Trade Cases

There is No Short Supply Process Under the AD/CVD Laws

Written by John Packard

End users who use specialty steels that are not readily available in the United States have to be concerned about both supply and price due to the successful prosecution of the antidumping and countervailing duty trade cases by the domestic steel industry.

Earlier this week Steel Market Update received a “letter to the editor” which prompted us to do some research regarding exclusions/exceptions to the dumping duties assigned on corrosion resistant, cold rolled out of Japan and China as well as the soon to be assigned duties on cold rolled and hot rolled steels.

Here is what one of our readers had to say:

“Platts Steel Business Briefing reported today about a consortium of steel users in Europe that has been established with ” the aim of protecting their freedom to source..( steel ) from third countries after the EU filed dumping suits against a number of counties on Hot rolled coils. The consortium feels that closing the European market to imports would have ” disastrous consequences for European steel users and downstream industries “.
Although several steel buyers in the US have expressed their concern about the massive dumping suits being filed by the domestic steel industry I believe many buyers here have not realized what will happen to them if there are no more imports and they will be dependent on two or possibly only one domestic supplier.  
The last time a ‘ Short Supply Petition ‘ was filed with the GAO’s [GAO – General Accounting  Office) National Security and International Affairs division was in 1988 when 96 out of 161 petitions were approved. The time period between filing the petition and receiving a reply was up to 236 days in some cases.”

SMU discussed this subject with trade attorney Lewis Leibowitz who told us there were hundreds of filings during the restrictions (Section 201) in place in 2002 and 2003. Leibowitz reminded SMU that the AD/CVD rulings are far reaching and cover all of the products listed in the scope – whether they are produced in the United States or not.

In the late 1980’s there were voluntary restraint agreements (VRA’s) in place with countries around the world. The VRA’s were quotas assigned to import suppliers and, as Leibowitz explained the system, “The GAO report went through the imperfections of that process, which were many.”

The difference between the 1980’s, 2000’s and now is there is no short supply process under the antidumping (AD) and countervailing duty (CVD) laws. “.  An exclusion from antidumping or countervailing duties is not given even if the product needed is unavailable from domestic sources.  The only escape is if the product is excluded from the scope of the case–and in practical terms, that requires the approval of the domestic petitioners.  It happens occasionally, but quite rarely.  The petitioners take care of their customers and other important folks; but the Commerce Department will not help those users who suffer genuine hardship from the cutting of their supply lines.”  

This is an area that will plague manufacturing companies who were buyers of specialty hot rolled, cold rolled or coated products not produced in the United States.

This is a subject we will discuss further at our Steel Summit Conference in Atlanta on August 29-31st.

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