Antidumping And Countervailing Duty (AD/CVD) Petitions Filed Against Certain Tungsten Shot From China

On July 10, 2024, antidumping and countervailing duty petitions were filed with the U.S. Department of Commerce (“DOC”) and U.S. International Trade Commission (“ITC”) concerning imports of Certain Tungsten Shot from China. AD petitions concern unfair pricing practices (i.e., “dumping”), generally defined as selling imported goods in the U.S. market below their home market prices or the cost of production. CVD petitions concern competitive distortions caused by unfair government subsidies. If AD/CVD investigations are initiated by the DOC, they can lead to year-long investigations and the potential for additional duty liability for the imports concerned.

Importantly, although AD/CVD investigations center on the practices of foreign producers, exporters, and governments, it is the U.S. importer of record that is liable for any additional AD or CVD duties resulting from the investigations. Thus, both foreign producers/exporters and U.S. importers of the merchandise subject to AD/CVD investigations have a vested interest in their outcome. Given the rapid pace of such proceedings, affected foreign producers/exporters and U.S. importers are strongly encouraged to quickly assess the implications and determine whether to defend their interests in the investigations.

Petitioner(s)

The petitions in question were filed by Tungsten Parts Wyoming, Inc.

Product Scope

The products covered by the scope of the petitions are as follows:

The merchandise covered by the investigations is certain tungsten spheres or balls, also known as shot, that are 92.6 percent or greater tungsten by weight. In scope shot have a diameter ranging from 1.5 mm to 10.0 mm. Subject shot can be referred to as “Tungsten Super Shot.” Merchandise is covered regardless of the combination of compounds that comprise the non-tungsten material and whether or not the tungsten shot is additionally coated with another material, including but not limited to copper, nickel, iron or metallic alloys.

Tungsten shot subject to the investigations may be classified under the following Harmonized Tariff Schedule of the United States (HTSUS) subheading: 8101.99.8000. Merchandise may also be entered under HTS subheadings 8482.91.0020 or 9306.21.0000. The HTSUS subheadings are provided for convenience and customs purposes only. The written description of the scope of the investigations is dispositive.

It is important to remember that it is the physical description of the product that is controlling. The provided HTSUS numbers are just for reference purposes only.

The AD/CVD Process

AD/CVD investigations are bifurcated proceedings administered by two government agencies -- the DOC and the ITC. The DOC controls the initiation process for any investigation and is also responsible for determining the degree of dumping or subsidization. The ITC is responsible for determining whether the imports concerned are causing or threaten to cause “material injury” to the U.S. domestic industry. Importantly, there must be affirmative findings of dumping and/or subsidization by the DOC and material injury or threat thereof by the ITC for the possibility of AD/CVD duties to apply through what is known as an AD or CVD “order.” If either agency reaches a negative conclusion, no order may be imposed.

AD/CVD investigations are also sequential, with staggered preliminary and final phase determinations issued by the DOC and the ITC. The first preliminary determination is issued by the ITC, followed by a preliminary DOC ruling. In the final phase, the DOC issues its final determination first, followed by the ITC. At the preliminary stage, if the ITC reaches a negative injury finding, the investigation is terminated. In the final phase proceedings, if either the DOC or ITC reach negative findings, the investigations are also terminated.

AD/CVD investigations are fact-intensive, characterized by short deadlines and significant data and document demands. The key investigative tool for both the DOC and the ITC is the questionnaire, with the DOC often relying on both an initial questionnaire and multiple supplemental questionnaires that follow thereafter. These are technical documents that require significant expertise to complete and submit in proper form.

In AD/CVD investigations, potential duty liability normally first accrues with release of the DOC's preliminary determination. If AD or CVD margins are found, U.S. importers are required to begin posting deposits with U.S. Customs and Border Protection (“CBP”) on all entries of the imports under investigation moving forward. Depending on future circumstances, those deposits could be liquidated by CBP as additional duty liability, or refunded in part or in whole.

AD/CVD orders may be reviewed annually, and determined margins of dumping and subsidy revised on a retrospective basis, effecting entries made over the past year. This means that actual duty liability is initially unknown and may be more or less than deposits made over the preceding annual review period. AD/CVD orders are up for termination every 5 years under a “sunset” review process, but typically last 15 or more years.

Next Steps

The DOC will normally issue an initiation determination within 20 days of receipt of the petitions. Initiation delays are otherwise rare and typically involve questions of standing and whether the Department is satisfied that the petitions were filed on behalf of the U.S. domestic industry. Once initiation occurs, AD/CVD investigations proceed along a rapid timeline, making it critical for affected foreign producers/exporters and importers to quickly engage to understand the implications and determine whether to defend their interests in the proceeding. To illustrate, the ITC will issue questionnaires and typically schedule a staff conference with interested parties 21 days after the petition is filed, before rendering a preliminary determination 45 days after the petition is filed, as required by law.

Some of the important dates related to the instant petition(s) are set forth below:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.