PROMOTING INTERNATIONAL BUSINESS DEVELOPMENT WHILE PROTECTING DOMESTIC MARKETS: AN ANALYSIS OF THE NEW SHIPPER REVIEW POLICY OF THE UNITED STATES

Georgetown Journal of International Law, Winter 2005 by Fandl, Kevin J

Prior to the final determination of an antidumping order by Commerce, estimated duties must be paid by the importer either by cash or by bond.21 If these duties are less than those found in the final order, the importer does not have to pay the difference.22 If the final duty determination is less than the estimated duties already paid, the importer receives a refund.23 Within seven days of the final determination by Commerce, the antidumping order with the corresponding dumping margin rates is published in the Federal Register. From that point on, all exporters subject to the order are required to pay a cash deposit for the total amount of duties owed and are no longer permitted to post a bond.24

Contrast this process with the case of an importer requesting an administrative review, expedited review, or NSR of the already existing antidumping order. Commerce initially publishes a preliminary rate, to which the exporter under review will thereafter be subject. If Commerce then returns a final rate that is higher than the preliminary rate, the importer must pay the difference.25 Thus, fraudulent new shippers will be charged the higher rate on already imported merchandise-if the shippers are still in existence. The retroactive collection of duties in these cases is often unsuccessful since the shipper already imported its merchandise to the U.S. market and simply needs to change its company name to continue exporting the subject goods.

VII. ABUSE OF THE NEW SHIPPER REVIEW POLICY

The price at which a company has offered its product for sale to a U.S. buyer may have been considered less than normal value by the ITA, either because of domestic subsidies, illegal business practices, or some other offset in price.26 As a result, an antidumping order may exist on that particular type of merchandise. To avoid these duties and gain fast access to the U.S. market, many companies, whether they are new shippers or not, attempt to initiate an NSR.

Freedom from making a cash deposit is equivalent to a free pass for an exporter because it will be able to import its merchandise, through a U.S. importer, at a fraction of the duty rate that its domestic market counterparts would have to pay. To take advantage of this policy, some exporters provide fraudulent documentation alleging no exports during the POR and at least one legitimate sale outside the POR, thereby qualifying them for preliminary new shipper status. Once they are given this status, they receive a bonding privilege that provides nearly free access to the U.S. market.

Another way in which export companies abuse the new shipper process is by using shell companies. Here, a company subject to the high duty margin that made sales during the POR, which would disqualify it for new shipper status, establishes a shell company to filter its products on to the U.S. market.27 This new company then makes a few legitimate sales to an unaffiliated buyer in the United States outside the POR. After these sales, that "unaffiliated" buyer usually sells those goods at a significant loss on the U.S. market. The goal of the exporter is to establish a normal market value sale from the exporting country to an unaffiliated U.S. domestic purchaser. This, in addition to having made no sales during the dumping investigation POR, will qualify the exporter for preliminary new shipper status.