December 12, 2007 CNFI AD Lecture Outline by Eric Y. Wang, Hunton & Williams

Transcription

1 December 12, 2007 CNFI AD Lecture Outline by Eric Y. Wang, Hunton & Williams I. U.S. AD Procedures a. Regulatory Requirement - Injury, Dumping, and Causation b. International Trade Commission ( ITC ) - Injury or Threat of Injury ( c. Department of Commerce ( DOC ) - Dumping ( II. The Basics - What Is Dumping a. Price Comparison and What Else? b. DOC Questionnaire - Sections A, B, C, D & E ( 1. Section A - Corporate Structure, Accounting Practice, and Others 2. Section B - Home Market Sales 3. Section C - U.S. Sales 4. Section D - Cost of Production v. Factor of Production 5. Section E - Further Manufacturing in the U.S. c. Market Economy v. Non-Market Economy d. Key Concepts III. Margin Calculation a. Market Economy 1. Investigations 2. Reviews b. Non-Market Economy IV. Reviews and Other Issues a. Administrative Reviews b. New-Shipper Reviews c. Bona Fide Sales and the Current Trend d. Legal System Difference - Common Law v. Civil Law

2 INTERNATIONAL LAW FIRM Antidumping Investigation Procedure Timetable Petition Filed ITC DOC Prelim. Conference, 21 days after petition Prelim. Determination, 45 days after petition Initiation of Investigation, 20 days after petition. Negative Affirmative Investigation continues, DOC issues questionnaire. Case Terminated Regular Timetable Extended Timetable DOC Prelim. DOC Prelim. 160 days after petition 210 days after petition Regular Extended Regular Extended Timetable Timetable Timetable Timetable DOC Final Deter. DOC Final Deter. 75 days after DOC prelim. 135 days after DOC prelim. ITC Final Hearing 2 weeks before ITC Final. Regular Timetable Extended Timetable ITC Final Deter. ITC Final Deter. 45 days after DOC Final 75 days after DOC Final Negative Affirmative DOC issues the antidumping order within 7 days from Case Terminated the ITC Final Determination.

3 Overview of Antidumping and Countervailing Duty Law BY ERIC Y. WANG

4 Basics of Trade Remedies

5 Our Firm Founded in 1901, Hunton & Williams has a significant international presence. More than 900 attorneys in 19 offices have served clients in over 100 countries around the world.

6 World Offices Offices Atlanta Austin Bangkok Brussels Charlotte Dallas Hong Kong Knoxville London Los Angeles McLean Miami New York Norfolk Raleigh Richmond Singapore Washington

7 WTO Uruguay Round 1994 GATT Uruguay Round agreements Creation of WTO All WTO members follow WTO trade remedy agreements Antidumping (AD) Countervailing duties (CVD) Safeguards

8 What is Dumping? B. DUMPING = EXPORT PRICE< NORMAL VALUE 1. Export Price Export Sales Price Constructed Export Price Sales 2. Normal Value Home-market Sales Third-country Sales Constructed Value

9 What is a Non Market Economy? Country where it is impossible to distinguish between the State and the Private Sector: China Vietnam Cuba North Korea Laos Market prices and costs are not usable, so must construct a comparison price Dumping analysis based on hypothetical prices and costs from a country like the target country Calculated rates can vary wildly

10 What is Material Injury? Investigating authority considers the following: Sales Market Share Profits Return on Investment Capacity Utilization Production Investment Employment Prices

11 What is Causal Link? Investigating authority considers the following: Volume of Imports Lost Sales Price Suppression or Depression Import Penetration Levels Relationship of the Dumping Margins to the Margin of Underselling

12 What is a Countervailing Duty? Import duty assessed to offset injurious subsidies A. THREE CRITERIA 1. Subsidies 2. Material Injury or Threat of Material Injury or Material Retardation 3. Causal Link

13 What are Material Injury/Causal Link? 1. Material Injury, or Threat of Material Injury of Material Retardation AND 2. Causal Link BOTH ARE SAME AS IN DUMPING

14 What is a Subsidy? THREE CRITERIA 1. Financial Contribution by the Government 2. Financial Benefit to Recipient 3. Financial Benefit is Specific Government loans, tax holidays, tax deductions, duty exemptions for equipment, excessive duty drawback, government supplied goods and services ALL INVOLVE FINANCIAL CONTRIBUTION BY GOVERNMENT AND BENEFIT TO RECIPIENT

