Information regarding the antidumping and countervailing duty petitions on Ferrosilicon from Brazil, Kazakhstan, Malaysia, and Russia | White & Case LLP

On March 28, 2024, CC Metals and Alloys, LLC and Ferroglobe USA, Inc. (collectively, "Petitioners") filed an antidumping duty ("ADD") petition and a countervailing duty ("CVD") petition on imports of ferrosilicon from Brazil, Kazakhstan, Malaysia, and Russia. The ADD petition alleges that imports of ferrosilicon from the targeted countries are being sold in the United States at less than fair value (that is, "dumped"). The CVD petition alleges that the Governments of the targeted countries are providing countervailable subsidies with respect to the manufacture, production, and export of ferrosilicon. Petitioners allege that the domestic industry has been materially injured and is threatened with further material injury by the subject imports.

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There are two phases – preliminary and final – of ADD and CVD investigations. The Department of Commerce ("DOC") will determine whether imports of ferrosilicon from the targeted countries were dumped in the United States, and establish the antidumping duties that will be imposed. It will also determine whether the governments of the targeted countries subsidized exports of ferrosilicon to the United States. The International Trade Commission ("ITC") will determine whether imports of the subject merchandise are materially injuring, or threaten to materially injure, the domestic industry.

In order for final ADD and CVD to be imposed, both agencies must issue "affirmative" findings. We discuss below the steps involved in reaching such findings.

By April 17, 2024, DOC must decide whether the ADD petition contains the legally required information regarding Petitioners' standing, dumping, and injury to warrant initiating an investigation. The standard for initiation is low, requiring only that the ADD petition contains information that is "reasonably available" to Petitioners. Consequently, we expect DOC will initiate the ADD investigation by the April 17 deadline.

DOC will issue a questionnaire to, and calculate a dumping rate for, one or more producers in each of the targeted countries. These producers are referred to as "mandatory respondents." The decision of which producers will receive the questionnaire will be based on export volumes. DOC could choose only one producer from each targeted country to respond to the questionnaire if it is possible to account for 80%-85% of exports with just one producer. If not, DOC will choose two or more producers from each targeted country.

The companies that are selected as mandatory respondents will receive dumping rates based on their actual data. If a company refuses to respond to the questionnaire, it will be assigned a dumping rate based on "adverse facts available," which is a punitive rate, typically based on the dumping rate calculated in the petition. The dumping rates alleged in the petition vary by country, as follows:

Because DOC considers Russia as a "non-market economy" ("NME"), DOC begins its investigation under the assumption that all exporters are part of a single, government-operated "Russia-wide entity," which will be subject to a "Russia-wide" antidumping duty margin. This margin is often based on "adverse facts available," making it punitively high. Companies that demonstrate sufficient independence from the Government of Russia may receive a separate dumping rate based on their actual data.

All other producers from each country (other than those that are issued the questionnaire) will be subject to each country's "All Others" Rate, which normally is calculated as the weighted average of the rates assigned to the mandatory respondents in each country.

The ADD questionnaire will request detailed information regarding US sales and home-market sales of ferrosilicon (transaction-specific prices, direct selling expenses, movement expenses, etc.) and production costs during the period of investigation ("POI"), which will be the period of January 1, 2023, through December 31, 2023. DOC will also issue multiple supplemental questionnaires to clarify information reported in the initial response. The burden of responding to the questionnaires is significantly increased if: (1) companies affiliated with the mandatory respondent also produce and/or sell the subject merchandise in the targeted countries; and/or (2) key materials used to produce the subject merchandise are purchased from affiliated suppliers.

Within 140 days after the ADD investigation is initiated (we estimate by September 4, 2024), DOC must make a preliminary determination of whether dumping exists and, if so, the estimated dumping margin for each company investigated (DOC can, and often does, postpone the preliminary determination for an additional 50 days). If DOC makes an affirmative preliminary determination, Customs and Border Protection ("CBP") will suspend liquidation of entries of ferrosilicon from the targeted countries and require importers to provide ADD cash deposits equal to the preliminary dumping margin calculated for the exporter multiplied by the entered value of the merchandise. Normally, the suspension of liquidation begins on the date DOC's preliminary determination is published in the Federal Register. However, if there are "critical circumstances," the suspension can apply retroactively to imports made 90 days before the preliminary determination is published.

