Presented at a conference in Jakarta, Indonesia, May 11, 2000.
In the last three years, for the first time Indonesian companies have been the target of U.S. antidumping cases, starting with Melamine Institutional Dinnerware, Mushrooms and Rubber Thread and now moving on to Carbon Steel Plate and Cold-Rolled Steel. Contrary to popular belief, U.S. antidumping cases are a good sign for the Indonesian economy. Indonesian exporters for the first time are producing and exporting enough products to the United States so as to cause problems for U.S. industries. If Indonesia were exporting very little to the United States, there would be no antidumping cases against Indonesian products.
Moreover, although certain Indonesian companies may feel that the U.S. antidumping law is unfair, in fact, antidumping laws have become the internationally approved form of protectionism as countries around the world have adopted antidumping laws, including the United States, EC, Mexico, Canada, Venezuela, Argentina, Japan, Korea, Australia, China, India and recently, Indonesia. In many countries, defending antidumping cases is simply seen as a cost of doing business with foreign countries.
For almost twenty years, my practice has focussed on the U.S. antidumping law, starting first from 1980 to 1987 in the U.S. government at the U.S. International Trade Commission (ITC) and the Commerce Department (DOC) and then in private practice. Since 1991 we have been involved and have been able to win numerous antidumping cases for Japanese, Taiwan, Romanian, English and Chinese companies, including initial investigations and review investigations, at both the DOC for low dumping margins and at the ITC for no injury. Many of these cases have involved chemical, metal and agricultural products, such as Refined Antimony Trioxide, Sulfur Dyes, Silicon Carbide, Saccharin, Sulfanilic Acid, Sebacic Acid, Polyvinyl Alcohol, Citric Acid, Steel and Honey.
From these cases, we have learned certain strategies that foreign companies can follow to win an antidumping case, be it at the DOC for low dumping margins or at the ITC for no injury.
I. Participate With Counsel
The most important lesson is to participate with counsel. We have been able to win all twelve cases in which we represented Chinese exporters. The only Chinese antidumping case we have lost is the case in which the Chinese exporters refused to participate - Garlic. Although the U.S. importers participated in the Garlic case, even though we flew to China and met with Chinese exporters, we could not persuade the Chinese exporters to fight on their own behalf at Commerce. We were told blank by the Chinese exporters, "[T]he U.S. market is not important for us." Since the Chinese exporters refused to participate at the DOC, the DOC had no choice and gave them all the 376 percent antidumping margin alleged by the U.S. industry in the petition.
Pursuant to the U.S. antidumping law, if foreign exporters refuse to participate and provide information in response to its questionnaire, the DOC has no choice – it must use the best information available (BIA) to calculate the antidumping margin. In most cases, the best information is the information in the petition.
Since the Chinese exporters did not participate at the DOC and received a 376% dumping margin, the ITC reached an affirmative injury determination. The effect of the Garlic determination was a complete disaster as all Chinese garlic has been shut out of the U.S. market since 1994.
Moreover, the law firm representing the United States garlic producers specializes in bringing antidumping cases for U.S. companies. The refusal of the Chinese garlic exporters to participate in the Garlic case was like feeding raw meat to a lion as the law firm used the victory in the Garlic case to persuade U.S. companies to bring dumping cases on honey, bicycles, mushrooms and indigo. These cases cover about $300 million of imports from China. From little seeds, big trees grow.
In my review of Indonesian countervailing duty and antidumping cases, there appears to be another problem, trying to respond to antidumping cases without advice of counsel. It is fair to state that no foreign exporter has ever been able to win an antidumping case, be it at the ITC or DOC, without the advice of an experienced trade counsel. Remember the U.S. antidumping laws, like antidumping laws around the world, have been written to protect domestic industries. Any mistakes made in the submission of questionnaire responses will result in the DOC using BIA and the Indonesian company getting the dumping margin in the petition. Without the benefit of experienced trade counsel, mistakes will be made and the foreign company will simply lose the case.