15 What is a Specific Subsidy? Targeted at a particular industry, region or company(ies) Exporters Strategic Industries Regions and Municipalities

16 Can a Non Market Economy Subsidize Its Industry? REMEMBER: Non-Market Economy is where State and Private Sector are Commingled. So how can one calculate the benefit received by the company? What is a subsidy in a non-market economy? Export-related vs domestic subsidies Investment incentives? Duty/VAT refunds? Preferential loan rates? US countervailing duty case on Coated Paper from China is test Could result in countries imposing AD and CVD on Chinese or Vietnamese products

17 American Style of Litigation Substantial documentation of all steps of process More legalistic and less political influence Compromise results are not encouraged AD/CVD duties can be applied retroactively (importer not certain of actual amount of duties accessed until 1-2 years later) AD/CVD duties based on actual extent of dumping/subsidization AD/CVD duties applied indefinitely Process is costly for agency and parties

18 Overview of Antidumping Investigations

19 Overview of Antidumping Investigations How Is Investigation Started: Normally Initiated by the U.S. Department of Commerce ( DOC ) based on a petition from a U.S. producer, a group of U.S. producers, or a U.S. labor union. Self-Initiation: Under extremely rare circumstances, DOC may self-initiate an investigation. Sequence of Investigation: After the case is initiated, an antidumping investigation will involve the following four stages:

20 Overview of Antidumping Investigations Four Stages of Antidumping Investigations Preliminary Determination of Injury Preliminary Determination of Dumping Final Determination of Dumping Final Determination of Injury

21 Timeline for Antidumping Investigations Day Day 210, if extended Day 345, if both preliminary and final are extended Day 390, if DOC preliminary and final are extended Day 397, if DOC preliminary and final are extended Event Petition is filed DOC Initiation ITC Preliminary Determination DOC Preliminary Determination DOC Final Determination ITC Final Determination DOC issues antidumping duty order

22 Preliminary Determination of Injury Deadline: Preliminary U.S. International Trade Commission ( ITC ) Determination: 45 days after receipt of the petition. Standard: whether there is a reasonable indication of material injury, or threat thereof, as a result of dumped imports. Injury may be interpreted differently for apparel cases. How Does ITC Determine Injury?: factors as lost sales, price suppression, layoffs, increasing inventories, decreasing shipments, low capacity utilization, and reduced profits (or losses).

23 Preliminary Determination of Injury Hearing: Prior to making the preliminary determination, the ITC holds an informal public hearing approximately mid-point in this 45-day period. Negative Determination: Investigation ended. Affirmative Determination: Investigation goes to DOC for determination of dumping.

24 Preliminary Determination of Dumping Timing of DOC Preliminary Determination: 140 days after the case is initiated, although a 50-day extension is possible in a complicated case. Basis of Determination: Information contained in detailed responses to questionnaires that are sent to the major foreign producers of the investigated merchandise (usually those constituting between 60 to 80 percent of a country s exports of the subject product to the United States).

25 Preliminary Determination of Dumping Basis of Calculation: DOC calculates the difference between normal value of the merchandise to a foreign producer s ex-factory prices to customers in the United States. When Does Dumping Occur: Dumping occurs if the producer s normal value is greater than its ex-factory U.S. price.

26 Preliminary Determination of Dumping Effect of Affirmative DOC Preliminary Determination: DOC requires U.S. Customs and Border Protection ( Customs ) to suspend liquidation (not calculate final duties owed). Who is Liable for Antidumping Duties: The importer of the merchandise must post a bond or cash to cover potential antidumping duties that may be assessed later.

27 Preliminary Determination of Dumping Important Date: The date on which the suspension of liquidation occurs is the key date for enforcement of the law. Critical Circumstances: The dumping law does not provide for a retroactive duty assessment except in unusual situations (i.e., when critical circumstances are found to exist).

28 Preliminary Determination of Dumping Timing: If critical circumstances are found, then retroactive duty applies only to entries that are unliquidated as of the date on which the affirmative preliminary determination is published in the Federal Register. The retroactive duty period is 90 days prior to the preliminary determination official publication date. Effect of Negative Determination: Customs does not suspend liquidation, but investigation is not terminated. The investigation then proceeds to the DOC s final determination.

29 Final Determination of Dumping DOC Final Determination: 75 days after its preliminary determination, although a 60-day extension is possible. Hearing: Before making its final determination, however, the DOC allows all foreign and U.S. parties to request a hearing and to submit comments and legal arguments pertaining to the investigation.

