Proposed Rule2024-15086
Regulations Enhancing the Administration of the Antidumping and Countervailing Duty Trade Remedy Laws
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Published
July 12, 2024
Issuing agencies
Commerce DepartmentInternational Trade Administration
Abstract
Pursuant to Title VII of the Tariff Act of 1930, as amended (the Act), the U.S. Department of Commerce (Commerce) proposes to update its trade remedy regulations to enhance the administration of the antidumping duty (AD) and countervailing duty (CVD) laws. Specifically, Commerce proposes to codify existing procedures and methodologies and create or revise regulatory provisions relating to several matters including the collection of cash deposits, application of antidumping rates in nonmarket economy proceedings, calculation of an all-others' rate, selection of examined respondents, and attribution of subsidies received by cross-owned input producers and utility providers to producers of subject merchandise.
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<title>Federal Register, Volume 89 Issue 134 (Friday, July 12, 2024)</title>
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[Federal Register Volume 89, Number 134 (Friday, July 12, 2024)]
[Proposed Rules]
[Pages 57286-57334]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-15086]
[[Page 57285]]
Vol. 89
Friday,
No. 134
July 12, 2024
Part IV
Department of Commerce
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International Trade Administration
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19 CFR Part 351
Regulations Enhancing the Administration of the Antidumping and
Countervailing Duty Trade Remedy Laws; Proposed Rule
Federal Register / Vol. 89, No. 134 / Friday, July 12, 2024 /
Proposed Rules
[[Page 57286]]
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DEPARTMENT OF COMMERCE
International Trade Administration
19 CFR Part 351
[Docket No. 240703-0184]
RIN 0625-AB25
Regulations Enhancing the Administration of the Antidumping and
Countervailing Duty Trade Remedy Laws
AGENCY: Enforcement and Compliance, International Trade Administration,
Department of Commerce.
ACTION: Proposed rule; request for comments.
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SUMMARY: Pursuant to Title VII of the Tariff Act of 1930, as amended
(the Act), the U.S. Department of Commerce (Commerce) proposes to
update its trade remedy regulations to enhance the administration of
the antidumping duty (AD) and countervailing duty (CVD) laws.
Specifically, Commerce proposes to codify existing procedures and
methodologies and create or revise regulatory provisions relating to
several matters including the collection of cash deposits, application
of antidumping rates in nonmarket economy proceedings, calculation of
an all-others' rate, selection of examined respondents, and attribution
of subsidies received by cross-owned input producers and utility
providers to producers of subject merchandise.
DATES: To be assured of consideration, written comments must be
received no later than September 10, 2024.
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-2023-
0003. Comments may also be submitted by mail or hand delivery/courier,
addressed to Ryan Majerus, Deputy Assistant Secretary for Policy &
Negotiations, Performing the Non-Exclusive Functions and Duties of the
Assistant Secretary for Enforcement and Compliance, Room 18022, U.S.
Department of Commerce, 1401 Constitution Avenue NW, Washington, DC
20230. An appointment must be made in advance with the Administrative
Protective Order (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 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 the material be
treated as confidential 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 (E&C) Communications office at
<a href="/cdn-cgi/l/email-protection#e2a7a1a18d8f8f978c8b8183968b8d8c91a29690838687cc858d94"><span class="__cf_email__" data-cfemail="c5808686aaa8a8b0abaca6a4b1acaaabb685b1b7a4a1a0eba2aab3">[email protected]</span></a> or to John Van Dyke, Import Policy Analyst,
at <a href="/cdn-cgi/l/email-protection#4d27222523633b2c23293426280d393f2c2928632a223b"><span class="__cf_email__" data-cfemail="94fefbfcfabae2f5faf0edfff1d4e0e6f5f0f1baf3fbe2">[email protected]</span></a>. Inquiries may also be made of the E&C
Communications office during business hours at (202) 482-0063.
FOR FURTHER INFORMATION CONTACT: Scott D. McBride, Associate Deputy
Chief Counsel for Trade Enforcement and Compliance, at (202) 482-6292,
or Jesus Saenz, Attorney, at (202) 482-1823.
SUPPLEMENTARY INFORMATION:
General Background
Title VII of the Act vests Commerce with authority to administer
the AD/CVD trade remedy laws. Section 731 of the Act directs Commerce
to impose an AD order on merchandise entering the United States when it
determines that a producer or exporter is selling a class or kind of
foreign merchandise into the United States at less than fair value
(i.e., dumping), and material injury or threat of material injury to
that industry in the United States is found by the U.S. International
Trade Commission (ITC).
In addition, section 701 of the Act directs Commerce to impose a
CVD order when it determines that a government of a country or any
public entity within the territory of a country is providing, directly
or indirectly, a countervailable subsidy with respect to the
manufacture, production, or export of a class or kind of merchandise
that is imported into the United States, and material injury or threat
of material injury to that industry in the United States is found by
the ITC.
Section 771(5)(B) of the Act defines a countervailable subsidy as
existing when ``a government or any public entity within the territory
of a country provides a financial contribution; provides any form of
income or price support; or makes a payment to a funding mechanism to
provide a financial contribution, or entrusts or directs a private
entity to make a financial contribution, if providing the contribution
would normally be vested in the government and the practice does not
differ in substance from practices normally followed by governments;
and a benefit is thereby conferred.'' To be countervailable, a subsidy
must be ``specific'' within the meaning of section 771(5A) of the Act.
The Act provides numerous disciplines which Commerce must follow in
conducting AD and CVD proceedings. For example, sections 703(d)(1)(B),
705(d), 733(d)(1)(B), 735(c), and 751 of the Act direct Commerce to
order U.S. Customs and Border Protection (CBP) to collect cash deposits
as security pursuant to multiple determinations in its proceedings,
until Commerce orders the assessment of AD or CVD duties. Likewise,
sections 705(c)(1)(B), 705(c)(5), 735(c)(1)(B)(i), and 735(c)(5) of the
Act set forth the means by which Commerce determines the AD margin or
countervailable subsidy rate to be applied to imported subject
merchandise exported or produced by entities not selected in an
investigation for individual examination. In addition, sections
777A(c)(2) and 777A(e)(2)(A) of the Act allow Commerce to limit the
number of exporters or producers to be individually examined, while
section 782(a) allows Commerce to select voluntary respondents.
In accordance with these and other statutory provisions, this
proposed rule codifies and enhances the procedures and practices
applied by Commerce in administering and enforcing the AD and CVD laws.
Explanation of the Proposed Rule
Commerce proposes several updates to the AD and CVD regulations
found at part 351.\1\ The proposed changes are summarized here and
discussed in greater detail below. Commerce invites comments on all
proposed regulatory changes and clarifications, including suggestions
to improve them.
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\1\ Commerce's proposed rule seeks to codify several distinct
procedures and practices under various sections of the Act. As such,
Commerce generally intends the rule's provisions to be severable and
to operate independently from each other. Commerce's intent that the
rule's provisions be severable is demonstrated by the number of
distinct regulatory provisions addressed in this rulemaking and the
structure of the preamble in addressing them independently and
supporting each, respectively, with Commerce's statutory
interpretation, agency practice, and court precedent. Accordingly,
Commerce intends each portion of this rule to be severable from each
other but has included all of the proposed provisions in one
rulemaking for purposes of enhancing Commerce's trade remedy
regulations.
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<bullet> Revise the Subpart A heading of part 351 to reflect the
provisions to which it applies.
<bullet> Revise Sec. 351.104(a)(7) to reflect that preliminary and
final issues and decision memoranda issued in investigations and
administrative
[[Page 57287]]
reviews before the implementation of Commerce's filing system,
Antidumping Duty and Countervailing Duty Centralized Electronic Service
System (ACCESS), may be cited in full in submissions before Commerce
without placing the memoranda on the record.
<bullet> Revise Sec. 351.107 to accurately and more holistically
describe Commerce's establishment and application of cash deposit
rates, including explaining that some cash deposit rates are calculated
on an ad valorem basis at importation, while others are calculated on a
per-unit basis. The proposed regulation would also describe situations
in which Commerce applies cash deposit rates in a producer/exporter
combination and the process by which a producer/exporter combination
may be excluded from provisional measures and an AD or CVD order as a
result of a calculated de minimis cash deposit rate following an
investigation. Furthermore, the regulation would set forth an AD cash
deposit hierarchy for imports from market economies, an AD cash deposit
hierarchy for imports from nonmarket economies, and a CVD cash deposit
hierarchy. Finally, revised Sec. 351.107 would describe the effective
date for cash deposit rates following the correction of ministerial
errors in investigations and administrative reviews.
<bullet> Codify and update Commerce's methodology for determining
if an entity exporting merchandise from a nonmarket economy should
receive an antidumping duty rate separate from that of the nonmarket
economy entity. New Sec. 351.108 would provide that in a nonmarket
economy, one dumping margin may apply to all exporting entities from
that economy. It would explain that if an entity located in a nonmarket
economy is majority-owned by the government, the government can control
its production, management, sales and export activities and it will not
receive a separate rate. It would also describe additional scenarios in
which an entity in the nonmarket economy will not receive a separate
rate if the government owns 50 percent or less of the entity's shares
and (1) the government has a disproportionately larger degree of
influence or control over the entity's production and commercial
decisions than the ownership share would normally entail and the
Secretary determines that the degree of influence or control is
significant; (2) the government has the authority to veto or control
the entity's production and commercial decisions; (3) government
officials, employees or representatives have been appointed as officers
and have the ability to make or influence production or commercial
decisions; or (4) the entity is required by law to maintain or in fact
maintains one or more government officials, employees, or
representatives in positions of authority who have the ability to make
or influence production or commercial decisions. Further, it would also
codify Commerce's analysis for determining if an entity is de jure and
de facto separate from the government for purposes of export
determinations, including an additional consideration of whether the
entity, regardless of government ownership, must maintain government
officials, employees or representatives in positions of authority who
have the ability to make or influence decisions on export activities.
In addition, the proposed rule would allow for consideration of any
other information on the record suggesting that the government has
direct or indirect influence over the exporter's export activities.
Finally, proposed Sec. 351.108 would clarify the requirements for a
separate rate application or certification and would suggest a revision
to deadlines for separate rate applications of fourteen days following
publication of the notice of initiation in the Federal Register.
<bullet> Add Sec. 351.109 to address Commerce's methodologies for
selecting respondents in investigations and administrative reviews,
including the steps Commerce would take to determine the number of
exporters or producers that is practicable to investigate or review for
calculating the all-others rate in investigations and for calculating a
rate for unexamined exporters and producers. This provision would allow
for a single country-wide subsidy rate, provide a waiver from
examination if both petitioners and the potential respondent agree to
non-selection of that potential respondent, and clarify that a
nonmarket economy entity rate is not the same thing as an all-others
rate. In addition, Sec. 351.109 would move the existing voluntary
respondent provisions from Sec. 351.204 to Sec. 351.109 and update
and revise the regulatory provisions applicable to the selection of
voluntary respondents and deadlines for voluntary respondent
submissions.
<bullet> Modify Sec. 351.204 to move Sec. 204(d)(1)-(3) to
section 109 and move Sec. 204(e)(1)-(3) to section 107. Further,
update and simplify Sec. 204(a) and (c), and move Sec. 204(e)(4) to
Sec. 204(d), along with a new subheading for that paragraph and a new
heading for section 204 itself.
<bullet> Modify Sec. 351.212(b) to clarify that entries may be
assessed either on an ad valorem value or per-unit basis.
<bullet> Modify Sec. 351.213(f) to indicate that Commerce may
select respondents, including voluntary respondents, in the context of
an administrative review.
<bullet> Modify the header of Sec. 351.214 to emphasize that the
regulations cover both new shipper reviews and CVD expedited reviews,
each derived from different statutory authorities.
<bullet> Modify Sec. 351.301(b)(2) to require that interested
parties submitting new information to rebut, clarify or correct factual
information on the record must identify in writing the specific
information being rebutted, clarified, or corrected and explain how the
new factual information rebuts, clarifies or corrects that existing
factual information.
<bullet> Modify Sec. 351.301(c)(3) to revise the time in which
surrogate value submissions in nonmarket economy country antidumping
proceedings and benchmark information in countervailing duty
proceedings may be submitted in investigations and administrative, new
shipper, and changed circumstances reviews.
<bullet> Modify Sec. 351.306(a)(3) to clarify that Commerce may
share business proprietary information with CBP officials involved in
negligence, gross negligence, or fraud investigations.
<bullet> Add paragraphs (g), (h), and (i) to Sec. 351.308 to
reflect that pursuant to section 776 of the Act, Commerce may apply
partial or total facts available, may use previously calculated dumping
margins and countervailable subsidy rates in separate segments of the
same proceeding without the need to corroborate those margins or rates,
may use the highest dumping margin available as adverse facts
available, need not estimate what an antidumping or countervailing duty
rate would have been if an entity had acted to the best of its ability,
and need not consider the ``commercial reality'' of an interested party
in applying adverse facts available.
<bullet> Revise Sec. 351.309(c) and (d) to request that parties
include a table of contents, sources such as tribunal decisions and
administrative case determinations in the table of authorities, and a
public executive summary of no more than 450 words for each discrete
issue raised in case briefs and rebuttal briefs. This change would
remove the encouraged inclusion of a five-page summary.
<bullet> Modify Sec. 351.401(f) to reflect that Commerce may treat
both producing and non-producing affiliated parties as a single
collapsed entity.
[[Page 57288]]
<bullet> Add Sec. 351.404(g) to address the filing requirements
for those alleging the existence of a multinational corporation and to
clarify that the multinational corporation provision will not be
applied when the non-exporting country is located in a nonmarket
economy.
<bullet> Add Sec. 351.405(b)(3) to set forth the criteria Commerce
would normally consider in selecting an amount of profit normally
realized by exporters or producers in connection with the sale of same
or similar merchandise in determining constructed value under the
constructed value profit cap.
<bullet> Modify Sec. 351.408(b) to update and enhance Commerce's
selection of economically comparable countries as part of its nonmarket
economy methodology in accordance with sections 773(c)(2)(B) and
773(c)(4)(A) of the Act. In addition to selecting a comparable economy
based on per capita gross domestic product (GDP) or gross national
income (GNI), Commerce could also consider factors including the size
and composition of export activity in certain countries and the
availability, accessibility, and quality of data from those countries
as part of its analysis.
<bullet> Remove current Sec. 351.502(d), (e), and (f) which state
that integrally linked subsidies, agricultural subsidies and subsidies
to small- and medium-sized businesses are not ``specific'' for purposes
of determining the countervailability of a subsidy under the CVD law.
<bullet> Move Sec. 351.502(g) covering disaster relief to Sec.
351.502(d) and add that such relief includes pandemic relief.
<bullet> Amend Sec. 351.502(e) to explain that subsidies that
provide employment assistance to workers grouped in general categories
(such as age, gender, and/or the existence of a disability, veterans,
or unemployment status) will not be considered specific if those
assistance programs are generally available to everyone hired within
those categories without restrictions specific to individual
industries.
<bullet> Remove Sec. 351.502(f) and (g) entirely, as those
provisions are no longer required with the other above-listed edits
incorporated.
<bullet> Add Sec. 351.503(b)(3) to address the general treatment
of the balance or value of contingent liabilities/assets not otherwise
covered in paragraph 503(a) as an interest-free provision of funds and
calculate the benefit using a short-term commercial interest rate.
<bullet> Add Sec. 351.505(a)(6)(iii) to provide an initiation
standard for government-owned policy banks that would find the
threshold for specificity met if a party can sufficiently allege that a
policy bank provides loans pursuant to government policies or
directives.
<bullet> ModifySec. 351.505(b) to remove the term ``otherwise''
from the regulation to bring the language into conformity with other
regulations addressing the treatment of long-term loans.
<bullet> Modify Sec. 351.505(c) to remove paragraphs (c)(3) and
(c)(4) and update paragraph (c)(2) to be the only provision addressing
long-term loans. The benefit for long-term loans would be calculated by
determining the difference between what a party would have paid on a
comparable commercial loan and the actual amount the party paid on a
government loan during a period of investigation (POI) or review (POR),
and then allocating the benefit amount to the relevant sales during the
POI or POR. Consistent with the language of section 771(5)(E) of the
Act, remove sentences in current Sec. 351.505(c)(1) and (c)(2) that
state that the present value in the year of receipt of the loan should
never be permitted to exceed the principal of the loan in our
calculations.
<bullet> Consistent with section 771(5)(E) of the Act, modify Sec.
351.505(e) to remove the sentence ``[i]n no event may the present value
(in the year of receipt of the contingent liability loan) of the
amounts calculated under this paragraph exceed the principal of the
loan.''
<bullet> Modify Sec. 351.509, the regulation addressing direct
taxes, to add a clause stating that the calculation of a benefit under
Sec. 351.509(a)(1) applies to firms located in an area designated by
the government as being outside the customs territory of the
government.
<bullet> Modify Sec. 351.511(a)(2)(i) to provide for the
comparison of a government price to either an actual transaction in the
country in question or to ``actual sales from competitively run
government auctions'' in determining a benchmark price under the
definition of ``adequate remuneration.'' In addition to defining actual
transaction prices, modified Sec. 351.511(a)(2)(i) would also define
``competitively run government auctions.''
<bullet> Complete Sec. 351.512, applicable to the purchase of
goods, which is currently reserved. New Sec. 351.512(a)(1) would
provide that in general, where goods are purchased by the government
from a firm, a benefit will exist if the goods are purchased for more
than adequate remuneration. Proposed Sec. 512(a)(2) would define
adequate remuneration for this provision, including an explanation that
Commerce will use ex-factory or ex-works comparison prices and the
price paid to the firm for the good by the government in order to
measure the benefit conferred to the recipient. Proposed Sec.
512(a)(3) would explain that when the government is both a provider and
purchaser of a good, Commerce will normally measure the benefit by
comparing the price the government sold the good to a firm with the
price the government paid when purchasing the good from the same firm.
Proposed Sec. 512(b) would state that date of receipt of the benefit
will be at the time of receipt of payment for the purchased good, and
Sec. 351.512(c) would address the time period in which Commerce would
allocate the benefit for the purchase of a good.
<bullet> Remove reserved Sec. 351.521 titled ``Import substitution
subsidy,'' because no such regulation is necessary in light of the
definition of an import substitution subsidy found in section
771(5A)(C) of the Act.
<bullet> Replace Sec. 351.521 with a new regulation addressing
export subsidies which exempt, remit, or defer indirect taxes and
import charges on capital goods and equipment. Proposed Sec. 521(a)(1)
would address the benefits received through an export subsidy that
provides for the full or partial exemption or remission of an indirect
tax or an import charge on the purchase or import of capital goods and
equipment. Proposed Sec. 521(a)(2) would address the benefits received
through a deferral of indirect taxes or import charges. Proposed Sec.
521(b) would explain the time of receipt of the benefit in the case of
full or partial exemptions or remissions of indirect taxes or import
charges, as well as the time of receipt of deferral of indirect taxes
or import charges. Finally, proposed Sec. 351.521(c) would explain
that Commerce will allocate the benefit of a full or partial exemption,
remission, or deferral to the year in which the benefit is considered
to have been received.
<bullet> Delete and reserve Sec. 351.522, as it addresses green
light and green box subsidies that lapsed pursuant to section
771(5B)(G) of the Act.
<bullet> Revise Sec. 351.525(b)(6)(iii), which addresses the
attribution of subsidies to holding companies and their subsidiaries.
Specifically, this proposed rule would remove the second sentence of
the provision in Sec. 351.525(b)(6)(iii), which states that if a
holding company merely served as a conduit for the transfer of the
subsidy from the government to a subsidiary of the holding company,
Commerce will attribute the subsidy to products sold by the subsidiary.
