Yet Another International Trade (AD/CVD) Petition Against China Products: This Time it’s Collated Staples (and it Also Includes Taiwan and Korea)

On June 6, 2019, Kyocera Senco Industrial Tools Inc. (Petitioner) filed antidumping (AD) and countervailing duty (CVD) petitions against certain collated steel staples (“collated staples”) from China, Korea, and Taiwan. A copy of those petitions can be viewed here.

Under U.S. trade laws, a domestic industry can petition the U.S. Department of Commerce (“DOC”) and U.S. International Trade Commission (“ITC”) to investigate whether the named subject imports are being sold to the United States at less than fair value (“dumping”) or benefit from unfair government subsidies. For AD/CVD duties to be imposed, the U.S. government must determine not only that dumping or subsidization is occurring, but also that the subject imports are causing “material injury” or “threat of material injury” to the domestic industry.

Collated staples are the latest steel-related product in which U.S. producers have sought AD/CVD protection because increased costs caused by the steel/ aluminum tariffs have made it harder for these US producers to compete against imports.  The petition primarily targets China, which accounts for over 85 percent of total imports.  Imports from Korea and Taiwan appear to be negligible (less than 3 percent of total imports), but Petitioner asserts the import volumes from these countries are likely to increase and therefore should be covered by this AD/CVD action.

This reinforces what the international trade lawyers at my firm have been seeing for the half a year or so: a massive increase in cases being brought against Chinese products in an effort to increase the duties on those products when they enter the United States. The media is so focused on the US-China tariff wars, it has pretty much ignored the side wars that the United States is waging against Chinese products by imposing high duties via the AD/CVD mechanism. These duties just keep coming and if and when the United States ever do reach a trade deal, these duties will likely be so prevalent as to nullify any deal at least to some extent. See The US-China Trade War: Winter is Coming, where we explained why US-China trade will be in a straight-line decline for years, trade deal or no. See also, US-China Tariff Updates: What You Can (and Should NOT) do NOW, where I lay out what you can and should do (and not do) to respond to the tariff war.

Truth is that with all the trade issues involving China and bipartisan anti-China sentiment prevalent in the United States, now is a great time to bring such actions. The international trade lawyers at my firm almost exclusively defend against antidumping and countervailing duty claims instead of bringing them — we represent mostly the overseas producers and exporters and the US-based importers — so I say all this not to encourage more such actions, but as a simple statement of fact. If you are importing products from China, you need to assess and know the trade risks of your imports and to think about alternative sourcing.

Based what I keep hearing from my own firm’s China lawyers and international manufacturing lawyers, many American and European companies are seeking to diversify their product manufacturing away from China. See China-US Decoupling Continues and Will Continue, but Must be Done Right and China Manufacturing: Is the Bloom now Off That Rose? and The China-US Trade War and the Winner is….MEXICO. It appears US foreign policy is to drive business from China to countries like Mexico (note how quickly President Trump’s mini-tariff war with Mexico was resolved), the Ukraine, Vietnam, Thailand, the Philippines, and Indonesia, among others. What this means big picture is that the price of products coming from China to the United States will continue rising and, as one of our China lawyers so often tells our clients: “you need to act accordingly.”

But I digress….

Back to the new collated staples case.

Scope of the collated staples case. 

The proposed scope definition in the petition identifies the merchandise to be covered by this AD/CVD investigation as follows:

The scope of this investigation is certain collated steel staples. Certain collated steel staples subject to this proceeding are made from steel wire having a nominal diameter from 0.0345 inch to 0.0830 inch, inclusive, have a nominal leg length from 0.25 inch to 3.0 inches, inclusive, and a nominal crown width from 0.187 inch to 1.125 inch, inclusive.

Certain collated steel staples may be manufactured from any type of steel, and are included in the scope of the investigation regardless of whether they are uncoated or coated, and regardless of the type or number of coatings, including but not limited to coatings to inhibit corrosion.

Certain collated steel staples may be collated using any material or combination of materials, including but not limited to adhesive, glue, and adhesive tape or adhesive or paper tape.

Certain collated steel staples are generally made to American Society for Testing and Materials (ASTM) specification ASTM F1667-17, but can also be made to other specifications. Regardless of any applicable specification, however, all certain collated steel staples exhibiting the physical characteristics of the written scope description are included in the scope.

Certain collated steel staples subject to this investigation are currently classifiable under subheading 8305.20.00.00 of the Harmonized Tariff Schedule of the United States (HTSUS). While the HTSUS subheading is provided for convenience and for customs purposes, the written description of the subject merchandise is dispositive.

Alleged AD Margins for Collated Staples.  

Petitioner calculated estimated dumping margins for China at 119.68% to 122.92%, at 47.35% for Taiwan, and at 10.23% to 14.25% for Korea. Note how the China percentages are considerably higher than 25%.

Though Petitioner alleged numerous government subsidy programs that benefitted the Chinese collated steel staple industry, Petitioner did not allege specific subsidy rates.

Named Exporters/Producers of Collated Staples.

Petitioner included a list of companies that it believes are producers and exporters of the subject merchandise. I have attached the list of collated staple exporters and producers here.

Named U.S. Importers of Collated Staples.

Petitioner included a list of companies that it believes are U.S. importers of the subject merchandise. I have attached the list of collated staple importers here.

Estimated Schedule of Investigations on the Collated Staples Case.

June 6, 2019 – Petitions filed

June 26, 2019 – DOC initiates investigation

June 27, 2019 – ITC Staff Conference

July 21, 2019 – ITC preliminary determination

November 3, 2019 – DOC CVD preliminary determination (assuming extended deadline)

January 2, 2020 – DOC AD preliminary determination (assuming extended deadline)

May 16, 2020 – DOC final determination (extended and AD/CVD aligned)

June 30, 2020 – ITC final determination (extended)

July 7, 2020 – DOC AD/CVD orders issued (extended)

We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.