US Actions Against Brazilian Imports
The US Commerce Department and US International Trade Commission have the authority to investigate allegations that imports into the United States are entering at prices below cost or with the benefit of countervailable government subsidies. Antidumping and countervailing duty orders are country, producer and product specific, which means that they apply to the products identified by the complaining US producers of the same goods, and only from the subject country. If these duties are imposed, then they apply for a minimum of five years, meaning that producers/exporters to the United States, US importers, and customers will have to account for such duties into their supply chains. These duties can be set at specific (lower), individual levels for those producers/exporters that cooperate with the investigation conducted by US authorities.
The United States has recently investigated exports from Brazil of manufactured raw materials, such as common aluminum alloy sheets and aluminum foil, along with agricultural products such as lemon juice and raw honey. The resulting additional duties imposed by these investigations have ranged from about 8% to 50%, which can be devastating to US importers who are legally responsible for paying the cash deposits for covered imports upon entry, and to Brazilian producers/exporters, who lose competitiveness in or even access to the large US market. In the brass rods investigation initiated a few days ago, the petitioners alleged a 62.6% dumping margin for exports from Brazil.
Be Prepared for Antidumping/Countervailing Duty Investigations
There are ways to proactively prepare for an investigation by the United States, and given the potential disruption to shipping activity, these actions are well worth considering.
First, Brazilian producers that routinely export to the United States should constantly assess their pricing practices so that sales are not made below the cost of production plus expenses and a profit, and also compare the export prices to the United States with their local sales prices.
Second, Brazilian producers/exporters should maintain a comparison database that allows for the assessment of price comparisons across markets.
Third, constantly monitoring publications by the US Commerce Department and US International Trade Commission is a must to ensure awareness of newly-filed petitions. Where new petitions are filed, quick action must be taken to decide on participation: as mentioned above, a timely and full cooperation with the US investigations may result in a company securing an individualized duty rate that may be significantly lower than the margins for companies that do not cooperate or do not secure an individual duty rate. A favorable rate can serve as a competitive advantage after an order is issued. In other words: if a Brazilian producer cooperates and achieves a reduced, individualized rate, it may have improved access to the US market for at least five years after the imposition of antidumping and/or countervailing duties, given that other exporters will face higher duties to be paid by customers.
As noted, over the past three years there have been four cases generating antidumping duty orders against imports from Brazil. The products subject to these recent orders are common alloy aluminum sheet, aluminum foil, raw honey, and lemon juice. The duty margins found in these cases are illustrated below. As mentioned above, a new case involving brass rods from Brazil has just been initiated.
In view of Baker McKenzie's global reach, which includes strategic cooperation with Trench Rossi Watanabe in Brazil, we can help producers with a global antidumping and countervailing duty strategy that allows a company to leverage domestic trade policy in all major markets. Our team of professionals is available to discuss questions regarding US investigations or investigations in all main jurisdictions, including the United Kingdom, the European Union, China, and Japan. For more information, please visit our Trade Remedies homepage.
* * * * *
Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law.