The agency would remove this language because it is proposing to modify
the language in the regulation addressing the transfer of subsidies
from cross-owned companies
[[Page 57289]]
in new proposed Sec. 351.525(b)(6)(vi) to state that a transferred
subsidy will be solely attributed to the products produced by the
recipient of the transferred subsidy. This modification would apply to
all cross-owned companies, including holding or parent companies.
<bullet> Revise Sec. 351.525(b)(6)(iv), which currently addresses
the attribution of subsidies to input suppliers. The proposed rule
would revise the subheading to apply to input producers and divide the
paragraph into Sec. 351.525(b)(6)(iv)(A) and Sec.
351.525(b)(6)(iv)(B). Proposed Sec. 525(b)(6)(iv)(A) would use
language similar to the current provision, addressing input producers
that supply a downstream producer. Proposed Sec. 525(b)(6)(iv)(B)
would list several factors that Commerce may consider in determining if
an input product is primarily dedicated to the production of the
downstream product.
<bullet> Move current Sec. 351.525(b)(6)(vi), the definition of
cross-ownership, to a new Sec. 351.525(b)(6)(vii).
<bullet> Move current Sec. 351.525(b)(6)(v), covering the transfer
of subsidies between corporations with cross-ownership producing
different products, to Sec. 351.525(b)(6)(vi) and modify it to address
the transfer of subsidies from any cross-owned corporation. Under this
modification, a transferred subsidy from a cross-owned corporation
would be attributed solely to products produced by the recipient of the
transferred subsidy.
<bullet> Modify Sec. 351.525(b)(6)(v) to cover the attribution of
subsidies to cross-owned corporations providing electricity, natural
gas or other similar utility products. The regulation would provide
that Commerce will attribute subsidies received by a provider of
utility products to the combined sales of the cross-owned producer and
the sales of products sold by the producer of subject merchandise if at
least one of two identified conditions are met.
<bullet> Add a new Sec. 351.525(b)(8) to propose that Commerce
would not tie or attribute subsidies on a plant- or factory-specific
basis.
<bullet> Add a new Sec. 351.525(b)(9) to propose that a subsidy
normally would be determined to be ``tied'' to a product or market when
the authority providing the subsidy was made aware of, or had knowledge
of, the intended use of the subsidy and so acknowledged the intended
use of the subsidy prior to, or concurrent with, the approval or
bestowal of the subsidy.
<bullet> Revise language in Sec. 351.525(b)(1) to reflect that the
attribution regulations now extend to Sec. 351.525(b)(9) and add a
sentence that states that Commerce may limit the number of cross-owned
companies examined under this provision if the facts on the record and
available resources warrant such a limitation.
<bullet> Revise Sec. 351.525(c), which addresses the attribution
of subsidies to trading companies, to address the formula for
cumulating subsidies, both when the trading company exports the
individually examined respondent's merchandise and when the trading
company is the individually examined respondent itself.
<bullet> Add Sec. 351.525(d) to explain Commerce's adjustment of
the ad valorem subsidy rate when a country is experiencing high
inflation, which is defined for this provision as an inflation rate
greater than 25 percent per annum during the relevant period.
<bullet> Replace current Sec. 351.526, which is no longer
relevant, with language codifying Commerce's practice with respect to
subsidy extinguishment from changes in ownership. Proposed Sec. 526(a)
would explain that, in general, Commerce will presume that non-
recurring subsidies continue to benefit a recipient in full over a
particular allocation period notwithstanding an intervening change in
ownership. Proposed Sec. 526(b) would set forth the criteria by which
an interested party may rebut the presumption of the continuation of a
benefit in full over the relevant allocation period. Furthermore,
proposed Sec. 526(c) would explain that if the presumption is
rebutted, the full amount of the benefits from subsidies preceding the
change in ownership would be found to be extinguished, including the
benefits of concurrent subsidies meeting the criteria set forth in
Sec. 351.526(c)(2).
<bullet> Update Sec. 351.104(a)(2)(iii), Sec. 351.214(1)(1),
Sec. 351.214(l)(3)(iii), Sec. 351.301(c)(1), and Sec.
351.302(d)(1)(ii) to correct for cross-citations modified as a result
of this Proposed Rule.
1. Revising Subpart A Heading to Part 351 To Include the Record of
Proceedings, Cash Deposits, Nonmarket Economy Antidumping Rates, All-
Others Rate, and Respondent Selection
Currently, Subpart A to part 351, which covers Sec. Sec. 101-107,
is titled ``Scope and Definitions,'' although it also covers
administrative record requirements and proceedings, as well as cash
deposits. In this Proposed Rule, Commerce proposes the revision of the
cash deposit regulation, as well as the creation of two new regulations
which codify the agency's separate rates and respondent selection
practice and procedures. Accordingly, Commerce proposes changing the
name of Subheading A to ``Scope, Definitions, the Record of
Proceedings, Cash Deposits, Nonmarket Economy Antidumping Rates, All-
Others Rate, and Respondent Selection.''
2. Revising Commerce's Filing Requirements To Allow Citation of
Preliminary and Final Issues and Decision Memoranda Issued Before the
Implementation of Commerce's ACCESS Filing System Without Placing Them
on the Record--Sec. 351.104(a)(7)
On March 25, 2024, Commerce issued a final rule which provided
clarity and procedures for interested parties submitting documentation
to the agency, explaining which documents may be cited without placing
documents from other segments and proceedings on the record and which
documents must be placed on the record to be considered by Commerce in
its analysis and determinations.\2\ Those modifications added Sec.
351.104(a)(7), which currently states that interested parties citing to
public versions of documents which were issued by Commerce in other
segments or proceedings before the implementation of ACCESS must place
copies of those documents on the record because such documents have no
assigned ACCESS barcode number.
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\2\ See Regulations Improving and Strengthening the Enforcement
of Trade Remedies Through the Administration of the Antidumping and
Countervailing Duty Laws, Final Rule, 89 FR 20766, 20768-20773
(March 25, 2024).
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Commerce has reconsidered the scope of public documents to which
Sec. 351.104(a)(7) applies and has determined that public preliminary
and final issues and decision memoranda issued in investigations and
administrative reviews pursuant to Sec. Sec. 351.205, 210 and 213
before ACCESS was implemented need not be subject the requirements of
that provision. Accordingly, this proposed rule would remove the
requirement that such memoranda be placed on the record to be
considered. Citations to these memoranda, like all such citations
relied upon by interested parties in submissions to Commerce, must be
cited in full (albeit without an ACCESS barcode number) and, as set
forth in Sec. 351.104(a)(6), if Commerce determines that a citation is
not cited in full, it may decline to consider and analyze the cited
preliminary or final issues and decision memoranda in its preliminary
and final determinations.
[[Page 57290]]
3. Explaining Commerce's Cash Deposit Procedures and Calculations
Including Producer/Exporter Combination Rates, AD/CVD Hierarchies, and
Effective Dates for Ministerial Errors--Sec. 351.107
Sections 703(d)(1)(B), 705(d), 733(d)(1)(B), 735(c), and 751 of the
Act provide Commerce with the statutory authority to determine cash
deposit rates and order the suspension of liquidation and collection of
cash deposits in antidumping and countervailing duty investigations and
reviews. Specifically, sections 703(d)(1)(B) and 705(d) of the Act
direct Commerce to determine cash deposit rates and issue instructions
to CBP pursuant to preliminary and final determinations in CVD
investigations, and sections 733(d)(1)(B) and 735(c) of the Act direct
Commerce to determine cash deposit rates and issue instructions to CBP
pursuant to preliminary and final determinations in AD investigations.
With respect to section 751 of the Act, various provisions, such as
sections 751(a)(1), 751(a)(2)(C), and 751(d), describe procedures by
which Commerce instructs CBP to suspend liquidation of entries of
merchandise, collect cash deposits, and revoke or terminate the
collection of cash deposits pursuant to the results of different types
of reviews. Commerce proposes a revision to Sec. 351.107(a) that
addresses Commerce's authority to take such actions under the Act.
Proposed Sec. 351.107(b) would establish the general rule that
Commerce will instruct CBP to suspend liquidation of merchandise
subject to an AD or CVD proceeding and apply cash deposit rates
determined in that proceeding to all applicable imported merchandise.
Proposed Sec. 351.107(b) would also establish that, in general, cash
deposits should be calculated in proportion to the estimated value of
the merchandise, as reported to CBP, on an ad valorem basis. This
provision would be similar to the description of the final assessment
of merchandise pursuant to AD and CVD proceedings on an ad valorem
basis as already set forth in Sec. 351.212(b).
In 1997, Commerce promulgated Sec. 351.107 to provide guidance on
the rules for calculating the cash deposit rate.\3\ Since that
rulemaking, Commerce has encountered several scenarios where the
current Sec. 351.107 did not provide guidance in applying a cash
deposit rate or rates. For example, although the 1997 regulations
provide for the assessment of entries on an ad valorem basis, the cash
deposit regulations do not address the similar calculation of cash
deposits. Over the years, relying on statutory and court guidance,
Commerce developed various practices that are reflected in the proposed
Sec. 351.107 revision. Although Commerce normally instructs CBP to
calculate cash deposits on an ad valorem basis, it has also at times
instructed CBP to calculate cash deposit rates on a per-unit basis.
Proposed Sec. 351.107(c)(1) describes the exception to Commerce's
normal ad valorem practice, stating that the calculation of cash
deposits on a per-unit basis might be appropriate if the information
normally used to calculate an ad valorem cash deposit rate is not
available or the use of an ad valorem cash deposit rate is otherwise
not appropriate. For example, it is Commerce's practice to calculate
cash deposits on a per-unit basis when an ad valorem basis will result
in an under-collection of duties.\4\
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\3\ See Antidumping Duties; Countervailing Duties, Final Rule,
62 FR 27296, 27318-19 (May 19, 1997) (1997 Final Rule) (discussing
the finalized cash deposits regulation).
\4\ See Certain Activated Carbon from the People's Republic of
China Final Results of Antidumping Duty Administrative Review; 2010-
2011, 77 FR 67337, (November 9, 2012) and accompanying IDM (Certain
Activated Carbon from the People's Republic of China IDM) at 34
(stating ``the regulation, however, does not proscribe
{Commerce{time} from resorting to other methods of calculating and
assigning assessment and cash deposit rates, and the agency does so
in certain circumstances . . . {Commerce{time} changed the cash
deposit and assessment methodology from an ad valorem to a per-unit
basis because the application of an ad valorem rate based on net
U.S. price would yield an under-collection of duties due to Jacobi's
undervaluing of its United States sales.'').
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Accordingly, to ensure the proper calculation of the cash deposit
rate, Commerce is codifying its practice of relying on reported unit
measurements when relying on reported sales values would result in an
inaccurate cash deposit rate because entered sales values are unknown,
undervalued, or systematically understated.\5\ The regulation explains
that units to which a cash deposit rate may be applied include, but are
not limited to, weight, length, volume, packaging (such as the type or
size of packaging), and individual units of the product itself.
Notably, the U.S. Court of International Trade (CIT) has affirmed
Commerce's use of a per-unit methodology.\6\
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\5\ See id.; see also 1-Hydroxyethylidene-1, 1-Diphosphonic Acid
from the People's Republic of China: Final Results of Antidumping
Duty Administrative Review; 2016-2018, 84 FR 67925, (December 12,
2019) and accompanying IDM (1-Hydroxyethylidene-1, 1-Diphosphonic
Acid from the People's Republic of China IDM) at Comment 5; Wooden
Bedroom Furniture from the People's Republic of China: Final Results
and Final Rescission in Part, 75 FR 50992 (August 18, 2010), and
accompanying IDM (Wooden Bedroom Furniture from the People's
Republic of China IDM) at Comment 17; and Honey from the People's
Republic of China: Final Results and Final Rescission, In Part, of
Antidumping Duty Administrative Review, 70 FR 38872 (July 6, 2005)
and accompanying IDM (Honey from the People's Republic of China IDM)
at Comment 7.
\6\ See Wuhan Bee Healthy Co. v. United States, Slip Op. 2008-61
at 12 (CIT May 8, 2008) (Wuhan Bee).
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Commerce normally calculates a cash deposit rate applicable to all
imported subject merchandise exported by an examined exporter or
produced by an examined producer. Proposed Sec. 351.107(c)(2) would
provide an exception whereby Commerce may apply a cash deposit rate
determined in the current or a preceding examination only to imported
merchandise both produced by an identified producer and exported by an
identified exporter in a producer/exporter combination rather than all
the subject merchandise exported by an examined exporter or produced by
an examined producer. Commerce's regulations already provide for the
application of cash deposit rates to certain producer/exporter
combinations in current Sec. 351.107(b); however, unlike the newly
proposed paragraph, the current regulation addresses only merchandise
where the producer and exporter are not the same entity. The CIT has
held that Commerce has ``broad discretion to determine when and how to
administer combination rates'' in order to prevent the evasion of the
calculated cash deposit rates.\7\ Accordingly, Commerce proposes to
revise and clarify the producer/exporter combination provisions in the
regulation, including the example set forth in proposed Sec.
351.107(c)(2)(i).
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\7\ See Tianjin Magnesium Int'l Co. v. United States, 772
F.Supp.2d 1322,1341 (CIT 2010) (stating, ``Commerce has broad
discretion to determine when and how to administer combination
rates.''); Lifestyle Enter., Inc. v. United States, 768 F. Supp.2d.
1314 (CIT 2011) (stating ``Commerce has a duty to prevent
circumvention of AD law and may do so by imposing combination
rates.'').
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To provide even greater clarity on the application of producer/
exporter combinations, Sec. 351.107(c)(2)(ii)(A) through (D) sets
forth four examples in which Commerce would instruct CBP to apply a
determined cash deposit rate to a producer/exporter combination.
Specifically, Commerce would instruct CBP to collect cash deposits for
producer/exporter combinations in (1) new shipper reviews; \8\ (2) AD
[[Page 57291]]
investigations of exporters or producers from a nonmarket economy; \9\
(3) scope, circumvention, and covered merchandise inquiries when
Commerce has made a determination on a producer/exporter combination
basis; \10\ and (4) any additional segments Commerce deems appropriate
based on the facts of the record.\11\
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\8\ See, e.g., Certain Cut-to-Length Carbon-Quality Steel Plate
Products From the Republic of Korea: Final Results of Antidumping
Duty Administrative Review and New Shipper Review; 2014-2015, 81 FR
62712 (September 12, 2016), (``With respect to Hyundai Steel
Company, the respondent in the new shipper review, the Department
established a combination cash deposit rate for this company
consistent with its practice, as follows . . .'').
\9\ See, e.g., Carbon and Certain Alloy Steel Wire Rod From the
People's Republic of China: Final Determination of Sales at Less
Than Fair Value and Final Affirmative Determination of Critical
Circumstances, in Part, 79 FR 68860, 68861 (November 19, 2014)
(``{Commerce{time} will instruct CBP to require a cash deposit
equal to the weighted-average amount by which the normal value
exceeds U.S. price, with the above-noted adjustments, as follows:
(1) The rate for the exporter/producer combinations listed in the
chart above will be the rate we have determined in this final
determination.'').
\10\ See, e.g., Glycine from the People's Republic of China:
Preliminary Partial Affirmative Determination of Circumvention of
the Antidumping Duty Order and Initiation of Scope Inquiry, 77 FR
21532, 21535 (April 10, 2012).
\11\ For an example of an additional appropriate usage of
combination rates, in Tung Mung Development Co. v. United States,
354 F. 3d 1371, 1380 (Fed. Cir. 2004), affirming Tung Mung
Development Co. v. United States, 219 F. Supp. 2d 1333 (CIT 2002),
the U.S. Court of Appeals for the Federal Circuit (Federal Circuit)
affirmed Commerce's use of a combination rate in addressing
middleman dumping--a situation in which a foreign producer sold
merchandise for less than normal value to a foreign exporter, and
the foreign exporter subsequently sold the merchandise for even less
than normal value to the United States.
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In addition, under another exception to Commerce's normal
application of cash deposit rates to all imported subject merchandise
exported by an examined exporter or produced by an examined producer,
when Commerce determines in an AD or CVD investigation that a
respondent should be excluded from an AD or CVD order, it is Commerce's
long-standing practice to instruct CBP to apply that exclusion on a
producer/exporter combination basis. Sections 703(b)(4)(A) and
733(b)(3) of the Act provide that Commerce shall disregard any
countervailable subsidy rate and any dumping margin, respectively, that
is zero or de minimis in the preliminary determination. Moreover,
sections 705(c)(2) and 735(c)(2) of the Act provide that Commerce shall
``terminate'' the investigation, suspension of liquidation, and
collection of cash deposits for the investigated exporter or producer
when Commerce makes a negative determination based on a zero or de
minimis countervailable subsidy rate or dumping margin for that
exporter or producer. In other words, when a zero or de minimis
countervailable subsidy rate or dumping margin is calculated for an
exporter or producer based on particular investigated producer/exporter
transactions, Commerce's long-standing enforcement of the Act has been
to exclude future imports of merchandise from the disciplines of the AD
or CVD order using those same investigated producer/exporter
combinations. Proposed Sec. 351.107(c)(3) would codify Commerce's
practice of excluding the producer/exporter combination or combinations
examined in the investigation that satisfy those statutory requirements
and identifying that combination or combinations publicly in the
Federal Register.\12\
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\12\ See Common Alloy Aluminum Sheet from Italy: Final
Affirmative Determination of Sales at Less Than Fair Value (LTFV),
86 FR 13309 (March 8, 2021) (stating that ``because the estimated
weighted-average dumping margin for Laminazione is zero, entries of
shipments of subject merchandise produced and exported by this
company will not be subject to suspension of liquidation or cash
deposit requirements.''); see also Common Alloy Aluminum Sheet from
Bahrain, Brazil, Croatia, Egypt, Germany, India, Indonesia, Italy,
Oman, Romania, Serbia, Slovenia, South Africa, Spain, Taiwan and the
Republic of Turkey: Antidumping Duty Orders, 86 FR 22139, 22141
(April 27, 2021) (finding that ``because the estimated weighted
average dumping margin is zero for subject merchandise produced and
exported by Laminazione Sottile S.p.A., entries of shipments of
subject merchandise from this producer/exporter combination are
excluded from the antidumping duty order on subject merchandise from
Italy.'').
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Commerce's current regulations address the exclusion of producers,
exporters, and combinations of nonproducing exporters and producers in
current Sec. 351.204(e)(1)-(3). For purposes of clarity, Commerce
proposes to move the paragraphs found in current Sec. 351.204(e)(1)
through (3) to proposed Sec. 351.107(c)(3)(i) through (iii) and update
the language and examples to better reflect Commerce's practices and
procedures in applying a producer/exporter combination in exclusions
from AD and CVD investigations and orders. Commerce proposes
recognizing that in a preliminary determination, with respect to
entries of subject merchandise for which a producer/exporter
combination has been preliminarily determined to have an individual
weighted-average dumping margin or individual net countervailable
subsidy rate of zero or de minimis, as long as that producer/exporter
combination is identified in the Federal Register, Commerce would not
instruct CBP to suspend liquidation of entries of subject merchandise
or collect cash deposits. Similarly, with respect to final
determinations, proposed Sec. 315.107(c)(3)(ii) states that (1)
Commerce would instruct CBP to exclude a producer/exporter combination
identified in the Federal Register from an AD or CVD order and (2)
resellers of subject merchandise cannot benefit from an exclusion
applicable to a producer/exporter combination determined in an
investigation.
Commerce is also proposing the addition of a fourth paragraph to
Sec. 351.107(c) to address cash deposit instructions that require the
use of a certification. Commerce added Sec. 351.228 to the regulations
in 2021 to require certifications by importers and other interested
parties regarding whether merchandise is subject to an AD or CVD
order.\13\ In accordance with that provision, in certain instances
certifications are required to accompany the payment of cash deposits.
