12 things exporters should know about UK trade remedies
This briefing only covers anti-dumping and countervailing (anti-subsidy) duties. Safeguard investigations are different in that they are initiated against all sources of imports where there is a sudden surge in imports that causes serious injury. They involve imports from countries exporting to the UK and the measures are not company specific as they are for anti-dumping and countervailing duty cases. Safeguard investigations are relatively rare in major economies such as the EU and US and this is likely to be the case in the UK also.
1. How does a UK trade remedy investigation exporters to the UK?
Investigations are country specific - A trade remedy investigation is initiated by the Trade Remedies Authority (TRA) when an applicant is able to provide sufficient evidence that imports from a particular country are dumped and/or subsidised. Investigations are initiated by country, meaning that every manufacturer that is exporting to the UK from that country will be included in the investigation. Sometimes cases are initiated against more than one country where the applicants claim that there are multiple sources of dumping and/or subsidies.
Trade remedy measures increase the customs cleared price of exports to the UK - Anti-dumping and countervailing duties are paid by importers at the same time as regular import duties. Ultimately, therefore, the outcome of a trade remedy investigation will often be to increase the customs cleared price of your products to the UK customers of your products.
Cooperating exporters can get individual duties - The ultimate impact of a trade remedy investigation is that goods exported to the UK may have to pay an additional duty, calculated according to the level of dumping and/or subsidy or the extent to which the imports cause injury. Exporters that cooperate in the investigation will get an individual level of duty. For exporters that decide not to cooperate the TRA calculates a residual duty that will apply to all imports apart from the named exporters given specific duties.
It is possible that individual exporters could get zero or low duties - For the companies that cooperate in the investigation, if no dumping or subsidies are occurring, it is possible that the company concerned could get a zero duty. Thus, for an exporter that is pricing fairly, trade remedy investigations can give them an advantage if all of their competitors’ products face additional duties when exported to the UK.
Trade remedy investigations can affect exports even before duties are applied - Duties are not paid until the TRA has at least made provisional findings. Thus, despite the initiation of an investigation, exports to the UK can continue without additional duty. However, the initiation of an investigation alone can have an impact on exports to the UK. Importers can switch sources of imports merely on the basis of ensuring that there is no liability to pay an additional duties. Only in specific circumstances can duties be collected retroactively and up to a maximum of 90 days prior to the provisional determination. Interested parties will know that this is a possibility because a notice will have been published requiring that imports of the product concerned be registered.
2. Minimising the risk of trade remedy investigations
Trade remedy investigations are triggered by UK industry applications. Thus, exporters may not know about the existence of the investigation until it is initiated by the TRA.
However, there are actions that exporters can take to minimise the risk of trade remedy investigations. Whilst dumping and subsidy calculations are not an exact science, it is possible to assess the extent to which current export prices are likely to be found dumped or subsidised. Where there is a risk of dumping or subsidy pricing issues, export volumes can be monitored to assess whether the quantities are sufficient to cause injury in the UK market. Note that, given that trade remedy investigations are done a country basis, it is not only an individual exporter's own pricing and export volumes that need to be monitored. Government trade statistics can be used to monitor volumes. If total export volume from the whole country is greater than 3% of total UK imports, and the volumes are increasing significantly, this highlights potential risk.
3. What happens when an anti-dumping or subsidy investigation is initiated?
A notice of initiation will be published on the TRA’s website formally announcing the initiation of the investigation. The notice will set out the countries involved and the definition of the product subject to investigation.
In order to participate in the investigation, exporters must register as interested parties. The notice will set out how to do this and the deadline (usually 2 weeks). Registration involves providing some basic details on exports to the UK. According to how many exporters register as interested parties the TRA will make a decision on whether it will choose a sample. Questionnaires will then be sent to the exporters concerned.
Interested parties usually have a month to reply to the questionnaire. If there are legitimate issues in meeting the deadline, the TRA will consider requests for extensions. During the pandemic, for example, the TRA was helpfully very flexible in providing additional time to interested parties to compete their questionnaires. However, such extensions delay the TRA’s work and, thus, they are likely to only be agreed where there are genuine reasons given.
