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Why US Slapped Punitive Duties on Polyester Yarn from China and India

The U.S. Department of Commerce announced affirmative final determinations in the antidumping duty (AD) and countervailing duty (CVD) investigations of imports of polyester textured yarn from China and India.

The ruling came result of after petitions filed by Unifi Manufacturing Inc. of Greensboro, N.C., and Nan Ya Plastics Corp. America of Lake City, S.C. In their petition, the yarn makers claimed injury due to unfair trade practices.

Foreign companies that price their products in the U.S. market below the cost of production or below prices in their home markets are subject to antidumping duties. Companies that receive unfair subsidies from their governments, such as grants, loans, equity infusions, tax breaks or production inputs, are subject to countervailing duties aimed at directly countering those subsidies.

Commerce found exporters from those countries dumped yarn in the U.S. at margins ranging from 76.07 percent to 77.15 percent from China and 17.62 percent to 47.51 percent from India. Commerce also determined that exporters from China and India received “countervailable” subsidies at rates ranging from 32.18 percent to 473.09 percent and 4.29 percent to 21.83 percent, respectively.

Commerce made affirmative final critical circumstances determinations in the China AD and CVD investigations, finding that “critical circumstances exist for imports of polyester textured yarn from all producers and exporters from China.” As a result of the final affirmative determinations for China, Commerce will instruct U.S. Customs and Border Protection (CBP) to collect AD cash deposits equal to the applicable final weighted-average Commerce Department dumping rates.

Further, as a result of the affirmative final CVD determinations, if ITC makes affirmative injury determinations, Commerce will instruct CBP to resume collection of CVD cash deposits equal to the applicable subsidy rates. In the meantime, CBP will continue to require cash deposits from importers of polyester textured yarn from China based on these rates, effective 90 days before the publication date of the preliminary determination.

Speaking to analysts last month, Al Carey, executive chairman of Unifi, which has said the dumping and unfair subsidies had negatively impacted its business, said, “We believe the recent trade developments, including antidumping and countervailing duties, are set to reshape our industry and provide meaningful opportunities over the next few quarters.”

In 2018, imports of polyester textured yarn from China and India were valued at an estimated $45.5 million and $21.6 million, respectively.

The U.S. International Trade Commission (ITC) is scheduled to make its final injury determinations on or about Dec. 30. If the ITC makes affirmative final injury determinations, Commerce will issue the AD and CVD orders. If the ITC makes negative final determinations of injury, the investigations will be terminated and no orders will be issued.

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