Anti-Dumping Duties Explained by Bonnie Kersch

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Bonnie Kersch 0:00
So you may have all kinds of powers of attorney out there Customs Brokers acting on your behalf that you don’t even know about, and some of those could be filing anti dumping injuries.

Lalo 0:11
Welcome to simply trade. Brought to you by global Training Center. My name is Lalo, and together with my co host, Andy, we have well over 60 years of combined trade logistics and supply chain experience along the way. We have seen and witnessed different challenges in trade compliance. We decided to put the show together and call on our friends and colleagues in the business to hang out with us and share their knowledge in all things trade. Thank you for spending some time with us. Enjoy the show.

Andy 0:40
Lalo, I can tell you, we just had the previous shows on the anti dumping and countervailing duty Jen and David trees and commodities all that. Quite frankly, that is, you know, makes you about as nervous as a long tail cat in a room full of rocking chairs. It’s like, you know that is a big deal. And you hope that if you’re importing commodities, that they definitely have checked out that they do not qualify for ad or CBD. But yet, you know it’s a big deal. So you know, great content on those previous shows. Today, we’re going to be talking with Bonnie, who is an actual importer, and be able to get great experience, but I think that we’re going to get some, you know, good details on, well, I’m a compliance person. What do I got to do? I mean, right? So what ad CBD is a big deal. Where do I go? What do I do? What’s, what are the steps?

Lalo 1:44
Right? And her experience is amazing. I mean, she, she, she was an importer. I believe that’s where she started. Was a company as an importer. Then became a consultant for several years, helping other companies with topics like adcvd And, of course, countless others. And it’s back with an importer, one of the country’s largest importers, and so, I mean, she’s, she’s very well qualified. I’m really excited to talk to her. She’s been a longtime friend of personal, friend of both of ours, but of also, you know, in it, within the industry, not not just as as as a trade practitioner, but just as a buddy to us,

Andy 2:22
definitely, well, she’s one that is Bonnie’s always a pleasure to be around. But the one thing about her is, I mean, she is so intelligent, and yet it’s great to talk with her. And every time I talk with her, I’m going, this woman’s gonna forget more than I get to learn. So it’s like I’m looking forward to talking with her. Folks are gonna be in for a good show. I think it’s gonna be worthwhile. Yeah, let’s bring her on. Looking forward to talking with you. Bonnie, here is an app. Thanks for coming on. But I’m gonna tell you that we’re looking for what I want to hear us talk about, we’ve established that the ad and CVD situations, the cases, the commodities, when somebody is being an importer, it is a big deal, and you got to really do your due diligence and research to get in and make sure that your products, if covered under ad or CBD situations that you take appropriate actions. But here’s part of the issues that in the previous shows that we had. It is, you know, established is very important. But what I see Bonnie is where we’re lacking. Here. I want to see a few more specific actions that come up what a compliance related person should be trying to do, because this has got to be a coordinated effort with your your purchasing, your your marketing, your sales, your operations, the you know, the import, export, logistics and all that. So what do you do if you have a new product that comes in? What do you do as an importer at Wayfair or anywhere else, any other company that you do? What’s the approach you would recommend somebody take to make sure that they’re either proficient in the knowledge that this is okay, or what actions they should take? So

Bonnie Kersch 4:19
you know, an example that I like to use for people who maybe aren’t familiar with anti dumping is the avocado case. Because everyone loves avocados, right? Love a good guacamole. So what happened was, US farmers, if, let’s say you’re an avocado farmer in the US, right? You own a farm, you can sell your avocados for $2 a piece. Okay? And then all of a sudden, all of these Chinese avocados flood the market, and these Chinese farmers can sell their avocados in the US for $1 a piece. Well, now, as the US farmer, you’re like, What the heck? You know, I can’t compete with these Chinese farmers who can sell their avocados for $1 I can sell them for $2 Dollars. Now I’m my farm is gone, right? I can’t sell my avocados. So then the US government comes in and says, Okay, we’re going to help with this. So now what we’re going to do is place a 200% duty rate on these Chinese avocados to help our American farmers. So now the Chinese avocados are now priced higher than the US avocados, and as an American farmer, I can compete with, you know, the market again. So I think that’s, you know, a good place to start is to just let folks know that this is really not, I mean, is it retaliatory, sure, right? But it’s really to help us, producers and manufacturers and farmers, and frankly, you know, that’s what our country is built on. So that’s really important. On. So that’s

