	Background

		AD/CV Duty Laws

U.S. laws authorize the imposition of AD/CV duties to remedy unfair trade  practices of other countries and foreign companies that cause material  injury (or threat thereof) to domestic industries, namely dumping (i.e.,  sales at less than fair market value), and countervailable foreign  government subsidies. In addition,  prospective petitioners must demonstrate that they have sufficient support  from the domestic industry. ITC’s Office of Investigations and Trade Remedy Assistance Office. Some SMEs Have Petitioned for the Imposition of AD/CV Duties and Most SME Petitioners Had Annual Sales Revenue of at Least $10 Million

		SMEs Were Listed on a Third of the Petitions for AD/CV Duties and Represented a Quarter of Petitioners over the Past 6 Years

Our analysis showed that some SMEs petitioned for the imposition of  AD/CV duties to seek relief from unfair trade practices; over the past 6  years, about one-third of the petitions for AD/CV duties listed SME  petitioners and about a quarter of the total number of petitioners were  SMEs. Close to half (17) of the 38 SME petitioners were in the iron and steel  industry (see fig. Producers of goods under investigation, including SMEs, can benefit from  successful AD/CV duty petitions even if they are not petitioners. The challenges most frequently  cited were (1) high legal costs, (2) difficulty obtaining domestic and  foreign pricing and production data, and (3) difficulty demonstrating  industry support. Five of the six trade lawyers  we interviewed roughly estimated that the average legal cost for pursuing  an AD or CV duty case from petition through the investigation was  between $1 million and $2 million, with approximately 70 to 75 percent of  the cost incurred during the investigation phase. Pricing and Production Data Required during the Petition and Investigation Phases Are Difficult to Obtain

During the petition and investigation phases, it is often difficult for  prospective petitioners to obtain domestic and foreign pricing and  production data required by Commerce and ITC regulations and  guidance. Commerce and ITC Assistance Can Help SMEs Address Key Challenges

		Commerce and ITC Staff Help SMEs Obtain Data Required to File a Petition and Review Draft Petitions

Both Commerce and ITC have staff that respond to inquiries and provide  information and assistance to SMEs to relieve some of the administrative  challenges and costs of filing a petition. Self-Initiation of AD/CV Duty Investigations May Reduce Some Initial Costs but Could Also Have Adverse Effects

			Commerce Reserves Use of its Authority to Self-Initiate Investigations to Special Circumstances

U.S. law authorizes Commerce to initiate an AD/CV duty investigation  without a petition, but according to Commerce officials, the department  reserves the use of this authority to special circumstances consistent with  international trade agreements. Commerce has used this authority once  since 1991, under special circumstances. Because self-initiation opens an investigation without a petition, it could  reduce some initial costs to SMEs but could also have adverse effects,  including raising questions of whether the action was taken consistent  with U.S. obligations under international trade agreements. We are sending copies of this report to the appropriate congressional  committees, the Department of Commerce, the International Trade  Commission, the Office of the United States Trade Representative, and  the United States Small Business Administration. Appendix II: Objectives, Scope, and Methodology

Our objectives were to examine (1) the extent to which small and  medium-sized enterprises (SME) have petitioned for the imposition of  antidumping (AD) and countervailing (CV) duties, (2) key challenges to  SMEs’ ability to pursue the imposition of AD/CV duties, and (3)  assistance provided by Commerce and ITC to help SMEs address these  challenges. fewer than 500 employees), and (2) the company affiliation  information. In  addition, we interviewed three academics, representatives from two  industry associations, six trade lawyers, two Congressional Research  Service trade experts, and two SME petitioners.
Why GAO Did This Study

The United States and many of its trading partners have enacted laws to remedy the unfair trade practices of other countries and foreign companies that cause or threaten to cause material injury to domestic producers and workers. U.S. laws authorize the imposition of AD duties on certain imports that were dumped (i.e., sold at less than fair market value) and CV duties on certain imports subsidized by foreign governments. Commerce and ITC conduct AD/CV duty investigations, most of which are initiated based on petitions filed on behalf of a domestic industry. According to the U.S. Census, in 2010, small and medium-sized enterprises accounted for 45 percent of employment in the manufacturing sector.
GAO was asked to review SMEs pursuit of trade remedies. This report examines (1) the extent to which SMEs have petitioned for the imposition of AD/CV duties, (2) key challenges to SMEs ability to pursue the imposition of AD/CV duties, and (3) assistance provided by Commerce and ITC to help SMEs address these challenges. GAO examined petition data from ITC and interviewed petitioners, trade lawyers, trade association officials, academics, trade experts from the Congressional Research Service, and Commerce and ITC officials. In addition, GAO reviewed AD/CV duty petitions and reports.

What GAO Found

Some small and medium-sized enterprises (SME)--which are defined by the Small Business Administration's Office of Advocacy as independent businesses with fewer than 500 employees--have petitioned for the imposition of antidumping (AD) and countervailing (CV) duties to seek relief from unfair trade practices. Among the 56 petitions filed between 2007 and 2012, GAO found 21 that included at least 1 SME petitioner. In addition, the 56 petitions represented a total of 147 petitioners, of which 38 were SMEs. The majority of these SME petitioners had annual sales revenue of at least $10 million. Close to half of the total SME petitioners were in the iron and steel industry. Since participation in the petitions is not mandatory, producers, including SMEs, may benefit from a successful petition even if they choose not to join as a petitioner.
SMEs face three key challenges when pursuing the imposition of AD/CV duties: (1) high legal costs, (2) difficulty obtaining domestic and foreign pricing and production data, and (3) difficulty demonstrating industry support. Trade lawyers estimated that the cost of pursuing an AD or CV case during the petition and investigation phases can average between $1 million and $2 million and sometimes more, especially if the case involves multiple countries. It is often difficult for prospective petitioners to obtain domestic and foreign pricing and production data required by Department of Commerce (Commerce) and International Trade Commission (ITC) regulations and guidance. In addition, it can be difficult for prospective petitioners to demonstrate enough industry support to meet statutory requirements.
Commerce and ITC both have offices that provide information and assistance to SMEs to help them meet some of the administrative requirements and reduce costs. Commerce has the authority to self-initiate an AD/CV duty investigation without a petition and has used this authority only once since 1991. According to Commerce officials, the Department uses this authority only when it has significant participation from the industry. Self-initiation would likely have little impact on SMEs' overall costs since SMEs incur most costs during the investigation phase. Also, self-initiation could have adverse effects, including raising questions of whether the action was taken consistent with U.S. obligations under international trade agreements.

What GAO Recommends

GAO is not making any recommendations.