Many foreign companies simply do not understand how detailed the response to Commerce Department’s questionnaire must be or how extensive the Commerce Department’s verification in Indonesia of that response will be.
II. Win the Initial Investigation
The most important lesson for Indonesian exporters is to take every opportunity to win the case in the initial investigation. To win a dumping case in the initial investigation and obtain an antidumping order, U.S. producers must file a petition and prove two points - high dumping margins at the DOC and injury or threat of material injury at the ITC. If the U.S. producers are able to prove dumping margins at the DOC and injury at the ITC in the initial investigation, the Commerce Department will issue an antidumping order. At that point, Indonesian exporters can fight the case only by getting low dumping margins in antidumping review investigations so that they can export again.
On the other hand, during the initial investigation, Indonesian exporters have three ways to win an antidumping case: At the ITC for no injury, or at the DOC with low antidumping margins or a negotiated suspension agreement between the Indonesian and U.S. governments. Winning an antidumping case means Indonesian exporters can continue exporting their products to the United States. Winning is important because losing a dumping case can truly be disastrous.
Once the U.S. producers win at the DOC and the ITC, the DOC issues an antidumping order. That order can stay in place with high dumping margins forever - that is, 10 to 20 years. Over fifteen years ago, in 1983 the DOC issued an antidumping order on barium chloride from China and very little barium chloride has been imported from China since then. In 1999 in the Sunset Review investigation the ITC determined to leave the antidumping order on barium chloride from China in place for another five years beginning year 2000, which means that the dumping order on barium chloride will stay in place until 2005. In other words, the antidumping order on barium carbonate from China will have been in place for over 20 years.
Although the antidumping provisions in the 1995 Uruguay Round Agreements Act provide for DOC and ITC "sunset" review investigations every five years, in case after case, from Potassium Permanganate and Barium Chloride to Polyester Print Cloth, the DOC and ITC continue to leave antidumping orders in place so long as the U.S. industry fights to keep them in place.
III. Every Method Of Victory Is Difficult And Has Its Own Price
As stated above, there are three ways to win an antidumping case, either at the DOC for low dumping margins or with a suspension agreement or at the ITC for no injury. Winning an antidumping case, be it at the DOC or the ITC, is very difficult, but with the help of experienced trade counsel, Indonesian companies can win the case and continue to export their products to the United States.
A. DOC - Low Margins
In over 90% of the cases, the DOC finds a dumping margin in the initial investigation and reaches an affirmative determination. The question for the individual Indonesian company is whether the dumping margin is low enough so that the company can continue to export products to the United States.
In contrast to countries, such as China, in Indonesia, the DOC bases the dumping margin on the foreign exporter/producer’s actual prices and costs. In the first stage of the analysis, the Department will compare the Indonesian respondent’s sales in the Indonesia market or third country market to its U.S. sales to determine whether Indonesian exports are dumped because the U.S. prices are lower than the prices in the Indonesia market or third country market. To make the sales comparison, the DOC starts from the first sale between unrelated parties, then like peeling layers of an onion, through a series of adjustments, the DOC reaches the prices at the factory door. The DOC will then compare the U.S. prices with the foreign exporter’s home market or third country prices at the factory door, to determine whether it is dumping.
If the U.S. petitioner alleges that the foreign producer is selling below production cost, the DOC will compare the fully allocated production cost with sales in its home market. If more than 20 percent of the sales are less than the cost of production, the DOC will then disregard any home market sales below production, and look only at above cost home market sales. If 95% of home market sales are below production cost, the DOC will either compare the U.S. sales with sales to a third country market or use "constructed value", namely, the foreign producer’s fully allocated cost of production plus profit, overhead, and selling, general and administrative expenses (SG&A); and compare this with U.S. sale price, to determine whether the foreign producer is dumping.