30 Final Determination of Dumping Effect of Negative DOC Determination: The investigation is terminated. Effect of Affirmative DOC Determination: Company-specific estimated dumping margins. ITC would conduct a final injury determination.

31 Final Determination of Injury Standard for Final ITC Determination: Whether the U.S. industry is being materially injured (or threatened with material injury) by reason of the dumped imports. (Note that this may be interpreted differently for apparel cases) Timing: If Affirmative DOC Preliminary Determination: ITC must make its final determination of injury before the later of:

32 Final Determination of Injury 120 days after an affirmative preliminary determination by the DOC, or 45 days after an affirmative final determination by the DOC. If DOC s Preliminary Determination Was Negative: the ITC s final determination is due 75 days after the final affirmative determination by the DOC.

33 Injury Phase U.S. International Trade Commission Information Examined: Are imports from Vietnam causing material injury to the U.S. industry or threat thereof? What is material injury? What is causation? Underpricing Depressing prices Lost sales

34 Injury Phase U.S. International Trade Commission Questionnaires: Sent to U.S. producers, importers, purchasers and Vietnamese producers. Critical Importance Of Purchaser Participation: Purchasers information and testimony are critical to disprove the allegations. Hearing: The ITC holds a hearing and accepts testimony and economic presentations.

35 Post-Investigation Procedures Antidumping Duty Order: If the ITC and DOC both issue final affirmative determinations concerning injury and dumping, respectively, DOC publishes an antidumping duty order in the Federal Register. Impact of AD Order: Importers must post a cash deposit equal to the estimated dumping margin set in the DOC s final determination. (surety bonds no longer allowed).

36 Post-Investigation Procedures Administrative Review: The DOC will, upon request, periodically conduct administrative reviews of the AD order for purposes of: (A) calculating the exact dumping margin for each exporter on entries covered by that review, and (B) recalculating the duty deposit rate for future entries.

37 Post-Investigation Procedures Final Liquidation of Entries: If review is requested, DOC will order Customs to liquidate entries at dumping margin found in review. If no review is requested, DOC will order Customs to liquidate entries based on the estimated duties deposited. Review Process: Continues indefinitely until the order is either completely or partially revoked. An individual company may ordinarily request that it be revoked from an order if it can show no dumping for three administrative review periods in a row.

38 Post-Investigation Procedures Sunset Review: On the fifth anniversary of the antidumping order, the DOC and the ITC are required to determine if revocation of the antidumping order would likely to lead to the continuation or recurrence of dumped imports and of material injury to the domestic industry by reason of the dumped imports. If both the DOC and the ITC make negative findings, then the order is revoked.

39 Summary of Department of Commerce Procedures

40 Antidumping Investigation Procedures: Issuance of Antidumping Questionnaire DOC Questionnaire: DOC will issue questionnaires to companies selected to respond to the questionnaire ( Respondents ). The questionnaire is long and detailed and is divided into the following sections: Section A: Information on organization, extent of central government control of export operations, accounting and sales practices and general information about sales of the subject merchandise.

41 Antidumping Investigation Procedures: Issuance of Antidumping Questionnaire Section B: Not applicable to non-market cases. Section C: Information on U.S. sales of subject merchandise. Section D: Factors of Production Deadline: The normal response deadline is thirty days from issuance, with a possible two-week extension.

42 Antidumping Investigation Procedures: Petitioner Comments and Supplemental Questionnaires Who Sees a Company s Information: DOC and petitioner s counsel. Pursuant to an administrative protective order, or APO, petitioner s counsel from disclosing a respondent s confidential information. Even if inadvertently disclosed, the petitioner s counsel will be sanctioned. Petitioner s counsel will submit comments to DOC on areas that they believe are deficient or areas in which petitioner believes that the respondent has used an inappropriate methodology.

43 Antidumping Investigation Procedures: Petitioner Comments and Supplemental Questionnaires Supplemental Questionnaires: Based on comments from petitioner, and after independent review, DOC will issue a supplemental questionnaire. The length and intensity: varies based on the quality of the data that a respondent submits and the quality of the review by both petitioner and DOC. Deadline for Responding: Normally two weeks, with the possible extension of an additional two weeks. Note: DOC can issue more than one supplemental questionnaire.

