Rule2024-29245
Regulations Enhancing the Administration of the Antidumping and Countervailing Duty Trade Remedy Laws
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 16, 2024
Effective
January 15, 2025
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) is amending its trade remedy regulations to enhance the administration of the antidumping duty (AD) and countervailing duty (CVD) laws. Specifically, Commerce is codifying existing procedures and methodologies and creating or revising regulatory provisions relating to several matters including the collection of cash deposits, indicators used in surrogate country selection, 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.
Full Text
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<title>Federal Register, Volume 89 Issue 241 (Monday, December 16, 2024)</title>
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[Federal Register Volume 89, Number 241 (Monday, December 16, 2024)]
[Rules and Regulations]
[Pages 101694-101769]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-29245]
[[Page 101693]]
Vol. 89
Monday,
No. 241
December 16, 2024
Part II
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; Final Rule
Federal Register / Vol. 89, No. 241 / Monday, December 16, 2024 /
Rules and Regulations
[[Page 101694]]
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DEPARTMENT OF COMMERCE
International Trade Administration
19 CFR Part 351
[Docket No. 241206-0317]
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: Final rule.
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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) is amending its
trade remedy regulations to enhance the administration of the
antidumping duty (AD) and countervailing duty (CVD) laws. Specifically,
Commerce is codifying existing procedures and methodologies and
creating or revising regulatory provisions relating to several matters
including the collection of cash deposits, indicators used in surrogate
country selection, 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: These amendments are effective January 15, 2025.
FOR FURTHER INFORMATION CONTACT: Scott D. McBride, Associate Deputy
Chief Counsel for Trade Enforcement and Compliance, at (202) 482-6292,
Jesus Saenz, Senior Attorney, at (202) 482-1823, Ashlande Gelin,
Attorney, at (202) 306-7302, or John Van Dyke, Import Policy Analyst,
at <a href="/cdn-cgi/l/email-protection#bcd6d3d4d292caddd2d8c5d7d9fcc8ceddd8d992dbd3ca"><span class="__cf_email__" data-cfemail="4822272026663e29262c31232d083c3a292c2d662f273e">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
General Background
On July 12, 2024, Commerce proposed amendments to its existing
regulations, 19 CFR part 351, to enhance the administration of the AD
and CVD trade remedy laws, in ``Regulations Enhancing the
Administration of the Antidumping and Countervailing Duty Trade Remedy
Laws,'' published at 89 FR 57286 (July 12, 2024) (Proposed Rule). This
final rule concerns the AD/CVD statutory and regulatory provisions in
general, as well as those provisions pertaining to filing requirements;
the application of cash deposits; the determination of separate rates
for nonmarket economy entities; the calculation of rates for unexamined
exporters and producers, including the all others rate; the selection
of voluntary respondents; the assessment of AD and CVD rates on a per-
unit basis; the submission of surrogate value, benchmark, and rebuttal
information; the selection of facts otherwise available; the sharing
with U.S. Customs and Border Protection (USCBP) of proprietary data for
use in negligence and gross negligence investigations, in addition to
investigations involving fraud; the collapsing of affiliated producers
and non-producers, the application of the special rule for
multinational corporations, the calculation of amounts for selling
expenses and for profit for constructed value: and a series of CVD-
specific provisions, which Commerce summarizes below.
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 USCBP to collect cash deposits as security pursuant to
affirmative 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 final
rule codifies and enhances the procedures and practices applied by
Commerce in administering and enforcing the AD and CVD laws.
As Commerce explained throughout the preamble to the Proposed Rule,
the purpose of these amendments is to help enhance and facilitate the
administration of the AD and CVD regulations found at part 351.\1\ The
codification of Commerce practice in this final rule, as well as
updates to certain regulatory provisions to reflect modifications made
by Congress to the Act in 2015, will provide greater clarity and
transparency to Commerce's procedures and calculations. In addition,
Commerce has revised its methodology in nonmarket economy
investigations and reviews to more effectively address situations in
which a state-owned entity has less than majority state ownership but
the state continues to control an entity through veto power or ``golden
shares.'' It has furthermore updated the means by
[[Page 101695]]
which it selects economically comparable countries for purposes of
determining normal value in nonmarket economy proceedings. Furthermore,
Commerce has updated many of its CVD regulations to provide both
clarity and transparency to Commerce's CVD methodology and to codify
long-standing CVD policies. Finally, for the first time, Commerce has
promulgated CVD regulations to address the government purchase of goods
for more than adequate remuneration (MTAR) and the provision of rebates
or exemptions of indirect taxes and import charges to exporters that
purchase capital goods and equipment.