Despite the complexity of the calculations, it is possible to get low dumping margins. If the Indonesian exporter can get a 0% dumping margin, such as our Chinese client in the PVA case, it is in the best situation because the exporter is excluded from the dumping order and is not subject to annual review investigations. If the dumping margin is over 2% and if the ITC reaches an affirmative determination, however, the problems have just begun, because of the antidumping review investigation.
Indonesian exporters often do not understand that the initial DOC investigation does not determine the amount of antidumping duties that the U.S. importer must pay. The initial investigation merely determines the amount of the cash deposit that the U.S. importer must pay to the U.S. Customs Service when the product is imported into the United States. Once the antidumping order is issued, a year later in the antidumping review investigation, the DOC will determine the actual amount of the antidumping duties owed by the U.S. importer.
If the DOC determines that the actual antidumping duties are lower than the cash deposit, the U.S. importer receives back from the U.S. Customs Service the difference plus interest. If the DOC determines that the actual antidumping duties are higher than the cash deposit, however, the U.S. importer owes the difference plus interest. To keep its low dumping margin, therefore, the Indonesian exporter must continue to participate in annual review investigations.
In the Sulfanilic Acid case, the Chinese exporter that had the lowest dumping margin decided not to participate in the second review investigation because of competition from two other Chinese exporters. The dumping margin for this exporter went from 19% to 87% and at least one importer owed the U.S. Customs Service over $150,000 in additional duties and interest.
In the Crawfish case, the company with the lowest dumping margin decided not to participate in the first review investigation and allow the Commerce Department to verify its information. The Chinese company’s dumping margin went from 91% to 201%, and U.S. importers face liability of over $5,000,000.
In the initial antidumping investigation, Iron Castings from China, the DOC determined that the dumping margin was 11 percent. In the review investigation, however, the DOC changed its methodology and the dumping margin increased to 99%. All of a sudden certain U.S. importers were facing bankruptcy because they owed the difference between the 11% deposit and the 99% duties plus interest.
If the U.S. importer is a subsidiary of the Indonesian exporter, this liability can truly be overwhelming. The antidumping margin in the review investigation also sets the rates for all future imports, so higher dumping margins in the review investigation can shut Indonesian exporters out of the U.S. market.
Although a company may get low dumping margins at the DOC and, therefore, a competitive advantage, the price of a victory through low dumping margins is yearly review investigations, which means continued payment of legal fees and continued risk of losing the U.S. market.
B. DOC – Suspension Agreement
Like the antidumping review investigation, the suspension agreement also has its price of victory. As stated above, obtaining suspension agreements is very difficult to do. In more than 80 cases against China, the DOC has granted suspension agreements in only two cases: Honey and Carbon Steel Plate. A suspension agreement is a negotiated agreement between the U.S. and Indonesian governments in which the DOC stops the antidumping case and issues a quota with a price floor.
In the Honey case, the major reason the DOC gave the Chinese exporters an agreement was the U.S. importers and the honey packers, who package domestic and imported honey for sale in the U.S. market. If Chinese honey imports were cut off completely, the U.S. packers faced the substantial loss of production jobs in the United States. The packers, therefore, were able to put substantial pressure on the U.S. government to give the Chinese an agreement.
Political pressure is even more important in an antidumping case against Indonesia. In contrast to antidumping case against China and Russia, since Indonesia is a market economy country, petitioner must agree to the suspension agreement before the DOC will grant one. If there is enough political pressure in the case, however, DOC can often find ways to pressure petitioner into accepting a suspension agreement.
Suspension agreements, however, also have a price. After issuing the suspension agreement in the Honey case, Chinese exporters have been very frustrated because the DOC’s price floor has been so high it has had the effect of reducing substantially Chinese honey exports to the United States. Pursuant to the Honey Suspension Agreement, the DOC revises the floor price periodically based on historical data. If prices are falling in the U.S. market, however, the floor price is often so high that Chinese cannot export honey to the United States.