Proposed Sec. 351.107(c)(4) would add a paragraph that states that the
agency may instruct CBP to apply a cash deposit requirement that
reflects the record information and effectuates the administration and
purpose of the certification.\14\
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\13\ See Regulations to Improve Administration and Enforcement
of Antidumping and Countervailing Duty Laws, 86 FR 52300, 52383
(Sept. 20, 2021).
\14\ See, e.g., Certain Uncoated Paper From Brazil, the People's
Republic of China, and Indonesia: Affirmative Final Determinations
of Circumvention of the Antidumping Duty Orders and Countervailing
Duty Orders for Certain Uncoated Paper Rolls, 86 FR 71025, 71027
(December 14, 2021) (``Commerce is continuing to impose a
certification requirement . . . , in order to not be subject to cash
deposit requirements, the importer is required to meet the
certification and documentation requirements described in Appendix
IV for merchandise from Brazil, Appendix VI for merchandise from
China, and VII for merchandise from Indonesia.'').
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Current Sec. 351.107(c)(1) provides guidance for applying cash
deposit rates where entry documents do not identify the producer of
subject merchandise. That paragraph is no longer necessary under this
proposed rule because proposed Sec. 351.107(d) and (e) would set forth
cash deposit hierarchies that provide more detailed guidance regarding
the application of cash deposit rates. Specifically, the hierarchies
set forth in proposed Sec. 351.107(d) and (e) would address the
situation in which a producer and exporter each have different AD or
CVD cash deposit rates and CBP must determine the rate to apply in
collecting cash deposits regarding a given entry of subject
merchandise. When the entry documents do not identify a specific party
(i.e., a producer or exporter) in a step of the proposed cash deposit
hierarchy, the subsequent step of the proposed cash deposit hierarchy
would apply. When the entry documents do not identify any party for
which the Secretary has established a current cash deposit rate, CBP
would be instructed to apply the all-others rate or nonmarket economy
entity rate to entries of the subject merchandise, pursuant to sections
705(c)(5) and 735(c) of the Act
[[Page 57292]]
and proposed Sec. 351.108(b) and Sec. 351.109(f) of Commerce's
regulations. These provisions apply only when Commerce has not
previously established a combination cash deposit rate for the producer
and exporter in question under Sec. 351.107(c)(2).
Commerce routinely articulates a cash deposit hierarchy for market
and nonmarket antidumping proceedings in its determinations based on
the factors listed in proposed Sec. 351.107(d) \15\ and proposes to
codify the antidumping market and nonmarket cash deposit hierarchies
under paragraphs (d)(1)(i) and (ii), respectively.
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\15\ See, e.g., Methionine From Spain: Final Affirmative
Determination of Sales at Less Than Fair Value and Final Affirmative
Determination of Critical Circumstances, 86 FR 38985, 38986 (July
23, 2021) (``we will instruct CBP to require a cash deposit equal to
the estimated weighted-average dumping margin or the estimated all-
others rate, as follows: (1) The cash deposit rate for the
respondent listed above will be equal to the company-specific
estimated weighted-average dumping margin determined in this final
determination; (2) if the exporter is not a respondent identified
above, but the producer is, then the cash deposit rate will be equal
to the company-specific estimated weighted-average dumping margin
established for that producer of the subject merchandise; and (3)
the cash deposit rate for all other producers and exporters will be
equal to the all-others estimated weighted-average dumping
margin.'') and Glass Containers From the People's Republic of China:
Final Affirmative Determination of Sales at Less Than Fair Value, 85
FR 58333, 58337 (September 18, 2020) (``Commerce will instruct CBP
to require a cash deposit equal to the weighted-average amount by
which the normal value exceeds U.S. price as follows: (1) The cash
deposit rate for the exporter/producer combinations listed in the
table above will be the rate identified in the table; (2) for all
combinations of Chinese exporters/producers of subject merchandise
that have not received their own separate rate, the cash deposit
rate will be the cash deposit rate established for the China-wide
entity; and (3) for all non-Chinese exporters of subject merchandise
which have not received their own separate rate, the cash deposit
rate will be the cash deposit rate applicable to the Chinese
exporter/producer combination that supplied that non-Chinese
exporter.'').
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The antidumping duty order cash deposit hierarchy for a market
economy proceeding proposed in Sec. 351.107(d)(1)(i) includes three
steps for determining the applicable cash deposit rate for a given
entry of subject merchandise. Commerce would first determine if it has
already determined a cash deposit rate for the exporter and, if so,
instruct CBP to apply that cash deposit rate to the exporter's entries
of subject merchandise. When such an exporter-specific cash deposit
rate does not exist, proposed Sec. 351.107(d)(1)(i)(B) would provide
that if a cash deposit rate exists for the producer in question,
Commerce would instruct CBP to apply that rate to the entries of
subject merchandise at issue. If the first and second steps do not
yield a result (i.e., Commerce has not previously established a cash
deposit rate for either the exporter or the producer of subject
merchandise), under proposed Sec. 351.107(d)(1)(i)(C) Commerce would
instruct CBP to apply the all-others rate determined in the
investigation of the underlying proceeding, pursuant to section 735(c)
of the Act and proposed Sec. 351.109(f), as the cash deposit rate for
the entries of subject merchandise in question.
For proceedings involving a nonmarket economy country, proposed
Sec. 351.107(d)(1)(ii) would apply. First, under proposed Sec.
351.107(d)(1)(ii)(A), if Commerce has already established a cash
deposit rate for the exporter, such as in an investigation, the agency
would instruct CBP to apply it to the entries of subject merchandise in
question. If Commerce has not established a cash deposit rate for the
exporter, pursuant to proposed Sec. 351.107(d)(1)(ii)(B) Commerce
would instruct CBP to apply the cash deposit established for the
nonmarket economy entity pursuant to proposed Sec. 351.108(a) to the
entries at issue.
Next, proposed Sec. 351.107(d)(1)(ii)(C) would addresses entries
of subject merchandise resold in the United States through a third-
country reseller under proceedings involving a nonmarket economy
country. In that situation, Commerce would normally instruct CBP to
apply the cash deposit rate applicable to either the nonmarket economy
country exporter that supplied the subject merchandise to the reseller
or to an applicable producer/exporter combination, as warranted.
Finally, proposed Sec. 351.107(d)(2) would provide an exception to
the two AD cash deposit hierarchies pursuant to which based on unique
facts in an underlying proceeding. Commerce might determine that an
alternative cash deposit rate (i.e., a cash deposit rate not identified
under proposed paragraph Sec. 351.107(d)(1)) is the most appropriate
cash deposit rate to apply to the entries in question, and accordingly
instruct CBP to apply that alternative cash deposit rate.
In addition to the AD cash deposit hierarchies set forth in
proposed Sec. 351.107(d), proposed Sec. 351.107(e) would establish a
new CVD cash deposit hierarchy that applies when the producer and
exporter in question have differing cash deposit rates. Under proposed
Sec. 351.107(e)(1)(i), when a cash deposit rate is established for
both the producer and exporter of subject merchandise, Commerce would
instruct CBP to apply the higher of the two rates for the entry of
subject merchandise in question. If that step does not apply and a cash
deposit rate exists for the producer but not the exporter of subject
merchandise, Commerce would instruct CBP to apply the producer's cash
deposit rate to the entries in question under proposed Sec.
351.107(e)(1)(ii). If that step does not apply and a cash deposit rate
exists for the exporter but not the producer of subject merchandise,
Commerce would instruct CBP to apply the exporter's cash deposit rate
to the entries of subject merchandise at issue under proposed Sec.
351.107(e)(1)(iii). Finally, if none of those rates exist, Commerce
would instruct CBP to apply the all-others rate determined in the
investigation to the entries of subject merchandise at issue under
proposed Sec. 351.107(e)(1)(iv).
Just as with the AD cash deposit hierarchies' exception found in
proposed Sec. 351.107(d)(2), if Commerce determines that a cash
deposit rate other than that resulting from the CVD cash deposit
hierarchy should apply based on the unique facts in the underlying
proceeding, then under proposed Sec. 351.107(e)(2) Commerce might
instruct CBP to use an alternative methodology in applying cash deposit
rates to entries of subject merchandise.
Proposed Sec. 351.107(f) would address effective dates for amended
preliminary and final determinations and results of review upon the
correction of a ministerial error, in accordance with sections 703,
705(e), 733, and 735(e) of the Act and Sec. 351.224(e) through (g) of
Commerce's regulations. When Commerce amends a preliminary or final
determination in an investigation and the amendment increases the
dumping margin or the countervailable subsidy rate, proposed Sec.
351.107(f)(1) would provide that the new cash deposit rate would be
applied to entries made on or after publication of the amended
determination.\16\
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\16\ See Urea Ammonium Nitrate Solutions from the Republic of
Trinidad and Tobago: Amended Preliminary Determination of Sales at
Less Than Fair Value, 87 FR 12935, 12936 (March 8, 2022) (``Because
these amended rates result in increased cash deposit rates, they
will be effective on the date of publication of this notice in the
Federal Register.'').
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On the other hand, under proposed Sec. 351.107(f)(2), when
Commerce's amends a preliminary or final determination in an
investigation and that amendment results in a decrease of the dumping
margin or the countervailable subsidy rate, then the new cash deposit
rate would be retroactive to the date of publication of the original
preliminary or final determination, respectively.\17\
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\17\ See Raw Honey from Brazil: Amended Preliminary
Determination of Sales at Less Than Fair Value, 86 FR 71614, 71615
(December 17, 2021) (``Because these amended rates result in reduced
cash deposit rates, they will be effective retroactively to . . .
the date of publication of the Preliminary Determination.'').
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[[Page 57293]]
Furthermore, under proposed Sec. 351.107(f)(3), when Commerce
amends the final results of an administrative review, the effective
date of the amended cash deposit rate would be retroactive to entries
following the date of publication of the original final results of
review, regardless of whether the dumping margin or countervailable
subsidy rate increases or decreases.\18\
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\18\ See Certain Carbon and Alloy Steel Cut-to Length Plate from
Belgium; Amended Final Results of Antidumping Duty Administrative
Review, 2018-2019, 86 FR 21274 (April 22, 2021) (``The following
cash deposit requirements will be effective retroactively for all
shipments of the subject merchandise entered, or withdrawn from
warehouse, for consumption on or after March 24, 2021, the
publication date of the Final Results of this administrative
review.'').
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In addition to amended cash deposit rates made pursuant to
ministerial error corrections under paragraphs Sec. 351.107(f)(1)
through (3), Commerce may also make such amendments as a result of
litigation when alleged or disputed ministerial errors are at issue. In
those circumstances, as reflected in proposed Sec. 351.107(f)(4), the
effective date of the amended cash deposit rates may differ from those
resulting from the application of Sec. 351.107(f)(1) through (3).
Furthermore, proposed Sec. 351.107(f)(4) explains that the applicable
effective date following litigation will normally be identified in a
Federal Register notice. In most cases, in accordance with the statute,
such amendments pursuant to litigation will be prospective in
application.
4. Describing and Modifying Commerce's Separate Rates Practice and
Procedures for Nonmarket Economy Country Antidumping Proceedings--Sec.
351.108
Section 771(18)(A) of the Act defines a nonmarket economy country
as any foreign country which Commerce determines ``does not operate on
market principles of cost or pricing structures, so that sales of
merchandise in such country do not reflect the fair value of the
merchandise.'' Further, section 771(18)(C)(i) of the Act states that
``{a{time} ny determination that a foreign country is a nonmarket
economy country shall remain in effect until revoked'' by Commerce.
For over three decades, in antidumping proceedings involving
nonmarket economy countries, Commerce has repeatedly determined that
legally distinct entities are in a sufficiently close relationship to
the government to be considered part of a single entity (i.e., the
government-controlled entity).\19\ Reflecting that dynamic, current
Sec. 351.107(d) states that ``{i{time} n an antidumping proceeding
involving imports from a nonmarket economy country, `rates' may consist
of a single dumping margin applicable to all exporters and producers.''
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\19\ See Fine Denier Polyester Staple Fiber from the People's
Republic of China: Preliminary Affirmative Determination of Sales at
Less Than Fair Value, Postponement of Final Determination, and
Extension of Provisional Measures, 83 FR 6335 (Jan 5, 2018), and
accompanying Preliminary Decision Memorandum, dated December 18,
2017, at ``Separate Rates'' (Polyester Staple Fiber from the PRC
PDM). For an example of a Commerce determination finding a country
is a non-market economy, see Antidumping Duty Investigation of
Certain Aluminum Foil From the People's Republic of China:
Affirmative Preliminary Determination of Sales at Less-Than-Fair
Value and Postponement of Final Determination, 82 FR 50858, 50861
(November 2, 2017).
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In the 1991 Sparklers from China investigation,\20\ Commerce
established a separate rate test, which it further developed in a
subsequent 1994 investigation on Silicon Carbide from China.\21\ Under
the separate rate test, if an entity can demonstrate that the foreign
government does not have either legal (de jure) control or control in
fact (de facto) over the entity's export activities, it may receive a
separate rate. Commerce's separate rate test has been affirmed as in
accordance with law and otherwise acknowledged multiple times by the
Federal Circuit.\22\
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\20\ See Final Determination of Sales at Less Than Fair Value:
Sparklers from the People's Republic of China, 56 FR 20588, 20589
(May 6, 1991) (Sparklers from China).
\21\ See Notice of Final Determination of Sales at Less Than
Fair Value: Silicon Carbide from the People's Republic of China, 59
FR 22585, 22586-22587 (May 2, 1994) (Silicon Carbide from China).
\22\ See Diamond Sawblades Mfrs. Coal. v. United States, 866
F.3d 1304, 1310-11 (Fed. Cir. 2017); see also Changzhou Hawd
Flooring Co. v. United States, 848 F.3d 1006, 1009 (Fed. Cir. 2017);
Dongtai Peak Honey Indus. Co. v. United States, 777 F.3d 1343, 1349-
50 (Fed. Cir. 2015); and Canadian Solar Int'l LTD v. United States,
68 F. 4th 1267, 1270 (Fed. Cir. 2023).
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Over the past decade, Commerce has modified its practice pursuant
to a series of CIT decisions and remand redeterminations. For example,
in Advanced Technology, the CIT held that Commerce's traditional
separate rate practice was deficient because it failed to recognize the
authority that a government may hold over an entity's commercial
activities when it owns a significant portion of that entity.\23\
Accordingly, consistent with the Court's holdings on this issue, it is
now Commerce's practice to conclude that when a government holds a
majority ownership share, either directly or indirectly, in a
respondent exporting entity, the majority holding in and of itself
demonstrates that the government exercises, or has the potential to
exercise, control over the entity's operations generally.\24\ This may
include control over, for example, the selection of management, a key
factor in determining whether an entity has sufficient independence in
its export activities to merit a separate rate. Consistent with normal
business practices, Commerce would expect any majority shareholder,
including a government, to have the ability to control, and an interest
in controlling, the operations of the entity, including the selection
of management and the strategic and financial decisions of the entity.
Thus, under Commerce's current separate rate practice, if a foreign
government holds a majority ownership share of a respondent exporting
entity, Commerce will not grant that entity a separate rate.
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\23\ See Advanced Technology & Materials Co., Ltd. v. United
States, 885 F. Supp. 2d 1343, 1349-1357 (CIT 2012), affirmed in
Advanced Technology & Materials Co., Ltd. v. United States, Case No.
2014-1154 (Fed. Cir. 2014).
\24\ See, e.g., Polyester Staple Fiber from the PRC PDM at
``Separate Rates.''
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As described below, Commerce is now proposing to codify Commerce's
separate rate practice in Sec. 351.108. Although a government in a
nonmarket economy country may own or control entities located both
within and outside of a nonmarket economy country, the proposed
regulation addresses only the application of Commerce's separate rate
practice to entities located within the nonmarket economy country. In
addition, Commerce is also proposing to modify its separate rate
practice in Sec. 351.108 to address additional real-world factors
through which a foreign government can control or influence production
decisions, pricing and sales decisions, and export behavior. Finally,
Commerce is proposing the codification and modification of separate
rate application and certification requirements.
Proposed Sec. 351.108(a) would provide that if Commerce determines
that entities located in a nonmarket economy country are subject to
government control (i.e., in a sufficiently close relationship to be
considered part of a single entity, the government-controlled entity),
absent evidence on the record indicating otherwise, Commerce will
assign such entities a single antidumping duty deposit rate. This
paragraph replaces current Sec. 351.107(d) and clarifies that the
single cash deposit or assessment rate is called ``the nonmarket
economy entity rate.''
Proposed Sec. 351.108(b) would provide that an entity may receive
its own rate, separate from the nonmarket economy entity rate, if it
demonstrates to
[[Page 57294]]
Commerce that it was sufficiently independent from the control of the
nonmarket economy government with respect to its commercial and export
activities during the relevant period of investigation or review to
justify the application of a separate rate. The regulation would then
set forth the circumstances and criteria which Commerce would consider
in determining if the application of a separate rate is warranted based
on record information.
The first circumstance pertains to nonmarket economy government
ownership and control. When a government, at any level, owns an entity,
either directly or indirectly, the proposed regulation describes
certain situations in which no separate rate will be permitted. The
first ownership situation, set forth in Sec. 351.108(b)(1)(i), as
described above and consistent with Commerce's current practice, is
when the government has a majority share, described as ``over fifty
percent ownership,'' of the entity. If the government owns more than
fifty percent of an entity subject to an antidumping proceeding,
Commerce will not determine that the entity is separate from government
control and will not calculate a separate rate for that entity.
In addition, proposed Sec. 351.108(b)(1)(ii) sets forth a
modification to Commerce's practice in addressing four specific
situations in which the government has an ownership interest which is
fifty percent or less of an entity but still has the ability to control
or influence the entity's production and commercial decisions. Under
those specific situations, in accordance with this Proposed Rule,
Commerce would not determine that the entity is separate from
government control and thus would not calculate a separate rate for
that entity.
Under the first circumstance, set forth in proposed Sec.
351.108(b)(1)(ii)(A), if the government's ownership share provides it
with a greater degree of control or influence over the entity's
production and commercial decisions than an ownership share of that
amount would normally entail absent such special treatment, and
Commerce concludes that the degree of control or influence of the
entity is significant,\25\ the entity would not be eligible for a
separate rate. Such special shares in a company are sometimes referred
to as ``golden shares.'' \26\ When a government owns such special
shares it may have the ability to exercise a disproportionate level of
influence or control over an entity's decisions central to Commerce's
calculations.
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\25\ A determination that the degree of control or influence is
``significant'' would be based on a case-by-case analysis and
dependent on consideration of the government's, as well as other
shareholder's, abilities to control or influence the entity's
production and commercial decisions. For example, the government may
own one percent of the shares of an entity and still make certain
production or commercial decisions for the entity despite
disagreement by the owners of the other ninety-nine percent of
shares. The significance of the degree of control or influence by
the government would be entirely dependent on the facts on the
record before Commerce.
\26\ Organization for Economic Co-operation and Development,
OECD Guidelines on Corporate Governance on State-owned Enterprises,
17-16 (2015) (``Some borderline cases need to be addressed on a
case-by-case basis. For example, whether a ``golden share'' amounts
to control depends on the extent of the powers it confers on the
state.'') and (``{M{time} inority ownership by the state can be
considered as covered by the Guidelines if corporate or shareholding
structures confer effective controlling influence on the state
(e.g., through shareholders' agreements.''). See also id. at 63
(``Any special rights or agreements that diverge from generally
applicable corporate governance rules, and that may distort the
ownership or control structure of the SOE, such as golden shares and
power of veto, should be disclosed.'').
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Under the second circumstance, set forth in proposed Sec.
351.108(b)(1)(ii)(B), if the government has the authority to veto or
control an entity's production and commercial decisions, Commerce would
find the entity at issue ineligible for a separate rate. Such authority
can have an outsized effect on the production and commercial decisions
made by an entity, so Commerce has concluded it would be inappropriate
to find an entity eligible for a separate rate if the government holds
veto power or control over these decisions.
