Freight rail couplers from China and Mexico face new AD/CVD petitions

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Key points

  • US producers have filed a new petition on freight rail couplers from China and Mexico that could subject these products to anti-dumping and countervailing duties.
  • In 2021, China and Mexico accounted for 75% of the combined imports of freight rail couplers and components into the United States. The combined value of subject goods imported in 2021 from China and Mexico was $55.4 million.
  • If the ITC and DOC issue affirmative preliminary determinations, U.S. importers will be required to file cash deposits in an amount equal to the anti-dumping and/or countervailing duties for all entries from the date the preliminary determination of the DOC is published in the Federal Register.

Introduction

On September 28, 2022, domestic producers filed petitions with the U.S. Department of Commerce (DOC) and the U.S. International Trade Commission (ITC), seeking anti-dumping (AD) duties on imports of certain freight rail couplers and of their parts from China and Mexico and countervailing duties (CVD) on these imports from China.

The petitioner is the Coalition of Freight Coupler Producers, which includes national producer McConway & Torley LLC and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW). The USW represents unionized workers at Amsted Rail Company, which is not itself a claimant in this case.

This motion follows a negative material injury determination by the ITC from July 2022 in a similar case involving freight rail couplers and components from China, which had a slightly different scope. The underlying motion for this case was filed in September 2021 by the same Coalition. In its negative determination, the ITC concluded that subject imports did not significantly undersell the domestic like product, nor did they depress prices or suppress price increases, ultimately concluding that the subject imports did not have a significant impact on the domestic industry. This petition appears to attempt to achieve a different result than the USITC by changing the wording of the scope and adding imports from Mexico into the analysis.

Under US law, a domestic industry can request the government to initiate an anti-dumping investigation into the price of an imported product to determine whether it is sold in the United States (US) at a price below its fair value (i.e. “dumped”). A domestic industry may also request the initiation of a countervailing duty investigation regarding alleged subsidization of foreign producers by a foreign government. Additional duties may be imposed if the DOC determines that the imported goods are being dumped and/or subsidized and if the ITC also determines that the domestic industry is materially injured or threatens to be materially injured. injury due to subject imports. Notably, in past anti-dumping and countervailing investigations of freight couplers and parts thereof from China, the DOC has reached affirmative dumping and subsidizing determinations, although final anti-dumping and countervailing orders have never been imposed. due to the ITC’s negative material injury determination.

If the ITC and DOC issue affirmative preliminary determinations, U.S. importers will be required to file cash deposits in an amount equal to the anti-dumping and/or countervailing duties for all entries from the date the preliminary determination of the DOC is published in the Federal Register. Preliminary AD/CVD rates may change in DOC’s final determination, following further factual investigation, verification, and exposition.

Scope

The scope of this investigation covers certain freight car couplers (also known as “adjustments” or “assemblies”) and their parts. Freight wagon couplers are made up of two main parts, namely the joints and coupler bodies, but can also include other elements (e.g. coupler locks, locking lift assemblies, hitch pins, hitch starters and rotors). Parts covered by the investigation include (1) E coupler bodies, (2) E/F coupler bodies, (3) F coupler bodies, (4) E joints and (5) F joints , as reported by the Association of American Railroads (AAR). Freight rail coupling parts are included in the scope of the survey when imported individually.

Covered freight car couplers and parts are included in scope whether or not they are finished, whether they are imported individually or with other covered or non-covered parts, whether assembled or not , whether assembled or not, or if they are attached to non-targeted goods, such as other non-targeted parts or a completed car. Finishing includes, but is not limited to, arc washing, welding, grinding, shot blasting, heat treating, machining, and assembly of various parts. When a covered coupler or parts are mounted on or on other non-covered goods, such as a rail car, only the covered coupler or parts are covered by the scope.

Finished goods covered by the scope of this investigation meet or exceed the AAR specifications of M-211, “Foundry and Product Approval Requirements for the Manufacture of Couplers, Coupler Yokes, Knuckles, Follower Blocks, and Coupler Parts” and/or AAR M -215 “Coupling Systems” or other equivalent national or international standards (including any revision of the standard(s).

The country of origin of subject couplers and their parts, whether fully assembled, unfinished or finished, or attached to a rail car, is the country where the subject coupler parts were cast or forged. The subject good includes couplers as defined above that have been further processed or assembled, including couplers attached to a wagon in third countries. Further processing includes, but is not limited to, arc washing, welding, grinding, shot blasting, heat treatment, painting, coating, priming, machining and assembly of various parts. The inclusion, attachment, assembly or assembly of non-covered parts with covered parts or fittings, either in the country of manufacture of the covered product or in a third country, does not exclude covered parts or fittings of the scope. The couplers that are the subject of this investigation can currently be classified under the Harmonized Tariff Schedule of the United States (HTSUS) under statistical report number 8607.30.1000. Unfinished subject goods may also enter under statistical report number HTSUS 7326.90.8688. Covered goods attached to finished railcars may also enter under HTSUS Statistical Reporting Numbers 8606.10.0000, 8606.30.0000, 8606.91.0000, 8606.92.0000, 8606.99.0130, 8606.99.0160 or subheading 9803.00.5000 if they are imported as an Instrument of Traffic. The subject good may also be imported under statistical report number HTSUS 7325.99.50. These HTSUS subheadings are provided for convenience and customs purposes only; the written description of the scope of the survey is decisive.

Foreign Producers and Exporters of Subject Goods

A list of foreign producers and exporters of cargo couplers and components, as identified in the petition, is provided in Appendix 1.

U.S. Importers of Subject Goods

A list of U.S. importers of cargo couplers and components, as identified in the petition, is provided in Attachment 2.

Alleged Dumping/Subsidizing Margins

The petitioner did not publicly claim a margin of dumping for China.

The petitioner alleged margins of dumping ranging from 67.49% to 169.90% for China, and from 162.62% to 185.17% for Mexico. The DOC generally imposes duties at these alleged dumping rates on exporters that do not cooperate with the investigation. For example, in the recent anti-dumping/countervailing investigation involving like products from China, no Chinese producers cooperated, resulting in anti-dumping and countervailing margins of 116.70 percent and 265.99 percent. hundred, respectively.

No specific subsidy rate for China is included in the request.

Potential trade impact

According to official United States import statistics, a total of 25.1 million kilograms of subject goods were imported into the United States in 2021, including 15.2 million kilograms imported from China and 9.8 million kilograms imported from Mexico. In 2021, China and Mexico accounted for 75% of the combined imports of freight rail couplers and components into the United States. The combined value of subject goods imported in 2021 from China and Mexico was $55.4 million.

Provisional calendar of investigations

09/28/2022 Petition filed.

11/12/2022 ITC Preliminary Injury Determination.

2022-12-22 DOC’s preliminary countervailing duty determination, if not deferred.

2/25/2023 DOC’s preliminary countervailing duty determination, if fully deferred.

03/07/2023 DOC’s preliminary anti-dumping determination, if not deferred.

2023-04-26 DOC’s preliminary anti-dumping determination, if fully deferred.

2023-09-15 DOC’s final anti-dumping and countervailing determinations, if preliminary and final determinations fully deferred.

11/06/2023 ITC’s final injury determination, if DOC’s determinations are fully deferred.

13/11/2023 AD/CVD decrees published.

If you have any questions regarding this update, please contact Bernd G. Janzen, Matthew R. Nicely, Yujin K. McNamara, Spencer S. Griffith, or any of the attorneys in our trade remedy practice.

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