** 8/30/2023 UPDATE ** On August 28th, the U.S. International Trade Commission (ITC) issued a preliminary determination that the U.S. domestic industry is being materially injured by imports of pea protein from China.
In light of this decision, the next step in the investigations is the U.S. Department of Commerce’s issuance of preliminary determinations as to rates, expected in October (for counter-vailing duties) and mid-December (for antidumping) (although these deadlines can be extended). Once the DOC publishes these preliminary determinations, importers will be required to deposit AD/CVD duties on subject merchandise entered into the U.S. on or after the publication dates, and liquidation of those entries will be suspended. However, if the DOC and ITC find that there are “critical circumstances” (imports increased at least 15% following the filing of the petition compared to a similar period before the petition was filed), entries made up to 90 days prior to the DOC’s preliminary determinations may be subject to deposit of AD/CVD duties.
*** Original Post ***
On July 12, 2023, PURIS Proteins LLC (a U.S. pea protein producer) filed petitions requesting imposition of antidumping (AD) and countervailing (CVD) duties on high protein content pea protein (HPC pea protein) from China. If ultimately successful, the petitions have the potential to result in imposition of extremely significant additional duties on imports of Chinese-origin HPC pea protein, a plant-based alternative animal protein which can be consumed directly or used as an ingredient to manufacture a wide variety of food products such as snack bars, plant-based meat products, bakery and dairy products, sauces and seasonings, sugar, gum, and chocolate confectionary products, baby foods, breakfast cereals, and nutritional drinks.
1. Scope of the Merchandise at Issue
The subject merchandise (the merchandise falling within the scope of the AD and CVD petitions) is pea protein with a protein content higher than 65 percent on a dry weight basis (also known as pea protein concentrate, pea protein isolate, hydrolized pea protein, pea peptides, and fermented pea protein). It includes HPC pea protein in all physical forms, including liquid (solution) and solid (powder) forms. Pea protein (including HPC pea protein) has the Chemical Abstracts Service (CAS) registry number 222400-29-5.
The merchandise also includes HPC pea protein that is blended, combined, or mixed with non-subject pea protein or with other products, including, but not limited to, protein powders, dry beverage blends, and protein fortified beverages, so long as the total HPC pea protein content (from whatever source) is 5 percent or more on a dry weight basis. However, only the Chinese-origin HPC pea protein component of the product is in scope (i.e., will be subject to AD and/or CVD if the petitions are successful). The HPC pea protein will remain in scope regardless of whether the blending, combining, or mixing occurs in third countries (i.e., outside of China).
The subject merchandise is currently classified in HTSUS subheadings 3504.00.1000, 3504.00.5000, and 2106.10.0000. The petitions note that it may also enter the U.S. market under HTSUS subheading 2308.00.9890. However, while the HTSUS subheadings and the CAS registry number are provided for convenience and customs purposes, the written description in the investigation is dispositive.
2. Potential Duties
The potential antidumping duties that could result from these petitions are significant, as the petitioner is alleging dumping margins between 23.86% – 291.74% of the covered articles’ declared value at import. On the countervailing duty side, the petitioner alleged countervailing duty margins above de minimis, which is one half percent (0.005). CVD rates can be quite substantial, depending upon the extent of any subsidization found. The Department of Commerce (DOC) determines the amount of subsidization and petitioners are only required to allege that the subsidies exceed one half percent. Therefore, an allegation that more than a de minimis margin is involved is not an indication that small CVD margins exist.
3. Next Steps
The petitions have been filed simultaneously with the Department of Commerce (DOC) and the ITC. The DOC generally has 20 days to determine if the petition has enough information and industry support to initiate an investigation. The ITC will make a preliminary determination as to whether there is a “reasonable indication” that the subject imports are injuring or threatening to injure the U.S. industry. The ITC gave notice on July 13 that it has instituted these preliminary phase AD and CVD investigations. As noted in the notice, unless the DOC extends the time for initiation, the ITC will reach its preliminary determination by August 28, 2023, and transmit its views to the DOC by September 5, 2023. The “reasonable indication” threshold for an ITC affirmative finding at this preliminary stage is quite low, so the great majority of preliminary determinations are affirmative.
If the ITC’s preliminary determination is affirmative, the DOC will then make preliminary and final determinations as to AD and CVD duty margins, if any. Preliminary determinations take from 60-130 days from the initiation date in CVD cases, and from 100-190 days in AD cases, although the cases are often aligned. CVD final determinations are generally made by DOC within 75 days of the preliminary determination while in AD cases, the final DOC determination is 75-135 days after the preliminary determination. Again, AD and CVD determination dates are often aligned.
If DOC’s final determination in the AD and/or CVD case is/are affirmative, then the case goes back to the ITC for a final determination within 45 to 75 days of whether the subject imports have caused or threaten to cause material injury to the U.S. industry.
Importers are required to deposit AD and/or CVD duties on subject merchandise entered into the U.S. on or after publication of a DOC preliminary determination, and liquidation of those entries will be suspended. Deposit rates may subsequently be adjusted by the DOC final determination. In addition, if the DOC and ITC find that there are “critical circumstances” (imports increased at least 15% following the filing of the petition compared to a similar period before the petition was filed), entries made up to 90 days before the DOC’s preliminary determinations may be subject to deposit of AD/CVD duties. Here, the DOC’s preliminary determinations are expected in October (for CVD) and mid-December (for AD), although the deadline for these determinations can be extended; therefore, if the ITC’s preliminary determination as to injury is affirmative, importer might be required to deposit AD and/or CVD duties as early as October and December of 2023 (and even earlier if critical circumstances are found).
A final AD and or CVD order is issued only after an affirmative finding by the ITC.
