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Major Drop in AD/CV Duty Distributions Could Further Lower Foreign Retaliation

Friday, February 22, 2019
Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection’s annual report on the distribution of antidumping and countervailing duties to domestic producers shows that such distributions declined dramatically in fiscal year 2018. As a result, retaliatory tariffs by the European Union, Japan, and others are likely to all but evaporate, at least for the time being.

The Continued Dumping and Subsidy Offset Act, commonly referred to as the Byrd Amendment, allowed the U.S. to distribute AD and CV duties collected on foreign-made goods to affected domestic industries. The law was found to violate World Trade Organization rules and subsequently repealed, but distributions continue for entries of goods made prior to Oct. 1, 2007.

In response, the WTO allows each affected country or economy to raise its tariffs on goods imported from the U.S. in direct relation to the amount of AD and/or CV duties on goods from that country or economy that were distributed during the previous year.

Duties Disbursed. A total of $23.4 million in AD/CV duties was disbursed in FY 2018, down 48.8 percent from FY 2017.

Uncollected Duties. The amount of AD/CV duties on CDSOA-eligible entries filed prior to Oct. 1, 2007, and liquidated during FY 2018 that went uncollected totaled $333,417, a major decline from $20.8 million in FY 2017. Honey from China accounted for 97.8 percent of this amount with brake rotors from China accounting for the remainder.

Duties Remaining in Clearing Account. A total of $17.2 million in AD duties and $903,058 in CV duties filed with the entry prior to Oct. 1, 2007, on CDSOA-eligible cases remained in the CDSOA clearing account as of Oct. 1, 2018, down from $19.5 million and $1.0 million, respectively, from the previous year. Individual cases with the highest amounts included honey from China ($5.2 million), crawfish tail meat from China ($2.4 million), fresh garlic from China ($1.7 million), and petroleum wax candles from China ($1.4 million).

CBP notes that funds do not transfer from the clearing account to the special account for distribution until liquidation occurs.

EU Retaliation. In 2018 the EU lowered from 4.3 percent to 0.3 percent its retaliatory tariffs on women’s and girls’ jeans, sweet corn, crane trucks, and metal spectacle frames from the U.S. The EU does not appear to have yet adjusted its retaliation levels in light of CBP’s most recent statistics.

For more information on AD/CV duties and other trade remedy issues, please contact Kristen Smith at (202) 730-4965 or David Craven at (312) 279-2844.

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