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\1\ This final rule codifies 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 the proposed provisions in one rulemaking
for purposes of enhancing Commerce's trade remedy regulations.
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Explanation of Modifications From the Proposed Rule to the Final Rule
and Responses to Comments
In the Proposed Rule, Commerce invited the public to submit
comments.\2\ Commerce received 27 submissions from interested parties
providing comments, including domestic producers, exporters, importers,
foreign governments, and foreign entities. The majority of commenters
supported Commerce's proposed regulations and indicated that the new
and revised regulations would increase transparency and enhance and
improve the administration and enforcement of the AD and CVD laws. Some
of the comments provided suggestions to further improve the regulations
at issue, and Commerce considered the merits of each submission and
analyzed the legal and policy arguments considering both past practice
and Commerce's mandate to enhance and improve the administration of our
AD and CVD laws. Pursuant to that analysis, Commerce has made certain
modifications to the Proposed Rule in response to those submissions.
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\2\ See Proposed Rule, 89 FR at 57286.
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The preamble to the Proposed Rule provided background, analysis,
and explanations which are relevant to these regulations. With some
modifications, as noted, this final rule would codify regulations
proposed on July 12, 2024. Accordingly, to the extent that parties wish
to have a greater understanding of these regulations, Commerce
encourages not only consideration of the preamble of these final
regulations but also a review of the analysis and explanation in the
preamble to the Proposed Rule.
In drafting this final rule, Commerce carefully considered each of
the comments received and the following sections address the comments
received. Each section contains a brief discussion of the regulatory
provision(s), a summary of the comments Commerce received, and
Commerce's response to those comments, including an explanation when
Commerce modified its proposed regulations in response to those
comments.
1. Commerce Has Made Small Modifications to Proposed Sec.
351.104(a)(7), Which Addresses the Citation of Certain New Factual
Information on the Record
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 from other segments and
proceedings may be cited without placing such documents on the record
and which documents must be placed on the record to be considered by
Commerce in its analysis and determinations (RISE Final Rule).\3\ Those
modifications added Sec. 351.104(a)(7), which states that interested
parties citing public versions of documents issued by Commerce in other
segments or proceedings before the implementation of Commerce's
Antidumping Duty and Countervailing Duty Centralized Electronic Service
System (ACCESS) (or that otherwise have no assigned ACCESS barcode
number) must submit copies of those documents on the record.
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\3\ 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) (RISE Final Rule).
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In the Proposed Rule, Commerce stated that it was reconsidering the
scope of public documents to which Sec. 351.104(a)(7) applies and
proposed that public preliminary and final issues and decision
memoranda issued in investigations and administrative reviews pursuant
to Sec. Sec. 351.205, 351.210, and 351.213 with no assigned ACCESS
barcode number need not be subject to the requirements of that
provision.\4\ Commerce explained that citations to these memoranda,
like all such citations relied upon by interested parties in
submissions to Commerce, would still be required to be cited in full
(albeit without an ACCESS barcode number).\5\ Commerce also stated
that, as set forth in Sec. 351.104(a)(6), if Commerce determined that
a citation was not provided in full, Commerce could decline to consider
and analyze the cited decision memoranda in its preliminary and final
determinations.\6\
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\4\ Id.
\5\ Id.
\6\ Id.
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Commerce received five comments in response to the Proposed Rule.
No commenter opposed allowing interested parties to cite preliminary
and final issues and decision memoranda from other investigations and
administrative reviews without ACCESS barcode numbers without also
submitting those documents on the record of a segment of the
proceeding. Accordingly, this final rule continues to allow parties to
cite public documents that meet that description without submitting
them on the record.
