On February 6, 2013, the Chinese Ministry of Commerce (“MOFCOM”) initiated an antidumping (“AD”) investigation on cellulose pulp from the United States, Canada and Brazil at the request of a group of Chinese producers of the product.  Cellulose pulp, which is mainly used for the production of chemical fibers like viscose fiber and rayon acetate, is a significant import for China:  approximately US$1.1 billion in cellulose pulp was brought in from the three targeted countries in 2012.  The complainants have alleged that imports from these countries have caused them injury, and argue that dumping margins for these imports could be as high as 51 percent. 

Foreign producers and exporters intending to participate in the investigation must register with both the Bureau of Fair Trade for Imports and Exports (“BOFT”) and the Bureau of Investigation for Industry Injury (“BIII”) within MOFCOM.  Registration documents must be submitted within 20 days from the date of initiation, i.e., by February 26, 2013.  Even though this case was initiated only a few days before the start of the Chinese New Year holiday, MOFCOM is not expected to grant any extensions.  Foreign producers who do not properly register by this deadline are likely to be assigned a punitive high AD margin which could effectively shut them out of the Chinese market.

During the AD investigation, BOFT will examine whether cellulose pulp imports from the targeted countries have been dumped in China, and BIII will determine whether the domestic industry has been injured by these imports.  Based on information collected from the parties through questionnaires, the agencies will first make a preliminary determination within 180 days from the initiation of the investigation, though this could be delayed based on the complexity of the investigation.  If the preliminary determination is affirmative, China’s General Administration of Customs will begin to impose “provisional duties” on imports from these countries in the amount of the preliminarily calculated dumping margin. 

The investigation is scheduled to conclude 12 months after initiation, though this deadline can be extended for an additional six months, if necessary.  If BOFT and BIII’s final determinations are also affirmative, an AD order will be issued mandating the collection of duties in the amount of the final dumping margin calculated by BOFT.  This additional duty liability will then remain in place for a period of at least five years.  Periodic recalculations of this duty amount and/or early termination are possible, but rare.

Many U.S. exporters are eager to take advantage of China’s continuing economic growth, and the United States has just overtaken the EU as the largest market for China’s exports.  These large and growing export volumes have inevitably led to tensions on both sides of the Pacific.  Nevertheless, and notwithstanding that the United States initiated six trade investigations against Chinese imports in 2012, China initiated only two such cases against U.S. imports last year.  While it is too early in the year to make any solid predictions, the fact that MOFCOM initiated an antidumping case so early in 2013 suggests that Chinese trade investigations may be on the upswing, and U.S. exporters should be on guard.