Antidumping duties can be imposed after an administrative procedure (the “Antidumping Investigation”) carried out by the DECOM (Departamento de Defesa Comercial, the Trade Remedies Department of the Secretariat of Foreign Trade of the Ministry of Development, Industry and Foreign Trade – MDIC).

In the antidumping investigation, DECOM will analyze whether there is: (i) dumping in the exports from the investigated origin to Brazil; (ii) injury suffered by the domestic industry; and (iii) a causal link between the dumping and the injury. In case of positive determination for all three elements, antidumping duties may be applied.

Antidumping Duties are a surcharge added to the import duty upon customs clearance, and paid by the importer. The duty varies according to the origin and to the exporting company. Please note that antidumping duties can be imposed at any amount found by the authority as necessary to compensate for the identified dumping (based on the dumping margin) or for the injury caused to the domestic producers (based on the undercutting margin), with no limitations in terms of amounts.

Dumping occurs if a foreign exporter sells the product in the internal market of the exporting country at higher prices than its sales price to Brazil.

The Dumping Margin is calculated by comparing the Normal Value with the Export Price of the product under investigation.

The Normal Value is the producer’s domestic price (i.e. the price of the sales by foreign manufacturers in the foreign market under analysis) in the most recent period of 12 months. If there are no sales in sufficient quantity to determine the related price, the export price of the like product to third countries or the constructed value (based on the cost of production) can be used. In the case of China, there may be a discussion if this origin can be considered a non-market economy or not, providing for the possibility of calculating the normal value on another basis (by means of a so-called “third market economy” country).

The Export Price is the price the foreign producer exports to Brazil. The related analysis covers the most recent period of 12 months.

Injury is based on the assessment of the domestic industry’s performance (which should be understood as a decreasing performance, generally speaking). It includes the drop in sales, profit, output, market share, productivity, return on investments, and degree of utilization of installed capacity; factors affecting domestic prices, including the scale of the dumping margin; and negative effects on cash flow, inventories, employment, wages, domestic industry growth, and ability to attract investment. The analysis of the performance covers the most recent five periods of 12 months each, the last one corresponding to the period of analysis of dumping.

There must also be a significant increase in imports (in absolute quantities or relative to the Brazilian market) from the investigated origin.

In addition, there must be an undercutting margin between the price of the product manufactured in Brazil and the price of the imports. Some cases may be based on the suppression or depression of prices due to the increase in imports.

The Causal Link includes the assessment of other factors that may simultaneously be causing injury to the domestic industry. Such factors include the volume and prices of non-dumped imports, the impact of liberalization policies on the price of domestic industry, reduction of demand, changes in patterns of consumption, restrictive practices in domestic and foreign trade, competition between domestic and imported products, technological progress, export performance, domestic industry productivity, captive consumption, and imports or resale of products imported by the domestic industry.

Upon a positive determination of these elements by DECOM, the antidumping measure is applied through a Resolution by the Chamber of Foreign Trade (CAMEX), and it remains valid for 5 years. The measure can be reviewed at the end of this period (a sunset review), allowing its renewal for subsequent periods of 5 years.

Based on the above said, the definition of the Product under investigation is of utmost importance. This is because it will be the basis for the definition of the domestic industry, its representativeness, the imported volumes, and the exporters involved, and it will delimitate the determinations of dumping, injury, and causation.

In case of more than one producer in Brazil, it is necessary to check if the request for the antidumping investigation is supported by the domestic industry, meaning at least 25% (preferably at least 50%) of the domestic production of the investigated product.