Two commenters suggested that Commerce modify the proposed
regulation language to clarify that the exception being proposed under
Sec. 351.104(a)(7) applies to all investigation and administrative
review preliminary and final issues and decision memoranda without an
associated ACCESS barcode number and not just those which were issued
``before the implementation of ACCESS.'' Those commenters noted an
inconsistency between the first and second sentences of the paragraph
as proposed in that regard.
One commenter suggested that all investigation and administrative
review preliminary and final determinations from other segments or
proceedings are not ``new factual information,'' and therefore, the
Secretary should state in the regulation that such memoranda are not
subject to the timing and filing restrictions of the factual
information regulation, Sec. 351.301. The commenter stated that just
because an ACCESS barcode number is missing does not mean that it
should be treated as new factual information under Sec. 351.301.
Other commenters took issue, fundamentally, with both Sec.
351.104(a)(6) and (7), stating that Commerce should expand the list of
documents that need not be submitted on the record, or need not include
an ACCESS barcode number, to be cited without submitting them on the
record. They stated that Commerce's allowance of an exception for just
preliminary and final decision memoranda in investigations and
administrative reviews and not similar decision memoranda in other
segments of a proceeding is arbitrary and that there is no reason for
Commerce to treat investigation and administrative review documents
differently. Furthermore, they stated that by requiring that certain
public Commerce documents, but not others, be submitted onto
administrative records, Commerce would be prejudicing interested
parties by preventing them from citing relevant Commerce practice and
policies, especially once the time for the submission of new factual
information on the administrative record has passed. Therefore, they
advocated that
[[Page 101696]]
Commerce should either allow all public documents originating with
Commerce from other segments or other proceedings to be cited without
submitting them on the record, or that Commerce at minimum expand the
list of documents which may be cited without submitting them on the
record in Sec. 351.104(a)(6).
Finally, two commenters stated that if Commerce continues to
require that public Commerce documents listed in Sec. 351.104(a)(6) or
public Commerce documents without associated ACCESS barcode numbers be
submitted on the record, Commerce should take into consideration that
interested parties frequently wish to cite certain Commerce public
documents from other segments or proceedings in response to Commerce's
preliminary determinations, which are issued after the time for the
submission of new factual information has passed. They stated that if
the time for new factual information closes before Commerce issues its
preliminary determination, there is no means by which those interested
parties can adequately defend their interests by arguing in a brief or
rebuttal brief that Commerce acted inconsistently in the preliminary
determination from past cases. They stated that under that scenario,
parties may not have been aware that a particular Commerce decision
memorandum from another segment or proceeding was relevant until after
the preliminary determination was issued. Those commenters, therefore,
suggested that Commerce allow parties to submit documents listed in
Sec. 351.104(a)(6) or those without associated ACCESS barcode numbers
as attachments in an appendix to case briefs and rebuttal briefs.
Response
Commerce has made two revisions to Sec. 351.104(a)(7), as
proposed. First, for purposes of Sec. 351.104(a), when Commerce is
describing documents issued by all agency employees, Commerce uses the
general term ``the Department'' to describe the overall originator of
those documents. This is true for Sec. 351.104(a)(3) through (6) and
should equally be used in Sec. 351.104(a)(7). The term ``Commerce''
appeared in the proposed regulation language, but should say ``the
Department,'' and Commerce has corrected for that error.
The second revision is in response to those commenters who pointed
out that Commerce's first and second sentences in the provision were
inconsistent. Section 351.104(a)(7) applies to all documents
originating with Commerce with no associated ACCESS barcode numbers and
not just those issued before the implementation of ACCESS. Accordingly,
Commerce has revised the second sentence to make that sentence
consistent with the first sentence, as requested by those commenters.
In response to the statements that Commerce's various decision
memoranda are not factual information and should not be subject to the
requirements of Sec. 351.301, Commerce addressed this claim in the
RISE Final Rule,\7\ explaining that collapsing determinations under
Sec. 351.401(f), for example, and calculation memoranda, are highly
dependent on the case-specific facts that Commerce analyzes.\8\
Commerce explained that although it agreed that ``each collapsing and
calculation memoranda is a legal analysis and decision by the agency,
each of these memoranda also reflect conclusions based on the facts
unique to the segment of the proceeding in which they were issued.''