Andy 5:43
really important. So forgive me for jumping in here, but I think there’s an important point here to delineate. When there is an anti dumping scenario, the accusation is the foreign goods are being brought into the US and sold below cost. In other words, somehow they’re being you know, the government in that country is heavily subsidizing that product, or somewhere along the lines where or the other is a company may, even though it’s a foreign company, may elect to sell their goods at a loss to try and gain market share, which is not a fair scenario. So there’s a difference of dealing with competition versus unfair competition, and I think that’s where the anti dumping cases come into play, where it’s coming in. It’s like there’s no way you can be selling for $1 when you know cost alone would make it at least a buck 50 or something. Who knows,

Bonnie Kersch 6:47
right, exactly? And yeah, the government subsidy portion of it that you mentioned is where the countervailing duties come into play, right? And so you have both those anti dumping and then the countervailing duties which are addressing that, that subsidy issue. So absolutely. So I think you know, to answer your, your previous question, as an importer, what do you do? I think there’s, there’s several routes you can take. I mean, there are some instances where you can say, Well, I’m just, you know, I can’t, my supply chain can’t afford to take on that additional duty. So I’m either going to switch to using a US supplier or a supplier from a different country that’s not covered under the scope of that anti dumping ruling. So for example, there was an anti dumping ruling in Canada recently on mattresses from China. But what? Let’s say you could still buy them from India, right? And you wouldn’t have those additional duties. So keep in mind that it also depends on country of origin. Of you know where these goods are coming from, so maybe you find a different supplier in another region that you can source from and avoid those duties. In some cases, you don’t have a choice, right? Especially coming from the chemical industry, there may only be one chemical plant that makes that good, and it’s in one region of the world. For example, lithium is mined from the ground, right? So there are only certain regions of the world where you can find that. So you may not be able to avoid, you know, anti dumping duties on some things, but on other things you can also, let’s say you want to stick with that same supplier. Are they able to relocate their manufacturing facility? Right? That could be another thing to ask them, you know, if they already have another manufacturing facility, let’s, let’s use the the mattresses from China, example. Again, let’s say that they have a manufacturing facility in India that’s producing something else other than mattresses. Are they able to start manufacturing mattresses in that facility now and shift their production so that, you know, they no longer fall under anti dumping. So I think there’s a different, you know, a few different avenues that you can take as an importer to try to help your, you know, your bottom line at the end of the day.

Andy 8:53
So let me ask this, all right, so let’s, let’s take a situation. Let’s take the stay with the mattresses in a minute. So if you have an opportunity where it looks like you’re needing to bring in mattresses for your stores, and so your folks are out there sourcing all of that in the process of doing that, obviously you also have the scenario where you’re should be vetting your suppliers, so a somebody says, Yeah, I can sell those to you or whatever. Well, get into the corporate bureaucracy, log on and complete the packet on becoming a vendor for our company in that realm before you you know, even the commodity comes up when somebody is looking at becoming a vendor of your company. Should not the compliance people be involved in vetting that and have a say in the approval process. Oh,

Bonnie Kersch 9:59
absolutely. Absolutely, absolutely, yeah. And not only you know, talking about anti dumping reasons, because obviously, you know, maybe there isn’t an anti dumping case on what you’re approving this vendor to source for your company at the time, but then one comes up later, right? But even looking at things like denied party screening, right, there are lots of reasons why, and just compliance issues in general, and even, you know, I know that you’re going to cover Incoterms in a subsequent issue episode, but you know, can that supplier act as the importer of record into the country that you need them to, you know, and determining those sorts of things, there are all sorts of reasons why your compliance folks should absolutely be involved when you’re onboarding a new supplier, for sure.

