New antidumping and countervailing duty petition: paper file folders from China, India and Vietnam – consequences for the industry and downstream consumers

On October 12, 2022, the Coalition of Domestic File Manufacturers, a US industry trade group comprised of Smead Manufacturing Company, Inc. and TOPS Products LLC., filed a petition with the US Department of Commerce (DOC) and the US International Trade Commission (ITC) alleging that paper file folders (PFF) from China, India and Vietnam are being sold in the US at less than fair value.  The petition also alleges that that the government of India is providing unfair subsidies to its producers and exporters of PFF to the US.

The companies seek the imposition of antidumping (AD) duties on imports of PFF from China, India and Vietnam, alleging dumping margins ranging from 84.51 percent to 202.26 percent for China, 120.50 percent to 227.88 percent for India and 182.67 percent to 236.38 percent for Vietnam.  The companies also seek the imposition of countervailing (CVD) duties on imports of PFF from India, alleging an unspecified total level of subsidies exceeding one percent.

Under US law, a domestic industry can petition the government to initiate an AD investigation to determine whether an imported product is sold in the US at less than fair value (ie, dumped). A domestic industry may also seek a CVD investigation into alleged subsidization of foreign producers or exporters by a foreign government. AD/CVD duties may be imposed if the DOC determines that imported goods are dumped and/or unfairly subsidized and if the ITC determines that the domestic industry is materially injured or threatened with such injury by reason of the subject imports.

Products covered by the petition

The products covered by the petition are file folders consisting primarily of paper, paperboard, pressboard or other cellulose material, whether coated or uncoated, that has been folded (or creased in preparation to be folded), glued, taped, bound or otherwise assembled to be suitable for holding documents. The scope includes all such folders, regardless of color, whether or not expanding, and with or without tabs, fasteners, closures, hooks, rods, hangers, pockets, gussets or internal dividers.

Folders covered by the petition, which typically are used to hold letter- and legal-size documents, have the following dimensions in their folded and closed position, a length and width of at least 8 inches and no greater than 17 inches, with no requirements in terms of depth.

The petition covers all varieties of folders, including but not limited to manila folders, hanging folders, fastener folders, classification folders, expanding folders, pockets, jackets and wallets.

The following products are not covered by the petition:

• mailing envelopes with a flap bearing one or more adhesive strips that can be used permanently to seal the entire length of a side such that, when sealed, the folder is closed on all four sides
• binders, with two or more rings to hold documents in place, made from paperboard or pressboard encased entirely in plastic
• non-expanding folders with a depth exceeding 7 inches and that are closed or closeable on the top, bottom, and all four sides (eg, boxes or cartons)
• fashion folders, which are defined as folders with all of the following characteristics: (1) plastic lamination covering the entire exterior of the folder; (2) printing, foil stamping, embossing (ie, raised relief patterns that are recessed on the opposite side) and/or debossing (ie, recessed relief patterns that are raised on the opposite side), covering the entire exterior surface area of the folder; (3) at least two visible and distinct printed or foil stamped colors other than the color of the base paper, and other than the printing of numbers, letters, words or logos, each of which separately covers no less than 10 percent of the entire exterior surface area; and (4) patterns, pictures, designs or artwork covering no less than thirty percent of the exterior surface area of the folder
• portfolios, which are folders having (1) a width of at least 16 inches when open flat, (2) no tabs or dividers, and (3) one or more pockets that are suitable for holding letter-size documents and that cover at least 15 percent of the surface area of the relevant interior side or sides, and
• report covers, which are folders having (1) no tabs, dividers or pockets, and (2) one or more fasteners or clips, each of which is permanently affixed to the center fold, to hold papers securely in place.

The products covered by the petition are provided for under subheading 4820.30.0040 of the Harmonized Tariff Schedule of the United States (HTSUS) and may appear in other HTSUS subheadings, including 4820.30.0020.

The total value of U.S. imports of PFF from China, India and Vietnam was $49.7 million in 2021.

Foreign producers and US importers of PFF

The petition identifies 66 exporters and 69 US importers of PFF from China, India, and Vietnam.  See the lists of exporters and importers from the petition.

Estimated schedule of investigations

AD and CVD proceedings are conducted pursuant to a strict statutory time schedule. Below is an estimated schedule for the AD and CVD investigations on PFF from China, India, and Vietnam.

10/12/2022 – Petition filed

11/28/2022 – ITC preliminary injury determination

1/5/2023 – DOC preliminary CVD determinations, if not postponed

3/13/2023 – DOC preliminary CVD determinations, if fully postponed

3/21/2023 – DOC preliminary AD determinations, if not postponed

5/10/2023 – DOC preliminary AD determinations, if fully postponed

9/29/2023 – DOC final AD and CVD determinations, if both preliminary and final determinations are fully postponed

11/13/2023 – ITC final injury determination, if DOC determinations are fully postponed and DOC final determinations are aligned

11/20/2023 – AD and CVD orders published

Consequences for exporters and US companies

US AD and CVD investigations can result in the imposition of substantial duties in addition to already-applicable duties and tariffs. If the ITC and DOC make affirmative preliminary determinations, US importers will be required to post cash deposits corresponding to the ad valorem AD and/or CVD duty rates determined for the subject merchandise on or after the date on which the DOC’s preliminary determination is published in the Federal Register. In certain circumstances, such duty deposit requirements may retroactively go into effect 90 days prior to the date of publication. The AD and CVD duties will remain in effect if the DOC and ITC make affirmative final determinations.

The DOC calculates specific AD and CVD margins for certain individual foreign producers and exporters selected for examination. Such rates are often much lower than those alleged in the petition. However, foreign producers and exporters that do not participate in the investigations may be subject to substantially higher rates. Duties imposed at these higher rates may force exporters to stop shipping to the US and importers to cease importation of subject merchandise. Thus, interested parties – including US and foreign producers, exporters, importers and downstream US purchasers of the subject merchandise – are encouraged to have a strategy for addressing AD and CVD investigations, including possible participation.

Under the statutory time schedule for AD and CVD investigations, the first decision (ie, the preliminary ITC determination of whether there is a reasonable indication that the US industry is materially injured, or threatened with material injury, by reason of the subject imports) must be made within 45 days after the filing of the petition – in this case, by November 28, 2022. An ITC hearing (ie, a public conference) is held around 21 to 23 days after the filing date. As a result, agency staff work, including the issuance of questionnaires to interested parties, begins almost immediately. Thus, quick action is encouraged to understand the specific implications of these developments as well as to prepare and implement a pertinent strategy.

To learn more, please contact any of the authors.