Suspension agreements are very difficult to obtain and also have a price.
If the Indonesian company cannot win at the DOC, it should try very hard to win the injury case at the ITC. Since 1991, we have handled twelve initial investigations for Chinese exporters and have been able to win all twelve of them, seven at the ITC for no injury - Shopping Carts, Refined Antimony Trioxide, Sulfur Dyes, Silicon Carbide, Saccharin, Disposable Lighters, and Citric Acid.
My review of the Cold-rolled Steel case indicates that the Indonesia steel producers have an excellent chance to win the entire case at the ITC for no injury. The Indonesians, however, need to participate in the case.
Winning at the ITC is difficult, but not as difficult as winning at the DOC. At the ITC in 1994 out of 10 antidumping cases against China, the ITC reached no-injury, negative determinations in only three cases, two of which we handled: Silicon Carbide and Saccharin. We were able to win both the Silicon Carbide and Saccharin cases because the Chinese exporters and the U.S. importers formed coalitions to fight at the ITC.
Every victory, however, has its own price. Remember, if an Indonesian company wins the case at the ITC, no antidumping order is issued and no further legal fees are required. On the other hand, a victory at the ITC means that all Indonesian companies win and can export their products to the United States. After we won the Silicon Carbide case, an article appeared in the Chinese press describing the case entitled, "Antidumping Cases -- Difficult to Win and Difficult to Preserve the Victory." After describing the difficulties of winning the case and the joy of victory at the ITC, the article went on to describe the "free rider" problem. The Chinese exporters that won the case were seeing their fruits of victory being taken away from them by the other Chinese exporters that could now export silicon carbide to the United States, but did not pay any of the legal fees and did not participate in the case.
The victory at the ITC, however, did have the effect of increasing Chinese exports substantially. During the initial investigation in 1993, Chinese silicon carbide exports to the United States were less than $20 million, now in 1999 they are over $60 million. Winning at the ITC can have the effect of increasing the U.S. market share for all Indonesian exporters, but the actual companies that participate in the case can lose their exclusive right to export the product with a low dumping margin.
IV. Strategies for Winning Initial Investigation
There are a number of strategies that Indonesian exporters and producers can use in the initial investigation to increase their chances of winning the case.
A. Work With The Importers
The most important strategy Indonesian exporters should follow to win an antidumping case is to work with the importers. In numerous cases, such as Crawfish and Mushrooms, foreign exporters have decided to go it alone, and the result has been disaster. Although the foreign exporters may have control over their own data, they do not understand the situation in the U.S. market. At the ITC, therefore, the importers are the only parties that can effectively argue against injury to the U.S. industry.
In Refined Antimony Trioxide, Sulfur Dyes, Silicon Carbide and Saccharin, the foreign exporters were able to win the ITC injury case only because the importers appeared and testified in person at the ITC hearing. In the Saccharin case, it was the testimony of the importers that caused the ITC to reach a negative determination. Specifically, the importers testified that if an antidumping order were issued blocking Chinese imports, they would just substitute the Korean saccharin, which was lower priced, for the Chinese saccharin. The majority of the ITC Commissioners realized that an antidumping order would not benefit the U.S. producer, only the Korean producers, and, therefore, reached a negative, no injury determination.
Moreover, importers can persuade the end users, which are U.S. producers, to testify on behalf of the Indonesian exporters at the ITC and the DOC. In the Sebacic Acid case, U.S. importers persuaded five U.S. manufacturers that used sebacic acid in their production process to testify on behalf of the Chinese. In the Silicon Carbide case, the U.S. importers persuaded General Motors, the largest U.S. car manufacturer and one of the significant users of Chinese silicon carbide, to testify on behalf of the Chinese exporters. This testimony by General Motors was one of the major reasons that the ITC reached a negative, no injury determination.