Andy 10:40
So one of the key things is, I mean, I’m kind of led you along that lines there, but I’m hoping you’re agreeing with that is yes, is one of the actions doesn’t necessarily have to be the first, although I would recommend that, before you get to commodities, look at the people you’re dealing with. And there’s several things just not for the ad or CVD situation where we’re focused on today, but I mean, you’ve got the forced labor prevention acts, you’ve got, like you just said, denied parties or restricted party screening, you got all that kind of stuff. So it’s going through, and getting that all set up is one thing. And then what? What about as far as a part, this is one of the things I guess I look at. And if you are a company that is an E commerce company, a virtual store, e commerce, whatever, even a heart, you know, brick and mortars as well. But I’m of the opinion, and I may be wrong. Help me with this a minute. When there is an item added to the inventory for sale, whether it’s, you know, physically on US soil, or not, or whatever, that item doesn’t just happen. I mean, it takes probably several weeks for to go through a, you know, especially a big company, a small one, I get, but it takes a while for you to go through and say, All right, yeah, we’re going to be taking pictures of this. We’re going to be doing a marketing thing. We’re going to be doing, we’re looking at the cost. We’re, you know, all those things are going to be involved. And it’s amazing to me that in that process, the compliance folks are usually, you know, left out until the product is sitting at the port, going, why is it not clear? He’s like, Well, what is it?

Bonnie Kersch 12:34
Yeah, that’s definitely something that that all companies should, should work on and make sure that they have, you know, included in the process, the trade compliance folks like you said, because there are all kinds of things. I mean, yes, you need to determine whether anti dumping applies to those goods or countervailing duties. But what about other, you know, restrictions as well, like, maybe there’s a PGA, a partner government agency requirement, like the FDA or the EPA or the USDA, right? There’s several different agencies looking at things. So, yeah, your trade compliance people should be involved for multiple reasons, and looking at, you know, country of origin information. Is this being sourced from North Korea? You know, can we do that, or from Syria or Cuba or right? There’s all types of reasons. And you know, when you’re talking about, you were talking about needing to, you know, take pictures of items and figure out how to market those items and that sort of thing, right? Having all of the necessary information needed about the item to determine the HTS code, for example, right? That can be very helpful to have your trade compliance people in, you know, on the front side, yeah, absolutely. Lots of reasons anti dumping reasons for sure, and if something does qualify for anti dumping duties, what do you what do you then decide to do? You know, some companies will determine we don’t want to sell these items because they would have to be so expensive for us to account for that additional duty rate that it just we wouldn’t be competitive in the market, right? Or they may determine that, you know, it would, they would actually lose money if they, if they didn’t build the additional cost into their products, cost that they’re charging their customer, are they? Are they actually losing money every time they make a sale? So you know, going tying in your anti dumping duties to your pricing and what you’re actually listing that item for sale, as you know, is a really important part of it as well. So you’d hate to find out, you know, once, once a customer, what you don’t want to have happen is a customer places an order for something and you don’t realize it qualifies for it has anti dumping duties on it until it reaches the border, right? And you didn’t collect that from the customer. Now you’ve lost all kinds of money.