DOC personnel normally visit the mandatory respondents' offices to verify the accuracy of the information provided in the questionnaire responses. This is normally done after the preliminary determination. If the questionnaire responses are incomplete or their accuracy cannot be verified, DOC will calculate dumping margins based on "adverse facts available," which normally means accepting the dumping margins calculated by Petitioners. The verification is one of the most difficult aspects of the investigation. To verify a respondent's reported information, DOC will send a team of verifiers and require access to confidential information, including the mandatory respondents' accounting records, sales and cost systems, and other sensitive information. In recent practice, due to the COVID-19 pandemic, DOC has first required companies to provide information related to safety and pandemic-related precautions. In the event that DOC determines that it cannot conduct an on-site, in-person verification due to travel or safety concerns, it may conduct a "virtual verification" through an online platform (e.g., Webex) as an alternative.

Within 75 days after the preliminary determination, DOC will issue a final ADD determination (as with the preliminary determination, DOC can, and often does, postpone this deadline for an additional 60 days). DOC's final decision is based on the verified information, public hearings, and briefs submitted by counsel involved in the case. If a zero-dumping finding is made, or only "de minimis" levels (i.e., less than 2.00%) of dumping margin are found, the investigation ends. If DOC's final ADD determination is affirmative, the case proceeds to ITC for a final injury determination. DOC will also instruct CBP to continue to suspend liquidation of entries of ferrosilicon from the targeted countries and require ADD cash deposits at the final dumping margins determined for each exporter. Individual companies receiving zero or de minimis rates are excluded from the ADD order (if issued).

As with the dumping investigation, DOC must decide whether the CVD petition contains the legally required information regarding Petitioners' standing, subsidies, and injury to warrant initiating an investigation by April 17, 2024.

DOC will then issue CVD questionnaires to the companies selected for investigation from the targeted countries, as well as to the governments of the targeted countries. Typically, DOC chooses the two or three largest foreign exporters to respond to the questionnaire. Again, these are referred to as "mandatory respondents." The CVD questionnaire will seek information about the alleged subsidies for the POI (the most recently completed fiscal year – that is, 2023), as well as for prior years. DOC will likely issue one or more supplemental questionnaires seeking clarification or additional information.

Within 65 days after the CVD investigation is initiated (we estimate by June 21, 2024), DOC must make a preliminary determination of whether subsidization exists and, if so, the estimated CVD rate for each company investigated (DOC can, and often does, postpone the preliminary determination for an additional 65 days). If DOC makes an affirmative preliminary determination, CBP will (as in the dumping investigation) suspend liquidation of entries of ferrosilicon from the targeted countries and require importers to provide cash deposits equal to the preliminary CVD rate calculated for the exporter multiplied by the entered value of the merchandise. Normally, the suspension of liquidation begins on the date DOC's preliminary determination is published in the Federal Register. However, if there are "critical circumstances," the suspension can apply retroactively to imports made 90 days before the preliminary determination is published.

DOC personnel will visit the mandatory respondents' offices to verify the accuracy of the information provided in the CVD questionnaire responses. DOC will also conduct on-site verifications of the information reported by the governments of the targeted countries. As in the dumping context above, DOC will first determine whether an on-site verification is feasible with respect to health and safety precautions and may conduct a "virtual verification" as an alternative to an on-site, in-person verification.

Within 75 days after the preliminary determination, DOC will issue a final CVD determination. DOC's final decision is based on the verified information, public hearings, and briefs submitted by counsel involved in the case. If a zero-subsidy finding is made, or only "de minimis" levels of subsidies (i.e., less than 1.00%) are found, the investigation ends. If DOC's final determination is affirmative, the case proceeds to ITC for a final injury determination. DOC will also instruct CBP to continue to suspend liquidation of entries of ferrosilicon from the targeted countries, and require CVD cash deposits at the final subsidy rates determined for each exporter. Individual companies receiving zero or de minimis subsidy rates are excluded from the order.

