Today, two major U.S. synthetic yarn producers – Unifi Manufacturing, Inc. ("Unifi") and Nan Ya Plastics Corporation, America ("Nan Ya") – filed a "critical circumstances" allegation regarding imports of polyester textured yarn from China in an ongoing trade remedy investigation. The critical circumstances claim charges that imports of the yarn surged into the United States in order to avoid the imposition of duties. If the allegation is proven, importers could face significant duty liabilities.

The critical circumstances provision allows the U.S. Department of Commerce (the "Commerce Department") to apply antidumping and countervailing duties retroactively if the agency determines that certain criteria are satisfied. In particular, the Commerce Department looks at whether imports of the merchandise under investigation were shipped into the United States in large volumes after the petitions are filed but before preliminary duties are established.

Unifi and Nan Ya filed petitions with the Commerce Department and the U.S. International Trade Commission (the "USITC") in October 2018 alleging that dumped and subsidized imports of polyester textured yarn from China and Indiaare causing material injury to the domestic industry. The Commerce Department initiated the investigations in November 2018 and the USITC preliminarily determined that imports from China and India are causing injury to the U.S. domestic industry in December 2018.

After the petitions were filed in October 2018, imports of polyester textured yarn from China increased by over 27 percent from their pre-petition volumes. The critical circumstances allegation filed by Unifi and Nan Ya asks the Commerce Department to account for this surge by imposing retroactive duties as soon as possible, but no later than the date that the preliminary determinations in the countervailing duty investigations are made. These preliminary determinations are scheduled to be completed by April 26, 2019.

The products affected by this case are made by Unifi at its production facilities in Yadkinville, North Carolina, and Madison, North Carolina, where Unifi employs approximately 1,100 and 450 people, respectively, and by Nan Ya at its production facility in Lake City, South Carolina, where Nan Ya employs approximately 900 people.

FACT SHEET

Antidumping and countervailing duties: Antidumping duties are intended to offset the amount by which a product is sold at less than fair value, or "dumped," in the United States. The margin of dumping is calculated by the Commerce Department. Estimated duties in the amount of the dumping are collected from importers at the time of importation. Countervailing duties are intended to offset the unfair subsidies that are provided by foreign governments and benefit the production of a particular good. The USITC, an independent agency, will determine whether the domestic polyester textured yarn industry is materially injured or threatened with material injury by reason of the unfairly traded imports.

Next steps: The Commerce Department is scheduled to reach preliminary determinations in the countervailing duty and antidumping duty investigations on April 26, 2019, and June 26, 2019, respectively, at which point preliminary cash deposit rates will be put in place. The entire investigative process will take approximately one year, with final determinations of dumping, subsidization, and injury likely occurring by the end of 2019.

Product descriptions: The product covered by the petitions is polyester textured yarn, which is synthetic multifilament yarn that is manufactured from polyester (polyethylene terephthalate). Polyester textured yarn is produced through a texturing process, which imparts special properties to the filaments of the yarn, including stretch, bulk, strength, moisture absorption, insulation, and the appearance of a natural fiber. The petitions include all forms of polyester textured yarn, regardless of surface texture or appearance, yarn density and thickness (as measured in denier), number of filaments, number of plies, finish (luster), cross section, color, dye method, texturing method, or packing method (such as spindles, tubes, or beams).

Courtesy: PR News Wire