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United States and Brazil: Antidumping and Countervailing Duty Enforcement – Increased actions against imports from Brazil

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In brief

Brazil as a Target for US Duties – What Producers Should Know

The United States is one of the most active countries in investigating so-called “unfair pricing” in the form of dumping or subsidization by foreign countries.  In the past three years, the United States has initiated five investigations against imports from Brazil, having very recently initiated a case involving brass rods.  Brazilian producers/exporters should be aware of the US activity in the antidumping and anti-subsidy space and, where there is a risk of such an action targeting a company’s exports from Brazil to the United States, consider taking steps to prepare in advance and implement a global trade remedies compliance, prevention, and action strategy.

US Actions Against Brazilian Imports

The US Commerce Department and US International Trade Commission have the authority to investigate allegations that imports into the United States are entering at prices below cost or with the benefit of countervailable government subsidies.  Antidumping and countervailing duty orders are country, producer and product specific, which means that they apply to the products identified by the complaining US producers of the same goods, and only from the subject country.  If these duties are imposed, then they apply for a minimum of five years, meaning that producers/exporters to the United States, US importers, and customers will have to account for such duties into their supply chains. These duties can be set at specific (lower), individual levels for those producers/exporters that cooperate with the investigation conducted by US authorities.

The United States has recently investigated exports from Brazil of manufactured raw materials, such as common aluminum alloy sheets and aluminum foil, along with agricultural products such as lemon juice and raw honey.  The resulting additional duties imposed by these investigations have ranged from about 8% to 50%, which can be devastating to US importers who are legally responsible for paying the cash deposits for covered imports upon entry, and to Brazilian producers/exporters, who lose competitiveness in or even access to the large US market.  In the brass rods investigation initiated a few days ago, the petitioners alleged a 62.6% dumping margin for exports from Brazil.

Be Prepared for Antidumping/Countervailing Duty Investigations

There are ways to proactively prepare for an investigation by the United States, and given the potential disruption to shipping activity, these actions are well worth considering.

First, Brazilian producers that routinely export to the United States should constantly assess their pricing practices so that sales are not made below the cost of production plus expenses and a profit, and also compare the export prices to the United States with their local sales prices.

Second, Brazilian producers/exporters should maintain a comparison database that allows for the assessment of price comparisons across markets.

Third, constantly monitoring publications by the US Commerce Department and US International Trade Commission is a must to ensure awareness of newly-filed petitions. Where new petitions are filed, quick action must be taken to decide on participation: as mentioned above, a timely and full cooperation with the US investigations may result in a company securing an individualized duty rate that may be significantly lower than the margins for companies that do not cooperate or do not secure an individual duty rate. A favorable rate can serve as a competitive advantage after an order is issued.  In other words: if a Brazilian producer cooperates and achieves a reduced, individualized rate, it may have improved access to the US market for at least five years after the imposition of antidumping and/or countervailing duties, given that other exporters will face higher duties to be paid by customers.

As noted, over the past three years there have been four cases generating antidumping duty orders against imports from Brazil.  The products subject to these recent orders are common alloy aluminum sheet, aluminum foil, raw honey, and lemon juice.  The duty margins found in these cases are illustrated below.  As mentioned above, a new case involving brass rods from Brazil has just been initiated.

Brasil US alert

In view of Baker McKenzie’s global reach, which includes strategic cooperation with Trench Rossi Watanabe in Brazil, we can help producers with a global antidumping and countervailing duty strategy that allows a company to leverage domestic trade policy in all major markets.  Our team of professionals is available to discuss questions regarding US investigations or investigations in all main jurisdictions, including the United Kingdom, the European Union, China, and Japan.  For more information, please visit our Trade Remedies homepage.

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Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law.

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Author

Christine Streatfeild is a Partner in the Washington DC Office and on the Steering Committee for the North America Trade Secrets Practice. She focuses on trade remedies and unfair competition cases, including forced labor investigations, antidumping and countervailing duty cases, safeguard measures, duties imposed for national security purposes (Section 232 duties), and Section 337 intellectual property and trade secrets disputes. She appears before the US International Trade Commission (ITC), US Department of Commerce (DOC), and in state and federal courts. Prior to joining Baker McKenzie, Christine served as the acting deputy director of the Generalized System of Preferences (GSP) and in the Environment and Natural Resources division of the Office of the United States Trade Representative. She has also served as an adjunct professor at the Krieger School, Johns Hopkins University, where she taught Global Trade, Policy and Competition. She is also on the 2021 USMCA Dispute Settlement Panels Roster (on behalf of the United States), a position she has held since 2019 (under the NAFTA). Christine focuses her practice on matters related to trade regulatory and intellectual property matters, including economic injury and damages, import duty compliance, and unfair competition allegations.

Author

Francisco Niclós Negrão is a Partner at *Trench Rossi Watanabe, SP, Brazil office.
*Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law.”

Author

Michael Kyle Kondrad is an associate in the IP Tech Practice Group in the Washington DC Office. His focus areas include intellectual property litigation, prosecution, trade regulations, trade secrets, transactional matters, and various matters related to the importation of goods into the United States including economic injury and damages, import duty compliance, and unfair competition. He has drafted memos, pleadings, patents, infringement charts, presentations, reports, client updates, legal articles, harmonized tariff schedule classifications, scope inquiries, country of origin determinations, administrative and sunset review narratives, penalty protests, and cease and desist letters. Michael has also helped manage proceedings before the United States Department of Commerce, U.S. International Trade Commission, and U.S. Customs and Border Protection, including managing documents, evidence, deadlines, research, drafting, and filing. In addition, he has performed extensive email and document review of client's records to assess past practices and trade compliance risks, performed intellectual property due diligence on contracts, documents, and patents from both the seller and buyer perspective, as well as reviewed client confidential information practices and drafted revised company trade secret policies and practices. Prior to working with Baker McKenzie, he worked as a Summer Associate for a consulting group where he researched, reviewed, and edited client documents regarding; non-disclosure agreements, indemnifications, damages, non-compete clauses, hiring contracts, defined technical terms, subcontracting, know-how licensing, and IP confidentiality (e.g. non-reverse engineering clause). Michael also conducted searches within the USPTO for third party patents to identify potential Freedom to Operate risks.

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Sarah Frey is an associate in Baker McKenzie's Intellectual Property & Technology Practice Group and resides in the Firm's New York office. While in law school, Sarah received the Carol Russ Memorial Prize for her commitment to promoting women's rights through the law. Sarah is also actively involved in the Firm's pro bono practice, focusing on gender justice litigation.

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