November 7, 2000
M E M O R A N D U M
TO:	Clients and Friends of the Firm
FROM:	George W. Thompson Neville Peterson LLP
RE:	United States Enacts New Law to Distribute Antidumping Duties to Petitioning Domestic Producers

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     As a result of legislation signed into law on October 27, 2000, antidumping duties collected on goods imported into the United States will be distributed to the United States domestic manufacturers who participated as petitioners in the original antidumping investigation. The legislation is set forth in Title X of H.R. Bill 4461, the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2001. This memorandum summarizes the new law's provisions.

1. The New Statute

     A. Eligible Parties and Purposes

     The statute provides that antidumping duties shall be distributed annually to "affected domestic producers", defined as "any manufacturer [or] producer . . . that was a petitioner or interested party in support of the petition with respect to which an antidumping duty order . . . has been entered, and remains in operation." Producers that have ceased production of the product covered by the order, or that have been acquired by an entity related to a party that opposed the investigation, are ineligible for the distribution. Section 754(a)(1).¹

     The distribution must be used by an "affected domestic producer" for "qualified expenditures". These are defined as any: expenditure incurred after the issuance of the antidumping duty finding or order . . . in any of the following categories:

     (A) Manufacturing facilities.

     (B) Equipment.

     (C) Research and development.

     (D) Personnel training.

     (E) Acquisition of technology.

     (F) Health care benefits to employees paid for by the employer.

     (G) Pension benefits to employees paid for by the employer.

     (H) Environmental equipment, training, or technology.

     (I) Acquisition of raw materials and other inputs.

     (J) Working capital or other funds needed to maintain production.

Section 754(b)(4).

     B. Procedures and Times for Distributions

     The new law establishes procedures and timetables for identifying affected domestic producers and distributing the collected duties to them. First, the International Trade Commission (Commission) is required to provide to the Customs Service (Customs) a list of petitioners in the original investigation. Customs shall thereafter publish in the Federal Register a "notice of intention to distribute" and a list of domestic producers, based on the Commission's list, that are potentially eligible to receive the distribution. Interested producers must respond with a certification indicating their desire and eligibility to receive the distribution, and stating their qualifying expenditures since the antidumping duty order went into effect. Section 754(d).

     The Commission must provide its list of affected domestic producers within 60 days of the law's effective date, and Customs must publish its "Notice of Intention to Distribute" at least 30 days before making a distribution. The statute requires distribution of duties "received in the preceding fiscal year" "not later than 60 days after the first day of a fiscal year from duties assessed during the preceding fiscal year." Within these constraints, the law leaves it to Customs to establish by regulation the time and manner of distribution. Section 754(d)(3), (c), (e)(3).

     Customs is required to establish special, separate funds for deposit of antidumping duties within 14 days of the law's effective date, in which antidumping duties assessed after the effective date must be deposited. A separate fund must be set up for each antidumping duty order. Section 754(e).

     The deposit requirement applies to all antidumping duty assessments made on or after October 1, 2000, meaning that antidumping duties collected from that time are subject to distribution. Thus, the first distribution should occur within 60 days of the end of fiscal year 2001.

     C. Amount of the Distribution

      Although the statute is not clear on this point, it appears to require that distributions be made from each special antidumping duty order-specific account only to eligible affected domestic producers in the antidumping investigation for which the account was established. The distributions will be made on a pro rata basis, apparently meaning that each affected domestic producer will receive the same amount from the order-specific account. The total amount to be distributed will include interest earned by the government on the deposited assessments.

2. Consequences for the United States Domestic Producers

     The legislation is either silent or unclear on several key points that may affect the amounts distributed to individual producers, and we will likely have to await Customs' implementation of regulations to have these points clarified. The following are some specific points to note.

     First, the distribution will be limited to those producers who were petitioners in the original investigation; the statute is clear on this point.

     Second, the statute appears to allow successor companies to original petitioners participate in the distribution, so that a company that acquired one or more petitioners after the antidumping duty order was imposed would be eligible. We infer this from the prohibition on eligibility of petitioning producers that were subsequently acquired by a party that had opposed the petition; if all acquiring companies were ineligible, it would have been unnecessary to impose this restriction on certain acquiring companies. Thus, the statute would appear to allow a company that acquired an original petitioner to receive the distribution. However, it does not address whether a company that acquired more than one petitioner will receive more than one pro rata share of the distribution.

     Third, the statute does not address what happens when the amount of assessed antidumping duties changes as the result of an annual review or subsequent court decision. Based on the distribution timing required by the statute, it appears that distributions will consist only of antidumping duty deposits, and will not take into account any post-entry increases or decreases. On the other hand, an argument could be made that "assessment" means the final amount of duties collected; this determination can be made only after the entries are liquidated, which may be years after the date of entry.

     Fourth, the legislation is controversial, was opposed by the administration, and is likely to be the subject of attempted repeal. The effect of any subsequent repeal on a domestic producer's right to a distribution of previously-accrued deposits cannot be determined at this time.

3. Conclusion

     Whether the law providing for distribution of antidumping amounts remains in place is difficult to determine. Opponents of the bill in the United States and abroad have criticized it as an improper subsidy to petitioner domestic producers, in violation of GATT rules. Congress had little opportunity to analyze or amend the measure, since it was included as a rider to a large agricultural funding bill which members of Congress were loath to vote down in an election year. Some observers have suggested that the measure will create incentives for domestic producers to file antidumping petitions which might not otherwise have been filed.

     There are likely to be post-election efforts to repeal the measure, but whether these will succeed cannot be determined at this time.

     We stand ready to furnish any additional information which may be required concerning this new and controversial law.

1.     The legislation does not provide United States Code references for its provisions. Therefore, the citations are to the new sections of the Tariff Act of 1930, as amended, set forth in the bill.

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