44 Antidumping Investigative Procedures: Verification Verification: After the preliminary determination, DOC conducts an on-site audit of the data submitted by the respondent. Purpose: verify the accuracy of the information submitted and verify that the respondent has not omitted any relevant information. Sales Verification: If sales are made direct to U.S., then verification will occur at export factory; if through affiliate in U.S., could occur in U.S.

45 Antidumping Investigative Procedures: Legal Briefs and Hearings Factors of Production: Will occur at factory or head office of company. Preparation: Extremely important to be well prepared ahead of time. Normally, attorney assisting company prepares the company one week prior to the verification. Verification Reports: Shortly after DOC completes its verifications, it will issue verification reports.

46 Legal Briefs and Hearing - Continued Briefs: Based upon these reports, along with any other legal issues that may exist, both the petitioner and the respondent can submit briefs to DOC (called case briefs ) Reply Briefs: Within five days, each party can rebut the other party s brief. DOC will hold a public hearing (if requested).

47 Respondent Selection

48 Selection of Mandatory Respondents Who Responds To Questionnaire: All producers or exporters, unless it is not practicable to do so. Due to its limited resources, the Department often determines that it is not practicable to review all known producers or exporters. If it is not practicable for the Department to investigate all known producers or exporters, the antidumping law allows the Department to limit the number of respondents in one of two ways:

49 Selection of Mandatory Respondents Identification of Producers Selection of the Largest Producers. This is the method used in nearly all cases by the Department to select mandatory respondents when it is not able to investigate all producers or exporters due to limited resources. The Department typically attempts to investigate producers accounting for at least 60 percent of the exports to the United States.

50 Selection of Mandatory Respondents Identification of Producers Sampling. Alternatively, the Department can select a sample of exporters, producers, or types of products that is statistically valid based on the information available to the Department at the time of selection. Not used often due to complexity of choosing a valid sample.

51 Selection of Mandatory Respondents Identification of Producers How Does DOC Determine The Largest Exporters?: DOC issues a mini-section A questionnaire. Primarily requests information regarding the volume and value of the producer/exporter s shipments of subject merchandise to the United States.

52 Selection of Mandatory Respondents Identification of Producers Non-Investigated Producers: In NME case, producers that are not investigated normally are assigned the country-wide rate, which is quite high. Separate Rates Application: If producer shows no government control, assigned a margin equal to the weighted average of all mandatory respondents (excluding de minimis margins and facts available margins), which is generally lower than the countrywide rate. Application must be filed within 30 days of publication of initiation notice if company wishes to secure right to amend application. Must be filed within 60 days to be considered at all.

53 Non-Market Economy (NME) Methodology

54 When and Why is NME Methodology Used? DOC Does Not Trust Sales In Home Market: In an NME, U.S. law presumes that home market sales are untrustworthy because home market prices are not based on the usual market signals, but instead are based on political decisions by central planners. Factors of Production: The DOC calculates normal value in an NME based in part on factors of production in a surrogate country, i.e., estimated costs if the product were produced in a market economy of comparable economic development.

55 Separate Rates Presumption of Governmental Control: In an NME proceeding, the DOC presumes that all companies within the country are subject to governmental control and should be assigned a single antidumping rate unless the respondent demonstrates the absence of both de jure and de facto governmental control over its export activities.

56 Absence of De Jure Control An absence of restrictive stipulations associated with an individual exporter s business and export licenses. Any legislative enactments decentralizing control of companies. Any other formal measures by the government decentralizing control of companies.

57 Absence of De Facto Control Whether the export prices are set by, or subject to, the approval of a government authority. Whether the respondent has authority to negotiate and sign contracts and other agreements. Whether respondent has autonomy from government concerning management. Whether the respondent retains the proceeds of its export sales and makes independent decisions regarding disposition of profits or financing of losses.

58 Factors of Production Factors of Production: What are they?: Hours of labor required. Quantities of raw materials employed. Amounts of energy and other utilities consumed. Representative capital costs. Freight costs for inputs.

59 Information Used to Value Factors How Determined: Publicly available information from a single surrogate country, except for labor. Exception: Where a factor is purchased from a market economy supplier and paid in a market economy currency, DOC will use the price paid to the market economy supplier if those market economy purchases constitute 33 percent of all purchases of that factor. Note: Purchases from India, South Korea, Thailand, and Indonesia are not eligible for use as market economy purchases. Labor: The DOC will use regression-based wage rates reflecting relationship between wages and national income in market economy countries.