Another very important reason for working with the importers is - Politics. U.S. producers that use Indonesian raw materials can bring substantial political pressure to bear on the DOC and the ITC because U.S. jobs may be dependent on the imported raw materials from Indonesia. As mentioned above, in the Honey case, it was the packers that put substantial political pressure on the Department for a suspension agreement.
In the Sulfur Dyes case, the U.S. end user imported sulfur dyes from United Kingdom, India and China and then mixed the dyes in their facilities in South Carolina. Since the production facilities employed a substantial number of workers in South Carolina, the U.S. end user/importer was able to persuade Strom Thurmond and Ernest Hollings, two Senators that were known as being anti-China, to write very strong letters on behalf of the Chinese exporters. Because U.S. jobs were at stake, the two Senators had to support the producer in their state, which imported sulfur dyes from China. The political pressure certainly made it easier for the ITC to reach a negative, no injury determination without any fear of criticism.
Political pressure on behalf of the U.S. importers and Indonesian exporters cannot win a case at the DOC or ITC, but it has the effect of leveling the playing field. The DOC, in particular, cannot bash the Indonesian exporters that much if they know that there is also political pressure on their side. Without the importers, which can bring in the end users, however, the Indonesian exporters have no political pressure on their side, which makes it much easier for the ITC and the DOC to reach determinations that favor the domestic industry. If the DOC and ITC perceive the dumping case to be merely a fight between the United States and Indonesia, Indonesia usually loses because the antidumping law is intended to protect U.S. industries. In sharp contrast to the cases mentioned above, in the Mushrooms case, for example, no U.S. importer testified in person on behalf of the Chinese or Indonesian exporters at the ITC hearing.
As explained below, if the Indonesian exporters lose at the ITC, the importers can also agree to import test shipments so as to lower the dumping margins in the antidumping review investigations, which has the effect of opening up the U.S. market to the Indonesian exporters. In the Sebacic Acid case, after the antidumping order was issued, an importer in the coalition agreed to import a small amount of sebacic acid for Sinochem Tianjin so that it could do the first review investigation. Sinochem Tianjin now has the lowest dumping margin and is one of two Chinese exporters that continues to export sebacic acid to the United States.
Because importers are such an important factor in winning an antidumping case, Indonesian exporters should not try to cut them out of the case and go it alone. Instead, Indonesian exporters should form coalitions with the U.S. importers to participate together in the case. The importers will take the lead at the ITC, while the Indonesian exporters take the lead at the DOC. In many instances, the U.S. importers may agree to share legal fees with the Indonesian exporters, which will cause the per company costs for the Indonesian exporters to decline substantially.
Finally, Indonesian exporters should understand that the importers are the parties that are liable for any increase in antidumping duties in the antidumping review investigations. In the Crawfish case, for example, because of problems with certain Chinese exporters in the antidumping review investigation, a number of U.S. importers are facing additional duties of over $20 million owed to the U.S. Customs Service and possible bankruptcy. Because the U.S. importers are the parties that are liable for the duties, Indonesian exporters should find ways to work with them in antidumping investigations.
Moreover, in the initial Crawfish investigation the Chinese decided to go it alone and ignore the importers. During the antidumping review investigation, however, when faced with enormous liability, the importers banded together. One of the importers, a large restaurant chain, was able to put substantial political pressure on the DOC because of its political connections. In the review investigation, however, the DOC has very few options and it was much harder to win that case. If that political pressure had been used in the initial Crawfish investigation, however, the Chinese might have been able to win the entire case by at a minimum obtaining a suspension agreement.
B. Allocations at Commerce Department
In responding to the DOC’s questionnaire, one of the most important issues is allocations. As stated above, the DOC uses actual costs to determine whether the Indonesian exporter is dumping, but those costs are the actual costs to produce the product subject to investigation, not some other product.
