Client Alert 25 Oct. 2023

Antidumping Petitions Filed with DOC and ITC Concerning Imports of Frozen Warmwater Shrimp from Ecuador, India, Indonesia and Vietnam

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On October 24, 2023 antidumping petitions were filed with the U.S. Department of Commerce (“DOC”) and U.S. International Trade Commission (“ITC”) concerning imports of Frozen Warmwater Shrimp from Ecuador and Indonesia, and countervailing duty petitions were filed concerning imports of Frozen Warmwater Shrimp from Ecuador, India, Indonesia and Vietnam. AD petitions concern unfair pricing practices (i.e., “dumping”), generally defined as selling imported goods in the U.S. market below their home market prices or the cost of production. CVD petitions concern competitive distortions caused by unfair government subsidies. If AD/CVD investigations are initiated by the DOC, they can lead to year-long investigations and the potential for additional duty liability for the imports concerned.

Importantly, although AD/CVD investigations center on the practices of foreign producers, exporters, and governments, it is the U.S. importer of record that is liable for any additional AD or CVD duties resulting from the investigations. Thus, both foreign producers/exporters and U.S. importers of the merchandise subject to AD/CVD investigations have a vested interest in their outcome. Given the rapid pace of such proceedings, affected foreign producers/exporters and U.S. importers are strongly encouraged to quickly assess the implications and determine whether to defend their interests in the investigations.

PETITIONER(S)

The petitions in question were filed on behalf of the American Shrimp Processors Association.

PETITIONER(S)

The products covered by the scope of the petitions are as follows:

"The scope of these investigations includes certain frozen warmwater shrimp and prawns whether wild-caught (ocean harvested) or farm-raised (produced by aquaculture), head-on or head-off, shell-on or peeled, tail-on or tail-off,25 deveined or not deveined, cooked or raw, or otherwise processed in frozen form.

The frozen warmwater shrimp and prawn products included in the scope, regardless of definitions in the Harmonized Tariff Schedule of the United States (HTSUS), are products which are processed from warmwater shrimp and prawns through freezing and which are sold in any count size.

The products described above may be processed from any species of warmwater shrimp and prawns. Warmwater shrimp and prawns are generally classified in, but are not limited to, the Penaeidae family. Some examples of the farmed and wild-caught warmwater species include, but are not limited to, whiteleg shrimp (Penaeus vannemei), banana prawn (Penaeus merguiensis), fleshy prawn (Penaeus chinensis), giant river prawn (Macrobrachium rosenbergii), giant tiger prawn (Penaeus monodon), redspotted shrimp (Penaeus brasiliensis), southern brown shrimp (Penaeus subtilis), southern pink shrimp (Penaeus notialis), southern rough shrimp (Trachypenaeus curvirostris), southern white shrimp (Penaeus schmitti), blue shrimp (Penaeus stylirostris), western white shrimp (Penaeus occidentalis), and Indian white prawn (Penaeus indicus).

Frozen shrimp and prawns that are packed with marinade, spices or sauce are included in the scope. In addition, food preparations, which are not “prepared meals,” that contain more than 20 percent by weight of shrimp or prawn are also included in the scope.

Excluded from the scope are: (1) breaded shrimp and prawns (HTSUS subheading 1605.20.10.20); (2) shrimp and prawns generally classified in the Pandalidae family and commonly referred to as coldwater shrimp, in any state of processing; (3) fresh shrimp and prawns whether shell-on or peeled (HTSUS subheadings 0306.36.0020 and 0306.36.0040); (4) shrimp and prawns in prepared meals (HTSUS subheading 1605.20.05.10); (5) dried shrimp and prawns; (6) canned warmwater shrimp and prawns (HTSUS subheading 1605.20.10.40); (7) certain dusted shrimp; and (8) certain battered shrimp. Dusted shrimp is a shrimp-based product: (1) that is produced from fresh (or thawed-from-frozen) and peeled shrimp; (2) to which a “dusting” layer of rice or wheat flour of at least 95 percent purity has been applied; (3) with the entire surface of the shrimp flesh thoroughly and evenly coated with the flour; (4) with the nonshrimp content of the end product constituting between four and 10 percent of the product’s total weight after being dusted, but prior to being frozen; and (5) that is subjected to IQF freezing immediately after application of the dusting layer. Battered shrimp is a shrimp-based product that, when dusted in accordance with the definition of dusting above, is coated with a wet viscous layer containing egg and/or milk, and par-fried.

The products covered by the scope are currently classified under the following HTSUS subheadings: 0306.17.0004, 0306.17.0005, 0306.17.0007, 0306.17.0008, 0306.17.0010, 0306.17.0011, 0306.17.0013, 0306.17.0014, 0306.17.0016, 0306.17.0017, 0306.17.0019, 0306.17.0020, 0306.17.0022, 0306.17.0023, 0306.17.0025, 0306.17.0026, 0306.17.0028, 0306.17.0029, 0306.17.0041, 0306.17.0042, 1605.21.1030, and 1605.29.1010. These HTSUS subheadings are provided for convenience and for customs purposes only and are not dispositive, but rather the written description of the scope is dispositive."

