Approximately a year ago, on August 16, 2017, a petition for antidumping (AD) and countervailing (CVD) duties on stainless steel flanges from China and India was filed by the Coalition of American Flange Producers (CAFP), an association of U.S. producers of stainless steel flanges. The case was brought in response to unfairly dumped and subsidized flanges being increasingly imported into the United States by Chinese and Indian producers. Last week, on August 13, 2018, the U.S. Department of Commerce (DOC) issued its final determinations in its AD and CVD investigations of Indian stainless steel imports, finding that Indian flanges are being dumped at rates of 19.16 to 145.25 percent and subsidized at rates of 4.92 to 256.16 percent.
While these margins are high and reflect the substantial degree to which Indian stainless steel flanges are unfairly traded in the United States, even before these determinations, this case has had a significant and positive effect on U.S. imports and the U.S. industry. That is, in the year prior to the filing of the petition, imports of stainless steel flanges from India surged dramatically, rising from approximately 400,000 to 1,000,000 kilograms per month. In the year since the filing of the petition, imports from India have decreased dramatically, falling to just 200,000 kilograms per month.
As shown in the chart above, examined at a more granular level, imports of Indian stainless steel flanges continued to decrease as the case progressed. While the petition was filed in August 2017, import levels actually fluctuated for the remainder of 2017, likely the result of Indian producers rushing flanges into the United States in advance of anticipated AD and CVD duties. However, once DOC issued its preliminary AD and CVD determinations, in which it forecasted high margins, imports plummeted. For instance, on January 23, 2018, DOC issued its CVD preliminary determination finding that Indian imports were being subsidized at rates of 5.00 to 239.61 percent. This caused a sharp decline in Indian imports. Similarly, on March 28, 2018, DOC issued its AD preliminary determination, finding that Indian imports were being dumping at rates of 18.10 to 145.25 percent. This caused an even steeper decline in Indian imports. The point being, as this case progresses, and the extent to which Indian stainless steel flanges are unfairly traded is made more clear, imports of those flanges have continued to plummet.
It should be stressed, however, that even the current duty deposit rates do not reflect the final duties that importers will owe on incoming shipments. Under the U.S. system, the duties paid at entry remain contingent, and changeable, until DOC concludes a post-investigation administrative review of those duties. With respect to stainless steel flanges from India and China, this means that final duty liability for imports subject to the preliminary duties will not be determined until mid-2019 at the earliest. Because of the lengthy contingent liability that AD and CVD duties represent, as well as the potential for final duties to be much higher than those paid at entry, importers may need to seek increased customs bonding to continue to import stainless steel flanges from India and China. Sureties may also require additional fees or security to underwrite bonds on such entries, given the increased uncertainty and risk involved.
Ultimately, Wiley Rein and the CAFP anticipate that DOC’s significant, final AD and CVD margins will cause Indian imports to continue to decrease, keeping them at stable and fair levels. This will allow U.S. stainless steel flange producers to compete on a level playing field, enabling them to produce more flanges and hire more workers here in the United States.