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Defending a cost investigation: Minimize the risk of a cost allegation
08/12/2022 07:38
Foreign companies can reduce the risk of a cost investigation by preparing their responses carefully. A foreign company should always keep in mind that the petitioner's lawyers will be searching carefully for any information that can be used to document an allegation of sales below cost. Whenever possible, the company should avoid providing any information that will help in that effort.
It is very difficult to prevent a determined petitioner from developing the cost information necessary to make an allegation of sales below cost. In some cases, petitioners have even hired special consultants, at great expense, to develop independently the costs of producing certain merchandise in a particular country. Nevertheless, foreign companies should prepare their responses to the Commerce Department in a way that does not help the petitioner in its efforts.
Difference-in-merchandise adjustments are particularly difficult, and should be avoided if possible. As a practical matter, however, it has become very difficult to prevent the cost allegation from being made. The current Commerce Department expectations for detailed information to support a difference-in-merchandise adjustment almost always provide petitioners with enough information to make the below cost allegation.
