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Few Options to Help Smaller Companies Pursue Trade Remedies, Report Says

Thursday, June 27, 2013
Sandler, Travis & Rosenberg Trade Report

The Government Accountability Office issued recently a report concluding that there are limited options for helping small and medium-sized enterprises to pursue the imposition of antidumping and countervailing duties on imported goods. SMEs have had limited involvement in trade remedy actions, the report states, and face a number of challenges in expanding their participation. However, the GAO made no recommendations for addressing these challenges to the legislators who requested the report.

The report finds that among the 56 AD/CV petitions filed between 2007 and 2012, 21 included at least one SME petitioner. In addition, these 56 petitions represented a total of 147 petitioners, of which 38 were SMEs. The majority (21) of the SME petitioners had annual sales revenue of at least $10 million, while three had annual revenues of under $1 million. Close to half (17) of SME petitioners were in the iron and steel industry, including producers of steel garment hangers, steel nails, drill pipes, and welded stainless steel pressure pipes, while others included producers of wood products, aluminum products and machinery.

SMEs face three key challenges when pursuing the imposition of AD/CV duties, the report states. One is high legal costs, which can average $1-2 million from petition through investigation and can go higher, especially if the case involves multiple countries. Another challenge is obtaining domestic and foreign pricing and production data, which can be time-consuming and expensive. Finally, it can be difficult for SMEs in an industry with numerous producers to demonstrate enough industry support to meet statutory requirements.

However, the report adds, there are limited options for making it easier for SMEs to pursue AD/CV cases. The factors listed above are part of a process designed to ensure that the imposition of AD/CV duties on foreign exports is backed by sufficient evidence of unfair trade practices and is consistent with U.S. law and internationally agreed-upon standards, and the U.S. could open itself up to challenge and possibly retaliation by trading partners if it is found to have violated those standards. The report also cautions against expanded use of the Commerce Department’s authority to self-initiate AD/CV duty investigations without a petition (which it has used only once since 1991, and then only under extenuating circumstances), stating that any cost savings for SMEs would be limited and that there could be adverse effects such as foreign governments initiating their own investigations without data to support allegations of unfair trade practices. The only option the GAO sees is “additional public resources to help SMEs address the challenges of high legal costs and difficulty obtaining pricing and production data,” which is unlikely in the current federal budget climate.

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