By Douglas J. Heffner, Richard P. Ferrin, William Silverman and Rick L. Johnson

On October 22, 2013, an antidumping duty (AD) and countervailing duty (CVD) petition was filed by Mexichem Fluor, Inc. on R-134a gas from China. Mexichem alleges AD margins as high as 196% and that Chinese producers are benefitting from several subsidies. Duty liability could begin as soon as January 16, 2014.

A. What Are Antidumping and Countervailing Duties?

AD duties are imposed to offset unfairly priced imports that materially injure or threaten to injure the U.S. industry. CVD duties are imposed to offset allegedly unfairly priced imports that are subsidized by national, state, or provincial governments that materially injure or threaten to injure the U.S. industry.

B. Potential Impact of AD and CVD Petition

As a result of these investigations, the AD and CVD duties imposed can be significant. If you are an importer of R-134a, as a result of these investigations, you could be responsible for significant AD and CVD duties. If you are a purchaser but not the importer, these investigations could potentially disrupt your ability to source R-134a from China.

C. Use of R-134a

R-134a is used as a refrigerant gas. It is primarily used in air conditioning systems in vehicles. Vehicle manufacturers purchase the product directly, generally under contracts, to install in new vehicles. Repair shops generally purchase R-134a from distributors for refilling the vehicle air conditioner. In addition to vehicle air conditioning systems, R-134a may be used in stationary air conditioning units for commercial or residential buildings. For a full description of the scope of the investigation, please click here.

D. U.S. Government Agencies Involved In the Investigation

The U.S. government agencies involved in these investigations are the Department of Commerce (DOC), which calculates dumping and countervailing duty margins, and the U.S. International Trade Commission (ITC), which determines whether the U.S. industry is being materially injured or threatened with material injury. For a summary of the investigative procedures, please click here.

E. How The Drinker Biddle Customs and International Trade Group Can Help

Although the foreign exporter is assigned the AD or CVD margin, because the importer is ultimately liable for the AD and CVD duties, it is important that importers participate to limit their risk of a high duty. In addition, purchasers can participate at the ITC to explain why they purchase the imported product as opposed to domestic product. We can also assist your Chinese supplier in responding to the AD and CVD questionnaires in order to obtain the lowest AD and CVD margins possible, which would allow your Chinese supplier to continue supplying you with R-134a.

F. Key Dates

December 6, 2013

Deadline for ITC preliminary injury determination. If negative, case is terminated, and no AD/CVD duties are imposed. If affirmative, DOC proceeds with its investigation.

January 16, 2014

Deadline for DOC preliminary CVD determination. If affirmative, potential CVD liability begins for importers. Note that the deadline can be postponed until March 24th.

April 1, 2014

Deadline for DOC preliminary determination of dumping, if deadline is not postponed. If affirmative, potential AD liability begins for importers. Note that the deadline can be postponed until May 21.

October 3, 2014

Likely deadline for DOC final AD and CVD determination. If DOC finds no dumping or subsidies, investigations are terminated.

November 17, 2014

Likely deadline for ITC final injury determination.


Source: Client Alert