The U.S. International Trade Commission, Material Injury Determinations, and Remedies for US Manufacturers: An Introduction
Written by Dan Pickard of Wiley Law
The U.S. International Trade Commission (“ITC”) is one of the most powerful, but least known, agencies in the Federal Government. The ITC is an independent, quasi-judicial, federal agency, which, in trade remedy investigations, determines whether a domestic industry is materially injured, or threatened with material injury, by dumped or subsidized imports. The ITC’s decisions in these trade remedy cases, generally either antidumping or countervailing duty investigations, can have major effects on both international trade and domestic industries, specifically by determining whether U.S. manufacturers and their workers are entitled to a remedy against unfair import competition. This article provides a brief introduction to this important agency.
The ITC is composed of six Commissioners, who are nominated by the President and confirmed by the U.S. Senate. No more than three Commissioners may be of any one political party (i.e., there are typically three Democrats and three Republicans) The Commissioners serve overlapping terms of nine years each, with a new term beginning every 18 months. The Chairman and Vice Chairman are designated by the President for two-year terms. The Chairman and Vice Chairman must be from different political parties, and the Chairman cannot be from the same political party as the preceding Chairman. The ITC has a staff of over 300 professionals, including investigators, analysts, economists, attorneys, and technical support personnel.
The ITC has four primary responsibilities, namely: (1) investigate and make determinations as to whether unfairly priced imports have injured a domestic industry; (2) investigate claims that imports have violated U.S. intellectual property rights; (3) provide independent analysis and information on tariffs, trade and competitiveness; and (4) maintain the U.S. tariff schedule.
The ITC is likely best known for its role in antidumping investigations. As explained in a previous article in this series, before antidumping duties can be assessed on unfairly priced imports, the ITC must find that the imports are a cause of material injury (or threat thereof) to the U.S. industry. In this regard, injury is defined as harm that is more than inconsequential, insignificant, or immaterial. Indeed, the domestic industry can demonstrate injury in a number of ways, typically through downward trends in financial data (production, shipments, profits, etc.). Operating losses are not a necessary component of material injury if it is otherwise clear that the industry would have been better off absent the subject imports. As long as the dumped imports are found to be a cause of material injury or threat thereof, the ITC will make an affirmative determination, even if there are other, more important causes of such injury or threat.
If the ITC makes a final affirmative determination (i.e. 3 or more of the 6 Commissioners finding material injury or threat of material injury) then an antidumping order will be issued that will require payment of duties for all covered imports from all producers in the subject countries in an amount to offset the unfair pricing. The antidumping order is issued for a five-year period but which can be re-issued for subsequent five-year periods through a “sunset review” process. Antidumping orders frequently result in U.S. manufacturers regaining lost market share, increased pricing levels in the United States, and improved operating profits and profit margins.
The ITC also conducts “Section 201” investigations (also known as “Safeguard” cases) which are one of the strongest trade remedy actions available under U.S. law. These cases are less common than antidumping investigations and to examine whether a particular import is causing or threatening to cause “serious injury” to a domestic industry (as compared to “material injury” in an antidumping investigation).
Both the injury and causal standards are higher in a Section 201 investigation as compared to an anti-dumping case. However, the remedy provided in a Section 201 can be much broader – covering imports potentially from every country in the world – and more meaningful than in an antidumping/countervailing duty case. Additionally, Section 201 does not require a finding of an unfair trade practice, as do the antidumping and countervailing duty laws.
If the ITC makes an affirmative injury determination under Section 201, the investigation proceeds to a remedy phase. During the remedy phase, ITC recommends specific actions to address the serious injury to the domestic industry. The ITC generally must make its injury finding within 120 days (150 days in more complicated cases) of the initiation of the Section 201 investigation, and must transmit its report to the President, together with any relief recommendations, within 180 days after initiation. The President can then accept, reject, or modify the ITC’s recommendation.
For more information regarding the U.S. International Trade Commission, please do not hesitate to contact Daniel B. Pickard, a partner in the International Trade practice of Wiley Rein LLP, in Washington DC. He can be reached at 202.719.7285 or via email at [email protected].