Once the questionnaires are sent in, the TRA will check and analyse the data provided. This will involve a detailed verification of the data. As with other trade remedy authorities, prior to covid the TRA’s plan was to conduct these verifications on-site at the exporter’s premises. However, while such travel was not possible, the verifications have been done virtually. The verification is a detailed audit of the accuracy of the data provided.
The TRA will then make provisional findings and issue a statement of essential facts. Interested parties have the possibility to comment on these findings. Following this the TRA will finalise their determination and make a recommendation to the Secretary of State. The Secretary of State has the ultimate decision whether to adopt or reject the TRA’s recommendation.
4. Do exporters have to cooperate in the investigation?
Trade remedy investigations are administrative procedures rather than criminal investigations. This means that there is no legal obligation to participate in the investigation. Whether an exporter should cooperate in the investigation or not is a commercial decision based on the importance of the market concerned. Non-cooperation means that a company’s exports will be subject to the residual duty which will be the highest rate applied. If an exporter would like to try to prove it is not dumping, or to establish a dumping margin lower than other exporters from the same country, it is usually beneficial to cooperate.
Cooperation means providing a lot of detailed information about domestic and export sales transactions as well as a detailed breakdown of the cost of manufacturing and selling the product. Often the data is required at a level of detail not typically prepared in a company’s accounting system. It can be time consuming to produce the data at the detailed level required by the TRA. However, this can be worth it if the company has a chance of getting a zero or low level of trade remedy measure.
5. Check the definition of the product scope and the domestic industry
The UK industry applying for the trade remedy measure will provide an initial definition of the scope of the product subject to investigation. This will be discussed in detail with the TRA which will consider issues such as whether the goods are ‘like products’ and the extent to which they compete with each other. The TRA will go to some lengths to ensure that the product definition, and the precise tariff codes covered by the investigation, makes sense. However, the TRA is not necessarily expert on the product concerned. Thus, one of the first things that exporters should do is to check the product definition. If the definition does not make sense, or a particular tariff code should be excluded, this should be discussed with the TRA. The precise scope of the final measure can sometimes vary from that announced in the notice of initiation.
6. What is the questionnaire like?
The exporters questionnaire requests information including the following key data:
Technical information on the product concerned and comparison with the product produced by UK industry.
Company structure and operations.
Transaction by transaction data on domestic and export sales.
Cost of production for domestic products
Much of this data will have to be specially calculated for the purposes of the investigation. It is therefore extremely important that careful notes and paper trails are maintained on how the data has been calculated. This will make the verification process much smoother and will help in satisfying the TRA that the data provided is accurate.
The questionnaire requests a considerable amount of data, much of which is commercially sensitive. Thus, it is possible to submit some data in confidentiality. This is done by preparing a confidential and non-confidential version of the questionnaire response. The confidential data can be excluded and summarised in a way that gives some understanding of the data submitted without breaching business confidentiality.
7. What happens at verification?
If on-site verification takes place, this will usually occur over a number of consecutive days where the TRA investigators will visit your company offices. If possible, it is good to give the investigators a tour of the manufacturing facilities so that they can understand your production process in advance of sitting down for detailed discussions about the data.
If the verification happens by video call, it is likely that there will be a number of meetings but these not need necessarily be over consecutive days.
A verification involves the TRA examining whether the questionnaire complete establishes an accurate and reasonable dataset.
If you are hoping to get a zero or low duty, the verification is very important and it is worth putting effort into satisfying the TRA that your data is accurate. The questions asked by the TRA may indicate how they are approaching certain issues. It is important to consider carefully the direction of the verification in order to be able address issues that may be going in a direction that will make the duty level higher.
8. Should an exporter make other submissions?
In order to be considered as fully-cooperating, exporters must complete the questionnaire to the best of their ability. However, there are additional actions which can be critical in ensuring the best possible result to the investigation.
In addition to calculation get level of dumping and/or subsidy, the TRA will consider the extent to which UK industry has been injured by the imports concerned. Further, they will assess the extent to which the imports have been the cause of injury, taking into account other factors that might have caused injury. Although it is not required, exporters can provide useful data and evidence to the TRA. For example, if there is strong evidence that other factors are causing injury rather than the dumped/subsidised imports, this should be provided to the TRA.