Andy 14:39
Well, you’ve got a customer dissatisfaction situation, or especially, even if it’s a legitimate, if you will, fee duty, all that cost to the customer, they’re gonna like, what are you done? Trying to do now? You’re trying to gouge me or whatever, and that’s not gonna work. Okay? So, vetting, being a. Involved in the vetting process, looking at, you know, obviously being more proactive in the vetting of the commodity itself. Obviously, you just mentioned the classification, and being involved in that. And so let’s take it a step further. All right, you got it classified. Looks like it’s coming from China in this case, or whatever else, you know, whatever kind of I don’t want to everybody hops, harps on China,

Bonnie Kersch 15:23
but it could be anywhere, not, not picking on China, yeah, but, but,

Andy 15:27
you know, all these kinds of things. The point being is, you haven’t even done any kind of research if it qualifies for ad or CBD. So how do you do that? What would you what? Where’s the resource? Where are you going to go? To go? Well, here’s my list of items that are, you know, where am I going to check that out?

Bonnie Kersch 15:50
And, yeah, I know that. What I was

Lalo 15:52
going to say is that question that Andy’s saying is, I brought that up previously on one of their previous episodes, and I said, I mean, a company has those, may have some resources, but what about the guy or the gal that’s selling on Etsy or on Amazon? You know, they right, they’re just buying, you know, so, but anyway, go ahead,

Bonnie Kersch 16:11
right? Yeah, there’s definitely, um, a lot of resources that, like you said, you know, bigger companies can use. I know that, not to, you know, talk about any specific vendors, but I know that there’s a lot of like, Descartes has customs info out there that is widely seen as, you know, one of the good resources for this. But there are also websites Lalo to your point, like, what if you are just, you don’t have customs info, right? And you’re just a someone selling on Etsy, you can go basically Google, you know, anti dumping cases, and you can find all of them, but the best way to do it is to search by HTS code, so the Harmonized Tariff code for your item. So once you’ve been able to determine what that is, you can see if that HTS code flags for any anti dumping or countervailing cases. But just because an HTS code flags for it doesn’t mean it qualifies for it. For example, back to our mattress case. I don’t remember the exact, you know, parameters of that ruling, but let’s say it was something like, mattresses three inches thick or more qualify, but ones under three inches thick don’t fall under the scope of the ruling. So you can’t determine that just from the HTS code, right? So just because the HTS code flags for it, you then need to go back and look at your specific product and at the ruling itself and say, Are there any parameters that I can see whether my item is in or out of scope of the ruling? Well, taking

Andy 17:36
that a step further, there was an excellent example that our previous guy, guest had provided in one was, it was a cabinet, and let’s just say, a TV cabinet that was manufactured. But the the, and if I’m not mistaken, Lala, were they saying it was Indonesia or India or right is in the Far East somewhere, right, and it was the top was made out of a certain kind of slate that that qualified for an anti dumping or CBD case. Either one, I don’t recall which one, but, but everything else was fine. And the classification on that would have come across as, all right, the TV cabinet, or a cabinet for television. And yet, you know, and that HTS would not have flagged, but the fact that the top of it, you know, the counterpart of it, or whatever was made of a slate that was qualified. So there’s a scenario where I’m looking at it going, well, how are you going to know? So just like you said, All right, so let’s take that a step further. You know. All right, I’m doing due diligence. I’ve looked you can, and you probably need to be documenting on that particular commodity. If it’s going into you, you’re going to offer it to sell in your inventory online, or, you know, in the store or whatever. You better be documenting your due diligence on the I’ve checked here, I’ve looked here, or whatever, definitely. But are there any other resources that you can think of, like the Department of Commerce is where the ad and CBD cases go, right,