Under the third circumstance, as set forth in proposed Sec.
351.108(b)(1)(ii)(C), if government officials, employees, or
representatives hold positions of authority in the entity, including as
members of the board of directors or other governing authorities in the
entity, that have the ability to make or influence production and
commercial decisions for the entity, then Commerce would find the
entity at issue ineligible for a separate rate.
Likewise, under the forth circumstance, set forth in proposed Sec.
351.108(b)(1)(ii)(D), if the entity is obligated by law, its
foundational documents (such as its articles of incorporation), or
other de facto requirements to maintain one or more officials,
employees, or representatives of the government in positions of power
(including as members of the board of directors or other governing
authorities in the entity, which have the ability to make or influence
production and commercial decisions for the entity at issue), then
Commerce would not calculate a separate rate for the entity in that
situation. Unlike the scenario described in Sec. 351.108(b)(1)(ii)(C),
there is no requirement in this paragraph that a government official,
employee, or representative actually hold such an influential position
in the entity, only that information on the record shows that the
entity is required to have a government official, employee, or
representative hold such a position. Whether there is the potential for
a government official, employee or representative taking a position of
power, or the government official, employee or representative actually
holds such a position of power, both situations are means by which the
government could exercise an outsized amount of influence or control
over the entity.\27\ Boards of directors generally control many of an
entity's production and commercial decisions, so if the entity is
required to have a government representative on a board of directors,
for example, then it is reasonable to conclude that the government
representative on the board could also exercise control, or could have
the potential to exercise control, over the entity's production and
pricing decisions.
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\27\ Id. at 14 (``Examples of an equivalent degree of control''
to the state ``being the ultimate beneficiary owner of the majority
of voting shares'' would include, ``for instance, cases where legal
stipulations or corporate articles of association ensure continued
state control over an enterprise or its board of directors in which
it holds a minority stake.'').
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It is Commerce's observation over many years of administering AD
and CVD proceedings that government entities who own the same
percentage of shares of a company as non-government entities do not
always have the same influence over company decisions as the non-
government entities. In fact, Commerce has observed that governments
that have ownership interest in companies and have officials,
employees, or representatives in positions of power within those
companies frequently hold greater influence over company decisions than
those without the institutional, political and resource backing of the
government.\28\ Furthermore, it is also Commerce's observation that
government representatives often do not
[[Page 57295]]
have the entity's profits as their primary motivating factor, unlike
most non-government share-holders.\29\
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\28\ This observation is most notable in Commerce's CVD
proceedings involving China. Commerce has observed that the Chinese
government has certain ownership interests which allow it to
influence certain companies and individuals. See, e.g., Commerce
Memorandum, ``Countervailing Duty Administrative Review of Steel
Racks from the People's Republic of China: Public Bodies Analysis
Memo,'' dated August 2, 2022 (ACCESS Barcode 4270527-01--4270527-
10), at 16-20.
\29\ Likewise, Commerce has also observed in China CVD
proceedings that profit is frequently not the government
representatives' primary motivating factor in making share-holder
decisions. See, e.g., Commerce Memorandum, ``Countervailing Duty
Administrative Review of Steel Racks from the People's Republic of
China: Analysis of China's Financial System,'' dated August 3, 2022
(ACCESS Barcode 4270869-01--4270869-13) at 3-7; 17-19.
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To be clear, Commerce is not proposing that any of these factors,
standing alone without some amount of government ownership, would
result in a denial of a separate rate. However, if the government has a
minority ownership in the entity and one of these four factors exists
as well, then, as with majority ownership, there exists the ability or
potential for the nonmarket economy government to exercise control over
the entity's operations in general, thereby warranting a determination
that no separate rate should be calculated for that entity.
Under proposed Sec. 351.108(b)(2) and (3), if an entity
demonstrates that there is no majority government ownership of the
entity or there is fifty percent or less government ownership and the
criteria listed in Sec. 351.108(b)(1)(ii) do not exist, Commerce would
then apply its analysis to determine the existence or absence of de
jure or de facto nonmarket economy government control. In addition to
the three factors historically considered by Commerce in applying its
de jure analysis (the absence of restrictive stipulations by the
government associated with an individual entity's business and export
licenses, legislative enactments decentralizing government control of
companies, and other formal measures by the government decentralizing
control of companies) and the four factors historically considered by
Commerce in applying its de facto analysis (whether export prices are
set by or are subject to the approval of a government agency, whether
the entity has authority to negotiate and sign contracts and other
agreements without government involvement, whether the entity has
autonomy from the government in making decisions regarding the
selection of its management, and whether the entity retains the
proceeds of its export sales and makes independent decisions regarding
disposition of profits or financing of losses), Commerce is also
proposing the consideration of three additional relevant factors for
purposes of applying a separate rate.
First, under proposed Sec. 351.108(b)(2)(i), as part of the de
jure analysis, an entity would be required to demonstrate that there is
no legal requirement that one or more officials, employees, or
representatives of the government serve as officers of the entity,
members of the board of directors, or other governing authorities in
the entity which make or influence export activity decisions.
Similarly, under proposed Sec. 351.108(b)(3)(i), as part of the de
facto analysis, if an entity has demonstrated that the factors listed
in Sec. 351.108(b)(1)(i), (ii), and (2) do not apply to the entity, it
would be required to demonstrate that there are no government
officials, employees, or representatives actually serving in such
leadership roles in the entity. Similar to the inclusion of government
representatives in company positions that allow them to make or
influence production or commercial decisions discussed above when there
is partial government ownership, these factors are included in the de
jure and de facto analyses to consider if government officials,
employees, or representatives, regardless of government ownership of
entity, may be in a position to control or influence an entity's export
activities.
Furthermore, Commerce proposes in Sec. 351.108(b)(3)(vi) that a
sixth factor be included in its de facto analysis, allowing Commerce to
consider ``any additional evidence on the record suggesting that the
government has no direct or indirect influence over the entity's export
activities.'' It is not Commerce's intention in this Proposed Rule to
provide an exhaustive list of examples of additional evidence that
might indicate de facto government influence over export activities,
and such a determination would be left to Commerce to determine based
on the information on the record on a case-by-case basis. However, one
example of means by which a government could influence an entity's
export activities that is not articulated in the regulation is through
threats, coercion, or intimidation. If the administrative record showed
that the government participated in or sanctioned threats, coercion, or
intimidation of an entity, either directly or indirectly, and those
actions impacted, or likely influenced, the entity to modify its export
activities, Commerce would deny separate rate treatment to an entity
under this provision. Governments can influence the export activities
of companies through a variety of de facto means, such as through
company decision-making when the government is an owner of shares in a
company, when there are ``insiders'' within the company who directly
work for the entity but take orders from the government, or when
decision-making is made under duress associated with government-
directed threats, coercion, and intimidation.\30\ This provision is
intended to make certain that all such relevant de facto scenarios are
captured and considered in Commerce's separate rate de facto analysis.
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\30\ Commerce does not intend to provide an exhaustive list of
types of threats, coercion or intimidation which governments may use
on an entity or an entity's colleagues, associates, friends and
family members to control or influence an entity's export behavior.
Some obvious examples involve bodily harm (kidnapping,
defenestration, muggings), harm to property (arson, vehicular
damage, personal property damage), blackmail, threats to living
welfare (such as threats to employment and access to housing,
electricity, heating, internet and medical care), or cyber-attacks,
but there are many additional examples which do not fall into these
categories and would still be considered threats, coercion or
intimidation which could control or influence an entity's export
decisions under Commerce's de facto analysis.
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In addition, proposed Sec. 351.108(c) would explain that if a
company is located in a nonmarket economy and is subject to a nonmarket
economy country proceeding, but is wholly owned by a market economy
foreign entity, then the application of the separate rate analysis
codified in paragraph (b) would be unnecessary to determine whether it
is independent of nonmarket economy government control.\31\ The
paragraph would clarify that for an entity to be wholly owned by a
market economy foreign entity, the foreign entity must be both
incorporated and headquartered in a market economy country or
countries. Thus, for purposes of this provision, if a foreign entity is
incorporated in a market economy country but headquartered in a
nonmarket economy country, Commerce would not consider the company
located in the nonmarket economy to be wholly owned by a market economy
foreign entity. Likewise, if the foreign entity is headquartered in a
market economy but incorporated in a nonmarket economy country,
Commerce would not consider the company located in the nonmarket
economy to be wholly owned by a market economy foreign entity, for
purposes of this provision. In either of those situations, Commerce
would conduct its separate rate analysis of the company located in the
nonmarket economy under the understanding that the company is from the
nonmarket economy country. The reason for this requirement is simple:
Commerce does not want companies to evade the application of its
separate rates analysis when those companies are owned by entities
either headquartered or
[[Page 57296]]
incorporated in a nonmarket economy country and may be controlled by
the nonmarket economy government.
---------------------------------------------------------------------------
\31\ See Polyester Staple Fiber from the PRC PDM at ``Separate
Rates.''
---------------------------------------------------------------------------
Proposed Sec. 351.108(d)(1) and (2) would codify the requirement
that separate rate applications and certifications be submitted by each
entity seeking a separate rate. In antidumping investigations, new
shipper reviews, and administrative reviews in which an entity has not
previously been assigned a separate rate, the entity must file a
separate rate application, the form of which, pursuant to the proposed
regulation, Commerce would make available to the public. In
administrative reviews in which an entity already has been assigned a
separate rate, under proposed Sec. 351.108(d)(3), the entity would
instead file a certification attesting that it had entries for which
liquidation was suspended during the period of review and that it
otherwise continued to meet the criteria for obtaining a separate rate.
Under these provisions, for new shipper reviews and administrative
reviews, Commerce has included a proposed requirement that interested
parties submitting an application must provide documentary evidence of
an entry with the separate rate applications for which liquidation was
suspended during the period of review in Sec. 351.108(d)(2). Commerce
would not consider separate rate applications in new shipper reviews
and administrative reviews if it is possible that no entry was
suspended during the period of review for a particular entity, because
without entries to which Commerce could assess duties there would be no
purpose for a separate rate analysis. Furthermore, Sec. 351.108(d)(3)
would explain that if the agency determined in a previous segment of
the proceeding that certain exporters and producers should be treated
as a single entity, then a separate rate certification in a subsequent
administrative review must identify and certify the required
information for all of the companies comprising that single entity.
Commerce is also proposing in Sec. 351.108(d)(1), (2), and (3)
that all separate rate applications and certifications \32\ be filed
with Commerce no later than fourteen days following publication of the
notice of initiation of an investigation or review in the Federal
Register. This would be a change from the current thirty-day
deadline.\33\ The current thirty-day deadline delays Commerce from
selecting respondents in its nonmarket economy proceedings because
Commerce cannot select respondents for individual examination until it
first determines the pool of exporters who have satisfied the separate
rate analysis. Likewise, until Commerce selects respondents, it cannot
issue respondent questionnaires. Commerce has determined that by
revising the deadline for submitting separate rate applications and
certifications to Commerce to fourteen days, Commerce will be able to
select respondents sooner in its investigations and reviews, and
thereby provide more time for Commerce to conduct its proceedings.
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\32\ Separate rate application and certification forms are
available on Commerce's website, which is recognized in Commerce's
nonmarket economy AD initiation notices. See, e.g., Initiation of
Antidumping and Countervailing Duty Administrative Reviews, 87 FR
35165, 35166-67 (June 9, 2022) (``The Separate Rate Certification
form will be available on Commerce's website at <a href="https://enforcement.trade.gov/nme/nme-sep-rate.html">https://enforcement.trade.gov/nme/nme-sep-rate.html</a> on the date of
publication of this Federal Register notice.'').
\33\ See, e.g., Glass Wine Bottles from Chile, the People's
Republic of China, and Mexico: Initiation of Less-Than-Fair-Value
Investigations, 89 FR 4911, 4914 (Jan 25, 2024).
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The last proposed provision of Sec. 351.108 is paragraph (e),
which would require entities that have submitted separate rate
applications or certifications, and then are subsequently selected to
be examined as an individually examined respondent, respond to all
sections of Commerce's antidumping questionnaire in order to be
eligible for a separate rate. In other words, all entities filing a
separate rate application or certification must be prepared to fully
participate in Commerce's proceedings if they are selected to be
individually examined respondents.
5. Including Procedures for Selecting Respondents, Calculating an All-
Others Rate, Calculating a Rate for Unexamined Respondents, and
Selecting Voluntary Respondents--Sec. 351.109
Sections 777A(c)(1) and 777A(e)(1) of the Act direct Commerce to
determine an individual weighted-average dumping margin or
countervailable subsidy rate for each known exporter and producer of
the subject merchandise. However, Commerce may limit its examination to
a reasonable number of exporters or producers under sections 777A(c)(2)
and 777A(e)(2) of the Act if it determines that it is not practicable
to determine an individual weighted-average dumping margin or
countervailable subsidy rate because of the large number of exporters
or producers involved in the investigation or review.
In addition, sections 703(d)(1)(A), 705(c)(5), 733(d)(1)(A), and
735(c)(5) of the Act set forth the general rules and exceptions which
Commerce applies in investigations for determining the rate applied to
all exporters and producers not individually examined in the
investigation, known as all-others rate, in both the preliminary and
final determinations.
Finally, section 782(a) provides that in investigations and
administrative reviews in which Commerce has limited the number of
exporters or producers examined, or determined a single-country wide
rate, Commerce may select voluntary respondents for examination if
certain criteria are satisfied.
The current regulations do not address the all-others rate and
provide little guidance about limiting examination of exporters and
producers; what guidance does exist in the regulation applies only in
investigations. The current voluntary respondent regulation at Sec.
351.204(d) applies only to investigations, does not provide details
about voluntary respondent submission deadlines, and does not reference
Commerce's practice for selecting voluntary respondents when there is
more than one voluntary respondent treatment request on the record.
Commerce is therefore proposing the addition of Sec. 351.109 to its
regulations to address and clarify each of these issues.
Proposed Sec. 351.109(a) would introduce each of these concepts,
including Commerce's respondent selection practice. Commerce's
statutory authority to engage in respondent selection is built on the
proposition ``that the largest exporters by volume are assumed to be
representative of the non-selected respondents.'' \34\ The Act creates
this assumption of representativeness by explicitly addressing the
impracticability of individually examining a large number of
respondents and the expectation that Commerce use the rates calculated
for the mandatory respondents as the basis for the rate for firms not
selected for individual examination.\35\
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\34\ See PrimeSource Bldg. Prod., Inc. v. United States, 581 F.
Supp. 3d 1331 (CIT 2022) (``Consistent with this assumption, the
cases also stand for the proposition that Commerce is expected to
use the mandatory respondents' rates to determine the antidumping
duty rate to be assigned to the non-selected respondents.'').
\35\ See sections 777A(c)(2) and 777A(e)(2)(A) of the Act.
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Commerce's respondent selection practice is not a means to gauge
whether a potential respondent is willing to participate in an
investigation or review, but rather whether Commerce can effectively
examine a reasonable number of producers and exporters, as
[[Page 57297]]
Congress intended, to calculate an accurate dumping margin or
countervailable subsidy rate.\36\ The Act explicitly allows Commerce to
focus its resources on individual examination of certain respondents
and, in doing so, allows Commerce to decline to examine others.\37\ In
codifying Commerce's respondent selection practice, the agency seeks to
promote transparency and efficiency when conducting administrative
reviews and investigations involving a large number of known exporters
and producers of subject merchandise.
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\36\ See Parkdale Int'l v. United States, 475 F.3d 1375, 1380
(Fed. Cir. 2007) (citing Rhone Poulenc, Inc. v. United States, 899
F.2d 1185, 1191 (Fed. Cir. 1990)).
\37\ Id.
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Sections 777A(c)(1) and 777A(e)(1) of the Act direct Commerce to
determine an individual weighted-average dumping margin or
countervailable subsidy rate for each known exporter and producer of
the subject merchandise in an investigation \38\ or administrative
review, where practicable, and Commerce has proposed codifying that
language in Sec. 351.109(b).
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\38\ For investigations, specifically, current Sec. 351.204(c)
reflects this general rule. Proposed Sec. 351.109(b) would replace
that provision, as explained below, and would apply equally to
administrative reviews, consistent with the language of sections
777A(c)(1) and 777A(e)(1) of the Act.
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However, in many of Commerce's investigations and administrative
reviews, there are a large number of exporters and producers of the
merchandise under investigation or review, and therefore Commerce
normally does not have the resources to examine ``each known exporter
and producer.'' \39\ Accordingly, Commerce limits the exporters or
producers under examination consistent with sections 777A(c)(2) and
777A(e)(2) of the Act.\40\ In doing so, Commerce normally issues a
respondent selection memorandum that provides its respondent selection
analysis, which has been affirmed by the CIT as in accordance with
law.\41\
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\39\ See, e.g., Commerce Memorandum, ``2020-2021 Antidumping
Duty Administrative Review of Circular Welded Carbon-Quality Steel
Pipe from the United Arab Emirates: Selection of Respondents for
Individual Examination,'' dated March 18, 2022, (ACCESS Barcode
4222983-1).
\40\ Id.
\41\ See Mid Continent Nail Corp. v. United States, 949 F. Supp.
2d 1247, 1274 (CIT 2013) (Mid Continent Nail Corp.) (affirming
``Commerce's decision not to conduct individual reviews of all
respondents was properly based on the agency's determination that
the proceeding here involved a ``large number'' of exporters and
producers.'').
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Proposed Sec. 351.109(c) would codify Commerce's long-standing
respondent selection analysis, whereby Commerce determines based on
record information whether it is practicable to determine individual
dumping margins or countervailable subsidy rates for every exporter or
producer. If it is not practicable to do so because of the large number
of exporters or producers involved in an investigation or review, in
accordance with proposed Sec. 351.109(c)(1), Commerce would then
determine the exporters or producers to be examined based on either a
sample of exporters or producers that is statistically valid based on
record information or the number of respondents that can be reasonably
examined based on the largest volume of exports of subject merchandise
from the exporting country.
Notably, the Act does not provide guidance as to how Commerce
should reach a statistically valid result or how Commerce must account
for the largest volume of subject merchandise that can reasonably be
examined.\42\ Moreover, the Act does not require Commerce to use only
the two aforementioned methodologies in limiting its examination.\43\
Rather, the Act grants Commerce discretion in reaching a ``reasonable
number'' of respondents for individual examination, accounting for any
practicability concerns that may affect Commerce's ability to examine
multiple respondents.\44\
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\42\ See Shanxi Hairui Trade Co. v. United States, 503 F. Supp.
3d 1307, 1320 (CIT 2021), aff'd, 39 F.4th 1357 (Fed. Cir. 2022)
(``The statute authorizes Commerce to employ a statistically valid
sampling method when choosing respondents to investigate, but does
not instruct Commerce as to how to reach a statistically valid
result in calculating the sample rate . . .''); Pakfood Pub. Co. v.
United States, 753 F. Supp. 2d 1334, 1343 (CIT 2011), aff'd, 453 F.
App'x 986 (Fed. Cir. 2011) (``{Commerce{time} turns to issuing Q & V
questionnaires or other sources of information when the CBP data for
the subject merchandise in question does not provide sufficient or
adequate data for the Department's respondent selection
purposes.'').
\43\ See United States v. Rodgers, 461 U.S. 677, 706 (1983)
(``The word ``may,'' when used in a statute, usually implies some
degree of discretion . . . {but{time} can be defeated by
indications of legislative intent to the contrary or by obvious
inferences from the structure and purpose of the statute.'').
