Details of ITA Final Rule that Ends "Bond Option" for Future AD/CV Investigations

Change Effective for AD/CV Petitions Filed on/after Nov 2

This change is effective on November 2, 2011, and will apply to all investigations initiated on the basis of petitions filed on or after that date. ITA states it is delaying the effective date to allow affected importers time to prepare for this new requirement.⁴

(See ITT's Online Archives 11093012 for BP summary announcing the availability of this final rule. See ITT’s Online Archives 11042631 for BP summary of the proposed rule.)

Cash Deposits to Better Ensure Importers Pay AD/CV Duties Owed

According to ITA, this requirement to post a cash deposit will better ensure that importers bear full responsibility for any future AD or CV duties they may owe, as the ITA and U.S. Customs and Border Protection have learned from the agencies' extensive experience in the administration of AD and CV law.

The ITA notes that the provisional measures period lasts, at most, six months, which is a relatively short period in the context of AD or CV proceedings. Furthermore, importers receive the cash deposit back in full if the imports at issue are not dumped or found to have benefited from a CV subsidy (or if the International Trade Commission make a final finding of no injury).

If the margin calculated for the final determination ends up lower than the margin calculated at the preliminary determination, the difference is refunded to the importer. However, if the margin calculated for the final determination is higher than the margin calculated at the preliminary determination, the difference is disregarded and not charged (according to current regulations on provisional measures).

Change will Reduce Burden on CBP

According to ITA, the Government Accountability Office (GAO--08--391) found that when an importer failed to pay supplemental AD or CVD duties, CBP frequently faced a lengthy process of trying to collect from bonding agents. Additionally, CBP reported bonding is more burdensome than collecting cash deposits because Single Transaction Bonds⁵ (STBs), used for AD and CVD investigations, must be reviewed for sufficiency and adequacy. Further, since bonds are legal documents, CBP must keep paper copies of the STBs. CBP also has to manually enter an electronic note in its Automated Commercial System for STBs. Conversely, cash deposits are recorded electronically in ACS and are usually transmitted to CBP electronically and, thus, are recorded automatically.

Change Supports the National Export Initiative

ITA also states that this final rule was one of the proposals it issued along with others to strengthen the agency's administration of AD and CV laws, in support of the President's National Export Initiative (NEI). It will help to ensure the U.S. Government collects the full amount of the duties owned should an investigation result in the imposition of an AD or CV order. (See ITT's Online Archives 10082711, for BP summary of 14 proposed changes to further NEI.)

Regs Currently Allow Either Cash Deposits or Bonds

The ITA currently states in its AD and CV notices (and CBP states in its messages), that either the posting of a bond or payment of a cash deposit is allowed until the order is in effect. (Once the order is in effect, only cash deposits are allowed.)

Regs to Instead Say Cash Deposits to be Usual Measure

The final rule will delete the sentence under current 19 CFR 351.205(a) which states that this type of provisional remedy in AD and CV investigations usually takes the form of a bonding requirement. It will instead add a sentence to paragraph (d) (on the effect of a preliminary determination) which states that the Secretary will normally order the posting of cash deposits during this provisional period to ensure payment if AD/CV duties are ultimately imposed.

(Note that elsewhere, ITA’s regulations state that provisional measures may only be in force for a four-month period (120 days), which can be extended up to six months (180 days) for AD cases. Also note that cash deposits are often referred to as estimated cash deposits, as they are made prior to assessment and liquidation.)

¹In the preamble, the ITA states that the use of the term "normal" provides it flexibility to address those rare and unusual circumstances that the ITA may find warrant the acceptance of bonds.

²The effective date of the AD or CV order is generally the date that the International Trade Commission's final affirmative injury determination is published in the Federal Register. Also a cash deposit would also have retroactive effect (90 days prior to the preliminary determination) if critical circumstances were found.

³Provisional measures are imposed from the date of the preliminary affirmative determination to ensure payment from that date forward, should AD or CV duties be finalized by an order (note that there can be a 'gap period" between the preliminary determination and an order, where there is no AD/CV liability or cash deposit requirement , if the statutory time limit for conducting the investigation expires.

⁴ITA states that this final rule does not affect the bonding option allowed during the pendency of new shipper reviews, which is required by statute.

⁵If the posting of a bond is chosen, CBP may currently accept either a single-entry or a continuous-entry bond for an estimated AD or CV duty rate that is less than 5% ad valorem. If the rate is over 5%, a single-entry bond is required.

(FR Pub 10/03/11, D/N 110420253-1577-02)

¹In the preamble, the ITA states that the use of the term ‘‘normal’’ provides it flexibility to address those rare and unusual circumstances that the ITA may find warrant the acceptance of bonds.