In preparing its defence of the preliminary injury investigation, a foreign company must consider a number of issues. This section addresses the questions that most commonly arise when a company is deciding whether and how to defend the investigation. The focus is on the general approach to defending the investigation.

Should the company defend the case?

Foreign companies sometimes wonder whether they should even bother to defend a preliminary injury investigation. Since the burden of proof at this stage is so low, the domestic petitioner almost always wins. Under these circumstances, why incur the cost of a defence?

There are two important reasons to defend the Commission's preliminary injury determination, even though the likelihood of success is limited. First, the company might win. Although the percentage of victories at this stage is small, some foreign companies have been successful. Statistics for the current Commission show that about 15% of investigations are terminated at the preliminary stage. More broadly over time, the rate of negative determinations at the preliminary stage has varied from 10% to 20%.

Since a victory at the preliminary determination means the investigation comes to an immediate end, it is worth the effort to try. The cost of defending the preliminary determination is small compared to the cost of defending the rest of the anti-dumping investigation.

Second, the Commission preliminary is a chance to define the arguments that might be crucial at the Commission final. If the foreign company does not participate in the preliminary investigation, the domestic industry is free to define the key issues however it wishes. With the investigation framed in the wrong terms, the Commission may not collect the data that the foreign company requires to prove its key arguments. It is therefore important to participate in shaping the form of the investigation.

Who should defend the case?

The company must assemble an effective defence team. Once the right team is assembled, most of the defence work can be handled by the team. Unlike the Commerce Department phases of the anti-dumping investigation, the injury investigations usually do not require a great deal of work by the foreign company. Most of the burden falls on the customers in the United States - whether related or unrelated - who import the merchandise under investigation. Those customers must complete detailed importers' questionnaires.

The foreign company must decide whether it will participate actively in the case itself, or leave this task to its United States subsidiary or importers. All injury investigations focus on imports into the United States market, their competition with the domestic products, and the condition of the United States industry. In most cases, United States subsidiaries (or unrelated importers if there are no subsidiaries) have more data and information with which to formulate arguments regarding the situation in the United States market and the condition of the domestic industry. Thus it is common for foreign companies to allow a subsidiary or importer to assume principal responsibility for the defence of the Commission case. Of course, such a decision assumes the foreign company has confidence in the subsidiary or importer and the team of professional advisers with whom they expect to work on the defence effort.

What is the role of outside advisers?

A defence before the Commission relies much more heavily on outside professional advisers than does the defence before the Commerce Department. Company accountants and staff do not need to collect large amount of data. The Commission itself collects most of the information in the form of questionnaires to domestic producers, importers and foreign producers. Based on this information, and any other information collected from public sources by the parties, the professional advisers prepare the best possible arguments that the United States industry is not suffering any injury because of the imports. Companies generally use two types of professional advisers. First, lawyers usually coordinate the defence effort. Since the Commission applies legal standards to decide whether or not there is injury, lawyers play an active role in this process. Moreover, because the Commission decisions often result in court appeals, and only lawyers are allowed to argue before the Court of International Trade, companies usually find it more efficient to have a lawyer involved from the beginning of the process. Usually the same lawyer handles both the Commission and Commerce Department phases of the defence, but companies sometimes use a different lawyer for each phase.

Second, economists often assist in the defence effort. Although the Commission applies legal standards, it applies these standards to economic facts. The Commission team handling the case always includes an investigator, a lawyer, and an economist. The team defending the foreign company should have the same expertise. Moreover, the role of the economist on the team has been expanding in recent years, as some Commissioners (many of whom are not lawyers) apply increasingly sophisticated economic analysis in their decision-making process. Under these circumstances, more and more foreign companies are adding an economist to their team of professional advisers. Typically the lawyers handling the case interview and hire an economist or an economic consulting firm, and assign them specific projects relating to the overall defence. Depending on the issues involved in the case, different types of economic analysis might be necessary. The lawyer must find an economist with expertise in the appropriate areas. The lawyer must also choose between an economist with an academic reputation, and an economist affiliated with a consulting firm. The former may have a better academic reputation, but the later may have more experience in handling Commission investigations.

In some cases, the economist actually supervises the defence of the Commission case. Sometimes lawyers without a great deal of experience before the Commission hire an economic consulting firm with much more experience; soon the economist is handling the overall defence. The Commission has no rules requiring the use of lawyers, so foreign companies may use economists or any other adviser that they wish. It is only when the outcome of the Commission case is challenged in court that lawyers must be used.

Should the company cooperate with the other companies involved?

Another important issue is whether the foreign company should coordinate and cooperate with the other companies and countries involved in the investigation. There are several considerations in favour of cooperation. First, cooperation ensures consistency among the arguments made by the various respondents. Second, cooperation can decrease the cost of hiring an economist, since several or all of the respondents can share the expense. Third, the lawyers representing the various parties can divide the work among themselves to avoid repetition, and thus reduce the cost of the defence to individual companies. Fourth, foreign companies generally prefer to maintain harmonious relations with their foreign competitors, especially when fighting a common battle.

As a practical matter, all the foreign industries targeted by an unfair trade case are going to either succeed or fail together. The Commission's overall determination will apply to a country unless that country can: (1) argue that its imports are 'negligible' and thus cannot be cumulated with other countries subject to the investigation; (2) argue that its imports do not have a 'reasonable overlap' of competition with other import sources or domestic sales, and thus cannot be cumulated with other countries; or (3) otherwise qualify for some exception to cumulation (such as certain Caribbean countries).

Although countries sometimes organize combined defences to minimize costs, more often each country has its own lawyer during Commission proceedings. Within a country, individual companies sometimes share the same lawyer and sometimes hire individual lawyers. As a practical matter, the countrywide defence at the Commission will be the same. Unlike individual countries, which might have special issues to consider or arguments to make, individual companies within a country face the same legal challenge. Since injury determinations are for countries, not companies, the defence must be countrywide.

It often happens, however, that individual companies decide to hire their own lawyers for a Commerce Department defence, and then have those lawyers handle the Commission phase as well. In such a case, it is imperative that the companies and their counsel cooperate. It makes sense for the foreign industry to designate one of the lawyers to take the role of coordinating the defence, and for the other lawyers to cooperate with the joint defence.

Source: Business Guide to Trade Remedies in the United States: Anti-dumping, countervailing and safeguards legislation practices and procedures