RETROSPECTIVE COLLECTION
OF ANTIDUMPING AND COUNTERVAILING DUTIES —
IMPACT ON CONSUMING INDUSTRIES

BACKGROUND:

The United States has a "retrospective" system of assessment and collection of antidumping and countervailing duties, which is different than that of most other countries. Under the US system, importers do not pay antidumping or countervailing duties at the time of entry; they pay deposits based on duty deposit rates that are subject to review and revision, up or down, as much as two years after the entry date. Therefore, the retrospective system creates uncertainty as to the actual cost of an imported product covered by duties and therefore makes importation of these products less appealing. Consuming industries in the United States are clearly harmed by this uncertainty.

Most countries employ an alternative "prospective" method of assessing and collecting antidumping and countervailing duties. In the prospective system, authorities determine before the entry of the goods the amount of duties and impose them on imports of covered products. The duties are final at the time of entry; there are no after the fact revisions. Therefore, the importer knows the amount of antidumping and countervailing duties it will have to pay, and thus, whether the importation is commercially viable. The certainty of the amount of duties facilitates importation of products, without reducing the protection granted to the domestic industry petitioners under the law.

IMPACT ON CONSUMING INDUSTRIES:

Many consuming industries rely on imports of raw materials or components to maintain global competitiveness. These industries are hurt by the retrospective system because it creates such uncertainty regarding the amount of antidumping and countervailing duties. If consumers are actually importers of record (and therefore liable to pay duties), they will not know their costs until long after they have used or re-sold the goods. If they are not the importers of record, they will be purchasing goods from importers who cannot determine with any certainty their full costs. When there is such uncertainty, importers are likely to import fewer products and assume less risk. Thus, there will be fewer imports and consuming industries will be less competitive.

THE CITAC SOLUTION:

The adoption of a "prospective" system in the United States would give consuming industries a better chance of competing successfully in the global economy. The retrospective system of assessment and collection of antidumping and countervailing duties should therefore be replaced. The uncertainty created by this system does not consider the needs of consuming industries regarding their costs.

CITAC calls on the Administration to examine and change the retrospective system, in consultation with consuming industries. While some have argued that a retrospective system allows for more accuracy, this "accuracy" is (a) illusory (because of vagaries in duty calculation by the Department of Commerce, it is impossible to argue credibly that the retrospective method as currently applied in the U.S. is accurate); and (b) outweighed by the uncertainties created by not knowing the amount of duties at the time of entry.