Proposed Rule2022-25216
Determining the Existence of a Particular Market Situation That Distorts Costs of Production
Primary source
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Published
November 18, 2022
Issuing agencies
Commerce DepartmentInternational Trade Administration
Abstract
Enforcement and Compliance (E&C), of the Department of Commerce (Commerce), administers the antidumping duty (AD) and countervailing duty (CVD) AD/CVD trade remedy laws of the Tariff Act of 1930, as amended (the Act). Section 773(e) of the Act provides for Commerce to address, in its antidumping calculations, the existence of a particular market situation (PMS), such that the cost of materials and fabrication do not accurately reflect the cost of production in the ordinary course of trade. Commerce seeks public comments as it considers revisiting its PMS methodology and issuing a new regulation that would identify information that Commerce should take into consideration and should not take into consideration in determining whether a PMS exists that distorts the cost of production. Commerce also seeks comments as it considers adjustments to calculations when the amount of distortion in the cost of production caused by a PMS cannot be quantified based on the record before it.
Full Text
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<title>Federal Register, Volume 87 Issue 222 (Friday, November 18, 2022)</title>
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[Federal Register Volume 87, Number 222 (Friday, November 18, 2022)]
[Proposed Rules]
[Pages 69234-69235]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-25216]
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DEPARTMENT OF COMMERCE
International Trade Administration
19 CFR Part 351
[Docket No. 221115-0239]
RIN 0625-AB23
Determining the Existence of a Particular Market Situation That
Distorts Costs of Production
AGENCY: Enforcement and Compliance, International Trade Administration,
Department of Commerce.
ACTION: Advanced notice of proposed rulemaking.
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SUMMARY: Enforcement and Compliance (E&C), of the Department of
Commerce (Commerce), administers the antidumping duty (AD) and
countervailing duty (CVD) AD/CVD trade remedy laws of the Tariff Act of
1930, as amended (the Act). Section 773(e) of the Act provides for
Commerce to address, in its antidumping calculations, the existence of
a particular market situation (PMS), such that the cost of materials
and fabrication do not accurately reflect the cost of production in the
ordinary course of trade. Commerce seeks public comments as it
considers revisiting its PMS methodology and issuing a new regulation
that would identify information that Commerce should take into
consideration and should not take into consideration in determining
whether a PMS exists that distorts the cost of production. Commerce
also seeks comments as it considers adjustments to calculations when
the amount of distortion in the cost of production caused by a PMS
cannot be quantified based on the record before it.
DATES: Comments must be received no later than December 18, 2022.
ADDRESSES: Submit electronic comments only through the Federal
eRulemaking Portal at <a href="https://www.Regulations.gov">https://www.Regulations.gov</a>, Docket No. ITA-2022-
0012. Comments may also be submitted by mail or hand delivery/courier,
addressed to Lisa W. Wang, Assistant Secretary for Enforcement and
Compliance, Room 18022, Department of Commerce, 1401 Constitution Ave.
NW, Washington, DC 20230. An appointment must be made in advance with
the APO/Dockets Unit at (202) 482-4920 to submit comments in person by
hand delivery or courier. All comments submitted during the comment
period permitted by this document will be a matter of public record and
will generally be available on the Federal eRulemaking Portal at
<a href="https://www.Regulations.gov">https://www.Regulations.gov</a>. Commerce will not accept comments
accompanied by a request that part or all of the material be treated
confidentially because of its business proprietary nature or for any
other reason. Therefore, do not submit confidential business
information or otherwise sensitive or protected information.
Any questions concerning the process for submitting comments should
be submitted to Enforcement & Compliance Communications office at (202)
482-0063 or <a href="/cdn-cgi/l/email-protection#115452527e7c7c647f78727065787e7f625165637075743f767e67"><span class="__cf_email__" data-cfemail="e0a5a3a38f8d8d958e89838194898f8e93a09492818485ce878f96">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: Scott McBride at (202) 482-6292 and
Hendricks Valenzuela at (202) 482-4750.
SUPPLEMENTARY INFORMATION:
Background on Particular Market Situation
In 2015, pursuant to the Trade Preferences Extension Act (TPEA),
section 771(15) of the Act was amended to provide that Commerce
consider sales to be outside the ``ordinary course of trade'' when
there are situations in which Commerce ``determines that the particular
market situation prevents a proper comparison with the export price or
constructed export price.'' Further, section 773(e) of the Act was
amended to provide that in determining the ``costs of material and
fabrication or other processing of any kind employed in producing the
merchandise, during a period which would ordinarily permit the
production of the merchandise in the ordinary course of trade,'' for
determining constructed value, ``if a particular market situation
exists such that the cost of materials and fabrication or other
processing of any kind does not accurately reflect the cost of
production in the ordinary course of trade,'' Commerce ``may use
another calculation methodology under this subtitle or any other
calculation methodology.'' The Act does not (1) define a particular
market situation (``PMS''), (2) identify the information which Commerce
should consider in determining the existence of a PMS that ``does not
accurately reflect the costs of production in the ordinary course of
trade,'' or (3) provide Commerce with guidance as to the information
which Commerce should consider in determining if a market situation is,
or is not, ``particular.''
