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Fair Trade: August 2010 Update

China Import Update — August 25, 2010

>A coalition of U.S. extruders, known as the U.S. Aluminum Extrusions Fair Trade Committee, has been formed for the purposes of evaluating and, as necessary, defending the U.S. aluminum extrusion industry from being manipulated by alleged unfair trade practices from importers. This Committee is not part of the Aluminum Extruders Council, but we do support its work and its goals.

Below you will find updates regarding the petition the U.S. Aluminum Extrusion Fair Trade Committee filed with the U.S. International Trade Commission (ITC) and the U.S. Department of Commerce (DOC) for redress from alleged unfair trade practices involving aluminum extrusions imported from China.

Update as of August 25, 2010

The countervailing duty ("CVD") and antidumping ("AD") investigations are proceeding. The Department of Commerce has fully extended the preliminary determinations in both investigations, as the petitioners, the Aluminum Extrusions Fair Trade Committee ("Committee") expected. The deadline for the preliminary determination in the CVD investigation is now Monday, August 30. The Committee expects the Department of Commerce to release the preliminary determination after noon on Tuesday, August 31. The deadline for the preliminary determination in the AD investigation has been extended to Wednesday, October 27, 2010.

In the CVD investigation, none of the three mandatory respondents — Zhongwang Group, Dragonluxe, or Miland — responded to Commerce's questionnaire. Thus, by law the subsidy rates for these companies will be determined based on the facts available. Because these companies did not cooperate with the investigation, Commerce is authorized to use adverse inferences to determine their subsidy rates. The Committee has argued that Commerce should infer that these companies received subsidies under each of the subsidy programs alleged in the petition, and that the levels of subsidization were consistent with the highest rates previously determined by Commerce in investigations of the same or similar programs in China.

After it became clear none of the three mandatory respondents would be participating, Commerce selected two voluntary respondents — Guang Ya Aluminum Industries Co., Ltd. ("Guang Ya") and Zhaoqing New Zhongya Aluminum Co., Ltd. and its Hong Kong affiliate Zhongya Shaped Aluminum (HK) Holding Ltd. ("Zhongya"). Guang Ya and Zhongya have participated in the investigation by responding to questionnaires issued by Commerce. The Government of China also has responded to requests for information. The Committee has analyzed the responses and provided comments to Commerce. The Committee expects Commerce to make an affirmative determination with respect to Guang Ya, Zhongya, and all other uninvestigated producers and exporters of the subject merchandise in China. If Commerce makes an affirmative determination, imports of subject merchandise after the date on which the preliminary determination is published in the Federal Register will be subject to countervailing duties in the amount of the subsidization. These duties will be "provisional," in that Customs and Border Protection will collect the money from importers only if a countervailing duty order is ultimately imposed. However, at the time of entry, importers will be required to post a bond to cover the potential liability for duties.

In the AD investigation, Commerce selected two mandatory respondents — Guang Ya and Zhaoqing Asia Aluminum Factory Co., Ltd. ("Asia Aluminum") — to participate in the investigation. A total of 38 producers and exporters of the subject merchandise in China provided quantity and value data and applied for a separate rate. In general, Commerce will calculate individual dumping margins for the mandatory respondents and apply a weighted-average of those rates to companies that are approved for a separate rate. Separate rate status is generally approved for companies that provide information showing that they operate independent of the government. For companies that are not mandatory respondents and did not apply for a separate rate, Commerce will apply the "China-wide" rate, which is the highest rate either calculated in the investigation or alleged in the petition.

The two mandatory respondents have provided initial responses to one part of Commerce's questionnaire. The deadline for the balance of the information initially requested by Commerce is August 30, 2010. Based on the information provided by Guang Ya and Asia Aluminum, the Committee intends to provide comments on the appropriate surrogate country and surrogate values in the investigation. Because China is a non-market economy under U.S. antidumping law, the Chinese cost of production and the basis of "normal value" in the investigation will be determined based on the value of the reported factors of production in a surrogate country. The Committee's dumping allegation relied on information from India to value the factors of production, but the Committee is free to propose an alternative surrogate country based on the information provided by the mandatory respondents. The deadline for surrogate country comments is September 7, and the deadline for surrogate value comments is September 13.

Finally, as noted above, the deadline for Commerce' preliminary determination is October 27, 2010. Like the CVD investigation, as of the date of the publication of the preliminary determination in the Federal Register, imports of the subject merchandise will be subject to "provisional" antidumping duties at the rates determined by Commerce. Customs will collect the money from importers only if an antidumping order is ultimately imposed. However, at the time of entry, importers will be required to post a bond to cover the potential liability for duties.