This release is issued by King & Spalding: The U.S. Department of Commerce ("Commerce") has issued a final ruling in a review of the countervailing duty ("CVD") order on subsidized imports of citric acid and certain citrate salts from China entered into the United States during 2011. The December 27 announcement upholds preliminary rulings issued in June and November of this year, and confirms the existence of significant countervailable subsidies. With this ruling, the duties on imports from Chinese producers/exporters RZBC Co., Ltd., RZBC Imp. & Exp. Co., Ltd., RZBC (Juxian) Co., Ltd., and RZBC Group Co., Ltd. (collectively, "RZBC"), will increase from 5.27% of customs value to 35.87% of customs value.

As a result of this final ruling, U.S. importers will be required to pay additional duties to U.S. Customs and Border Protection ("Customs") on imports they made in 2011 from RZBC. They will also be required to increase cash deposits on future imports from RZBC as of the date this final ruling is published in the Federal Register.

U.S. importers of citric acid are required to pay antidumping duty ("AD") and CVD cash deposits at the time of entry at rates that depend on the identity of the exporter. To the extent that the final rates exceed the estimated cash deposits, importers are required to pay additional duty assessments, plus interest. In 2011, the combined AD/CVD cash deposit rates on imports from China were 5.27% for RZBC, 17.14% for Yixing Union Biochemical Co., Ltd., 119.99% for Laiwu Taihe Biochemistry Co., Ltd , and 119.99% to 230.80% for all other exporters. Cash deposits, however, are only estimates of the importer's liability for paying AD/CVD duties. Now that Commerce's preliminary ruling in this CVD review is confirmed, U.S. importers will owe Customs the difference between the 5.27% cash deposits paid at time of entry in 2011 and the 35.87% duties assessed by Commerce in this review, plus interest.

The AD and CVD orders cover all forms of citric acid, sodium citrate, potassium citrate, and crude calcium citrate produced in China. These products are subject to the orders even if they are repackaged in and transshipped through a third country. U.S. importers are required to exercise reasonable care to make sure that AD/CVD cash deposits are paid on citric acid originating from China and that the entry documents filed with Customs report accurate information. Blending and further processing in a third country will not change the country of origin unless the citric acid is substantially transformed into a new product.

The domestic citric acid industry continues to work with Customs to identify attempts to circumvent the orders through transshipments, false customs declarations, and similar schemes. In one such instance, the U.S. government fined an importer of citric acid $17 million in unpaid duties and penalties.

King & Spalding
Joseph W. Dorn, 202-626-5445
jdorn@kslaw.com