is below “normal value.” - Normal value is the price at which the foreign producer sells the merchandise under investigation in its own domestic market or a third-country market, or its production costs. A separate surrogate-value based methodology is used to establish normal values for non-market economies. - The difference between normal value and the lower price in the U.S. market is called the dumping margin.

4. Dumping and Countervailable Subsidies • What is a countervailable subsidy? - Foreign governments subsidize enterprises or industries when they provide financial assistance to benefit production or exportation of goods. - A “countervailable subsidy” is one that can be offset by a higher duty charged on the subsidized good that is imported. To be countervailable, a subsidy must involve a government financial contribution that confers a benefit to a specific industry or enterprise that produces or exports the imported goods that are under investigation.

5. B. U.S. Administrative Framework • The U.S. Department of Commerce’s (DOC) Import Administration (IA) and the International Trade Commission (ITC) simultaneously receive AD and CVD petitions from the affected U.S. industry. • IA determines whether and to what extent dumping or subsidization is occurring. • ITC determines whether a U.S. industry competing with the allegedly dumped or subsidized product has been materially injured, or threatened by such imports. • IA and the ITC make their determinations independently.

6. AD/CVD Petitions • The petitioner must provide a reasonable basis to believe or suspect that dumping and/or subsidizationof a particular product is occurring, that the domestic industry has suffered “material injury or threat thereof,” and there is a causal link between them. • IA has the sole authority to initiate or not initiate the investigation. • After filing, IA has 20 calendar days to evaluate the petition and determine whether to initiate the investigation.

7. C. Petition Counseling • IA has established the Petition Counseling and Analysis Unit (PCAU), in order to help U.S. industries understand the U.S. unfair trade laws dealing with dumping and unfair foreign government subsidies, and the process of filing a petition requesting the initiation of an investigation. • Confidentiality - Prior to the official filing of the petition, any communications with the petitioner will be treated as confidential information.

8. In evaluating a petition, IA focuses on the following items: Scope Like Product Industry Support Dumping/Subsidy Allegation Material Injury D. Petitions

9. 1. Petitions: Scope • When filing the petition, the petitioner is required to include a detailed description of the merchandise from the foreign country to be covered under the investigation including: • The technical characteristics and uses of the merchandise. • Its current U.S. tariff classification number (HTS number).

10. 2. Petitions: Like Product • The petitioner must clearly identify the domestic like product, the product produced in the U.S. which is most similar to the foreign product covered under the scope of the investigation. • The petition must be filed on behalf of and have support of the industry producing the domestic like product.

11. 3. Petitions: Industry Support – Part 1 • “25 % Test” • Under U.S. statute, “the domestic producers or workers who support the petition” must “account for at least 25% of the total production of the domestic like product.” • The ratio for the 25% test is derived by: (Total production volume of all petitioners and supporters) (Total U.S. production volume)

12. Petitions: Industry Support – Part 2 • “50 % Test” • Under U.S. statute, “the domestic producers or workers who support the petition” must “account for more than 50% of the production of the domestic like product produced by that portion of the industry expressing support for or opposition to the petition” • The ratio for the 50% test is derived by: (Total production of all petitioners and supporters) (Total U.S. production volume of those expressing a position)

13. Petitions: Industry Support • Polling • If the domestic producers who support the petition do not account for at least 50% of total U.S. production, IA must, pursuant to U.S. statute and IA’s regulations, poll or otherwise determine industry support.

14. 4. Petitions: Dumping Allegation • According to U.S. statute, dumping occurs when a foreign company sells goods in the U.S. for less than the fair value (i.e., normal value). • The allegation of sales in the U.S. at less than fair value (dumping) is the thrust of any antidumping petition. The dumping allegation must contain all factual information relevant to: • The U.S. price of the subject merchandise. • The normal value of the foreign like product.

