Price Undertakings Under U.S. Antidumping Duty Law Prepared by Import Administration, U.S. Department of Commerce for the June 2 nd Korea Trade Commission’s 2005 International Trade Remedies Seminar

2 Price Undertakings Are authorized under Article 8 of the WTO Implementation of Article VI of GATT 1994 (AD Agreement). Undertakings are also authorized under Article 18 of the WTO Agreement on Subsidies and Countervailing Measures.

3 Article 8 of AD Agreement Provides that AD proceedings may be terminated or suspended. Voluntary undertaking by an exporter. Exporters to revise prices or cease exports at dumped prices so that injurious effect of dumping is eliminated.

4 Article 8 States: Undertakings offered need not be accepted if the authorities consider their acceptance impractical, for example, if the number of actual or potential exporters is too great, or for other reasons, including reasons of general policy.

5 Legal Authority Section 734 (for antidumping duty cases) of the Tariff Act of 1930, as amended, establishes the Department’s authority to enter into suspension agreements. Further, the Department’s regulations at 19 C.F.R describe the suspension agreement process.

6 Decision to Enter into Negotiations The decision whether to enter into negotiations is purely a policy decision. Commerce currently has only six suspension agreements in effect. If Commerce decides to enter into negotiations, Commerce then analyzes the agreement to see which of the two legal tracks it follows, elimination of injury or elimination of dumping.

7 Legal Requirements: Public Interest Public interest: An agreement must be determined to be in the public interest before Commerce can sign. To determine whether an agreement is within the public interest, Commerce considers the effect on consumers, the international economic interests of the United States, and the impact on the domestic industry producing the like merchandise.

8 Legal Requirements: Price Suppression/Elimination of Injury In addition to satisfying the public interest requirement, Commerce must ensure that the agreement will either eliminate the injurious effect of the exports covered by the investigation, or Prevent the suppression or undercutting of price levels in the U.S. market.

9 Legal Requirements: Signatories In a non-market economy agreement, the foreign government and Commerce. In a market economy agreement, exporters that account for “substantially all”, by volume or value, of the merchandise exported during the period of investigation (or another period considered representative) and Commerce. “Substantially all” is defined as 85%in Commerce’s regulations.

10 Process A proposed suspension agreement may be submitted to Commerce within 15 days after the issuance of the preliminary determination in an antidumping duty investigation. A proposed suspension agreement may be submitted by: The foreign government, in a non-market economy case, or Exporters and producers in a market economy case.

11 Process: Notice and Comment Commerce analyzes the agreement and holds consultations with interested parties. If a preliminary agreement is reached, Commerce and the foreign government or exporters initial the preliminary agreement. The initialed agreement is issued to interested parties for comment. Parties are normally allowed 20 days to comment. After comments are received from interested parties, Commerce analyzes these comments and then holds further consultations with interested parties.

12 Process: Signature & Continuation Signature: Commerce must have made an affirmative preliminary determination and the ITC must have made an affirmative preliminary injury determination. A final suspension agreement must be signed no later than Commerce’s final antidumping determination. Continuation: An interested party can request that the investigation can be continued.

13 Signature & Continuation (cont.) Commerce then issues its final antidumping determination and the ITC issues a final injury determination. If either Commerce or the ITC makes a negative determination at the final stage, then the investigation ends and the entire proceeding is terminated.

14 Process: Continuation If the investigation is continued, and both Commerce and the ITC have affirmative final determinations, the suspension agreement goes into effect. After the agreement goes into effect, if the investigation was continued, and a violation of the agreement takes place, Commerce will issue an antidumping duty order. If the investigation was not continued and a violation takes place, then Commerce will resume the investigation at the date of the preliminary determination.

15 Process: Duty Collection If an agreement is reached, all suspended entries would be liquidated and cash deposits would be returned. Going forward, entries would no longer be suspended. Merchandise subject to the agreement would not be subject to suspension of liquidation or an antidumping duty. Imports would have to meet the provisions of the agreement for entry, which might include selling at or above a certain price and specific documentation.

16 Terms of Suspension Agreements Reference price calculation and movement mechanism, frequency of issuance of price. Normal value calculation and reporting instructions. Frequency of issuance of normal value. Quota period and amount of quota, calculation instructions. Documentation requirements for export. Reporting requirements to Commerce. Anti-circumvention requirements. Consultation mechanism. Duration. Violation provisions.

17 Administration of Agreements Once an agreement is signed, Commerce administers the terms of the agreement. The terms of the agreement, including any quota for the product or price at which exporters must sell at or above, are continually monitored by Commerce staff. Commerce also closely monitors compliance with any reporting requirements included in the terms of the agreement, and reviews the required documentation required for import of the product.

18 Thank You