The Indonesian producers, therefore, should not report all the costs at the factory, but only the costs to produce the product that is subject to investigation. The Indonesian factory, therefore, should find a way to shift costs away from the product subject to investigation and allocate costs so that only those costs to manufacture the product that is subject to investigation are reported to the Commerce Department.
1. Be Prepared and Take It Serious
After the Commerce Department’s preliminary determination in the initial investigation or before the preliminary determination in the review investigation, the Commerce Department will visit the Indonesian exporter to verify the sales reported and the Indonesian factory to verify the cost of production.
Indonesian companies must take the verification seriously. In the Sebacic Acid case, there was a major problem in the first review investigation, because the largest exporter had allowed two departments to make sales of sebacic acid. One department, which had made most of the sales, was fully prepared for the verification. The other department, however, completely ignored the verification. The person who had made the sales had gone to India and locked the original documents in a filing cabinet.
At verification, the DOC traces the sales into the books and records of the company and into the financial statement. More importantly, the Commerce Department traces the payment for the sales through the books and records of the company and into the bank account. At the Sebacic Acid verification, the Commerce Department discovered that the other department had worked with another export company to sell the sebacic acid to the United States. When Commerce traced the payments from that department into the books and records of the company, it discovered that a substantial part of the payment had gone to another export company, which did not participate in the review investigation. The department had merely taken a small percentage of the payment as its commission.
In the final determination, the DOC determined that the two sales by the other department were actually the sales of another exporter, levied a 243% dumping margin on the two sales, and the exporter’s dumping margin zoomed up from 0 to 75%, knocking it out of the U.S. market. More importantly, the U.S. importer faced additional duties of over $500,000 on those two sales alone.
2. DOC Investigators Are the Judge
Another major problem is how to treat the DOC investigators. At verification, the DOC investigators are not your friends, but they are not your enemies either. They are the judges. Moreover, they are being paid to verify the accuracy of the response and, therefore, are paid to be skeptical. The investigators, therefore, are searching for mistakes, but so long as the mistakes are minor and the company is being cooperative, the Commerce Department will usually give the company the benefit of the doubt.
On the other hand, it is a mistake to become too friendly with the DOC investigators. In the Saccharin case, for example, we had a major problem because one of the factory workers decided to practice her English with the DOC investigators. In practicing her English, however, she revealed certain information that seriously damaged the company’s position.
D. Testify at the ITC Against the Threat Case
One of the mistakes that Indonesian exporters may make is not to come to the ITC hearing. Once the dumping case is filed many Indonesian exporters and producers want to take the opportunity to come to the United States, but they should not come at the wrong time.
The Commerce Department hearing is usually not important. By the time of the hearing, the Department’s investigative team usually has already made its decision and appearance at the hearing generally has no impact on the outcome of the case.
In direct contrast, however, testimony by the Indonesian exporters and producers at the ITC hearing can make the difference between winning and losing the injury case. At the hearing, the ITC Commissioners appear in person to listen to the domestic industry’s and the respondent’s arguments. At that hearing, the Commissioners are especially interested in threat of material injury. In their decision, the ITC Commissioners must determine whether the Indonesian imports will threaten material injury to the U.S. industry in the near future and part of the decision is based on the intention of the Indonesian exporters and producers.
If the Indonesian exporters and producers appear at the hearing, their presence and testimony can reassure the ITC Commissioners that their export activities will not threaten the U.S. industry in the future. If the Indonesian exporters and producers do not appear at the hearing, to an ITC Commissioner this action in and of itself can indicate a threat of material injury.
In the Refined Antimony Trioxide case, for example, it was the strong testimony of a Chinese official on the Chinese government’s decision to impose export licenses so as to preserve the natural resource, which caused the Commission to realize that the Chinese exports would not increase so as to threaten the U.S. industry. In addition, in the same case, petitioners had argued that Chinese had such high antimony reserves that the Chinese industry had to threaten the U.S. industry. The Chinese producer, however, was able to show the ITC staff that the natural reserves were so far away from the factories that they could not be developed in the near future.