It is important to remember that it is the physical description of the product that is controlling. The provided HTSUS numbers are just for reference purposes only. Thus, it is conceivable that product imported using those HTSUS numbers is outside of the scope and vice versa, there could be product imported using different HTSUS numbers and included within the scope.

THE AD/CVD PROCESS

AD/CVD investigations are bifurcated proceedings administered by two government agencies -- the DOC and the ITC. The DOC controls the initiation process for any investigation and is also responsible for determining the degree of dumping or subsidization. The ITC is responsible for determining whether the imports concerned are causing or threaten to cause “material injury” to the U.S. domestic industry. Importantly, there must be affirmative findings of dumping and/or subsidization by the DOC and material injury or threat thereof by the ITC for the possibility of AD/CVD duties to apply through what is known as an AD or CVD “order”. If either agency reaches a negative conclusion, no order may be imposed.

AD/CVD investigations are also sequential, with staggered preliminary and final phase determinations issued by the DOC and the ITC. The first preliminary determination is issued by the ITC, followed by a preliminary DOC ruling. In the final phase, the DOC issues its final determination first, followed by the ITC. At the preliminary stage, if the ITC reaches a negative injury finding, the investigation is terminated. In the final phase proceedings, if either the DOC or ITC reach negative findings, the investigations are also terminated.

AD/CVD investigations are fact intensive, characterized by short deadlines and significant data and document demands. The key investigative tool for both the DOC and the ITC is the questionnaire, with the DOC often relying on both an initial questionnaire and multiple supplemental questionnaires that follow thereafter. These are technical documents that require significant expertise to complete and submit in proper form.

In AD/CVD investigations, potential duty liability normally first accrues with release of DOC’s preliminary determination. If AD or CVD margins are found, U.S. importers are required to begin posting deposits with U.S. Customs and Border Protection (“CBP”) on all entries of the imports under investigation moving forward. Depending on future circumstances, those deposits could be liquidated by CBP as additional duty liability, or refunded in part of in whole.

AD/CVD orders may be reviewed annually, and determined margins of dumping and subsidy revised on a retrospective basis, effecting entries made over the past year. This means that actually duty liability is initially unknown and may be more or less than deposits made over the preceding annual review period. AD/CVD orders are up for termination every 5 years under a “sunset” review process, put typically last 15 or more years.

NEXT STEPS

The DOC will normally issue an initiation determination within 20 days of receipt of the petitions. Initiation delays are otherwise rare and typically involve questions of standing and whether the Department is satisfied that the petitions were filed on behalf of the U.S. domestic industry. Once initiation occurs, AD/CVD investigation proceed along a rapid timeline, making it critical for affected foreign producers/exporters and importers to quickly engage to understand the implications and determine whether to defend their interests in the proceeding. To illustrate, the ITC will issue questionnaires and typically schedule a staff conference with interested parties 21 days after the petition is filed, before rendering a preliminary determination 45 days after the petition is filed, as required by law.

Some of the important dates related to the instant petition(s) are set for the below.

AD INVESTIGATION TIMELINE

Incremental Days

Date

Notes

Petition Filed

0

24-Jul-23

Initiation

20

13-Aug-23

Commerce may take an additional 20 days to determine industry support for the petition; all deadlines thereafter would be extended by the same amount

ITC Staff Conference

1

14-Aug-23

ITC Preliminary Determination

24

7-Sep-23

DOC Preliminary Determination

165

19-Feb-24

This date assumes a "complicated case" under the statute and full extension of the deadline for the DOC preliminary determination; the earliest possible date would be 115 days after the ITC preliminary injury determination

DOC Final Determination

135

3-Jul-24

This date assumes full extension of the deadline under the statute; the earliest possible date would be 75 days after the preliminary determination

ITC Final Determination

45

17-Aug-24

If the DOC preliminary determination was negative, add 30 days to this deadline

CVD INVESTIGATION TIMELINE

Incremental Days

Date

Notes

Petition Filed

0

24-Jul-23

Initiation

20

13-Aug-23

Commerce may take an additional 20 days to determine industry support for the petition; all deadlines thereafter would be extended by the same amount

ITC Staff Conference

1

14-Aug-23

ITC Preliminary Determination

24

7-Sep-23

DOC Preliminary Determination

105

21-Dec-23

Assumes no upstream subsidy allegation, which may extend the preliminary determination another 100 days. Also assumes "complicated" case full extension. At this stage, petitioners typically request alignment of the AD and CVD cases, with final determinations falling on the same AD final determination deadline

DOC Final Determination

75

5-Mar-24

This date assumes no alignment with the DOC AD final determination (see notes on preliminary determination above)

ITC Final Determination

45

19-Apr-24

This date assumes no alignment with the DOC AD final determination (see notes on preliminary determination above)

About Curtis

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For more information about Curtis, please visit www.curtis.com.

Attorney advertising. The material contained in this Client Alert is only a general review of the subjects covered and does not constitute legal advice. No legal or business decision should be based on its contents.

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