By Leah Scarpelli, Partner, ArentFox Schiff LLP
A significant development has emerged for importers and producers in the specialty food sector: a new antidumping (AD) and countervailing (CVD) duty case has been filed against oleoresin paprika imports from India. Rezolex, Ltd. Co., a U.S. producer of oleoresin paprika, has alleged that imports from India are being sold in the United States at less than “normal value” and are unfairly subsidized by the Indian government. AD/CVD duties will be imposed if the US Department of Commerce (DOC) determines that such alleged dumping and subsidization is occurring and if the US International Trade Commission (ITC) determines that there is “material injury” (or the threat thereof) by reason of the dumped and/or subsidized imports. The imposition of AD/CVD duties on oleoresin paprika imports could potentially alter the competitive landscape for this product in the U.S. market.
The initiation of this case is particularly noteworthy for companies that import oleoresin paprika from India to the United States, as the imposition of additional duties could significantly increase costs and disrupt established supply chains. The list of producers and importers named in the petition has been circulated. While all stakeholders are encouraged to review to determine if they may be directly affected, all importers of in scope oleoresin paprika will be liable for any potential AD/CVD duties ultimately imposed. Per the petition, the written description of products within the scope of this investigation is as follows:
The merchandise covered by the scope of this investigation is the coloring additive oleoresin paprika (ORP). ORP is a viscous, highly colored liquid in various shades of red or orange made from the extract of Capsicum peppers. Covered merchandise includes all ORP, regardless of pepper variety, with an American Spice Trade Association (ASTA) value of at least 500 or a color unit (CU) value of at least 20,000 as determined by spectrophotometric measurement. The Chemical Abstracts Service (CAS) Registry numbers for ORP are 68917-78- 2 and 84625-29-6; the Center for Food Safety and Applied Nutrition (CFSAN) number is 977006-45-3; the Flavoring Extract Manufacturers’ Association (FEMA) number is 2834; and the E number is E160c. Subject ORP may also be referred to by other product names, including, but not limited to, paprika oleoresin, oleoresin of paprika, paprika extract, extract of paprika, paprika oil, or paprika essential oil.
Subject ORP may be blended with oil or water prior to importation or may be imported in its crude or unstandardized form. The scope includes all ORP meeting the specifications above regardless of whether or not blended with or soluble in oil or water, and regardless of weight, pungency, quality, or solvent content. Further, the scope includes crude or unstandardized ORP extracted or produced in India that has been blended, finished, packaged, or otherwise processed in a third country, if the blending, finishing, packaging, or processing performed would not otherwise remove the merchandise from the scope if performed in India.
The merchandise subject to this investigation is classified in the Harmonized Tariff Schedule of the United States (HTSUS) under subheadings 3203.00.8000 and 3301.90.1010. Subject merchandise may also enter under HTSUS subheading 1301.90.9190, 1302.19.9140, and 3205.00.0500. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of this investigation is dispositive.
The specialty food industry, already grappling with a range of tariff issues, now faces additional uncertainty as this case progresses through the government’s investigative process. Importantly, once initiated by the DOC and the ITC, there are several quick deadlines, including the submission of questionnaire responses and a preliminary staff conference (hearing) at the ITC. Participation in the ITC investigation presents an opportunity for affected companies to provide input regarding the potential impact of imports on the market for oleoresin paprika in the U.S., which can help inform the ITC’s decision-making process and ensure that the broader implications for the specialty food sector are fully considered.
For further information, please contact SFA Member Education.