Bonnie Kersch 19:26
right? Yeah, they live there, yeah. Ultimately, honestly, I mean, just being abreast of what’s going on in the space of global trade, right? So there’s lots of publications you can sign up for free, ones that anybody can sign up for that don’t cost you anything free. Is my favorite price point. Lalo and Andy. I love free resources. If you go to CBP website, you can sign up for daily emails from them on various topics, and this is one of them. And so they’ll let you know. You know, anytime it’ll just come right to your inbox and. You’ll find out when new cases are happening. And to your point, like, how would I have known if that HTS code didn’t flag, staying abreast of all the new cases and saying, oh, there’s an anti dumping, you know, case on slate. Well, I mean to take, I know I have that one TV stand that has the slate on it. I may need to go, you know, take a look at that one. So that can be a really good resource. And just, you know, consistently staying abreast of what’s going on in global trade topics. And, like I said, lots of free resources to help you do that. Also, you know, partnering with a good trade consultant, whoever, whoever you choose. You know, I don’t want to name anyone specifically, but there’s lots of them out there. So whoever you choose to do that, and you know, once you form a good relationship with one of these outside trade consultants, they’ll let you know, like, Hey, didn’t you have that one product that had slate on it, just reminding you that there’s an anti dumping case on that you might need to take a look. Let me say this.

Andy 20:57
Hang on. Let me get to that point. I’m sorry, but you made a great point, Bonnie, and I love it, but it’s, it’s like, if you’re going to do an outside consultant or substance of that fact, it’s, it’s, you’re reaching out to an expert outside your company. The one thing that we had two attorneys make a an extremely important point on that, and that is, you know, sometimes you’ll get advice from your broker, and it may be free because they’re you’re doing the answer, or they’re doing the entries for you and all that, and or a good friend from a consulting firm. But in this particular case, if you’re going to you need to make sure that if that consultant, or whoever it is, a paid consultant, because if you do have problems, it’s like, again, part of the due diligence is, you know, if you’re getting free advice from anybody and it runs into problems, well, that advice is worth what you didn’t, it wasn’t worth what you Exactly, yeah, so, I mean, I don’t know about that, but that that’s one of those that, I guess, in looking at it, it would make it probably, I guess, worth it. You’ve done everything you can up to a point now, you’ve got enough information. Here. It’s classified. Here’s the commodity, here’s the pictures, here’s what it’s made out of. You know, as far as the composition of everything, and then send it to a consultant to say, please let me know I cannot find any ad or CBD or anything else on it. Do you agree with my assessment and pay a few 100 bucks if it takes?

Bonnie Kersch 22:36
Yeah, absolutely. Get them to double check your work. You know, at the end of the day, Andy and Lalo, and we’ve all worked in global trade for a long time. There is a lot to do, right? And I think one, you know, as I meet more and more global trade professionals, I think one common thread through all of us is that we are overachievers and we’re perfectionists, and we think we can do everything ourselves, right? Because we’ve all worked in a situation where we have been the global trade compartment, you know, department are just a team of one, and that’s inappropriate, right? So I think that, you know, I struggle with, and I’m sure other global trade professionals struggle with as well, is saying, you know, it’s okay to ask for help, right? It’s okay to, you know, like you said, Andy, do the initial work myself. And you know, think that I’ve gotten as far as I can, and I know the answers, but let someone else verify that, you know, let an outside consultant, an outside attorney, whoever you think is appropriate, just take a second look, right? And there’s absolutely nothing wrong with that. And I love that. You know, the three of us and the larger community can work together and and throw questions at each other, like, Hey, have you seen this before? You know, what did you do in this situation? I think that’s invaluable. That’s

Andy 23:49
what I call bird dogging. And it’s, it’s, you know, I don’t know the answer, but let me throw it out there, and somebody else may know or and gets me a little bit closer to a resource. And that’s one of the things that I like about the different trade associations that can help out. And again, it’s you’re not going to ultimately come up with the end solution for everything, but as you get closer, then you’re like, Okay, now I’ve got enough information, and somebody can recommend a certain expert or whatever that now, okay, I can spend some money and see if this is valid or not, or whatever.

Lalo 24:23
Hey, everyone, we’ll stop here and the next episode will air later this week. That way y’all can have an opportunity to listen to both episodes in the same week. And thank you all for joining us. We do have quite a bit a lot more information that we’re covering with Bonnie, and it’s worth the listen. And so thank you all for tuning in and catch you on the next episode.