ITA Reports to Congress on Retrospective and Prospective AD/CV Duty Collection Systems
The International Trade Administration has posted itsNovember 2010 report to Congress on the "Relative Advantages and Disadvantages of Retrospective and Prospective Antidumping and Countervailing Duty Collection Systems." As discussed in the report, the U.S. is the only major user of AD/CVD trade remedies that implements a retrospective system of duty assessment.
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U.S. system. Under the U.S. retrospective system, final duties are not assessed at the time that the subject merchandise is imported into the United States. Rather, after importation, interested parties may request an administrative review to determine the exact amount of duties to collect based on the level of dumping or subsidization that occurred during the review period. If no review is requested, affected entries are “liquidated” based on the AD or CVD deposit rate applicable at the time of importation. If a review is requested, affected entries are liquidated based on the results of the retrospective review.
Systems other WTO countries use. Conversely, under a prospective system, duties are collected at the time of entry based on previously calculated AD margins and CVD rates, or in some countries, previously determined normal values (reference prices) or subsidy amounts. The report notes that the prospective systems used by other WTO countries are all different. There is no single prospective system used by most WTO countries.
Prospective AD systems tend to fall within three general categories -- (1) prospective ad valorem systems, (2) prospective per unit systems and prospective normal value systems -- though some may incorporate a mixture of systems. Prospective CVD systems are generally limited to (1) prospective ad valorem or (2) per unit systems. (Prospective normal value systems only apply to AD duty collections.)
(An appendix to the report contains short descriptions of prospective AD/CVD assessment systems in place in Australia, Brazil, Canada and the European Union (EU).)
U.S. problem of uncollected AD/CV duties. Congress is interested in considering whether the U.S. should change from a retrospective system or revise its retrospective system, or make no change at all.
A 2008 GAO report triggered this concern, as it found that a substantial amount of AD/CVD duties were uncollected and concluded that the U.S. Government had two options for resolving the problem: (1) Congress could fundamentally change the U.S. AD/CVD system from a retrospective to a prospective duty collection system, or (2) Congress and the relevant agencies could alter specific aspects of the current retrospective system.
Report makes no recommendations. As the ITA was tasked only with reporting on the relative advantages and disadvantages of various retrospective and prospective antidumping and countervailing duty collection systems, it made no recommendations.
Congress had requested that the report address the extent to which each type of system would: (1) likely achieve the goals of remedying injurious dumped or subsidized exports; (2) minimize uncollected duties; (3) reduce incentives and opportunities for importers to evade AD and CVD duties; (4) effectively target high-risk importers; (5) address the impact of retrospective rate increases on U.S. importers and their employees; and (6) create a minimal administrative burden.
(See ITT's Online Archives or 03/31/10 news, 10033145, for BP summary of ITA requesting comments on this issue. See ITT's Online Archives or 04/26/10 news, 10042644, for BP summary of comments submitted.)
GAO Report 08-391 (March 26, 2008) available here.