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Stronger AD/CV Measures Among Tools Being Used to Deal with Steel Overcapacity

Monday, April 18, 2016
Sandler, Travis & Rosenberg Trade Report

The Obama administration has released a fact sheet outlining the steps it is taking to help the U.S. steel industry deal with the “significant challenges” it is experiencing as a result of global excess capacity. Specifically, the fact sheet said, the industry saw a 10 percent drop in crude steel production in 2015, a 37.9 percent increase in imports by volume in 2014 (though imports dropped in 2015) and a 17 percent drop in exports between 2014 and 2015, along with announced layoffs totaling more than 12,000 jobs in 2015.

U.S. Trade Representative Mike Froman told a hearing convened to examine the problem that while excess steel capacity “is not limited to China,” that country is “the principal source of the world’s overcapacity.” Froman added that the U.S. is willing to work with China on this issue “as cooperatively as possible” but will “remain clear that they cannot shift their excess capacity onto global markets without serious trade responses.” Froman indicated that this will be a key topic at the Strategic and Economic Dialogue meeting between U.S. and Chinese officials this summer.

The fact sheet sets forth the following ongoing measures.

Duty Evasion. The recently enacted Trade Facilitation and Trade Enforcement Act of 2015 gives U.S. Customs and Border Protection more tools to combat the evasion of antidumping and countervailing duties in steel and other industries and requires evasion allegations to be addressed within strict timelines. Commerce Secretary Penny Pritzker said the Department of Commerce is sharing information with CBP about possible instances of fraudulent transshipment, mislabeling and other evasion schemes. In addition, Pritzker said, the DOC has renewed its partnership with CBP and steel industry associations to educate port personnel on how to spot and stop the evasion of AD/CV duties on steel imports.

AD/CV Measures. The American Trade Enforcement Effectiveness Act enacted in 2015 overturns past judicial interpretations that limited the DOC’s ability to enforce AD/CV laws, including by providing stronger rules to deal with foreign producers that do not cooperate in AD/CV proceedings. The DOC has already begun implementing its new statutory authorities in proceedings involving a broad range of steel products from countries including Brazil, China, India and Korea and is considering ways to further strengthen such enforcement.

The DOC and CBP are currently enforcing 149 AD/CV duty orders against foreign steel. Nearly two-thirds of the 62 AD/CV investigations initiated in 2015 (the largest number in 14 years) cover steel products, as do 75 percent of the 61 ongoing investigations. Petitions in 2016 are on pace to exceed the number filed in 2015.

The DOC is using a 10 percent increase in its fiscal year 2016 funding to hire 38 new staff to support the AD/CV-related workload, which allows it to examine more foreign firms, conduct additional inquiries in verifications of foreign firm data, and exhaustively investigate issues and concerns raised by the domestic industry.

CBP Actions. In February CBP implemented a targeted approach to increase reviews of steel imports, which will provide both a statistically valid measure of the risk presented by such imports as well as targets for further enforcement. CBP is also requiring live entry on certain high-risk steel imports, a process that requires all documentation to be filed by the importer and examined by CBP and all duties deposited before the goods are released into U.S. commerce. CBP is increasing other operational measures on steel imports as well, including audits of steel importers.

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