Trade Cases

Domestic Mills AD/CVD Suits: This Time Its Different

Written by John Packard

Last week we reported on a change in the cold rolled antidumping/countervailing duty scope language that has created some concern within the manufacturing community.  The concern is related to changes which resulted in this being added to the scope language:

“Subject merchandise includes cold-rolled steel that has been further processed in a third country, including but not limited to annealing, tempering, painting, varnishing, trimming, cutting, punching, and/or slitting, or any other processing that would not otherwise remove the merchandise from the scope of the investigations if performed in the country of manufacture of the cold-rolled steel.”

A number of companies have objected to this language and how it could impact manufactured parts being produced in one of the countries targeted in the cold rolled trade suits. There were also objections regarding steel products which are not produced by mills in the United States.

Last Friday the domestic steel mills responded to comments made by a number of companies requesting exclusions from the cold rolled suit.

The companies mentioned in their response letter to the US Department of Commerce included: Caparo Precision Strip, Ltd; POSCO; Nissan North America; Hitachi Metals America, Ltd.; JFE Steel Corporation; Ministry of Economic Development of the Russian Federation; Electrolux Home Products; Ameri-Source Specialty Products, Inc.; Nippon Steel & Sumitomo Metals Corportation and Sumitomo Corporation of America.

In all cases, each company provided a product where they requested from the US DOC a scope exclusion (that the part specifically be excluded from the trade suits). In each case, the domestic steel mills’ attorneys responded back to the Department of Commerce with a firm “no” as, “…each of the products identified is without question covered by the written scope of these investigations….”

This Time it’s Different

The mills response included a reference to past investigations and the mills stated that this suit is different from the past when Commerce granted exclusions on similar type requests. “The scope of this case is intended to be different from the scopes of earlier cases on cold-rolled steel….” (bold print is part of the original document)

Furthermore, and perhaps critical to some manufacturing companies, the mills pointed out in their response to Hitachi’s request for exclusion for an ultra-tempered automotive steel and flapper valve steel, “…Assuming for the sake of argument that this product could not be produced domestically, there is no requirement that the domestic industry be able to produce every product that may be encompassed by the scope.”

Manufactured Parts

It appears that in this case the domestic steel mills’ attorneys are actually siding with Electrolux – the company was concerned that the new scope language would impact manufactured parts for appliance applications. Electrolux requested a specific exclusion which the mills argued was “unnecessary” since these products would not be considered cold rolled steel flat products.

The mill attorneys stated, “…while Electrolux provides drawings of vacuum cleaner sole plates as an example of a potentially excluded product, its exclusion language is much broader and vague. Given that Electrolux has provided no evidence to indicate that any product that it deems to be a part of an appliance is likely to be treated improperly as subject cold-rolled steel, there is no need for such an exclusion, much less an exclusion that is vague.”

Ameri-Source also requested exclusion for special tempered steels made with C-1075 or C-1095 steels for flapper valves as well as two annealed cold rolled parts that were described as “ultra-flat shadow mask steel” and that were previously excluded in past investigations. The mills argued that Ameri-Source did not provide any evidence that the steels were outside the scope of the investigation and should therefore be denied.

Black Plate, Excel Bright & Porcelain-Enameling Steel

POSCO claimed that black plate should be excluded as it is “readily distinguishable from other cold rolled steel products through its physical and chemical characteristics….” The domestic mills argued POSCO did not prevent evidence of the physical and chemical differences and that black plate should be included.

NSSMC requested black plate, porcelain enameling steel, Excel bright and extra bright finished cold rolled steels be excluded. In each case, the mills argued that each product is within the scope of the investigation and should not be excluded.

JFE asked for a similar exclusion on porcelain-enameling steel and the mills responded that the products are clearly covered within the scope and the exclusion request should be denied.

Chromium Molybdenum Steel

Sumitomo requested an exclusion on chromium molybdenum steel strip which Sumitomo claims is not produced by the domestic steel industry. The mills argued that Sumitomo did not provide proof of their claims and again reiterated their position that even if the industry does not produce the product, it is still within the scope of the investigation.

Comments from Trade Attorney Lewis Leibowitz

Steel Market Update solicited comments from trade attorney Lewis E. Leibowitz regarding the importance of the changes in scope language and the domestic steel industry’s response to the various exclusion claims outlined above.

He advised us that the steel industry has “gotten more assertive” with the recent filings and that companies bringing in foreign steel or even foreign steel parts will need to be aware as to how that steel or those parts are going to be perceived by US Customs. He told us the threshold has changed and the domestic mills are not likely to narrow the scope of the investigation.

He pointed out (as we have done above) that one key point is the domestic steel industry does not have to produce the product in order to file a dumping complaint against it. Steels which are either not produced domestically or are not items the domestic mills want to produce are being included in the scope of this cold rolled investigation, probably for tactical reasons.

There are a number of gray areas as it relates to manufactured parts, country of origin (due to processing) and other issues which could make it more difficult for manufacturers to import products.

SMU Note: Later this week the International Trade Commission will rule if the hot rolled cases should continue (preliminary injury determination). These cases are considered likely to be continued.

The next key date is November 2nd which is when the Preliminary Determination of Countervailable Subsidies will be made on the CORE (corrosion resistant) case. At the same time (or slightly before) there will be a decision rendered about Critical Circumstances on CORE (coated steels). The Preliminary Determination and Critical Circumstances rulings will be key to when duties will be collected from the importers of record. If Critical Circumstances are found the beginning date will be backdated by 90 days (into August) and duties will be due on products received from that point in time and moving forward.

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