15. Sample Market Economy (ME) Dumping Margin Calculation U.S. Price Normal Value Compare U.S Price to Normal Value Normal Value $136.00 U.S. Price $90.00 Difference Attributable to Dumping $46.00 Difference Attributable to Dumping/U.S Price $46.00 / $90.00=51.11% Dumping Margin =

16. Petitions: Subsidy Allegations • To be “actionable” under U.S. statute, a subsidy must: • Involve a “financial contribution,” • Confer a “benefit,” and • Be “specific.” • A CVD petition must: - Address all of the elements of a subsidy listed above for each program alleged. - Provide reasonably available documentary evidence of the alleged subsidies. - List the names of subsidy beneficiaries.

17. 5. Petitions: Material Injury • As defined by U.S. statute, “material injury” is harm which is not inconsequential, immaterial, or unimportant. • During the course of an AD or CVD investigation, the ITC is responsible for determining whether a domestic industry is materially injured or threatened with material injury as a result of the individual and cumulated impact of the allegedly dumped imports. • IA examines whether the petition provides evidence of material injury or threat thereof.

18. Injury Issues • Declining domestic prices • Reduced levels of production • Reduced levels of capacity utilization • Declining net sales and market share • Sales lost to imports • Declining profitability • Reduced levels of employment • Bankruptcy

19. Statutory Time Frame for AD & CVD Investigations AD: 140 Days from Initiation* --- CVD: 65 Days from Initiation* Day 0 7 Days from ITC Final 20 Days from Petition* 75 Days from DOC Prelim* 45 Days from Petition 45 Days from DOC Final Pre-Petition Activity Initiate Investigation DOC Preliminary Determination DOC Final Determination** Order Issued Petition Filed ITC Preliminary Determination** ITC Final Determination** * These dates may be extended under certain circumstances. ** If negative determination, the investigation ends. Unofficial Document - for Presentation Purposes Only

20. E. Drawn Stainless Steel Sinks from China: AD and CVD investigations • March 1, 2012 – AD and CVD petitions against China on stainless steel sinks filed on behalf of Elkay Manufacturing Company • March 21, 2012 – Assistant Secretary (AS) for Import Administration signed the Federal Register notice initiating the investigations (published in the FR on March 27, 2012) • August 6, 2012 – IA published its preliminary CVD determination • September 20, 2012 – At petitioner's request, IA publishes FR notice aligning the final CVD and the final AD determinations • September 27, 2012 - AS signed the FR notice of the preliminary AD determination • December 11, 2012 – Deadline for both the AD and CVD final determinations

21. Stainless Steel Sinks AD/CVD Petitions • Estimated dumping margins based on the AD petition ranged from 22.81 % to 76.53% • Based on the CVD petition, IA initiated on 45 individual subsidy programs within the following categories: grant programs, loans and directed credit, income tax programs, other tax programs, Government provision of goods or services for less than adequate remuneration, subsidies to enterprises located in industrial cluster zones

22. Stainless Steel Sinks AD/CVD Preliminary Determinations AD Preliminary determination: • Zhongshan Superte Kitchenware 63.87% • Guangdong Dongyuan Kitchenware 54.25% • Separate Rate Companies 59.06% • China-Wide Rate 76.53%

23. Stainless Steel Sinks AD/CVD Preliminary Determinations CVD Preliminary determination: • Guangdong Yingao Kitchen Utensils 2.12% • Zhongshan Superte Kitchenware 13.94% • Foshan Zhaoshun Trade Co. 13.94% • All Others 8.03%

24. Reference Information • Import Administration website: http://www.trade.gov/ia/ • Petition Counseling and Analysis Unit website: http://ia.ita.doc.gov/petitioncounseling/index.html • Antidumping Manual is available: http://ia.ita.doc.gov/admanual/index.html • U.S. Harmonized Tariff Schedule and Dataweb import statistics: www.usitc.gov • Import Administration’s Subsidies Enforcement Office website: http://esel.trade.gov/esel/groups/public/documents/web_resources/esel_home.hcsp