All parties should regularly check the non-confidential files on the TRA’s website. A non-confidential version of the application will be on the file where the UK industry applicants will have set out its evidence that the imports in question are causing injury. Exporters should check the application carefully and submit alternative evidence where relevant. It is helpful to keep monitoring the submissions of other interested parties and respond as appropriate throughout the investigation.
Whereas the exporter questionnaire contains confidential and commercially sensitive information, and thus each exporter must do this individually, arguments on additional issues such as product definition and injury/causality are more effectively done as a group. It may be most effective to make submissions under the name of an industry or trade association. Sometimes your government may be willing to submit comments on behalf of all the exporters.
9. Do exporters have a chance to comment on the TRA’s findings?
Once the TRA has made initial findings it will publish a statement of essential facts. This will present their conclusions on all of the issues considered and will include the proposals they would make to the SoS on the basis of this analysis. The SEF is put on the public file and is therefore available to all. The TRA will specify a period within which comments should be submitted.
In addition, exporters that have provided company specific data in a questionnaire will receive an additional confidential disclosure showing how their information has been used in the calculation of dumping and/or subsidy margins. As with the SEF, a period will be provided for exporters to comment on the calculations.
10. What role does the exporting country government have in trade remedy investigations?
For anti-dumping investigations, the government of the exporting country has no formal role in the case. On the other hand, countervailing duty investigations do formally involve the government as they relate to government subsidy schemes. Thus, in the latter, the TRA will send a questionnaire to the government as well as to the exporters.
Apart from the formal role in the case of subsidies, the government of the exporting country sometimes will make submissions on behalf of its exporting producers. This is particularly the case where there are political or economic interests for the country as a whole that the government feels are important to promote. One example where this might happen is where the exporting government believes that the TRA is doing something that is not consistent with the UK's WTO obligations.
11. When are measures applied?
Measures will not be applied at least until the point at which the TRA makes provisional findings and they are published on the TRA and DIT websites. Importers will not actually have to pay duties at this stage but will have to provide a guarantee such that, if the final determination is that duties should be applied, they will be collected from the date of provisional application.
As a general rule, exports made after initiation but before provisional duties will not be subject to any measures. However, in exceptional cases, duties may be backdated for a period prior to the date of provisional measures. This can only happen when the TRA has published an intention to register imports. In addition, duties can only be backdated for a maximum period of 90 days prior to the provisional determination.
12. What happens after measures have been adopted?
Measures will be adopted for a specified period, normally 5 years. However, various issues can arise once the measures are in place;
Changed circumstances - where circumstance change that would affect the level of measures, exporters can request an interim review. For example, if a new production line has reduced the normal value to a point where dumping is no longer occurring, an exporter can request that the TRA recalculates the level of duty.
Refunds - Importers can request a refund where the exporter is able to show that the actual import price eliminated the dumping, subsidy or injury (depending on how the duty was calculated). In practice, this provision is difficult to use and would require the involvement of the exporter concerned i.e. an importer could not merely assert that a refund was due without detailed evidence that could only come from the exporter.
Circumvention - Exporters should be aware that, where there is evidence of circumvention of measures, the TRA may take actions to correct the measures. There are legitimate ways of avoiding trade remedy measures (e.g. by changing the product so that it falls in a tariff code not covered by the measures). However, care must be taken to avoid fraudulent declarations (which can also be investigated as a customs offence) and when parts & components are imported and assembled into a final product that is covered by a trade remedy measure..
Newcomers - Exporters that did not export during the original investigation period, and are not related to any of the companies in the original investigation, can request a newcomer review to get a specific duty rather than being subject to the residual (highest) duty.
Suspension - measures can be suspended where market conditions have changed temporarily and injury is unlikely if the remedy was to be suspended.
Expiry review - The TRA will recommend how long measures will apply. This will be normally five years. The measures will automatically expire at this date unless UK industry requests an expiry review. An expiry review will consider whether dumping/subsidy and injury are likely to re-occur if the measures are removed. This will be a full investigation like the original investigation so exporters will again be required to complete questionnaires.