The cash deposit requirement resulting from the preliminary determination in the countervailing duty (CVD) portion of the unfair trade investigation went into effect as of March 14, 2013. For the vast majority of imports from China, the cash deposit levels are currently 27.16 or 22.63 percent. The cash deposit requirement resulting from the preliminary determination in the antidumping (AD) portion of the unfair trade investigation went into effect as of May 3, 2013. For the vast majority of imports from China, the cash deposit levels are currently 22.14 or 63.96 percent. A U.S. importer’s liability is equal to the sum of the CVD and AD cash deposit levels: for example, 27.16 percent plus 22.14 percent equals 49.3 percent. (Note: These figures have been supplied by a report released by The Department of Commerce on April 29, 2013.)
Under World Trade Organization rules and U.S. law, the CVD cash deposit requirement will be temporarily suspended in mid-July, and will be reinstituted if and when a CVD order is issued at the conclusion of these unfair trade investigations. However, the CFTHP notes that there is no equivalent suspension of the AD cash deposit requirements. Therefore, even accounting for the temporary suspension of the CVD cash deposit requirement, the vast majority of Chinese imports will remain subject to a continuing cash deposit of at least 22.14 percent.
Jeff Levin, counsel for CFTHP, noted that under U.S. law, the U.S. importer is responsible for making the cash deposit “as a ticket for admission for entry of the merchandise in the United States.” Mr. Levin further noted that if the Chinese producer or exporter reimburses the U.S. importer for these cash deposits, it can result in a doubling of the duties owed.
If an AD and CVD order are issued at the conclusion of these investigations in early November, the CVD cash deposit requirement will be re-instituted, while the AD cash deposit requirement will continue. Under the “retroactive assessment” system structured in U.S. law, cash deposits represent an escrow for estimated duties necessary to remedy unfair trading. Actual duties owing are determined through an annual review process, which will begin about one year after the conclusion of the current investigations. This annual review itself takes about a year to complete.
Mr. Levin observed that “what this retroactive system means, in very practical terms, is that a U.S. importer will not and cannot know what its ultimate duty liability will be on any particular entry for one year, often two years or more, after it entered the merchandise in the first place. If the calculation of actual duties owed exceeds the level of estimated duties, Customs will issue a bill to the U.S. importer for the difference, including the accrual of interest.”
Under U.S. law, any antidumping and countervailing duties collected on the Chinese imports go to the U.S. Treasury; U.S. manufacturers, such as the members of the CFTHP, do not receive any of these remedial duties.