60 Labor Rates for Vietnam Labor Rate Currently, the Labor Rate for Vietnam is 0.65 USD/hr. Due to an advantageous change in the way the DOC calculates labor rates, it is expected that Vietnam s labor rate will go down significantly. In fact, the DOC has preliminarily announced that the new labor rate for Vietnam will be 0.36 USD/hr. Labor rates are revised annually.

61 Surrogate Country Which Country Used as Surrogate?: Country must have level of economic development comparable to that of the NME country. Primary emphasis on per capita GDP as measure of economic comparability. Country must have significant producers of comparable merchandise. The DOC usually selects Bangladesh as a surrogate country in cases involving Vietnam.

62 Antidumping Duty Proceedings Non-Market Economies Importance of Retaining Information: All information provided is subject to audit by DOC. Imperative that the Company Retain the Appropriate Records Failure to Retain the Appropriate Documentation Often Leads to the Imposition of a High (even Prohibitive) Dumping Margin for that Company

63 Required Company Records (NME) Required Categories of Documents: Separate Rates (Absence of Governmental Control) U.S. Sales Documents U.S. Sales Expense Documents Factors of Production

64 Separate Rates Information Required For Separate Rates: Business Licenses (all issuances) Business Registration (all issuances) Proof of Citizenship, such as Passport (if entity is market economy, or market-economy owned) Audited Financial Statements Tax Returns

65 Information Needed For Separate Rates - Continued Proof of Ownership (e.g., shareholder certificates) Minutes of Meetings of General Shareholders meetings and Board of Directors Contracts, such as Land-Use and JV Export Certificates (if applicable) Organizational Chart Legal Structure Chart

66 U.S. Sales Information Required For U.S. Sales: Sales Invoices Bills of Lading Packing Lists Purchase Orders Sales Contracts Negotiation Documents (e.g., correspondence) Payment Records

67 U.S. Sales Expenses Information Required For U.S. Selling Expenses: Freight Invoices Customs Entry Documents (if applicable) Brokerage/Handling Invoices Credit and Debit Notes Expense Payment Records Royalty, Warranty, Technical Service, Commission Agent Agreements (if applicable)

68 Factors of Production Records Required For Factors of Production: Engineering Schematics Bills of Materials Inventory Records Material Input Purchase Invoices Energy Usage Invoices Factory Worker Man-Hours Processing Times (per Machine) Byproduct Sales Invoices

69 Non-Market Economy (NME) Calculation Methodology

70 Dumping Margin Calculation Methodology Non Market Economy Margin Calculation Methodology: Step 1: Calculate net price for each U.S. sale Step 2: Weight average together the net prices of each U.S. control number (the "product used for matching purposes as defined by DOC) Step 3: Calculate the normal value based on factors of production for U.S. control number Step 4: Calculate per unit margin for each U.S. control number

71 Dumping Margin Calculation Methodology - Continued Step 5: Multiply per unit margin by quantity of U.S. control number Step 6: Sum all dumping margins (e.g., including positive and negative margins for all control numbers) Step 7: Divide total of dumping margins by value of U.S. sales to obtain overall weighted average dumping margin Step 8: Determine whether overall margin is greater than 2%; if so, there is dumping

72 Dumping Margin Calculation Methodology - Continued Step 9: If overall dumping margin calculated by DOC in the final determination is less than 2%, then investigation is terminated for producer See sample calculation

73 Sample Margin Calculation U.S. Sales Price US Price: Model: Producer/Exporter: Shipping Terms: Price: Woven Shirt Supplier to U.S. Retailer FOB HCMC, Vietnam 7.5 USD/Woven Shirt

74 Sample Margin Calculation Normal Value (Direct Materials) I. Calculation of Input Costs of Manufacture Direct Materials: Factors of Production Unit Surrogate Value: Cost per piece: (Units per piece) (USD/Unit) Fabric # KG Fabric # KG Fabric # KG Thread KG Elastic KG String KG Pellon KG Labels 2 Number buttons 8 Number Snaps 2 Number Buckles 1 Number Zipper 1 Number Total Materials Cost: A

75 Sample Margin Calculation Normal Value (Energy and Labor) Energy Cost: Electricity 0.5 Kilowatt Hours Total Energy Cost: B Labor: Unskilled Direct Labor 1 Hours Skilled Direct Labor 0.75 Hours Indirect Labor 0.4 Hours Total Labor: C Fabric #1 Scrap Recovery KG Fabric #2 Scrap Recovery KG Fabric #3 Scrap Recovery KG D

