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On September 28, 2022, the Coalition of Freight Coupler Producers filed antidumping (AD) and countervailing duty (CVD) petitions against U.S. imports of certain freight rail couplers and parts thereof (“FRCs”) from China and Mexico. This coalition consists of one U.S. producer McConway & Torley (M&T) and the union workers at the one other U.S. producer, Amsted Rail Company, Inc. (Amsted).

These new AD/CVD petitions come just three months after the same petitioners lost their previous AD/CVD case that was filed against FRCs from China only. In June 2022, the U.S. International Trade Commission (ITC) ruled that the domestic industry was not injured or threatened with injury by imported Chinese FRCs. One of the reasons for the ITC’s negative injury determination was that Chinese FRCs could not be considered a cause of the alleged injury because of the significant presence of non-subject FRC imports from Mexico.

Presumably, Petitioners believe they can distinguish the current case from the prior case. By adding Mexico to China as the subject countries, the petitioner must believe their chances are now better since the ITC will this time make an affirmative injury determination. The petition notes that Amsted had shifted most of its production from Illinois to Mexico. Also, U.S. railcar producers shifted production to Mexico so that they could still use Chinese parts, including FRCs and avoid paying 25% Section 301 tariffs. Targeting this combination of imports from Mexico and China reflects the impact from the steady increasing shift of production out of China to third-countries throughout Southeast Asia and to Mexico.

Although the petitioner’s chances of winning the ITC case may now be stronger by adding Mexico, the petitioner also still needs the U.S. Department of Commerce (DOC) to make a determination that the named subject imports from Mexico and China are being sold to the United States at less than fair value (“dumping”). DOC likely will make very high dumping and subsidy determinations against Chinese FRCs as they did in the prior case (over 100% AD duty rate, and over 250% CVD duty rate). DOC considers China to be a non-market economy (NME) which tends to inflate the dumping margin calculations. The Chinese respondents may choose again to not participate in DOC’s investigation like the prior case.

Mexico, in contrast to China, is considered a market economy country so that DOC’s dumping margin calculations would use the company’s actual sales prices and costs (instead of NME surrogate values). Generally, market economy dumping margins tend to be much lower than NME dumping margins. So, it is unclear to what extent Mexican FRCs will be found to be dumping, if at all.

1. Scope

The petition proposes the scope of the merchandise to be covered by these AD/CVD investigations as freight railcar couplers (also known as “fits” or “assemblies”) and parts therof.

See the proposed scope definition for a complete description of the physical characteristics of the covered merchandise, and the HTS numbers that may be used to import the subject merchandise.

2. Alleged AD/CVD Margins.

Petitioner did not provide an estimated dumping margins for Mexican FRCs.

Petitioner provided one estimated dumping margin of 160% for Chinese FRCs.

Although Petitioner alleged numerous government subsidy programs that benefitted the Chinese FRC industry, Petitioner did not allege a specific subsidy rates.

3. Named Exporters/ Producers

Petitioner included a list of companies that it believes are producers and exporters of the subject merchandise. See attached list here.

4. Named U.S. Importers

Petitioner included a list of companies that it believes are U.S. importers of the subject merchandise. See attached list here.

5. Estimated Schedule of Investigations

September 28, 2022 – Petitions filed

October 18, 2022 – DOC initiates investigation

October 19, 2022 – ITC Staff Conference

November 12, 2022 – ITC preliminary determination

February 25, 2023 – DOC CVD preliminary determination (assuming extended deadline) (12/22/22 – unextended)

April 26, 2023 – DOC AD preliminary determination (assuming extended deadline) (3/7/23 – unextended)

September 8, 2023 – DOC AD/CVD final determination (extended)

October 23, 2023 – ITC final determination (extended)

October 30, 2023 – DOC AD/CVD orders issued (extended)