\44\ See Mid Continent Nail Corp., 949 F. Supp. 2d at 1272
(``{N{time} either the statute nor the legislative history makes any
reference to ``reasonable volume'' (only ``the largest volume of the
subject merchandise . . . that can be reasonably examined.'')); see
also Husteel Co. v. United States, 98 F. Supp. 3d 1315, 1331 (CIT
2015) (citing Mid Continent Nail Corp., 949 F. Supp. 2d at 1272)
(``{N{time} othing herein should be understood to suggest that
Commerce's discretion to choose between the two methodologies . . .
is wholly unfettered, or that `representativeness' could never
constrain Commerce's ability to . . . affect a determination as to
whether a specific number of exporters and producers is
``reasonable'' given the facts of a particular case.'').
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When Commerce determines to limit the number of exporters or
producers for individual examination based on the largest volume of
exports of subject merchandise from the exporting country, proposed
Sec. 351.109(c)(2)(i)-(iv) would provide the factors Commerce will
consider as part of its analysis. Under Sec. 351.109(c)(2)(i),
Commerce would first select the data source to determine the largest
exporters or producers of subject merchandise. Normally, Commerce's
selection would be based on information derived from CBP, but Commerce
may use another reasonable means of selecting potential respondents in
an investigation or review, such as quantity and value questionnaires.
Under Sec. 351.109(c)(2)(ii), Commerce would then select the largest
exporters or producers of the subject merchandise. Normally, that
analysis would be conducted based on the volume of imports of subject
merchandise. However, the analysis may instead be conducted based on
the value of imported products, depending on the product and record
information.
Under proposed Sec. 351.109(c)(2)(iii), once the list of exporters
or producers with the largest number of imports, either through volume
or value, is compiled, Commerce would next determine if the number of
exporters or producers on the list is too large to practically
individually examine each known exporter and producer of subject
merchandise. This provision lists the factors which Commerce might
consider in making such a determination, including the amount of
resources and detailed analysis which would be necessary for Commerce
to examine each potential respondent's information, the current and
future workload of the office administering the proceeding, and
Commerce's overall current resource availability.
Under proposed Sec. 351.109(c)(2)(iv), if Commerce determines that
the number of exporters is too large to practically individually
examine each known exporter or producer of the subject merchandise,
Commerce would then determine the number of exporters or producers
which can be reasonably examined. Under this provision, Commerce would
first consider the total and relative volumes (or values) of entries of
subject merchandise for each potential respondent derived from the data
source considered in Sec. 351.109(c)(2)(ii), then rank potential
respondents by the total volume or value of entries into the United
States during the relevant period. Lastly, Commerce would determine how
many respondents it can reasonably examine based on that information
and select the exporters or producers with the largest
[[Page 57298]]
volume or values of entries consistent with that number.
In addition, proposed Sec. 351.109(c)(2)(v) would address
situations in which one or more selected potential respondents do not
respond to Commerce's questionnaires or elect to withdraw from
participation in the segment of the proceeding soon after filing
questionnaire responses, or, early in the segment of a proceeding,
Commerce determines that they are no longer participating in the
investigation or administrative review \45\ or that their U.S. sales
are not bona fide sales of subject merchandise.\46\ In each of those
cases, when Commerce is selecting respondents based on the largest
exporter or producers, Commerce proposes, at its discretion, to select
the exporter or producer with the next largest volume or values to
replace the respondents initially selected for examination.\47\
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\45\ See, e.g., Fresh Garlic from the People's Republic of
China: Final Results of the Changed Circumstances Review, 80 FR
57579 (September 24, 2015), and accompanying Issues and Decision
Memorandum at Comment 4 (analyzing the additional burdens of
selecting another respondent following the withdrawal of a selected
respondent); see also Viet I-Mei Frozen Foods Co. v. United States,
83 F. Supp. 3d 1345, 1362 (CIT 2015), aff'd, 839 F.3d 1099 (Fed.
Cir. 2016) (``{T{time} o the prevention of abuse where Commerce
expends resources to initiate an individual examination--and the
respondent seeks to withdraw its participation when it changes its
mind about the benefit of such examination and prefers the `all
others' rate instead--is a reasonable basis on which Commerce may
decline to abort its examination.'').
\46\ Commerce has a long history of reviewing only bona fide
sales in investigations, administrative reviews and new shipper
reviews. See, e.g., Windmill Int'l Pte v. United States, 193 F.
Supp. 2d 1303, 1312-1314 (CIT 2002) (affirming Commerce's rescission
of an administrative review because it determined that the
respondent's sale of two cut-to-length carbon steel plates to the
United States was not ``commercially reasonable and was atypical of
the normal business practices between Windmill and the United States
purchaser.''). Therefore, the language as proposed will have
Commerce select respondents only from those exporter or producers
with bona fide sales to the United States. In determining if a sale
is bona fide, Commerce may consider the factors listed in section
751(a)(2)(B)(iv) of the Act and Sec. 351.214(k).
\47\ Although this provision would apply when Commerce selects
respondents based on the largest exporters or producers of subject
merchandise, it could also select further respondents when using a
sampling methodology to select a respondent for individual
examination, although in that case Commerce need not select
additional exporters or producers based on the volume or value of
imports.
---------------------------------------------------------------------------
With respect to proposed Sec. 351.109(d), it is important to
recognize that current Sec. 351.204(c) states that Commerce ``may
decline to examine a particular exporter or producer if that exporter
or producer and the petitioner agree.'' Commerce proposes to move this
provision to new Sec. 351.109(d) and revise it to become a waiver
provision.\48\ Accordingly, the proposed new paragraph states that
Commerce may waive individual examination of an exporter or producer if
both the selected respondent and petitioner file waiver requests for
that exporter or producer no later than five days after Commerce has
selected respondents. If Commerce determines to provide such a waiver
and had selected the waived respondent based on an analysis of the
largest exporters or producers, proposed Sec. 351.109(d) provides that
Commerce could select the next largest exporter or producer to replace
the waived respondent.
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\48\ See Oregon Steel Mills Inc. v. United States, 862 F.2d
1541, 1545-46 (Fed. Cir. 1988) (recognizing that Congress intended
to allow Commerce the authority to avoid the investigative burden
associated with an administrative review in situations where the
domestic industry has no continued interest in proceeding).
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Proposed Sec. 351.109(e) restates Commerce's expressed authority
under section 777A(e)(2)(B) of the Act to calculate a single country-
wide subsidy rate for all exporters and producers if it is not
practicable to determine individual countervailable subsidy rates due
to the large number of exporters or producers involved in the
investigation or review.\49\
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\49\ See, e.g., Honey from Argentina: Preliminary Affirmative
Countervailing Duty Determination and Alignment with Final
Antidumping Determination on Honey from the People's Republic of
China, 66 FR 14521, (March 13, 2001) (``Commerce determined that it
would not be practicable to investigate alleged countervailable
subsidies received by individual honey producers and exporters in
Argentina.'') and Notice of Final Affirmative Countervailing Duty
Determination and Final Negative Critical Circumstances
Determination: Certain Softwood Lumber Products from Canada, 67 FR
15545, 15547 (April 2, 2002).
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Section (f) of proposed Sec. 351.109 would set forth the
calculation of the all-others rate set forth for final determinations
in sections 705(c)(5) and 735(c)(5) of the Act and generally described
for preliminary determinations in sections 703(d)(1)(A) and
733(d)(1)(A) of the Act. As the Statement of Administrative Action
Accompanying the Uruguay Round Agreements Act (SAA) explains, these
provisions allow for Commerce to ``calculate individual dumping margins
for those firms selected for examination and an `all others' rate to be
applied to those firms not selected for examination.'' \50\ According
to the SAA, the goal of the ``all others'' rate is to reflect the
actual dumping margin or countervailing subsidy rate of the non-
selected respondents as accurately as possible.\51\
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\50\ See Statement of Administrative Action Accompanying the
Uruguay Round Agreements Act, H.R. Doc. 103-316 (1994) (SAA) at 873,
reprinted in 1994 U.S.C.C.A.N. 4040, 4200.
\51\ Id.
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Proposed sections 351.109(f)(1)(i) and (ii) would set forth the
general rule for determining the all-others rate as reflected in
sections 705(c)(5)(A)(i) and 735(c)(5)(A)(i) of the Act. Those
provisions state that, in general, the all-others rate will be equal to
the weighted average of the dumping margins or countervailable subsidy
rates calculated for those exporters and producers that are
individually investigated, exclusive of any zero and de minimis
margins, and any margins determined entirely on the basis of the facts
available.\52\
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\52\ See sections 705(c)(5) and 735(c)(5) of the Act; see also
MacLean-Fogg Co. v. United States, 753 F.3d 1237, 1239 (Fed. Cir.
2014) (recognizing that ``{t{time} o establish the all-others rate,
Commerce first discarded the AFA rate assigned to the three
mandatory respondents--correctly so . . .'').
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However, Commerce has encountered two common scenarios in which the
application of the general rule for determining the all-others rate
would not be appropriate or would have negative consequences based on
the facts on the record. Accordingly, Commerce proposes to codify these
exceptions in new Sec. 351.109(f)(2)(i) and (ii). In one scenario, if
Commerce determines that only one examined respondent's countervailable
subsidy rate or weighted-average dumping margin satisfies the criteria
set forth in sections 705(c)(5) and 735(c)(5) of the Act, respectively,
Commerce applies that countervailable subsidy rate or weighted-average
dumping margin as the all-others rate.\53\ That scenario and practice
would be codified in Sec. 351.109(f)(2)(i).\54\
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\53\ See Mid Continent Steel & Wire, Inc. v. United States, 321
F. Supp. 3d 1313, 1321 (CIT 2018) (``Applying the statutory method,
Commerce excluded the PRC-wide rate assigned to {a mandatory
respondent{time} and relied on the only other calculated rate, in
{the{time} segment, that was not zero, de minimis, or based
entirely on facts available or AFA . . .'').
\54\ Id.
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In the other common scenario, Commerce calculates dumping margins
or countervailable subsidy rates for two or more individually
investigated exporters or producers and then determines that if it were
to calculate an all-others rate using the actual, weighted-average
dumping margins or countervailable subsidy rates based on the entities'
proprietary information, the resulting all-others rate would
inadvertently divulge each respondent's proprietary information to the
other individually investigated exporter or producer. This can occur,
for example, when Commerce determines the all-others rate by
determining a weighted-
[[Page 57299]]
average of the rates calculated for two exporters or producers, because
each respondent can often figure out their competitor's proprietary
information through the resulting weighted-average rate.\55\
---------------------------------------------------------------------------
\55\ See MacLean-Fogg Co. v. United States, 100 F. Supp. 3d
1349, 1360-61 (CIT 2015) (recognizing that Commerce's practice ``is
to take both averages and compare each to the actual weighted-
average (using BPI available to the agency), in order to arrive at
the nearest approximation of the all-others rate contemplated by''
the statute.) (MacLean-Fogg Co.).
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Over time, Commerce has implemented a practice to address such a
situation, which the agency proposes to codify in Sec.
351.109(f)(2)(ii)(A)-(C). Specifically, Commerce first calculates the
weighted average of the dumping margins or countervailable subsidy
rates for the individually-investigated respondents using their
reported data, including business proprietary data, then calculates a
simple average of the individually-investigated respondents' dumping
margins or countervailable subsidy rates, as well as a weighted-average
dumping margin or countervailable subsidy rate based on the
respondents' publicly-ranged data.\56\ Once Commerce has both the
simple average and publicly-ranged weighted-average margins or rates,
Commerce compares them to the margins or rates calculated using the
companies' proprietary information.\57\ If the simple average is
numerically closer to the weighted-average margin or rate using the
proprietary information, Commerce would use the simple average for the
all-others rate.\58\ If the weighted-average margin or rate based on
publicly-ranged information is closer to the weighted-average margin or
rate based on proprietary data, then that margin or rate, instead,
would be the margin or rate Commerce applies to the all-other exporters
and producers.\59\
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\56\ Id.; see, e.g., Aluminum Extrusions from the People's
Republic of China: Final Results of Countervailing Duty
Administrative Review; 2010 and 2011, 79 FR 634 (January 2, 2014),
and accompanying IDM (Aluminum Extrusions from the People's Republic
of China; 2010 and 2011 IDM) at Comment 3; and Certain Frozen
Warmwater Shrimp from India: Preliminary Countervailing Duty
Determination, 78 FR 33344 (June 4, 2013), and accompanying PDM,
unchanged in Certain Frozen Warmwater Shrimp from India: Final
Affirmative Countervailing Duty Determination, 78 FR 50385 (August
19, 2013).
\57\ See MacLean-Fogg Co., 100 F. Supp. 3d at 1360-61.
\58\ Id.
\59\ Id.
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In addition, sections 705(c)(5)(A)(ii) and 735(c)(5)(A)(ii) of the
Act provide for an exception to the general all-others rule, which
would be reflected in proposed Sec. 351.109(f)(2)(iii). Those
provisions of the Act state that if the calculated rates for all
selected respondents are zero, de minimis, or based entirely on facts
available under section 776 of the Act, Commerce may use ``any
reasonable method to establish an all-others rate for exporters and
producers not individually examined.'' \60\ The Act and proposed
regulation emphasize that one reasonable method Commerce may use under
this exception includes ``averaging the estimated weighted average
dumping margins or countervailable subsidy rates determined for the
individually investigated exporters and producers'' using rates that
are zero, de minimis, or based entirely on facts available.\61\ The SAA
provides that ``the expected method is for Commerce to weight-average
such rates to determine the non-selected respondents' rate.'' \62\
However, the SAA also states that if the expected method ``is not
feasible, or if it results in an average that would not be reasonably
reflective of potential dumping margins for non-investigated exporters
or producers, Commerce may use other reasonable methods.'' \63\
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\60\ Sections 705(c)(5)(A)(ii) and 735(c)(5)(A)(ii) of the Act.
\61\ Id.
\62\ See SAA at 873.
\63\ Id.
---------------------------------------------------------------------------
Over the many years Commerce has applied its nonmarket economy
country methodology, when the agency has determined that the nonmarket
economy country entity has not participated in its proceedings or acted
to the best of its ability in providing necessary information, Commerce
has consistently applied a nonmarket economy country rate consisting of
a single dumping margin applicable to all exporters and producers not
receiving a ``separate rate'' in accordance with the facts available
and adverse facts available provisions of sections 776(a) and (b) of
the Act and current Sec. 351.107(d).\64\ Commerce has consistently
explained that a nonmarket economy country entity is a singular entity,
a nonmarket economy country rate is not an all-others rate, and the
all-others rate provision in the Act does not apply in AD
investigations covering nonmarket economy countries.\65\ To provide
clarity to the public, Commerce proposes Sec. 351.109(f)(3), which
would explain both that the rate determined for a nonmarket economy
country entity is not an all-others rate and that unlike an all-others
rate, which may not be increased or decreased in subsequent segments of
an AD proceeding, a nonmarket economy country entity rate may be
modified in subsequent segments of a proceeding if the nonmarket
economy country entity is selected for examination.\66\
---------------------------------------------------------------------------
\64\ See, e.g., 1,1,1,2-Tetrafluroethane from the People's
Republic of China: Final Determination of Sales at Less Than Fair
Value, 79 FR 62597 (October 20, 2014), and accompanying IDM at
Comment 1.
\65\ See Thuan An Prod. Trading & Serv. Co. v. United States,
348 F. Supp. 3d 1340, 1349 (CIT 2018) (explaining that Commerce
should have instead advanced the rationale ``that the {nonmarket
economy{time} entity is an individual entity, and therefore
{{time} should be considered an individually investigated rate,''
rather than attempting to distinguish an {nonmarket economy{time}
entity rate from an individually investigated rate and the all-
others rate).
\66\ See, e.g., Aluminum Extrusions from the People's Republic
of China: Final Results of Antidumping Duty Administrative Review;
2012-2013, 79 FR 78784 (December 31, 2014), and accompanying IDM at
Comment 3.
---------------------------------------------------------------------------
As explained above, the provisions in the Act that address the all-
others rate calculation apply only to CVD and market economy country AD
investigations. However, Commerce has a long-standing practice of
looking to the all-others provision in the Act for guidance in
determining a rate to apply to respondents that have not been
individually examined in nonmarket economy country AD proceedings,
market economy country AD administrative reviews, and CVD
administrative reviews. Specifically, in nonmarket economy country AD
investigations and administrative reviews, Commerce has taken guidance
from the all-others rate provision to calculate a rate for non-selected
companies who have satisfied Commerce's separate rate requirements but
have not been individually investigated or examined during a POI or POR
because, like market economy exporters or producers subject to an all-
others rate, these companies will not be individually-examined during
the relevant period of examination.\67\ In other words, a company that
demonstrates its entitlement to separate rate status in a nonmarket
economy country AD investigation or review receives either an
individual rate (as a mandatory or voluntary respondent) or a separate
rate (if not selected for individual examination) based on a
[[Page 57300]]
weighted-average of the rates calculated for the individually
investigated or examined respondents.\68\
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\67\ See, e.g., Polyethylene Terephthalate Film, Sheet, and
Strip from the People's Republic of China: Final Results of
Antidumping Duty Administrative Review; 2010-2011, 78 FR 35245,
(June 12, 2013), and accompanying IDM at Comment 4 (citing Amanda
Foods (Vietnam) Ltd. v. United States, 647 F. Supp. 2d 1368, 1379
(CIT 2009) (``To determine the dumping margin for non-mandatory
respondents in {nonmarket economy{time} cases (that is, to
determine the `separate rates' margin), Commerce normally relies on
the `all others rate' provision of {the statute{time} .''). Commerce
is now proposing to add a new regulation, Sec. 351.108, which sets
forth the separate rates requirements in this Proposed Rule.
\68\ See Viet I-Mei Frozen Foods Co. v. United States, 839 F.3d
1099, 1102 (Fed. Cir. 2016) (affirming Commerce's practice of
establishing differing treatment between the nonmarket economy
entity rate and the separate rate respondents.); see also Albemarle
Corp. & Subsidiaries v. United States, 821 F.3d 1345, 1349 (Fed.
Cir. 2016) (explaining that when all individually examined exporters
are assigned de minimis margins or countervailable rates, the
``expected method'' is for Commerce to assign a separate rate by
taking the average of the de minimis margins or countervailable
subsidy rates assigned to the individually examined respondents).
---------------------------------------------------------------------------
Similarly, in AD administrative reviews of market economy countries
and CVD reviews, Commerce will normally apply the weighted-average
margin or rate of the individually examined respondents to those
exporters or producers not selected for individual examination, despite
a request for individual review, because, like market economy exporters
or producers subject to an all-others rate, those non-selected
exporters or producers will not be individually examined during the
relevant POR.\69\
---------------------------------------------------------------------------
\69\ See, e.g., Stainless Steel Bar from India: Final Results of
Administrative Review of the Antidumping Duty Order; 2017- 2018, 84
FR 56179, (October 21, 2019), and accompanying IDM at Comment 7
(``Generally, Commerce looks to section 735(c)(5) of the Act, which
provides instructions for calculating the all-others rate in an
investigation, for guidance when calculating the rate for companies
that were not selected for individual review in an administrative
review.''); see also Circular Welded Carbon Steel Pipes and Tubes
from the Republic of Turkey: Final Results of Countervailing Duty
Administrative Review and Rescission of Countervailing Duty
Administrative Review, in Part; Calendar Year 2017, 84 FR 56173
(October 21, 2019), and accompanying IDM at 5 (explaining Commerce's
application of the all-others rate in a CVD context).
---------------------------------------------------------------------------
Proposed Sec. 351.109(g) would codify Commerce's practice of
determining a dumping margin or countervailable subsidy rate to apply
to respondents not individually investigated or examined under each of
those scenarios, and would provide, in particular, that in each of
these investigations and reviews, Commerce may use a simple average
instead of a weighted-average in its calculations if the use of a
weighted-average margin or rate would result in the release of one
exporter's or producers' business proprietary information to
another.\70\
---------------------------------------------------------------------------
\70\ See, e.g., Aluminum Extrusions from the People's Republic
of China: Final Results of Countervailing Duty Administrative
Review; 2010 and 2011 IDM at Comment 3.
