Sheep Industry News June 2023

President’s Notes BRAD BONER ASI PRESIDENT ASI Investigating Trade Case

O n April 25, the ASI Executive Board approved the following motion: to move forward with the preliminary investiga tion on dumping and countervailing duties, with ASI Guard Dog funds only and ASI’s choice of a law firm. On May 3, the Executive Board approved the following motion: that ASI engage the firm of Kelley Drye to conduct a preliminary investigation of lamb imports and violation of U.S. trade laws. The legal agreement with the firm should not obli gate ASI beyond the preliminary investigation. This action was in response to a letter sent to ASI from eight member states and the National Lamb Feeders Association in April who requested ASI investigate if there is any evidence to support a trade case against any country/countries importing lamb into the United States. In the first phase of any successful trade case, the focus is on the affected U.S. industry and whether it can prove it is being materially injured or threatened with material injury; and, if so, whether an increase in imports is a “l cause” thereof. As part of the investigative phase, surveys will be sent to individuals and companies involved in the American sheep industry. If you receive one of these surveys, it is important to please take the time to fill it out. The compiled results we receive will be one of the factors used to determine whether we move forward to a petition or not. All results received will be aggregated and individual company information will remain confidential. The volume of imported lamb imported into the United States has increased during the last several years along with consumer demand for lamb. The result has been that domestic lamb has lost market share to imports, with the vast majority of gains in consumer demand going to imported lamb meat products. That fact in and of itself is not reason enough to win a trade case against importing countries. We must be able to show that the country/countries are “dumping” lamb products into the United States. Dumping occurs when a country or company exports a product at a price that is lower in the foreign importing market than the price in the U.S. market. Dumping can occur also if the U.S. sales prices are below the fully allocated constructed costs plus a reasonable profit in the foreign home market. Therefore, just because imported products are priced below those of similar domestic products in the United States does not meet the definition of “dumping.” In addition, if there is dumping, a duty will be imposed to offset the amount of the “dumping margin.” If it is determined that the dumping margin is low, then the potential low additional duties may not warrant continued efforts to continue with a legal case. If the dumping margins are moderate to high – and therefore the remedy may also be mod erate to high – then pursuing a legal remedy makes much more economic sense. The other potential remedy is a countervailing case. A countervailing duty is a tariff imposed to “offset” or “countervail” foreign government subsidies on certain products or goods. To be successful with this type of case, it would have to be proven that the importing country/countries were subsidizing their producers with government payments of some kind. The level of potential remedy (duty) in this type of case is also subject to the amount of subsidies being provided by the importing country/ countries. The trade law firm we have retained for the investigation phase anticipates the investigation to determine the strength of our case will take between 60 and 90 days. It is important that our investigation remain confidential. Please do not discuss this with suppliers, customers or anyone out side of your company or the participating lamb organizations. If you have any questions, please contact ASI Executive Director Peter Orwick at peter@sheepusa.org or myself. Please, stay tuned as we move down this path. Until then, keep it on the sunny side.

4 • Sheep Industry News • sheepusa.org