The legislative history of the cost-based particular market
situation reflects that Congress intended for Commerce to not only
identify such situations, but to also effectively address them in its
calculations. For example, in advocating for the TPEA language, one
[[Page 69235]]
member of the House of Representatives argued that the legislation
would ``empower'' Commerce ``to be able to disregard prices or costs of
inputs that foreign producers purchase if the Department of Commerce''
determined that those input values were ``subsidized'' or otherwise
outside the ordinary course of trade.\1\ Likewise, on the United States
Senate floor, a Senator explained that the proposed legislation would
``guarantee that Americans can find a more level playing field as we
compete in the world economy. . . .'' \2\ The Senator emphasized that
this legislation would help stop United States workers and
manufacturers from ``being cheated'' by foreign industries that were
not playing fair and ``illegally subsidizing'' the production of
certain products.\3\
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\1\ See Congressional Record-House, H4666, H4690 (June 25,
2015).
\2\ See Congressional Record-Senate, S2899, S2900 (May 14,
2015).
\3\ Id.
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Since the Act was amended, Commerce has in certain instances
identified a PMS and adjusted its calculations in response, which has
been challenged before both the U.S. Court of International Trade and
the U.S. Court of Appeals for the Federal Circuit (CAFC). One matter
which has been at issue before the courts is the information Commerce
should consider in determining the existence of a PMS. That matter came
before the CAFC this past year in Nexteel v. United States, in which
the CAFC held that Commerce's finding that a PMS existed in Korea
during the period of review was unsupported by substantial evidence.\4\
In analyzing Commerce's PMS determination, the CAFC appeared to reach
at least four conclusions. First, a PMS which distorts costs, as
referenced in the Act, must cause costs to deviate from what they would
have otherwise been in the ordinary course of trade.\5\ Second, a PMS
must be particular to certain producers or exporters, inputs, or the
market where the inputs are manufactured.\6\ Third, if there is a claim
of a subsidy or government interference, there should be evidence that
the producer or seller of the input at issue received, or should have
received, that subsidy or government assistance, and that there is some
form of impact on the price of the input as a result of that subsidy or
government interference.\7\ Finally, Commerce is not required to
quantify a distortion in costs by the PMS to find the existence of a
PMS, but if Commerce is able to quantify the distortion, such a
quantification may help support a finding of the existence of a PMS.\8\
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\4\ See Nexteel Co. v. United States, 28 F.4th 1226 (Fed. Cir.
2022).
\5\ Id. at 1234.
\6\ Id. at 1234, 1236.
\7\ Id. at 1235-36.
\8\ Id. at 1234.
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In light of the CAFC's holding and analysis in Nexteel, as well as
our experience in administering the PMS provision over the past several
years, we have determined it is appropriate to revisit Commerce's
approach in certain instances to analyzing and determining the
existence of a PMS that distorts costs of production. In revisiting
Commerce's approach, we have considered that the public and Commerce
may benefit from the issuance of a regulation that addresses the
information which Commerce should consider, or need not consider, in
determining if a PMS exists that distorts costs of production. We also
believe that a regulation that addresses the adjustments Commerce may
make to its calculations if it determines the existence of a PMS that
distorts costs of production might prove beneficial. We are therefore
soliciting public comments on certain aspects of our PMS analysis
pursuant to that exercise.
Request for Comments
We are issuing this advanced notice of proposed rulemaking to
inform the public that Commerce is considering issuing a PMS regulation
and to invite comments on that new regulation. Specifically, Commerce
is inviting parties to provide comments on three issues: (1) identify
information which they believe Commerce should consider in determining
if a PMS exists which distorts the costs of production if that
information is reasonably available and relevant to the PMS allegation;
(2) identify information which they believe Commerce should not be
required to consider when determining if a PMS exists, regardless of
the PMS allegation; and (3) provide comments on adjustments which
Commerce may make to its calculations when it determines the existence
of a PMS, but the record before it does not allow for the
quantification of cost distortions.
Dated: November 15, 2022.
Lisa W. Wang,
Assistant Secretary for Enforcement and Compliance.
[FR Doc. 2022-25216 Filed 11-17-22; 8:45 am]
BILLING CODE 3510-DS-P
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