---------------------------------------------------------------------------
Lastly, proposed Sec. 351.109(h) covers the selection of voluntary
respondents. Under section 782(a) of the Act, even when Commerce limits
the number of respondents selected as mandatory respondents, an
exporter or producer may still obtain its own margin or rate as a
voluntary respondent if its voluntary respondent submissions are timely
and the number of exporters or producers subject to an investigation or
review is not so large that any additional individual examination of
such exporters or producers would be unduly burdensome for Commerce and
inhibit the timely completion of the investigation or review.\71\
Although current Sec. 351.204(d) references how a firm may request
voluntary respondent status under section 782(a) of the Act, the
regulation does not address the order in which a voluntary respondent
may be selected or the filing deadlines applicable to voluntary
respondents. Accordingly, in transferring the current voluntary
respondent provisions from Sec. 351.204(d) to proposed Sec.
351.109(h), Commerce has proposed to add additional provisions covering
voluntary respondents.
---------------------------------------------------------------------------
\71\ See sections 782(a)(1)(A) and (B) of the Act; see also SAA
at 843 (``Commerce may decline to analyze voluntary responses
because it would be unduly burdensome and would preclude the
completion of timely investigations or reviews.''); and Grobest & I-
Mei Indus. (Vietnam) Co. v. United States, 853 F. Supp. 2d 1352,
1365 (CIT 2012) (citing Longkou Haimeng Machinery Co., Ltd. v.
United States, 581 F. Supp. 2d 1344, 1353 (CIT 2012) (``When
Commerce can show that the burden of reviewing a voluntary
respondent would exceed that presented in the typical antidumping or
countervailing duty review, the court will not second guess
Commerce's decision on how to allocate its resources.'') (Longkou
Haimeng Machinery)) Grobest & I-Mei Indus. (Vietnam).
---------------------------------------------------------------------------
Specifically, as proposed, current Sec. 351.204(d)(1)-(3) would be
moved to new Sec. 351.109(h)(1), (2) and (3)(i). In addition, Commerce
has added two new provisions. First, Sec. 351.109(h)(3)(ii) states
that if more than one exporter or producer seeks voluntary respondent
treatment, and Commerce determines to examine one or more voluntary
respondents individually, it will select voluntary respondents based on
the chronological order in which the requests were filed correctly on
the record.\72\ This approach is consistent with Commerce's current
voluntary respondent selection policy.\73\
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\72\ If a voluntary respondent request is submitted on the
record but is later determined to have been submitted incorrectly,
then this provision would not apply to that exporter or producer and
Commerce would select the next exporter or producer as a voluntary
respondent which filed its voluntary respondent request correctly on
the record.
\73\ See, e.g., Commerce Memorandum, ``Administrative Review of
the Countervailing Duty Order on Certain Softwood Lumber Products
from Canada: Respondent Selection,'' dated April 26, 2022, (ACCESS
Barcode 4235480-01), at 8-10 (``Commerce will select voluntary
respondents based on the order in which the requests are
received.'').
---------------------------------------------------------------------------
In addition, Commerce proposes adding Sec. 351.109(h)(4), which
addresses the timing of voluntary respondent submissions. The provision
would explain that the deadlines for voluntary respondent submissions
would generally be the same as deadlines for submissions by
individually investigated respondents. Furthermore, it would provide
that if there are two or more individually investigated respondents
with different deadlines for a submission, such as when one gets an
extension of time which is longer than the extension of time granted to
another (or none at all), then the voluntary respondent will normally
be required to file its submission to Commerce by the earliest deadline
required of the respondents selected for individual examination.
6. Revising References to Persons Examined, Treatment of Voluntary
Respondents, and Exclusion From AD and CVD Orders--Sec. 351.204
Section 351.204 applies to certain general procedures and policies
in an investigation once Commerce determines that a petition is
sufficient under Sec. 351.203. The current version includes paragraphs
covering the period of investigation, Sec. 351.204(b); the selection
of persons to be examined, Sec. 351.204(c); the treatment of voluntary
respondents not selected for individual examination, Sec. 351.204(d);
and the exclusion of certain exporters and producers from an AD or CVD
order, Sec. 351.204(e).
Commerce proposes revising Sec. 351.204 in accordance with both
its proposed revisions of the cash deposit regulation, Sec. 351.107,
and the creation of a new respondent selection and all-others
regulation, Sec. 351.109, as discussed in greater detail elsewhere in
this Proposed Rule.
Revising and simplifying Sec. 351.204 is the logical outgrowth of
the proposed revisions to part 351. Commerce may limit its examination
of potential respondents not only in investigations, but in
administrative reviews as well. Accordingly, it is reasonable to have
the respondent selection provision appear in a regulation that applies
to administrative reviews as well as investigations. Accordingly,
Commerce proposes moving the parts of current Sec. 351.204(c) that
apply to both investigations and administrative reviews, including the
waiver provision and the statutory reference to a single country-wide
subsidy rate, to new Sec. 351.109. Commerce proposes to retain
language in current Sec. 351.204(c) that applies only to
investigations, while adding new language in that provision that
references the more general respondent selection provision,
[[Page 57301]]
Sec. 351.109(c). Commerce also proposes to revise Sec. 351.213(f)
pertaining to administrative reviews to reflect similar respondent
selection language for that segment of an AD or CVD proceeding.
Second, the same issue applies to the selection of voluntary
respondents, pursuant to section 782(a) of the Act: Commerce may select
voluntary respondents in both investigations and administrative
reviews. Accordingly, Commerce proposes moving the general voluntary
respondent selection provision from current Sec. 351.204(d) to new
Sec. 351.109(h). Likewise, Commerce proposes to add a sentence to
Sec. 351.204(c) that references new Sec. 351.109(h) and states that
Commerce may determine to examine voluntary respondents in
investigations. Similar language appears in revised Sec. 351.213(f) to
indicate that voluntary respondents may be selected in administrative
reviews.
Third, with the revision of the cash deposit regulation, Sec.
351.107, Commerce concludes that it would be logical to also revise and
move current Sec. Sec. 351.204(e)(1) through (3) to that regulation.
Commerce proposes language in new Sec. 351.107(c)(3) to address
scenarios in which Commerce would apply a producer/exporter cash
deposit combination or combinations in excluding producers and
exporters from AD or CVD investigations and orders as currently
addressed in Sec. 351.204(e)(1) through (3)).
With the changes being proposed to current Sec. 351.204(d) and
(e), Commerce therefore proposes renumbering Sec. 351.204(e)(4) to
Sec. 351.204(d), retitling the subsection, ``Requests for exclusions
from countervailing duty orders based on investigations conducted on an
aggregate basis'' and removing Sec. 351.204(e) entirely.
Finally, with these modifications to Sec. 351.204(c) and (d),
Commerce also proposes updating the heading of the regulation and
updating the introductory paragraph, Sec. 351.204(a), to reflect those
changes. As proposed, the new heading would be ``Period of
investigation; requests for exclusions from countervailing duty orders
based on investigations conducted on an aggregate basis.'' Revised
paragraph (a), as proposed, would reference the rules regarding the
period of investigation and exclusion requests for countervailing duty
investigations conducted on an aggregate basis.
7. Clarifying That Assessment Rates May Be Calculated on an Ad Valorem
or a Per-Unit Basis--Sec. 351.212(b)(ii)
Section 731 of the Act directs Commerce to impose duties on
imported merchandise ``that is being, or likely to be, sold in the
United States at less than fair value.'' Section 751(a)(2)(C) of the
Act states that an AD margin ``shall be the basis for the assessment of
antidumping duties on entries of merchandise covered by the
determination and for {cash{time} deposits of estimated duties.'' The
cash deposit rate is based on an estimated AD rate and applied to
future entries, \74\ whereas the assessment rate is based on the final,
accurate AD margin for the relevant period and is applied to entries
made during the period covered by an administrative review.\75\
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\74\ See section 773(d)(1)(B); see also Koyo Seiko Co. v. United
States, 258 F.3d 1340, 1342-44 (Fed. Cir. 2001) (Koyo Seiko Co.).
\75\ See section 751(a)(2); see also Koyo Seiko Co., 258 F.3d at
1347-48.
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The Act, however, does not require any particular method for
calculating an assessment rate.\76\ Commerce acknowledged this
discretion in the 1997 Final Rule, stating that ``neither the Act nor
the AD Agreement specifies whether sales or entries are to be reviewed,
nor do they specify how {Commerce{time} must calculate the amount of
duties to be assessed.'' \77\ In calculating an assessment rate, the
Federal Circuit in Torrington held that the Act simply requires that
the difference between the foreign market value and United States price
serve as the basis for assessed duties.\78\
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\76\ See section 751(a)(2) of the Act.
\77\ 1997 Final Rule, 62 FR at 27314 (internal citations
omitted).
\78\ Torrington Co. v. United States, 44 F.3d 1572, 1578 (Fed.
Cir. 1995); see also Koyo Seiko Co., 258 F.3d at 1346.
---------------------------------------------------------------------------
Commerce's regulations codify its assessment calculation
methodology. Currently, the regulation under Sec. 351.212(b) broadly
states that ``the Secretary will normally calculate an assessment rate
for each importer of subject merchandise covered by the review.'' \79\
The regulations explain that the assessment rate is determined by
``dividing the dumping margin found on the subject merchandise examined
by the entered value of such merchandise for normal customs duty
purposes.'' \80\ This assessment rate method is also known as an ad
valorem, or a percentage of value, basis.
---------------------------------------------------------------------------
\79\ 19 CFR Sec. 351.212(b).
\80\ Id.
---------------------------------------------------------------------------
Commerce also calculates an assessment rate on a per-unit basis,
however, when an ad valorem basis will result in an under-collection of
duties, such as when entered sales values are unknown, undervalued,
systematically understated, or otherwise unreliable.\81\ As explained
above with respect to the proposed revised cash deposit regulation,
Sec. 351.107(c), units upon which an assessment rate may be calculated
include, but are not limited to, weight, length, volume, packaging
(such as the type and size of packaging), and individual units of the
product itself. The CIT has affirmed this practice, holding that
``although Commerce normally calculates assessment rates on an ad
valorem basis, it has discretion to revise the assessment methodology
and adopt a reasonable method for ensuring an accurate collection of
total duties due.'' \82\
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\81\ See Certain Activated Carbon from the People's Republic of
China IDM at 34 (stating ``the regulation, however, does not
proscribe [Commerce] from resorting to other methods of calculating
and assigning assessment and cash deposit rates, and the agency does
so in certain circumstances . . . {Commerce{time} changed the cash
deposit and assessment methodology from an ad valorem to a per-unit
basis because the application of an ad valorem rate based on net
U.S. price would yield an under-collection of duties due to Jacobi's
undervaluing of its United States sales.''); see also 1-
Hydroxyethylidene-1, 1-Diphosphonic Acid from the People's Republic
of China IDM at Comment 5; Wooden Bedroom Furniture from the
People's Republic of China IDM at Comment 17; and Honey from the
People's Republic of China IDM at Comment 7.
\82\ See Wuhan Bee, Slip Op. 2008-61 at 12.
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Commerce is therefore proposing dividing current Sec. 351.212(b)
into paragraphs (i) and (ii), the first paragraph applicable to
assessment rates determined on an ad valorem basis and the second
applicable to assessment rates determined on a per-unit basis.
8. Recognizing That Commerce May Select Respondents and Voluntary
Respondents Practice in Administrative Reviews--Sec. 351.213(f)
As discussed above, Commerce is proposing revisions to its
regulations in Sec. 351.109 to reflect its practice of limiting the
number of exporters or producers examined when it is not practicable to
examine each known exporter producer in both investigations and
administrative reviews. Furthermore, Commerce is also proposing moving
and revising provisions covering voluntary respondent selection from
Sec. 351.204(d), which covers only investigations, to Sec.
351.109(h), because Commerce may select voluntary respondents in both
investigations and administrative reviews, as affirmed by the CIT.\83\
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\83\ See Qingdao Qihang Tyre Co. v. United States, 308 F. Supp.
3d 1329, 1363 (CIT 2018) (affirming Commerce's determination in an
administrative review to individually examine two respondents based
on the statutory authority to examine the ``exporters and producers
accounting for the largest volume of the subject merchandise from
the exporting country that can be reasonably examined.''); see also
Grobest & I-Mei Indus. (Vietnam), 853 F. Supp. 2d at 1365 (citing
Longkou Haimeng Machinery Co., 581 F. Supp. 2d at 1353 (``When
Commerce can show that the burden of reviewing a voluntary
respondent would exceed that presented in the typical antidumping or
countervailing duty review, the court will not second guess
Commerce's decision on how to allocate its resources.'').
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[[Page 57302]]
In proposed and updated Sec. 351.204(c), Commerce would
acknowledge that in investigations, specifically, the agency may limit
the number of exporters or producers examined, and, in accordance with
section 782(a) of the Act, Commerce may also determine to examine
voluntary respondents in investigations. Likewise, in Sec. 351.214(f)
similar proposed language would recognize that in administrative
reviews, Commerce may both limit the number of exporters or producers
examined and select voluntary respondents. The language proposed for
both provisions references the criteria and procedures set forth in
Sec. 351.109(c), to limit selection of exporters and producers, and
Sec. 351.109(h), to select voluntary respondents, in investigations
and administrative reviews.
As mentioned above, the current regulation does not address
Commerce's respondent selection process during administrative reviews
and the practicality of individually examining multiple respondents in
an administrative review when faced with a large number of exporters
and producers. Accordingly, the proposed changes to Sec. 351.109 and
Sec. 351.213(f) would provide clarity on that issue. Furthermore,
although current Sec. 351.213(f) allows for the examination of
voluntary respondents in administrative reviews, the reference to Sec.
351.109(h) in the proposed revision would make the regulation
consistent with the other aforementioned proposed changes to the
regulations.
9. Revising Header to Section 214 Identify Expedited Reviews Separately
From New Shipper Reviews--Sec. 351.214
Commerce proposes modifying the heading of Sec. 351.214, which
currently reads ``New shipper reviews under section 751(a)(2)(B) of the
Act,'' by adding to it the phrase ``and expedited reviews in
countervailing duty proceedings.'' Section 751(a)(2)(B) of the Act
provides Commerce the authority to determine dumping margins and
countervailing duty rates for exporters and producers that did not
export subject merchandise to the United States during the period of
investigation, referred to as ``new shipper reviews,'' and Sec.
351.214 contains several provisions with respect to the conduct and
administration of new shipper reviews. However, current paragraph (l)
of Sec. 351.214 does not relate to new shipper reviews but instead
provides procedures for conducting expedited reviews of exporters not
selected for individual examination in CVD investigations. Expedited
reviews in CVD investigations are not derived from, or related to,
section 751(a)(2)(B) of the Act. Accordingly, Commerce has determined
that the revision of the section heading to reflect that a proceeding
separate from new shipper reviews is also covered by Sec. 351.214
would provide clarity.
In addition, the Federal Circuit recently held that the
``individualized-determination provisions'' of section 777A(e) of the
Act, along with the ``regulatory-implementation authority'' of section
103(a) of the URAA, explicitly provide Commerce with the authority to
promulgate Sec. 351.214(l).\84\ The Court held that this regulatory
provision ``provides one procedure for giving effect to the primary
policy of providing individual-company rate determinations'' and that
the ``SAA itself makes the connection between the expedited-review
process at issue'' and the addition of section 777A(e) to the Act in
the URAA.\85\ Commerce proposes modifying the heading to Sec. 351.214
to make it consistent with the holding in COALITION v. U.S..
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\84\ Comm. Overseeing Action for Lumber Int'l Trade
Investigations or Negots. v. United States, 66 F.4th 968, 977 (Fed.
Cir. 2023) (COALITION v. U.S.).
\85\ Id. (explaining that ``{u{time} nder a heading, `Company-
Specific Subsidy Rates and Expedited Reviews,' the SAA states:
`Article 19.3 of the Subsidies Agreement provides that any exporter
whose exports are subject to a CVD order, but which was not actually
investigated for reasons other than a refusal to cooperate, shall be
entitled to an expedited review to establish an individual CVD rate
for that exporter.''' (citing SAA at 941). The Federal Circuit
further noted that the SAA also states that ``{s{time} everal
changes must be made to the [Tariff] Act to implement the
requirements of Article 19.3'' and that one subsection of the SAA
explained that the URAA ``eliminates the presumption in favor of a
single country-wide CVD rate and amends section 777A of the Act to
establish a general rule in favor of individual CVD rates for each
exporter or producer individually investigated.'' (citing SAA at
941)).
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10. Revising Requirements for Submissions of Rebuttal Factual
Information; Modifying Deadlines Concerning the Submission of
Information Pertaining to Factors of Production and Benchmarks for
Measuring the Adequacy of Remuneration--Sec. 301(b)(2), (c)(3)(i) and
(c)(3)(ii)
Commerce proposes to revise one of its reporting regulations, Sec.
351.301(b)(2), to require greater detail from interested parties.
Specifically, Sec. 351.301(b)(2), explains that if factual information
is being provided to rebut, clarify, or correct factual information on
the record, the submitter must identify the information already on the
record that is being rebutted, clarified, or corrected. Current Sec.
351.301(b)(2) does not, however, instruct the submitter to summarize
the information being provided under this paragraph or describe how
that new factual information rebuts the information already on the
record.\86\ This omission creates a burden on both Commerce and
interested parties to understand why the information being provided
under this paragraph is being submitted and how it is particularly
relevant to the information already on the record.
---------------------------------------------------------------------------
\86\ See Saha Thai Steel Pipe Pub. Co. Ltd. v. United States,
663 F. Supp. 3d 1356, 1373 (CIT 2023).
---------------------------------------------------------------------------
Accordingly, to provide clarity to all parties regarding the
submission of factual information being provided to rebut, clarify, or
correct information already on the record, Commerce is proposing to
revise Sec. 351.301(b)(2) to specify that the submitter must also
provide a narrative summary explaining how the specific factual
information being provided rebuts, clarifies, or corrects the
identified factual information already on the record.
In addition, Commerce is proposing an additional modification to
its reporting regulation, Sec. 351.301, to update deadlines for filing
certain information on the record. Current Sec. 351.301(c)(3)(i) and
(ii) establish time limits for interested parties to submit factual
information to value factors of production under Sec. 351.408(c) or to
measure the adequacy of remuneration under Sec. 351.511(a)(2) in AD
and CVD investigations, administrative reviews, new shipper reviews,
and changed circumstances reviews.
Currently, the submissions are due no later than 30 days before the
scheduled dates of preliminary determinations and results of review.
However, these submissions sometimes contain hundreds, if not
thousands, of pages of information that Commerce needs to analyze in a
short amount of time prior to issuing a preliminary determination or
the preliminary results. The large volume of information often
contained in these submissions makes it difficult for Commerce to meet
its statutory deadlines to determine the appropriate surrogate values
or benchmarks.
In addition, since the 30-day deadlines were codified, Commerce has
experienced a large increase in AD and CVD proceedings and orders which
it must administer. In order to effectively administer and enforce the
AD and CVD
[[Page 57303]]
laws, Commerce therefore proposes modifying these time limits to allow
Commerce additional time to more fully analyze these voluminous
submissions for purposes of its preliminary decisions.
Specifically, Commerce proposes revising Sec. 351.301(c)(3)(i) to
create both a subparagraph (A) and subparagraph (B) covering
investigations. Under the proposal, Commerce would revise the time
limit for parties to submit factual information to value factors of
production under Sec. 351.408(c) in AD investigations to no later than
60 days before the scheduled date of the preliminary determination and
proposes revising Sec. 351.301(c)(3)(i)(B) to increase the time limit
for parties to submit factual information to measure the adequacy of
remuneration under Sec. 351.511(a)(2) in CVD investigations to no
later than 45 days before the scheduled date of the preliminary
determination. Commerce recognizes that the statutory deadline for the
issuance of a preliminary determination in a CVD investigation \87\ is
shorter than the preliminary determination in an AD investigation,\88\
which is the reason the agency is proposing a change of 15 fewer days
in the time limit for CVD investigations.
