The U.S. Department of Commerce (Commerce) has placed preliminary dumping duties in excess of 100 percent on all wire rod imported from China.  These import duties will be instrumental in providing relief to the domestic wire rod industry that has already suffered material injury caused by Chinese imports.  In its preliminary determination published on September 8, 2014, Commerce found that Chinese producers dumped wire rod in the United States at rates between 106.19 and 110.25 percent.

The high preliminary duty rates are the result of Commerce’s application of “adverse inferences” to determine the Chinese producers’ dumping rates.  At the outset of this investigation, Commerce selected two large Chinese producers of wire rod to answer the agency’s information requests, but they refused to participate.  Because of this failure, Commerce used adverse inferences in determining the preliminary duty rate for Chinese producers.  In other words, when foreign companies do not participate, it is a recipe for substantial duties.

These preliminary dumping duties will be collected in addition to the anti-subsidy duties placed on the Chinese wire rod industry in July.  In the companion subsidy investigation, Commerce preliminarily determined that the Government of China provided countervailable subsidies to Chinese wire rod producers at rates equaling 10.30 to 81.36 percent of the value of sales.

Additionally, in its preliminary determination, Commerce found that “critical circumstances” exist for all exporters of Chinese wire rod except Rizhao Steel, Hunan Valin, and Jiangsu Shagang.  This finding is the first step in a process that would result in the dumping duties being applied retroactively (up to 90 days prior to the publication of Commerce’s preliminary determination).  The next steps require both Commerce and the International Trade Commission (ITC) to make final affirmative critical circumstances determinations before duties are collected retroactively.

Commerce is scheduled to issue its final antidumping and countervailing duty determinations in mid-November, and the ITC is scheduled to make its final determination in mid-December.  If both Commerce and the ITC make affirmative determinations, China will be added to the list of countries (i.e., Brazil, Indonesia, Mexico, Moldova, and Trinidad & Tobago) already subject to trade duties on imported wire rod.

Disclaimer: Wiley Rein LLP represents a domestic producer in this investigation.