76 Sample Margin Calculation Normal Value (Packing) Packing Materials Hanger 1 Number Hang tags 2 Number Swift tacs 6 Number Plastic bags 1 Number Tape KG Bag Stickers 0.1 Number Case Labels 0.15 Number Shipping cartons 0.05 KG Total Packing Materials: E Packing Labor Hours F

77 Sample Margin Calculation Normal Value Calculation II. Calculation of Normal Value Total Direct Inputs (direct materials (A) + energy (B)): G Direct Labor (C): Packing (materials (E) + labor (F)): Factory Overhead (11.4 percent, from surrogate financial Statements) (Direct Inputs (G)+ Packing Inputs (E)) * surrogate percentage Total Cost of Manufacture: (Direct inputs (G) + Direct Labor (C) + Packing (H) + Factory Overhead (I)) Selling, General and Administrative Expenses (32 percent, from surrogate financial statements) (Total Cost of Manufacture (J) * 32 percent) Interest Expenses (4.6 percent, from surrogate financial statements) (Total Cost of Manufacture * 4.6 percent) Total Cost of Production (COM (J) + SG&A (K)+ INT (L)) Profit (at 14 percent, from surrogate financial statements) (Cost of Production (M) * 14 percent) Cost of Production (M) + Profit (N)) Scrap Value Normal Value (O - D) H I J K L M N O D USD/piece

78 Sample Margin Calculation - Margin NME Margin Calculation Woven Shirt U.S. Net Price: 7.5 Normal Value: Per Unit Margin: Percentage Margin: %

79 Conclusion THANK YOU ERIC Y. WANG Hunton & Williams SINGAPORE

80 A-583-XXX Investigation POI: 4/1/0X - 3/31/0X Proprietary Document GIIO4: DATE: MEMORANDUM FOR: THROUGH: FROM: RE: March 26, 200X The File Thomas Futtner Program Manager AD/CVD Enforcement XXX XXX XXX XXX Analysts Group II, Office IV AD/CVD Enforcement Verification of the Sales Responses of [COMPANY NAME] for the Antidumping Duty Investigation of [PRODCUT] from Taiwan This memorandum identifies the Department of Commerce s (the Department s) verification procedures and findings in the verification of [COMPANY NAME]. The Department examined documentation at [COMPANY NAME] s headquarters in Taiwan, from January 28, 200X, through February 1, 200X, in order to verify information contained in the sales questionnaire responses submitted by [COMPANY NAME] in the above-referenced investigation. Lists of the sales exhibits and verification participants are in Appendices I and II, respectively.

81 VERIFICATION AGENDA I. INTRODUCTION Procedures: We reviewed the minor corrections to the responses resulting from verification preparation. Results: [COMPANY NAME] identified the following corrections to its reported data: 1) [COMPANY NAME] identified certain canceled and returned home market sales incorrectly included in its original home market database. We reviewed the invoices for the eleven canceled and returned sales to verify that the sales had been canceled and returned. Out of [ %] reported home market sales, these sales accounted for [ %]. For additional information, see Exhibit 1A. 2) [COMPANY NAME] submitted a revised quantity and value chart to incorporate the changes in the quantity and value data resulting from the canceled and returned sales. For additional information, see Exhibit 1B. 3) For packing expense corrections, [COMPANY NAME] revised the production quantity that was submitted in its original response to match [COMPANY NAME] s daily production reports. We verified the newly reported figure by checking the monthly quantities reported by [COMPANY NAME] against its monthly production journals. We took the October monthly production journal as an exhibit. [COMPANY NAME] also revised the calculation of recycled materials. For a detailed discussion of our examination of this correction, please see the Packing Expense section of the verification report below. For additional information, see Exhibit 1C. 4) [COMPANY NAME] recalculated its inventory carrying cost on a productspecific basis, instead of the company-wide basis that was submitted in Exhibit 7 of [COMPANY NAME] s Sections B and C response. For a detailed discussion of our examination of this correction, please see the Inventory Carrying Cost section of the verification report below. For additional information, see Exhibit 1D. 5) [COMPANY NAME] presented corrections to U.S. inland freight for 20 US sales. It corrected the misallocation of freight costs involving shipments of [PRODUCT] with more than one sale on the same truck. For a detailed discussion of our examination of this correction, please see the US Inland Freight section of the verification report below. For additional information, see Exhibit 2