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\87\ See section 703(b)(1) (requiring Commerce to issue a
preliminary CVD determination within 65 days after the date of
initiation). See also Sec. 351.205(b)(1).
\88\ See section 733(b)(1)(A) (requiring Commerce to issue a
preliminary AD determination within 140 days after the date of
initiation). See also 351.205(b)(1).
---------------------------------------------------------------------------
Furthermore, for administrative reviews, new shipper reviews, and
changed circumstances reviews, Commerce proposes revising Sec.
351.301(c)(3)(ii) to require parties to submit factual information to
value factors of production under Sec. 351.408(c) or to measure the
adequacy of remuneration under Sec. 351.511(a)(2) no later than 60
days before the scheduled date of the preliminary results of review.
Commerce recognizes that in requiring such factual information to
be submitted earlier in the proceeding, interested parties will have a
shorter period of time in which to supply potential surrogate and
benchmark information in AD and CVD proceedings. However, Commerce
believes that the proposed deadlines will still be sufficient for
interested parties to gather, prepare and submit that information,
while also improving Commerce's ability to reach accurate and
appropriate preliminary determinations in its proceedings.
11. Allowing the Provision of Business Proprietary Information to CBP
Employees Investigating Negligence, Gross Negligence, or Fraud--Sec.
351.306(a)(3)
As amended in 2015, section 777(b)(1)(A)(ii) of the Act states that
Commerce may disclose proprietary information ``to an officer or
employee of the United States Customs Service who is directly involved
in conducting an investigation regarding negligence, gross negligence
or fraud under this title.'' Current Sec. 351.306(a)(3) states that
Commerce may disclose business proprietary information to ``an employee
of U.S. Customs and Border Protection'' involved in conducting ``a
fraud investigation.'' However, the Act now includes ``negligence'' and
``gross negligence'' investigations.\89\
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\89\ See section 413(a) of the Trade Facilitation and Trade
Enforcement Act of 2015 (Pub. L. 114-125), 130 Stat. 122 (2016).
---------------------------------------------------------------------------
Accordingly, Commerce is proposing amendments to Sec.
351.306(a)(3) to expand the covered investigations to negligence and
gross negligence investigations as well as fraud investigations. These
proposed changes would bring Sec. 351.306(a)(3) into conformity with
section 777(b)(1)(A)(ii) of the Act as amended in 2015.
12. Updating the Facts Available Regulations, Including Adding Language
From the Trade Preferences Extension Act of 2015--Sec. 351.308(g),
(h), and (i)
On June 29, 2015, the Trade Preferences Extension Act of 2015
(TPEA) was signed into law. Among other changes, TPEA amended
provisions of section 776 of the Act,\90\ which governs Commerce's
authority to rely on facts otherwise available in conducting AD and CVD
proceedings.
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\90\ See TPEA of 2015, Public Law 114-27, 129 Stat. 362, 384
(2015), Sec. 502, codified at 19 U.S.C. 1677(e).
---------------------------------------------------------------------------
Current Sec. 351.308 addresses Commerce's practices and procedures
arising out of section 776 of the Act, but there are certain aspects of
Commerce's practice, and sections of the 2015 amendments, that are not
currently reflected in Commerce's regulations.
First, when applying facts available pursuant to section 776(a) of
the Act, there are cases in which Commerce determines that information
is missing or unreliable to the extent that the application of total
facts available is warranted to all of a exporter's or producer's
calculations and should be applied in determining the antidumping
margin or countervailable subsidy rate as a whole.\91\ However, in
other cases, Commerce may determine that only certain information is
missing or unreliable and, given the facts on the record, it is
appropriate to apply only partial facts available to a portion of its
antidumping or countervailing duty analysis and calculations for a
particular exporter or producer.
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\91\ See, e.g., Fine Denier Polyester Staple Fiber from India:
Final Results of Antidumping Duty Administrative Review, 2018-2019,
86 FR 29249 (June 1, 2021), and accompanying IDM at Comment 1.
---------------------------------------------------------------------------
The CIT and the Federal Circuit have upheld Commerce's practice to
apply ``partial'' and ``total'' facts available under section 776 of
the Act.\92\ While the Act does not explicitly reference total or
partial facts available,\93\ courts have recognized and affirmed
Commerce's authority to use partial facts available when there are
discrete gaps in the information and total facts available when none of
a party's information is available, useable, or reliable.\94\
Accordingly, Commerce proposes adding Sec. 351.308(g) to codify
Commerce's long-standing practice to apply either partial or total
facts available in implementing sections 776(a) and (b) of the Act.
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\92\ See, e.g., Mukand, Ltd. v. United States, 767 F.3d 1300,
1308 (Fed. Cir. 2014) (Mukand II) (affirming Commerce's application
of total adverse facts available when respondent's sales and cost
data was unusable), affirming Slip Op. 13-00041 (CIT March 25,
2013); Kawasaki Steel Corp. v. United States, 110 F. Supp. 2d 1029,
1043 (CIT 2000) (affirming Commerce's application of partial adverse
facts available with respect to certain information needed to
calculate respondent's constructed export price).
\93\ See Mukand II, Slip Op. 13-00041 (CIT March 25, 2013),
aff'd, 767 F.3d 1300.
\94\ See id.
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In addition, Commerce also proposes adding paragraphs (h) and (i)
to Sec. 351.308 to reflect changes incorporated into section 776 of
the Act by the TPEA. The TPEA amended section 776(c) of the Act to
provide that when Commerce relies on information obtained in the course
of an AD or CVD investigation or review pursuant to subsection (c)(1),
Commerce is not required to corroborate any dumping margin or
countervailing duty applied in a separate segment of the same
proceeding pursuant to subsection (c)(2).\95\ Accordingly, Commerce
proposes adding paragraph (h) to reflect that Commerce is not required
to conduct a corroboration analysis when applying margins or rates
derived from separate segments of the same proceeding pursuant to
section 776(c)(2) of the Act.
---------------------------------------------------------------------------
\95\ See section 776(c)(2) of the Act.
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Furthermore, the TPEA created section 776(d) of the Act, which
[[Page 57304]]
addresses Commerce's authority to select from among the facts otherwise
available when applying an adverse inference.\96\ Sections
776(d)(1)(A)(i) and (ii) of the Act provide that when applying an
adverse inference in a CVD proceeding, Commerce may use a
countervailable subsidy rate applied for the same or a similar program
in a CVD proceeding involving the same country and if none exists,
Commerce may use a countervailable subsidy rate for a subsidy program
from a proceeding that Commerce considers reasonable. Furthermore,
section 776(d)(1)(B) provides that when applying an adverse inference
in AD proceedings, Commerce may use any dumping margin from any segment
of the proceeding under the applicable antidumping order. In addition,
when selecting from the subsidy rates or dumping margins specified in
section 776(d)(1) of the Act, section 776(d)(2) of the Act authorizes
Commerce to apply the highest rate or margin, based on the evaluation
of the situation that resulted in Commerce applying an adverse
inference.
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\96\ Id.
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Finally, sections 776(d)(3)(A) and (B) of the Act provide that when
using an adverse inference in selecting among the facts otherwise
available, Commerce is not required to estimate what the
countervailable subsidy rate or dumping margin would have been if the
interested party found to have failed to cooperate under section
776(b)(1) had cooperated nor to demonstrate that the countervailable
subsidy rate or dumping margin reflects an alleged commercial reality
of the interested party.
In light of these modifications made to section 776 of the Act in
the TPEA, Commerce proposes adding Sec. 351.308(i)(1), (2), and (3) to
reflect the facts available language set forth in sections 776(d)(1),
(2), and (3) of the Act.
13. Revising Case Brief and Rebuttal Brief Regulation To Include
Executive Summaries--Sec. 351.309(c)(2) and (d)(2)
Current Sec. 351.309(c)(2) and (d)(2) of Commerce's regulations
address the filing requirements of case briefs and rebuttal briefs,
including an ``encouragement'' by the agency that parties ``provide a
summary of the arguments not to exceed five pages and a table of
statutes, regulations, and cases cited.'' Such summaries were intended
to enable the reader to quickly ascertain the main arguments presented
by interested parties. However, since that language was codified in the
regulation, Commerce has found that many such summaries submitted in
briefs and rebuttal briefs have been so general as to be of limited use
to interested parties and Commerce officials. Furthermore, the absence
of shorter and more succinct summaries for each of the issues raised in
interested parties' case and rebuttal briefs has resulted in Commerce
officials spending considerable time paraphrasing interested parties'
briefs and arguments in shorter summation for use in final decision
memoranda.
Therefore, starting in November 2023, Commerce revised the
instructions it provided to interested parties in the ``Public
Comment'' section of its notices of preliminary determination and
preliminary results \97\ to request that interested parties provide at
the beginning of their briefs a public executive summary for each issue
raised in those submissions, defining an ``issue'' as an argument that
Commerce would normally address in comments in its final issues and
decision memoranda. Furthermore, since November 2023, Commerce
requested that interested parties limit their executive summary of each
issue in briefs and rebuttal briefs to no more than 450 words (not
including citations). Commerce explained in its preliminary notices
that it has requested that parties submit such summaries so that those
summaries can appear in Commerce's issues and decision memoranda.\98\
This approach relieves the agency of the effort and time it takes to
paraphrase interested parties' arguments and also helps assure
interested parties that Commerce is reflecting their arguments
accurately in the agency's issues and decision memoranda.
---------------------------------------------------------------------------
\97\ See, e.g., Thermal Paper from the Republic of Korea:
Preliminary Results of Antidumping Duty Administrative Review, 2021-
2022, 88 FR 83384, 83386 (November 29, 2023); Refillable Stainless
Steel Kegs from the People's Republic of China: Preliminary Results
of the Antidumping Duty Administrative Revie,; 2021-2022, 88 FR
85230, 85231 (December 7, 2023); and Stilbenic Optical Brightening
Agents from Taiwan: Preliminary Results of Antidumping Duty
Administrative Review, 2022, 89 FR 7361, 7362 (February 2, 2024)
(Brightening Agents from Taiwan Preliminary Results).
\98\ See, e.g., Brightening Agents from Taiwan Preliminary
Results, 89 FR at 7362.
---------------------------------------------------------------------------
Commerce explained in those notices that it was, and is, Commerce's
intent to use the executive summaries as the basis of the comment
summaries included in the final decision memoranda that will accompany
the final results of review.\99\ However, there may be instances in
which Commerce will need to revise an interested party's executive
summary for purposes of context, simplicity, or clarity.\100\
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\99\ See id., 89 FR at 7362.
\100\ For example, Commerce may determine to remove or revise
lengthy footnotes when it places executive summaries in its issues
and decision memoranda if it determines that lengthy and
argumentative footnotes were an attempt to avoid the word length
restrictions for executive summaries requested in the regulation.
---------------------------------------------------------------------------
Consistent with that new policy, Commerce is proposing revising
Sec. 351.309(c)(2) and (d)(2) to request the inclusion of an executive
summary for each argument raised in the brief and rebuttal brief. The
regulation provides that executive summaries should be no more than 450
words in length, not counting supporting citations. With respect to
supporting citations, the new regulatory language is clear that, in
general, interested parties may include all relevant citations,
including prior Commerce decisions and Federal Court holdings, without
concern about the 450-word length.
In the past, Commerce has ``encouraged'' interested parties to
include a general summary in their case and rebuttal brief. Commerce
proposes replacing that term with the term ``request'' and eliminating
the reference to a general summary. The revised provision would request
that parties supply a table of contents listing each issue; a table of
authorities, include statutes, regulations, administrative cases,
dispute panel decisions, and court holdings cited; and an executive
summary for each argument raised in the brief. The change from
``encouraged'' to ``request'' is intentional, as Commerce's ability to
effectively administer that AD and CVD laws is improved when parties
submit tables of contents, tables of authorities, and an executive
summary for each argument raised in the brief.\101\ In addition, the
inclusion of a table of contents is consistent with Commerce's
practice, and the inclusion on the list of administrative cases and
dispute panel decisions to be cited in a table of authorities is
intended to provide additional clarity, as those sources are frequently
cited in briefs and rebuttal briefs.
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\101\ For purposes of this Proposed Rule, Commerce is
emphasizing that if interested parties fail to provide the succinct
450-word public executive summaries, pursuant to this revised
provision, Commerce may request that those parties resubmit their
entire brief or rebuttal brief with an executive summary.
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Finally, Commerce has proposed removing from its list of requested
(formerly encouraged) information the five-page summaries, for the
reasons explained above. Commerce does not find that five-page
summaries are generally helpful, although Commerce
[[Page 57305]]
will not prohibit the submission of such summaries if interested
parties wish to continue to supply them.
14. Revising To Include Practice of Collapsing Affiliated Producers and
Non-Producers--Sec. 351.401(f)
When affiliated producers share ownership, management, or have
intertwined operations, there is a significant potential for the
manipulation of the prices or production of the subject merchandise.
Commerce has a longstanding and court-affirmed practice of
``collapsing'' certain affiliated entities and treating them as a
single entity for purposes of its AD calculations.\102\ As currently
written, Sec. 351.401(f)(1) codifies Commerce's practice of collapsing
affiliated producers who ``have production facilities for similar or
identical products that would not require substantial retooling of
either facility in order to restructure manufacturing priorities''
where ``there is a significant potential for the manipulation of price
or production.'' Section 351.401 (f)(2) identifies the factors Commerce
may consider in determining whether there is significant potential for
the manipulation of price or production.
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\102\ See Notice of Final Determination of Sales at Less Than
Fair Value: Certain Frozen and Canned Warmwater Shrimp from Brazil,
69 FR 76910 (December 23, 2004), and accompanying IDM (Shrimp from
Brazil IDM) at Comment 5; see also Rebar Trade Action Coalition v.
United States, 398 F. Supp. 3d 1359, 1366-1371 (CIT 2019) (Rebar
Trade Action Coalition); Queen's Flowers de Colombia v. United
States, 981 F. Supp. 617, 622 (CIT 1997) (Queen's Flowers); and
Viraj Group. v. United States, 476 F.3d 1349, 1355-58 (Fed. Cir.
2007).
---------------------------------------------------------------------------
By collapsing affiliated producers and calculating a single
weighted-average dumping margin for the combined entity, the current
regulation discourages producers subject to antidumping duties from
shifting their production or sales to affiliated producers to evade
those duties. \103\
---------------------------------------------------------------------------
\103\ See Rebar Trade Action Coalition, 475 F. Supp. at 1368.
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However, affiliated non-producers such as exporters, importers, and
producers can also manipulate and influence prices and costs through
their mutual relationships.\104\ Accordingly, to prevent manipulation
of the prices and costs used in its dumping analysis, and prevent the
evasion of duties, Commerce has in several AD proceedings collapsed
non-producers with both producers and non-producers, and the CIT has
affirmed Commerce's authority to do so.\105\ Although the Act does not
expressly address collapsing, the CIT has held that Commerce's
collapsing practice, as applied to both affiliated producers and non-
producers, effectuates the basic purpose of the Act: to calculate
accurate dumping margins and to prevent the evasion of duties.\106\
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\104\ See Shrimp from Brazil IDM at Comment 5.
\105\ See NACCO Materials Handling Group, Inc. v. United States,
971 F. Supp. 586, 591-92 (CIT 1997) (NAACO Materials); Queen's
Flowers, 981 F. Supp. at 617-622; and Echjay Forgings, 475 F. Supp.
3d. at 1360 (CIT 2020) (citing Hontex Enterprises Inc. d/b/a
Louisiana Packing Company v. United States of America, 248 F. Supp.
2d. 1323 (CIT 2003)).
\106\ See Queen's Flowers, 981 F. Supp. at 622.
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As such, Commerce proposes revising Sec. 351.401(f) to explicitly
address the ability of the agency to collapse producers and non-
producers when it determines that there is a significant potential for
the manipulation of prices or production between two or more affiliated
parties.\107\
---------------------------------------------------------------------------
\107\ See United States Steel Corp. v. United States, 179 F.
Supp. 3d 1114, 1135 (CIT 2016).
---------------------------------------------------------------------------
In practice, Commerce has found the (f)(2) factors in the current
regulation instructive in determining whether to collapse non-producer
affiliated parties. For example, applying the factors of Sec.
351.401(f) relevant to non-producers, Commerce has collapsed producers
with affiliated resellers and exporters.\108\ Accordingly, Commerce
proposes modifying Sec. 351.401(f) to reflect Commerce's longstanding
practice of collapsing affiliated parties, rather than only affiliated
producers, by changing references to ``affiliated producers'' to
``affiliated parties.'' Further, Commerce proposes moving discussion of
whether affiliated parties have or will have access to production
facilities for similar or identical products from paragraph (f)(1) to a
newly created paragraph (f)(3). If applicable, paragraph (f)(3) would
require Commerce to consider if any of those facilities would require
substantial retooling in order to restructure manufacturing priorities.
This modification would ensure that Sec. 351.401(f) centers Commerce's
collapsing analysis on whether there is a significant potential for
manipulation of prices, production, or other commercial activities--a
factor relevant to producers and non-producers alike.\109\ Finally,
paragraph (f)(2), with a few minor modifications, would continue to
describe the factors Commerce may consider in determining whether there
is a significant potential for manipulation.
---------------------------------------------------------------------------
\108\ See Shrimp from Brazil IDM at Comment 5; see also Certain
Welded Carbon Steel Standard Pipes and Tubes from India: Preliminary
Results of Antidumping Duty Administrative Review, 75 FR 33578,
33580-33581 (June 14, 2010), unchanged in Certain Welded Carbon
Steel Standard Pipes and Tubes from India: Final Results of
Antidumping Duty Administrative Review, 75 FR 69626 (November 15,
2010); and Certain Preserved Mushrooms from the People's Republic of
China: Final Results and Final Rescission, in Part, of Antidumping
Duty Administrative Review, 70 FR 54361 (September 14, 2005), and
accompanying IDM at Comment 9.
\109\ See Shrimp from Brazil IDM at Comment 5; see also Rebar
Trade Action Coalition, 475 F. Supp. at 1367.
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15. Addressing the Submission of Multinational Corporation Provision
Allegations and Clarification That the Provision Does Not Apply to
Nonmarket Economy Countries--Sec. 351.404(g)
Section 773(d) of the Act enumerates the factors necessary for
Commerce to determine whether to apply the special rule for certain
multinational corporations in determining normal value for purposes of
its AD calculations. Current Sec. 351.301(c) sets forth the time
limits for submissions of various allegations, arguments, and factual
information relevant to that determination, but it does not refer to
allegations that the special rule for certain multinational
corporations should be applied given the facts on the record. In the
past, Commerce has articulated in its communications to outside parties
that the deadlines of Sec. 351.301(c)(2)(i) should apply to such
allegations,\110\ and Commerce is proposing to codify that
understanding in new Sec. 351.404(g)(1).
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\110\ See Commerce's Letter, ``Multinational Corporation
Provision,'' dated April 9, 2021 (ACCESS barcode: 4108533-01) at 2
n. 9 (stating ``Commerce intends to clarify in its initiation
notices for subsequent proceedings that the applicable deadline for
all interested parties to file an MNC allegation is established by
19 CFR 351.301(c)(2)(i).'').
---------------------------------------------------------------------------
Under section 773(d) of the Act, the special rule for certain
multinational corporations requires a determination concerning market
viability and the basis for determining normal value. Current Sec.
351.301(c)(2)(i) provides interested parties the deadline for
submitting allegations regarding market viability in an antidumping
investigation or administrative review. Proposed Sec. 351.404(g)(1)
would instruct interested parties to file multinational corporation
provision allegations in accordance with the filing requirements set
forth in Sec. 351.301(c)(2)(i).
