On February 7, 2022, the U.S. Department of Commerce (Commerce) published a notice in the Federal Register that it was self-initiating a scope inquiry and a circumvention inquiry into the importation of quartz surface products from Malaysia.1 Quartz surface products from China are subject to U.S. antidumping (“AD”) and countervailing duty (“CVD”) orders; this investigation will determine if quartz surface products finished in Malaysia are within the scope of the AD and CVD orders and, if not, whether they are circumventing the orders.2
This appears to be the first self-initiated scope and anti-circumvention investigation since Commerce amended its regulations governing scope rulings and anti-circumvention inquiries in September 2021.3
September 2021 Amendments
On September 20, 2021, Commerce published a Final Rule that significantly modified and expanded its then-existing AD and CVD regulations, with the aim of “improv[ing] administration and enforcement” of the statutes. As part of that major overhaul, Commerce made the following key changes that affect scope ruling and anti-circumvention proceedings:
- Moving circumvention inquiries from the scope ruling section to a new section focused on this type of inquiries. The change ensures that scope inquiries focus only on whether the merchandise at issue already is subject to an existing AD/CVD order.4
- Eliminating the distinction between formal and informal scope rulings.5
- Automatic initiation of a scope inquiry if Commerce does not respond to an investigation request within 31 days of filing.6
- Setting formal deadlines for scope investigations at 120 days, although Commerce may extend the deadline for an additional 180 days.7
- Clarifying Commerce’s authority to self-initiate anti-circumvention inquiries.8
- Expanding the period of potential retroactive application of AD and CVD duties beyond the date of initiation as published in the Federal Register, for both scope and anti-circumvention proceedings.9
Instant Scope & Circumvention Inquiries
When initiating the instant scope and circumvention inquires, Commerce states:
Commerce has determined that it is appropriate to first determine whether the merchandise is covered by the scope of the Orders through a scope inquiry, before considering whether the merchandise is circumventing the Orders.10
This is consistent with the September 2021 amendment discussed above. Specifically, as noted above, the purpose of a scope inquiry is to determine whether merchandise at issue already is subject to an existing AD/CVD order. By contrast, anti-circumvention inquires concern merchandise that is initially outside the scope of an AD/CVD order but whose entry into the U.S. market circumvents an AD/CVD order.11 In other words, an anti-circumvention inquiry may expand the current scope of an AD/CVD order to cover additional merchandise and/or merchandise from new countries.
Most importantly, assuming Commerce were to find either in-scope merchandise or a circumvention of the Chinese AD/CVD orders, it would also have to decide whether, and if so how, to apply the retroactive AD and CVD duties to unliquidated entries entered for consumption prior to Commerce’s initiation of the instant scope and anti-circumvention inquires. Under the old rule, a scope ruling or a circumvention determination generally could not reach entries entered prior to Commerce initiating the inquiry. Since the September 2021 amendment, there is great interest within the import community in how Commerce may exercise its newly gained authority.