Regulatory Updates

What are ADD/CVD?

Anti-Dumping Duties and Countervailing Duties are risks to be avoided in international trade. The topic can be confusing so here is a quick summary of ADD/CVD. Consult the CBP website for details.

Anti-dumping (ADD) and Countervailing duties (CVD) are intended to protect the US manufacturing industry from foreign manufacturers flooding the market at artificially reduced prices.  Dumping occurs when foreign companies sell goods in the US at less than fair value.  Countervailing situations are when a foreign government gives their companies tax breaks and subsidies allowing them to sell goods cheaply in the US. ADD and CVD lead to foreign undercutting of US manufacturers prices.

Anti-dumping duties are calculated at a company-specific level, where the duty amount makes up for the difference between the foreign manufacturer’s price and fair market value. In these cases, certain companies have been identified, investigated, and additional duties have been charged on their products.

Countervailing duties are determined on a country-specific level, and the duty rates counteract the subsidy or tax breaks given to the foreign manufacturer by their government with the intent of leveling the playing field.

When either of these situations occur, petitions for relief may be filed by U.S. manufacturers or businesses with the Department of Commerce (DOC) which, along with the US International Trade Commission (USITC), opens an investigation. If the results are positive, U.S. Customs and Border Protection (CBP) withholds liquidation of entries and collects ADD/CVD duties. The entries are not liquidated until the DOC instructs CBP headquarters to do so.

 CBP procedures affecting US importers

A positive result; an investigation which finds evidence of injury to the US industry, triggers CBP procedures which affect US importers. For an Anti-dumping (ADD) case CBP issues a case number beginning with (A), Case # A…. for a particular manufacturer. Importers and/or customs brokers then must report the case number on every entry (CBP form 7501, block 29) pertaining to this manufacturer. CBP will also look for evidence of bond during their investigation. If determined guilty, CBP will set the penalty and retroactively collect additional duties through the bond. These additional duties are determined by ITC and DOC with CBP as the enforcing agency.

Procedures for countervailing duties (CVD) are similar to those for anti-dumping duties (ADD): Investigation, case number beginning with (C), retroactive penalties. The difference is that under CVD the foreign manufacturer is subsidized by their government.

How to determine if a commodity falls under ADD/CVD

Your customs broker should be able to help you determine if a commodity falls under ADD/CVD. Further, you can review the scope of ADD/CVD orders to determine whether the merchandise falls under the scope of an order.  The scope of AD/CVD orders can be found in several places:

ADD/CVD is a highly technical aspect of trade and requires due diligence on the part of importers. It is imperative to engage the services of a reputable and knowledgeable customs broker. While the importer of record (IOR) bears primary responsibility for following the law, the broker’s role is to guide their client and make sure that proper procedures are followed.