New Regulations Highlight Importance of Anti-circumvention Inquiries

Practice into Rule

• New regulation (19 C.F.R. § 351.226) effective November 4, 2021 governs anti-circumvention inquiries which were previously part of the scope ruling regulations (19 C.F.R. § 351.225). The new regulations incorporate current practice but also some new elements.  
• The Department of Commerce may investigate evasion of antidumping and countervailing duties (AD/CVD) duties through anti-circumvention inquiries which examine whether AD/CVD duties are being evaded by products slightly altered by manufacturing processes to not meet the original order or by shipment through a third country, where enough inputs come from the subject country.  
• In effect, anti-circumvention inquiries expand the relevant AD/CVD order to cover additional countries or merchandise not originally a part of investigation.

What to Know

• The regulations allow for self-initiated or requested anti-circumvention inquiries. Commerce will accept or reject the circumvention inquiries request within 30 days (but may extend the deadline by 15 days). Initiation of circumvention inquiry will be published in the Federal Register and parties will have the opportunity to provide comments and factual information and rebut, clarify or correct factual information that is submitted.
• The preliminary determination is due 150 days from the publication of the initiation Federal Register notice and the final determination is due 300 days from the publication of the initiation of the Federal Register notice. The final determination may be extended by 65 days.
• Similar to AD/CVD investigations and administrative reviews, Commerce is also allowed to verify submissions for anti-circumvention inquiries.
• If Commerce makes an affirmative preliminary determination, then Commerce will direct U.S. Customs and Border Protection (CBP) to begin suspension of liquidation and require cash deposit of duties at the applicable AD/CVD rate for each unliquidated entry of the product not yet suspended, entered, or withdrawn from warehouse, for consumption on or after the date of publication of the notice of initiation of the anti-circumvention inquiry.
• Commerce has discretion to begin the suspension of liquidation and require a cash deposit of estimated duties after an affirmative preliminary or final determination of circumvention to all unliquidated entries dating back to the earliest suspension date under the order, usually the preliminary determination in the underlying investigation, as opposed to the date of initiation of the anti-circumvention inquiry.
• However, Commerce stated that it will not apply the provisions “in a way that would direct CBP to begin the suspension of liquidation of unliquidated entries not yet suspended, entered, or withdrawn from warehouse, for consumption, prior to [the stated effective date of November 4, 2021].” Therefore, the furthest retroactive suspension directed by Commerce that could apply under this framework is to unliquidated entries not yet suspended, entered, or withdrawn from warehouse, for consumption, on or after November 4, 2021.
• Commerce has full discretion to determine whether remedy should be:
  • producer-specific, exporter-specific, importer-specific basis, or some combination thereof;
  • on a country-wide basis to all products from the same country as the product at issue with the same relevant physical characteristics, (including chemical, dimensional and technical characteristics), regardless of producer, exporter, or importer of those products;
  • on a country-wide basis to all products from the same country as the product at issue with similar relevant physical characteristics, (including chemical, dimensional and technical characteristics), regardless of producer, exporter, or importer of those products; and
  • the implementation of a certification requirement under 19 CFR 351.228 (an attestation regarding whether or not the imported merchandise is subject to AD/CVD duties).

How We Can Help

Commerce was not shy about initiating anti-circumvention inquiries before formalizing the process in the new regulations and we anticipate that Commerce will continue prioritizing enforcement of AD/CVD orders after the issuance of the anti-circumvention regulations. Companies that navigate in this space must ensure that they monitor DOC’s anti-circumvention inquiries and whether expansion of existing AD/CVD orders will impact their imports. Arent Fox can help monitor anti-circumvention inquiries and represent stakeholders during the anti-circumvention inquiries to ensure that the DOC does not expand AD/CVD orders erroneously.