Packing costs are treated somewhat differently from delivery costs. Rather than subtracting the packing costs from both United States price and normal value to achieve a fair comparison, the Commerce Department subtracts any packing charges from normal value and then adds back the amount of United States packing. Suppose the packing cost for the United States market is $10 and the packing cost for the Mexican market is $8.

 

The total net price for sales to the United States and Canada (after making all other appropriate adjustments), including packing, is $100 in each market. The adjustment for net Mexican price would be: gross price, less Mexican packing, plus United States packing, or $100 — $8 + $10 = $102. In this example, the lower packing cost in Mexico has created a dumping margin (the United States price of $100 is lower than the adjusted Mexican price of $102).

 

This result is consistent with the law. The anti-dumping statute explicitly requires the comparison of United States price and normal value to be on an 'ex factory' basis, packed as if the merchandise were to be shipped to the United States. Thus, the term 'ex-factory price' under United States anti-dumping law really means 'ex-factory price of goods packed for the United States'.

 

As a practical matter, the adjustment for packing costs often does not make much difference. Packing for export to different markets is usually the same. (Rare exceptions do occasionally arise.) Foreign companies also often pack merchandise for sale in the home market and export markets using the same materials. When there is a substantial difference in packing, the adjustment can be more important, but the company does not have a great deal of flexibility in calculating packing costs. Like delivery costs, the costs of packing are usually unambiguous. To the extent possible, the foreign company would like to lower United States packing costs and raise the packing costs used to calculate normal value.

 

The Commerce Department requires packing costs to be calculated on a per-unit basis. When the company subcontracts packing, establishing the per-unit charges that are paid is quite easy as they are usually listed on the invoices. Even when the packing is not subcontracted, foreign companies usually have detailed packing cost figures for each product that they produce. The Commerce Department asks for detailed information about the material, labour and factory overhead costs of packing merchandise for shipment to the United States and to the comparison market. (The Commerce Department does not have a consistent practice with regard to factory overhead. Sometimes Commerce Department includes only variable overhead; sometimes it includes both variable and fixed overhead. Whether or not Commerce Department makes the distinction often depends on what the exporter reports in the response. The distinction normally has no significant effect on the anti-dumping calculation.) Packing materials are usually very easy - most foreign companies keep cost sheets showing the precise cost of packing materials. Packing labour and overhead can be calculated by determining two factors:

 

- The average labour and overhead rates, usually per minute, based on either packing labour and overhead expenses or overall labour and overhead expenses; and

- The per-unit time needed to complete packing, usually drawn from engineering time studies.

 

Multiplying the labour and overhead rates by the per-unit time yields the per-unit cost of packing labour. If the company cannot derive precise per-unit figures from its records, the Commerce Department will accept some allocation of packing costs, generally based on the unit volume or unit weight of the individual products.

 

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