In every single case that we have won at the ITC, including Refined Antimony Trioxide, Sulfur Dyes, Saccharin, and Silicon Carbide, our clients, the foreign exporters and producers, appeared at the ITC hearing and fought hard to show that their exports would not threaten injury to the U.S. industry. In direct contrast, in cases, such as Crawfish, the foreign exporters and producers did not even bother to show up at the ITC hearing and make their views known.
E. Fully Cooperate and Take Advantage of Every Opportunity To Win the Case
Two mistakes Indonesian exporters make are failing to fully cooperate in the DOC and ITC investigations and not taking advantage of every opportunity to win the case.
1. Full Cooperation and Answer Carefully
After deciding to participate in a case, Indonesian exporters may sometimes make the mistake of not responding fully to the DOC's questionnaire, but only giving the DOC the information that the Indonesian exporters want to give them. In the Tungsten Ore case, for example, despite requests from the DOC for certain information regarding tungsten ore reserves, the Chinese exporters decided to submit only the information that they wanted to give the DOC. One exporter explained, "[T]his information should be good enough for the DOC." In other words, the Chinese exporters expected the DOC just to accept the information that they were willing to give them.
The DOC, however, can ask for any information it wants to investigate. In the Tungsten Ore case, because the Chinese exporters refused to give the DOC all the information requested in the questionnaire response, the DOC rejected the Chinese submission, used the best information available and gave all Chinese exporters the 150% antidumping margin in the petition. As a result, the Chinese exporters lost the 20 million-dollar U.S. tungsten ore market in six months. Finally, in the sunset review, the Commerce Department has decided to lift the dumping order on tungsten ore as of January 1, 2000, nine years after the Commerce Department issued the order.
In the Polyvinyl Alcohol (PVA) case, the Chinese exporter was able to drive its dumping margin from 187% in the DOC preliminary investigation to 0% in the final determination because the Chinese producer did not take into account the fact that it was recycling its raw material inputs. As a result, the Chinese producer overstated a key raw material input, acetic acid, by 600% because it was reusing the acetic acid in its production process. The factory discovered this fact after the preliminary determination and resubmitted its data. By changing the data for acetic acid to take into account the recycling of the raw material input, the dumping margin dropped from 187% in the preliminary determination to 0% in the final. In reporting costs, factories must be very careful to report only the actual raw material and labor costs that go directly into producing the product subject to investigation.
2. Failure To Take Every Opportunity to Win the Case
Another mistake Indonesian exporters may make is not taking every opportunity to win the antidumping case. As stated above, winning an antidumping case means that Indonesian exporters can continue to export their product to the United States.
Indonesian exporters may believe that the best way to win the dumping case is by getting low antidumping margins at the DOC. If an Indonesian exporter gets the lowest margin, it can become the exclusive exporter of the product. As explained below, however, such a strategy can lead to substantial difficulties in a review investigation.
For example, in past cases, Chinese exporters have given up the opportunity of winning at the ITC because they have focused only on winning at the DOC. In several recent cases, Chinese exporters have lost cases at the ITC because they did not even attend the ITC hearing.
There is an old saying in English, "Do not put all your eggs in one basket, because it might break." Indonesian exporters cannot put all their eggs in the DOC basket, but must take every opportunity to win the case both at the DOC and the ITC.
V. Review Investigations
Once the Indonesian exporters and producers lose the case at the DOC and the ITC in the initial investigation, the DOC issues an antidumping order with a large dumping margin and many Indonesian exporters may simply give up on the U.S. market and stop exporting. Other Indonesian exporters, however, may realize that there is an opportunity. If they can get their dumping margins low enough, they can become exclusive exporters of the product to the United States, protected by the U.S. dumping law from competition by other Indonesian exporters.