ITC is currently scheduled to make a preliminary determination (that is, the Commissioners will vote) no later than May 12, 2024. The preliminary investigation will move very quickly. The legal standard that ITC must apply in reaching its preliminary determination is very low. Essentially, ITC must issue an affirmative preliminary injury determination unless it is clear that the US industry is not being injured or is not threatened with injury. Any doubt requires ITC to continue the investigation. Because this standard is so low, it is extremely difficult to terminate an investigation at the preliminary stage. In the final injury investigation, ITC has considerably more time to conduct its investigation and consider the facts and arguments presented by the parties. The legal standard is also higher in the final phase. Therefore, foreign producers are more likely to succeed at the final stage of ITC's investigation than at the preliminary stage. Nevertheless, it can be advantageous for foreign producers and importers to participate in the preliminary phase of the investigation so they can frame themes and issues for ITC's consideration in the final phase.

ITC will base its preliminary injury determination primarily on information received in responses to the questionnaires sent to US producers, US importers, and foreign producers. Typically, the ITC circulates these questionnaires to parties within two to three business days of the filing of the petition (i.e., on or around April 1, 2024); and sets the deadline for them a week before the Staff Conference, discussed below (i.e., on or around April 11, 2024). It is important that foreign producers timely submit responses. Otherwise, ITC likely will accept Petitioners' allegations, resulting in an affirmative preliminary injury determination.

ITC Staff will conduct a conference on or around April 18, 2024. At the conference, interested parties will have an opportunity to present oral testimony and answer ITC Staff's questions. Afterwards, parties will have an opportunity to present written arguments (and supporting exhibits) in post-conference briefs, which will be due on or around April 23, 2024.

In the final phase, the ITC conducts a more thorough investigation, with a much higher standard of injury. For the final phase, the ITC crafts more detailed questionnaires for issuance to US producers, US importers, and foreign producers, as well as (unlike in the preliminary phase) for issuance to US purchasers. Before issuing the questionnaires, ITC Staff circulates draft questionnaires for the parties' comments, which is an important opportunity to ensure the questionnaires solicit information needed to support the defense. After issuing and receiving responses to the questionnaires, ITC Staff prepares a report summarizing and discussing the information and data reported in the questionnaire responses, as well as information compiled from the preliminary phase of the investigation and ITC Staff's independent research. The ITC Staff's report is important because it is a key document relied upon by the Commissioners in evaluating whether the US industry is materially injured or threatened with material injury because of the cumulated subject imports. After issuance of the ITC Staff report, parties have approximately one week to submit briefs ("prehearing briefs") presenting their arguments supporting or opposing an affirmative determination of material injury (or threat thereof). Normally one week after the deadline for prehearing briefs, ITC holds a public hearing at which the Commissioners (i.e., the decision makers) preside. During the hearing, both sides – Petitioners in support of ADD/CVD and the foreign producers and US importers/purchasers opposed to ADD/CVD – will each have one hour to make an affirmative presentation, followed by a question-and-answer session with the Commissioners. For the defense, in particular, it is critical that industry witnesses (such as importers and US purchasers) opposed to the imposition of ADD/CVD participate and testify at the ITC hearing. After the hearing, the parties have approximately one week to prepare "posthearing" briefs, which typically focus on rebutting the other side's arguments and answering specific questions raised by the Commissioners at the hearing. Several days before the date of the ITC's scheduled vote, parties have one last opportunity to submit final comments in the case. Unlike the preliminary phase, which takes place over the course of approximately six weeks, the final phase normally takes place over the course of approximately four months.

The table below provides key deadlines* for the DOC and ITC ADD proceedings. These dates assume full extensions of the statutory deadlines and "alignment" of the final ADD and CVD determinations.

*Please note dates are approximate. To the extent a deadline falls on a weekend or holiday, the event will usually occur the preceding or next business day.

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