In addition, Commerce has previously determined that the special
rule for certain multinational corporations does not apply when the
non-exporting country at issue is a nonmarket economy \111\ and, thus,
normal value is
[[Page 57306]]
determined using a factors of production methodology in accordance with
773(c) of the Act.\112\ This is because section 773(d)(2) of the Act
requires that section 773(a)(1)(C) of the Act apply in order for
Commerce to use the statutory factors to determine whether to apply the
special rule for certain multinational corporations, and section
773(a)(1)(C) provides that Commerce will determine normal value using
third country sales and not the factors of production methodology
statutorily required for nonmarket economies. The Federal Circuit, in
Ad Hoc Shrimp Trade Comm, affirmed Commerce's interpretation of section
773(d)(2) of the Act as reasonable and in accordance with law.\113\
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\111\ See, e.g., Certain Frozen Warmwater Shrimp from Thailand:
Final Results and Final Partial Rescission of Antidumping Duty
Administrative Review, 72 FR 52065 (September 12, 2007) and
accompanying IDM (Shrimp from Thailand IDM) at 37 (stating ``the
legislative history suggests that Congress was primarily concerned
with situations where the home market was not viable and yet a
respondent's low priced exports to the United States market was
supported by higher priced sales of its affiliate in a third country
market. This legislative concern, however, does not appear to
encompass respondents from {nonmarket economy{time} countries. In
{nonmarket economy{time} cases, the Department disregards home
market prices and the respondent's cost of production and calculates
{normal value{time} on the reported factors of production.''
(internal citations omitted)); see also Certain Frozen Warmwater
Shrimp from the People's Republic of China: Notice of Final Results
and Rescission, in Part, of 2004/2006 Antidumping Duty
Administrative and New Shipper Reviews, 72 FR 52049 (September 12,
2007), and accompanying IDM at Comment 12.
\112\ In nonmarket economy cases, when there is ``likely price
distortion due to state involvement'' and sales of merchandise do
not reflect their fair value, Commerce is unable to determine normal
value and must instead rely on a factors of production methodology
in accordance with 773(c) of the Act. See Ad Hoc Shrimp Trade Action
Comm. v. United States, 596 F.3d 1365, 1369-71 (Fed. Cir. 2010) (Ad
Hoc Shrimp Trade Comm.).
\113\ See Ad Hoc Shrimp Trade Comm. 596 F.3d at 1369-73.
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Thus, consistent with Commerce's interpretation of the Act, as
affirmed by the Federal Circuit, Commerce is proposing new Sec.
351.404(g)(2) which would state clearly that the special rule for
multinational corporations will not apply where the non-exporting
country at issue is a nonmarket economy country and normal value is
determined using a factors of production methodology.
Commerce believes that these two additions to the regulations will
provide greater detail to the public with respect to the submission of
allegations to which the special rule for multinational corporations
would apply, as well as the application of the special rule itself.
16. Providing Criteria for Determining a Profit Rate Under the
Constructed Value Profit Cap--Sec. 405(a) and (b)(3)
As set forth in Sec. 351.405(a), pursuant to section 773(e) of the
Act in certain circumstances Commerce may determine normal value by
constructing a value based on the cost of manufacturing; selling,
general and administrative expenses; and profit. In constructing such a
value, the Act provides that Commerce should use the ``actual amounts
incurred and realized by the specific exporter or producer being
examined in the investigation or review for selling, general, and
administrative expenses, and for profits, in connection with the
production and sale of a foreign like product, in the ordinary course
of trade, for consumption in the foreign country.'' \114\ However,
there are times when the ``actual data are not available with respect''
to those production and sale amounts, and in those circumstances,
section 773(e)(2)(B) of the Act establishes three alternative methods
for calculating amounts for selling, general, and administrative
expenses, and profits, in connection with the production and sale of a
foreign like product, in those instances.\115\ The Act provides
Commerce with the discretion to select from any of the three
alternative methods, depending on the information available on the
record.\116\
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\114\ Section 773(e)(2)(A) of the Act.
\115\ See SAA at 840 (``At the outset, it should be emphasized,
consistent with the Antidumping Agreement, new section 773(e)(2)(B)
does not establish a hierarchy or preference among these alternative
methods. Further, no one approach is necessarily appropriate for use
in all cases'').
\116\ Certain Steel Nails from the Republic of Korea: Final
Determination of Sales at Less Than Fair Value, 80 FR 28955 (May 20,
2015) (Certain Steel Nails from Korea), and accompanying IDM at
Comment 4.
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One of those three options, described in section 773(e)(2)(B)(iii)
of the Act, allows Commerce to use amounts incurred and realized for
selling, general, and administrative expenses, and for profits based on
``any other reasonable method'' with one exception. The Act provides
that ``the amount allowed for profit may not exceed the amount normally
realized by exporters or producers'' other than the individually
examined exporter or producer ``in connection with the sale, for
consumption in the foreign country, of merchandise that is in the same
general category of productions as the subject merchandise.''
The SAA states that ``Commerce will develop this alternative
through practice,'' \117\ and with respect to the ``profit cap''
exception set forth in this provision,\118\ Commerce has done just that
for over two decades. It has been Commerce's practice in determining
the amount of profit normally realized by exporters or producers in
connection with the sale, for consumption in the foreign country, of
merchandise that is in the general category as the subject merchandise
for use in its constructed value calculations to consider four
criteria: (1) the similarity of the potential surrogate companies'
business operations and products to the respondent's business
operations and products; (2) the extent to which the financial data of
the surrogate company reflects sales in the home market and does not
reflect sales to the United States; (3) the contemporaneity of the data
to the period of investigation; and (4) the extent to which the
customer base of the surrogate company and the respondent is
similar.\119\
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\117\ SAA at 841.
\118\ Id. (``The Administration also recognizes that where, due
to the absence of data, Commerce cannot determine amounts for profit
under alternatives (1) and (2) or a ``profit cap'' under alternative
(3), it might have to apply alternative (3) on the basis of `facts
available.' This ensures that Commerce can use the alternative (3)
when it cannot calculate the profit normally realized by other
companies on sales of the same general category of products.'').
\119\ See Notice of Final Determination of Sales at Less Than
Fair Value: Pure Magnesium from Israel, 66 FR 49349 (September 27,
2001), and accompanying IDM at Comment 8; see also Notice of Final
Determination of Sales at Not Less Than Fair Value: Certain Color
Television Receivers from Malaysia, 69 FR 20592 (April 16, 2004),
and accompanying IDM at Comment 26.
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In elaborating the relevancy of each criterion, Commerce has
explained that the greater the similarity in business operations,
products, and customer base, the more likely that there is a greater
correlation in the profit experience of the two companies.\120\
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\120\ See Notice of Final Determination of Sales at Not Less
Than Fair Value: Certain Color Television Receivers from Malaysia,
69 FR 20592 (April 16, 2004), and accompanying IDM at Comment 26.
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Concerning the extent to which U.S. sales are reflected in the
surrogate's financial statements, because Commerce is typically
comparing U.S. sales to a normal value from the home market or third
country, Commerce has explained that it does not want to construct a
normal value based on financial data that contains exclusively or
predominantly U.S. sales.\121\ Further, in accordance with section
773(e)(2)(B) of the Act generally, Commerce has explained that it
seeks, to the extent possible, home market profit experience.\122\
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\121\ Id.
\122\ Id.
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Finally, with respect to the contemporaneity criteria, because
markets change over time, Commerce has explained that the more current
the data, the more reflective it believes that data would be of the
market in which the respondent is operating.\123\
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\123\ Id.
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[[Page 57307]]
Commerce has considered those criteria in selecting the appropriate
financial statements to determine constructed value profit under
section 773(e)(2)(B)(iii) of the Act for many years.\124\ Moreover, the
Federal Circuit, in Mid Continent Steel & Wire Inc., affirmed
Commerce's framework, based on those four criteria, as a reasonable
interpretation of section 773(e)(2)(B)(iii) of the Act.\125\
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\124\ See, e.g., Certain Oil Country Tubular Goods from the
Republic of Korean; Final Determination of Sales at Less Than Fair
Value and Negative Final Determination of Critical Circumstances, 79
FR 41983 (July 18, 2014), and accompany IDM at Comment 1.
\125\ Mid Continent Steel & Wire, Inc. v. United States, 941
F.3d 530, 542-43 (Fed. Cir. 2019) (concluding that Commerce's
analysis applying the four-part framework was a reasonable
interpretation of the statute).
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Accordingly, Commerce has determined that the public and the agency
alike would benefit through the codification of this practice in its
regulations. Therefore, Commerce is proposing a change to the last
sentence of Sec. 351.405(a) to indicate that the information that
Commerce will consider in determining a constructed value and the
addition of a new paragraph (3) to Sec. 351.405(b), which would apply
to determinations of ``profit and selling, general and administrative
expenses'' to reflect the four criteria described above in selecting a
value for CV profit under the ``profit cap'' exception set forth in
section 773(e)(2)(B)(iii) of the Act.
17. Revising Criteria for Determining Economic Comparability in
Calculating Normal Value From Nonmarket Economy Countries--Sec.
351.408(b)
Section 773(c)(2)(B) of the Act states that when Commerce is
conducting an antidumping analysis of a nonmarket economy country, it
will include consideration of the price of merchandise ``produced in
one or more market economy countries that are at a level of economic
development comparable to that of a nonmarket economy country.''
Furthermore, section 773(c)(4)(A) of the Act states that in valuing
factors of production for a nonmarket economy country analysis,
Commerce shall utilize, to the extent possible, ``the prices or costs
of factors of production in one or more market economy countries that
are--(A) at a level of economic development comparable to that of a
nonmarket economy country.''
Current Sec. 351.408(b) states that in determining whether a
country is at a level of economic development comparable to the
nonmarket economy under sections 773(c)(2)(B) and 773(c)(4)(A) of the
Act, Commerce will ``place primary emphasis on per capita GDP as the
measure of economic comparability.'' However, Commerce's general
practice has been to use per capita GNI instead of per capita GDP as
the measure of economic comparability \126\ because ``while the two
measures are very similar, per capita GNI is reported across almost all
countries by an authoritative source (the World Bank).'' \127\
Commerce's use of GNI has been recognized and affirmed as reasonable by
the CIT as a measure to determine economic comparability in multiple
holdings.\128\
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\126\ See Antidumping Methodologies in Proceedings Involving
Nonmarket Economy Countries: Surrogate Country Selection and
Separate Rates; Request for Comment, 72 FR 13246, 13246 n.2 (Mar.
21, 2007) (Surrogate Country Notice).
\127\ Id.
\128\ See, e.g., Clearon Corp v. United States, 38 CIT 1122,
1137-1140 (CIT July 24, 2014); see also Tri Union Frozen Prods. v.
United States, 163 F. Supp. 3d. 1255, 1268, n. 8 (CIT 2016); and
Tianjin Wanhua Co. v. United States, 253 F. Supp. 3d. 1318, 1322
(CIT 2017).
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Commerce is now proposing to update Sec. 351.408(b) to reflect
that Commerce may consider either GNI or GDP in selecting potential
surrogate countries. Per capita GNI measures the total income earned by
the residents of a country, whether from domestic or foreign sources,
divided by the average population of that country. Per capita GDP, on
the other hand, measures the total value of goods and services produced
within a country per person in a given year. This calculation provides
insights into overall economic output and living standards of a
population. Higher per capita GDP suggests a greater share of economic
output available for each citizen, which can translate into improved
living standards. GDP remains a widely recognized measure for assessing
a population's economic well-being and quality of life.\129\
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\129\ For examples using per capita GDP, see World Economic
Outlook: Navigating Global Divergences (October 2023), International
Monetary Fund (World Economic Outlook October 2023), available at
<a href="https://www.imf.org/en/Publications/WEO/Issues/2023/10/10/world-economic-outlook-october-2023">https://www.imf.org/en/Publications/WEO/Issues/2023/10/10/world-economic-outlook-october-2023</a>; World Development Indicators, World
Bank, available at <a href="https://databank.worldbank.org/indicator/NY.GDP.PCAP.CD/1ff4a498/Popular-Indicators#">https://databank.worldbank.org/indicator/NY.GDP.PCAP.CD/1ff4a498/Popular-Indicators#</a>; GDP per capita,
purchasing power parity (current international $)--OECD members,
World Bank (GDP per capita OECD member data), available at <a href="https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?locations=OE">https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?locations=OE</a>.
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There are potential benefits to the use of either per capita GNI or
per capita GDP. The use of per capita GNI as an aggregate economic
indicator might be appropriate in some cases for the reasons explained
in the Surrogate Country Notice. However, there may be other situations
in which the use of per capita GDP might be a better measure of
economic comparability. Accordingly, Commerce is proposing a
modification to Sec. 351.408(b) which allows the agency to place
primary emphasis on either per capita GDP or per capita GNI since both
options can be reasonably used to determine comparable economies,
depending on the facts before the agency.
In addition, Commerce proposes that Sec. 351.408(b) be further
amended to allow Commerce to consider additional factors that relate to
economic comparability: (1) the overall size and composition of
economic activity in those countries, as measured by either GDP or GNI;
(2) the composition and quantity of exports from those countries; (3)
the availability, accessibility, and quality of data from those
countries; and (4) additional factors which Commerce determines are
appropriate to consider in light of unique factors and circumstances.
Consideration of such examples may assist the agency in evaluating the
economic similarities and differences between countries.
With respect to the first factor, Commerce believes that reviewing
a country's overall size and composition of economic activity could
reveal not only what a country produces and exports but might also
provide a deeper understanding of its fundamental economic structure,
development phase, and role in the global economy.\130\
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\130\ See Paul Krugman & Maurice Obstfeld, International
Economics: Theory and Policy (5th ed. 2000), at 12-13, 66 (Ricardian
model and Heckscher-Ohlin model showing the relationship between
economic comparability and export patterns).
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With respect to countries' export compositions and quantities, such
information could help Commerce identify economies with similar levels
of development and industrial structures, as countries with similar
types and quantities of exports will more likely than not be at a
comparable economic level of development.\131\ As such, consideration
of such information might help Commerce provide comparisons that are
most grounded in economic reality and enhance the chances that the
selected surrogate countries possess similar underlying economic
structures.
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\131\ See id. at 31, Table 2 (citing 2013 International Trade
Statistics, U.N.Y.B. ST/ESA/STAT/SER.G/62 vol. 1 (New York: United
Nations, 2014), available at <a href="https://www.un-ilibrary.org/content/books/9789210566988/read">https://www.un-ilibrary.org/content/books/9789210566988/read</a>).
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Commerce has also proposed to include the availability,
accessibility, and quality of data from potential surrogate countries
as a factor to
[[Page 57308]]
consider because it is Commerce's experience that sometimes the best
sources of surrogate values for Commerce to use in its calculations are
those from countries where data are easily available, accessible and of
good quality.
Lastly, Commerce proposes that it consider additional economic
factors as appropriate in light of unique circumstances. Such factors
could include indicators such as purchasing power parity to account for
differences in spending power between countries.\132\ Other examples
include regional indicators that would allow Commerce, when reasonable,
to select a surrogate country or countries that are in the same
geographic region as the nonmarket economy country or that are not
going through temporary hyperinflationary periods. Consideration of
these factors would assist Commerce in selecting appropriate surrogate
countries when economy-wide or sector specific prices may be
contributing to distorting economic conditions.
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\132\ Notably, both the World Bank and IMF use the per capita
GDP purchasing power parity in some of their economic analyses. See
GDP per capita OECD member data, and World Economic Outlook October
2023.
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18. Removing the Integral Linkage Specificity Provision, the
Agricultural Exception to Specificity Rule and the Small- and Medium-
Sized Businesses Exception to Specificity Rule--Sec. 351.502(d), (e)
and (f). Revising and Moving the Disaster Relief Exception to
Specificity Rule and Creating an Employment Assistance Programs
Exception to Specificity Rule--Sec. 351.502(d) and (e)
In order for Commerce to find benefits provided by a particular
program to be countervailable, the program must provide benefits that
are legally specific, that is, not broadly available or widely used but
narrowly focused and used by discrete segments of an economy. Commerce
is proposing multiple changes to its specificity regulation, Sec.
351.502. First, the agency proposes to delete the integral linkage
provision found at current Sec. 351.502(d) pursuant to which Commerce
may examine whether an investigated subsidy program is specific under
section 771(5A)(D) of the Act by expanding its specificity analysis to
programs other than the investigated subsidy program if the
investigated subsidy program is ``integrally linked'' to other subsidy
programs. The concept of integral linkage contained in Sec. 351.502(d)
was a discretionary practice of Commerce at the time of its
codification. There was, and is, no statutory requirement to expand the
analysis of specificity under section 771(5A)(D) of the Act beyond the
investigated subsidy program. Since Sec. 351.502(d) was put into
place, respondents have rarely invoked the integral linkage provision,
and Commerce has rarely found two or more subsidy programs to be
integrally linked.\133\ For these reasons, Commerce proposes deleting
the integral linkage provision found at current Sec. 351.502(d).
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\133\ See, e.g., Countervailing Duties; Final Rule, 63 FR 65348,
65357 (November 25, 1998) (1998 Preamble); see also the Preamble to
Countervailing Duties: Notice of Proposed Rulemaking and Request for
Public Comments, 54 FR 23366, 23368 (May 31, 1989). The 1989
Proposed Rules were never finalized.
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Second, Commerce proposes to delete the agricultural exception
found at current Sec. 351.502(e) in order to ensure consistency with
the specificity test set forth in the SAA.\134\ Section 351.502(e)
currently provides that Commerce will not regard a domestic subsidy as
being specific under section 771(5A)(D) of the Act solely because the
subsidy is limited to the agricultural sector. When current paragraph
(e) was issued, Commerce explained that this exception for generally
available agricultural subsidies was consistent with prior practice and
that Commerce would find an agricultural subsidy to be countervailable
only if it were specific within the agricultural sector, e.g., a
subsidy limited to livestock or livestock receive disproportionately
large amounts of the subsidy.\135\
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\134\ See SAA at 911-955.
\135\ See 1998 Preamble, 63 FR at 65357-65358.
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This regulation was based on Commerce's decisions in several cases
during the 1980s, including Asparagus from Mexico,\136\ Fresh Cut Roses
from Israel,\137\ and Certain Fresh Cut Flowers from Mexico.\138\ In
Asparagus from Mexico, Commerce determined that the provision of water
to agricultural producers was not countervailable, explaining:
``{p{time} referential rates are not provided to the producers of any
one agricultural product'' and ``{w{time} e do not consider the
provision of water at a uniform rate to all agricultural producers in
this region to be a benefit, which would constitute a bounty or grant,
because Commerce considers the agricultural sector to constitute more
than a single group of industries within the meaning of the Act.''
\139\ Commerce cited this finding in support of its determination that
benefits from government-funded agricultural extension services were
not countervailable in Fresh Cut Roses from Israel.\140\ This practice
of considering the agricultural sector to constitute more than a
specific industry or group of industries was reaffirmed again in
Certain Fresh Cut Flowers from Mexico, when Commerce determined that
loans provided under a government-sponsored loan program known as the
Funds Established with Relationship to Agricultural (FIRA) program were
not countervailable because they were provided to the agricultural
sector as a whole and thus not specific.\141\ Specifically, Commerce
elaborated that: ``Producers of a wide variety of products including
fruits and vegetables, livestock, grains, meat products, milk, and eggs
are eligible for FIRA financing. Producers of agricultural tools may
also receive financing under FIRA. FIRA loans are also provided to the
fishing and the forestry industries.'' \142\ Commerce also pointed out
that ``{a{time} pproximately one-third of Mexico's labor force is
employed in ag
[…truncated; see source link]Indexed from Federal Register on July 12, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.