A. Test Sales and Regular Reviews
Once the ITC issues a final injury determination, the Commerce Department will issue an antidumping order. In that antidumping order, the Department will issue certain specific, per company dumping margins and an antidumping rate for all other Indonesian exporters.
Indonesian exporters, however, can obtain their own dumping margin by making a very small test sale to the United States, as low as a metric ton of the merchandise, so that the exporter can do the antidumping review investigation. Again, this is another reason to work with the importers. If the Indonesian exporters work together in a coalition with the U.S. importers, the importers will often be willing to take another chance and import a small amount of the merchandise, post the antidumping duty and give the Indonesian exporters the opportunity to do the review investigation.
Moreover, once the dumping order is issued, prices in the U.S. market often increase substantially, giving the Indonesian the opportunity to make a sale at a much higher price, which leads to lower dumping margins. In the Crawfish case, for example, after the antidumping order was issued, U.S. market prices for crawfish doubled and all of sudden it became very profitable for Chinese exporters to do test sales and antidumping review investigations because they could make very big profits in the U.S. market.
This test sale, however, often needs to be structured in a certain way so as to create very low dumping margins. Before making the sale, the lawyer will need to work with the exporter so as to make sure that its U.S. price is higher than its prices in Indonesia and also find ways to reduce the Indonesian producer’s cost of production.
More importantly, if the Indonesian exporter participated in the initial investigation, to do the review investigation, it must make a test sale, that "enters" the United States the month before anniversary date of the antidumping order. The antidumping order in the Melamine Dinnerware case, for example, was issued in February 1997. If the Indonesian exporter participated in the initial Melamine investigation, it must make a test sale to the United States and the shipment must "enter" the commerce of the United States, that means go into the Customs territory of the United States, by January 31st, the month before the anniversary date.
In the Potassium Permanganate case, for example, we had a very difficult time convincing the Chinese exporter to do the case so it kept delaying the shipment. In the second week of December, it decided to go forward with the review investigation and shipped the test sale to the United States, but the boat was slow. Since the antidumping order in the Potassium Permanganate case was issued in January, the test sale had to enter the United States by December 31st. Because the Chinese exporter took so much time deciding to do the case and the boat was slow, the test sale did not enter the United States until January 3rd. As a result of missing the cut off date by three days, the Chinese exporter had to wait one year to request a review investigation.
B. New Shipper
If the Indonesian exporter did not participate in the initial investigation and is not related to an exporter that was involved in the initial investigation, the Indonesian exporter can do a new shipper review investigation. New shipper review investigations are somewhat easier than regular review investigations.
First, instead of waiting one year, new shippers can request a review investigation every six months. Moreover, the test sale does not need to "enter" the United States before the anniversary date so long as the sale is made in the month before the anniversary date. To request a new shipper review investigation, the Indonesian exporter must submit evidence of the sale with the request, such as an invoice or contract.
New shipper review investigations are shorter than regular review investigations and importers can import from the new shipper during the review investigation by posting a smaller bond, rather than the higher cash deposit. Thus, there are real advantages to new shipper review investigations.
VI. The Case Is Not Over Until It Is Over
Yogi Berra, a very well known baseball manager in the United States, had a very famous saying, "The ball game is not over until it is over." In every dumping case against Indonesian exporters, it will be very difficult to teach this lesson. At some point in the proceeding, the Indonesian exporters will have decided that they are going to lose and just want to give up.
In the Honey case, for example, as a result of the 150% antidumping margin in the preliminary determination, many Chinese exporters were very frustrated and disappointed with the determination. The absurdly high dumping margin, however, was a factor used to get the suspension agreement from the DOC. In the Saccharin case, despite a 145% dumping margin in the final determination, the Chinese exporters won the entire case at the ITC for no injury.
The point is that Indonesian exporters and producers should work with the importers and take every opportunity to win the case. With a lot of hard work, Indonesian exporters and producers can win U.S. antidumping cases, and they can continue to export their products to the United States.