Two documents were published in the Federal Register on 11 January 2017 pursuant to the lengthy investigation into product dumping of “certain biaxial geogrids” from China into the United States. The case, which originated in July 2015 and collected documentation through the end of December 2015, led the US Department of Commerce, through its International Trade Administration arm, to determine that the biaxial geogrids in question “are being, or are likely to be, sold in the United States at less than fair value (LTFV).”
The Federal Register is the official, daily journal from the United States government with content focused on the distribution of government agency rules, proposed rules, and public notices. Daily publications are annually reorganized in the official Code of Federal Regulations (CFR).
Web pages with links to documents of note:
- International Trade Administration Determination #1 (11 January 2017)
- International Trade Administration Determination #2 (11 January 2017)
It must be noted that the ruling by the Commerce Department’s International Trade Administration is not an indictment of product quality and is not a ban on business with any specific company or with products from any specific country of origin.
GEOGRID PRODUCT DUMPING
While many manufacturers in China were given questionnaires by the investigating department, the agency has no power to force foreign companies to respond. Still, lack of response can be counted against those companies or can impair the ability of the agency to fully evaluate those companies which do participate.
Only two China-based manufacturers are cited in the final determination: Taian Modern Plastics (TMP) and BOSTD, as they appear to be the only companies that truly participated in the review.
Participation can result in a separate rate being made available to those companies, but in this case the ITA determined it still did not have enough information. ITA wrote:
[The companies] failed to cooperate by not acting to the best of their ability in this proceeding and, pursuant to section 776(b) of the Act and 19 CFR 351.308(a), we based [their] respective dumping margins on total adverse facts available (AFA).
The final determination went on to note that:
For the Preliminary Determination, the Department found that critical circumstances existed with respect to imports of geogrids from the PRC produced or exported by Taian Modern and the PRC-wide entity, but not with respect to imports of geogrids from BOSTD. We are not modifying our final critical circumstances finding for the PRC-wide entity (which now includes Taian Modern and BOSTD). Thus, pursuant to section 735(a)(3) of the Act and 19 CFR 351.206, we find that critical circumstances exist with respect to all exports of subject merchandise in this investigation.
Here, the complexity of the issue can be seen, as BOSTD, while still considered part of “the PRC-wide entity,” was not actually found to be contributing to the “critical circumstances” that determined the final LTFV ruling.
NOT AN EASY ISSUE TO DETERMINE
The calculation of fair value in product dumping investigations is somewhat difficult, but it involves finding comparative prices in other markets and adjusting for an equivalent “ex-factory” or “normal value” for export into the country in which a complaint is filed. If that price is higher than the export price, a product might be found to be undercutting the fair market and a dumping margin might be imposed.
From the Federal Register notice:
The products covered have a tensile strength of greater than 5 kilonewtons per meter (“kN/m”) according to American Society for Testing and Materials (“ASTM”) Standard Test Method D6637/D6637M in any direction and average overall flexural stiffness of more than 100,000 milligram-centimeter according to the ASTM D7748/D7748M Standard Test Method for Flexural Rigidity of Geogrids, Geotextiles and Related Products, or other equivalent test method standards.
Subject merchandise includes material matching the above description that has been finished, packaged, or otherwise further processed in a third country, including by trimming, slitting, coating, cutting, punching holes, stretching, attaching to woven or non-woven fabric or sheet material, or any other finishing, packaging, or other further processing that would not otherwise remove the merchandise from the scope of the investigations if performed in the country of manufacture of the biaxial integral geogrid.
The products subject to the scope are currently classified in the Harmonized Tariff Schedule of the United States (“HTSUS”) under the following subheading: 3926.90.9995. Subject merchandise may also enter under subheadings 3920.20.0050 and 3925.90.0000. The HTSUS subheadings set forth above are provided for convenience and U.S. Customs purposes only. The written description of the scope is dispositive.
The weighted average dumping margin was ruled to be 372.81%.
Again, many companies were surveyed but only two participated. Because of this, the Department of Commerce has applied this dumping margin ruling to the “PRC-Wide Entity,” affecting essentially all China-based manufactures of the product class studied.
GOING FORWARD
A product dumping case like this was expected from many people in the industry. The mid-2012 expiration of Tensar’s well-known patent on similar biaxial geogrids saw a flood of new brands on the market with manufacturing and finishing occurring in various countries. Price volatility and dumping concerns amidst so many competing companies in a narrow product range was not unexpected, and the tension building towards this has been felt on the floors of various exhibition halls during geotechnical engineering conferences.
Again, the ruling by the Commerce Department’s International Trade Administration is not an indictment of product quality and is not a ban on business with any specific company or with products from any specific country of origin.
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NOTE: This article was updated with additional context on the ruling, with respect to differing findings between TMP and BOSTD, despite both companies being considered part of the PRC-wide entity to which the LTFV ruling applies.
