By determining the appropriate 'like product', the Commission determines the relevant United States production to be examined. The next question that must be answered by the Commission is which United States producers of the like product should be included in the particular 'United States industry' to be analysed.

When analysing this question, the Commission first starts with a universe of all United States producers of the product (that is, all companies that have production facilities in the United States). The Commission then decides whether appropriate circumstances exist to exclude from this universe those United States producers that are either affiliated with any of the targeted foreign exporters or actually import the targeted product themselves.

Excluding a company from the domestic industry

The anti-dumping law is designed to protect United States producing industries, not companies that just happen to have some production facilities located in the United States. The increasing globalization of United States industries has created situations where a company that appears to be part of the domestic producing industry may in fact be more foreign than American. If the Commission finds that a company's true interests lie with importing, not domestic production, the Commission has the discretion to exclude that company from the domestic industry.

Whether a particular United States producer should be excluded from the composition of the United States industry to be examined in an anti-dumping injury proceeding is entirely within the discretion of the Commission based upon the facts presented in the case. The primary factors that the Commission examines in analysing whether appropriate circumstances exist to exclude a particular producer (or producers) include:

- The percentage of domestic production attributable to the importing (or affiliated) producer;

- The reason that the United States producer has decided to import the targeted merchandise; that is, whether the firm benefits from selling the imports or whether the United States producer must import the targeted product in order to enable it to continue production and compete in the United States market;

- Whether inclusion of this producer would skew the overall data on the United States industry; and

- The ratio of import shipments to United States production of the producer and whether the primary interest of the producer lies in domestic production or in importation.

If the above criteria have been satisfied, the foreign company may be able to argue that at least part of the petitioning domestic industry should be excluded. This strategy can be an effective way to exclude some companies that have been experiencing problems, and thus have the domestic industry show better performance. When the foreign company first learns of the petition, it can use its own information on the production and sourcing practices of its United States competition to evaluate whether some members of the petitioning domestic industry should be eliminated.

The final decision to exclude a company is subject to the Commission's discretion, not a strict legal standard. The Commission staff collects information on these factors, but only if one of the parties raises the issue. It is important, therefore, for the foreign company and its lawyers to evaluate this issue early in the investigation, and decide whether there is a strong enough basis to raise the issue with the Commission.

Even if there is a factual basis for excluding certain companies, it may not be in the best interests of the foreign company to make this argument. If a domestically based manufacturer benefits from lower priced imports, it may well be more profitable than the other domestic companies. Including such a company could reduce the appearance of injury. The foreign company and its lawyers therefore may argue that the related party does not conduct its operations differently from any other United States based industry, and should be considered part of the United States domestic industry. Of course, the domestic industry is likely to make the opposite argument. As is so often true in Commission investigations, companies can find themselves on different sides of an issue, depending on the circumstances.

Regional industries

To isolate the impact of imports and to maximize their effect on the domestic industry, the petitioner may try to limit the injury investigation to a 'regional industry'. By doing so, the petitioner can avoid an analysis of the effect of the imports on the entire United States market, where the effect may be somewhat diluted. To establish a regional industry, the Commission must find that:

- The domestic producers sell 'all or almost all' of their production of the like product to customers within the regional market, and not to a national market;

- Customers within the regional market do not buy a significant amount of the like product from domestic producers outside the region; and

- The imports under investigation are concentrated within the region.

Even though the Commission must determine that 'all or almost all' of the producers are materially injured - as opposed to a finding that a 'majority' is injured - it is usually easier for the Commission to find injury when the impact of the imports is concentrated into a single region.

The foreign company normally attempts to prove that no regional industry exists. To win this argument, the company need only establish that its imports do not all arrive at a single point of entry, or that the 'region' claimed by the petitioner is not isolated from other sections of the United States market. With the trend toward broad product distribution creating larger and larger markets, the foreign company should usually be able to refute a petitioner's claim for a regional industry. Ultimately, however, the outcome depends on the particular facts. Regional industries are quite unusual in anti-dumping cases. As a practical matter, most markets in the United States are national, and rarely are the costs of transportation relative to the total price of the product significant enough to create regional markets. Indeed, although petitioners sometimes argue for regional markets, since the adverse impact of imports may be felt more sharply in one region, the Commission usually finds national markets. In addition, anti-dumping orders based on regional markets are harder to administer, as the Commerce Department is supposed to apply duties, as much as possible, only to those imports going into the region for which the Commission found injury. For both these reasons, the United States rarely imposes dumping duties only for a regional industry.

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