\9\ Accordingly, each such document ``contains factual information
being introduced on the record of the ongoing segment or proceeding for
the first time.'' \10\ Thus, Commerce disagrees with the statement that
Commerce should state that the filing requirements of Sec. 351.301 do
not apply to Commerce-authored public decision memoranda from other
segments or proceedings because such information is not allegedly new
factual information on the record. In fact, such memoranda are
unquestionably new factual information in the context of a separate
segment or proceeding, and Commerce has not adopted that proposed
change.
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\7\ See RISE Final Rule, 89 FR at 20772.
\8\ Id.
\9\ Id.
\10\ Id.
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As Commerce also explained in the RISE Final Rule, ``the conduct of
an administrative proceeding is a time-intensive, resource-intensive,
and fact-intensive endeavor.'' \11\ Commerce implemented the ACCESS
barcode requirement to make it easier, in part, for Commerce to
retrieve the documents and consider them in reaching conclusions for
preliminary and final determinations.\12\ Therefore, allowing parties
to cite documents in their submissions without those ACCESS barcode
numbers present defeats the purpose of the requirement.
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\11\ Id.
\12\ Id., 89 FR at 20771.
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However, Commerce also recognizes that interested parties have
cited preliminary and final issues and decision memoranda in
investigations and administrative reviews without including ACCESS
barcode numbers for many years, and those four types of documents are
by far the public Commerce decision documents most frequently cited by
interested parties in their case briefs and rebuttal briefs. In
addition, those documents are relatively less difficult for Commerce to
find in legal resource services than many other types of documents
listed in Sec. 351.104(a)(6). Accordingly, Commerce has determined
that despite the additional burden on the agency case teams to retrieve
the cited documents, it is both fair and reasonable to allow interested
parties to cite those four types of public documents from other
segments or proceedings in submissions before the agency; especially
those submissions issued when no ACCESS barcode was associated with
those documents. Commerce has made no such determination with respect
to other documents listed under Sec. 351.104(a)(6) and therefore has
not codified such a filing exception for those additional Commerce-
authored documents.
With respect to the suggestion that Commerce should permit parties
to submit documents listed in Sec. 351.104(a)(6) for the first time on
the record as appendices to case briefs and rebuttal briefs, for the
reasons described below, Commerce does not agree that such a change to
the agency's procedures and regulations is warranted or that failing to
allow the submission of such documents late in a proceeding after the
time for new factual information has passed unduly prejudices
interested parties. These types of documents, such as collapsing
memoranda and calculation memoranda, typically contain extensive case-
specific business proprietary information. In the public versions of
such memoranda, the business proprietary information can be redacted
such that the detailed basis of Commerce's decision resulting from the
underlying business proprietary data may not even be publicly
discernable. Furthermore, to the extent that Commerce's analysis is
discernable in the public version of the memorandum, that same public
analysis should be reflected in a second location--Commerce's
preliminary and final issues and decision memoranda. Commerce normally
includes a public summary of its collapsing and calculation
methodologies, for example, in its preliminary decision memoranda
accompanying preliminary determinations or preliminary results
published in the Federal Register. In
[[Page 101697]]
those memoranda, Commerce publicly describes its collapsing
determinations and other major calculation issues raised by interested
parties in their case and rebuttal briefs in all final decision
memoranda accompanying final determinations or final results. It is in
these public issues and decision memoranda that Commerce's
methodologies can be clearly discerned in a public manner, without
relying on case-specific business proprietary information attached to
briefs or rebuttal briefs for the first time on the record, long after
the time for submitting new factual information on the record has
expired.
Under Sec. 351.104(a)(6) and (7) as modified in this final rule,
because interested parties can cite these public issues and decision
memoranda from other segments or proceedings, including such memoranda
without an associated ACCESS barcode number, to support their arguments
in their case and rebuttal briefs, Commerce disagrees that the
regulations, as amended, unduly prejudice interested parties as claimed
by certain commenters. Instead, Commerce finds that Sec. 351.104(a)
reflects a reasonable balance that allows parties to defend their
interests, while also allowing Commerce officials the ability to
analyze and consider information on the record without forcing the
officials to also assume the additional burden of (1) independently
researching the records of other past segments and proceedings, (2)
analyzing as part of that exercise the unique facts that were present
in those segments or proceedings that resulted in the application of a
particular methodology, analysis or calculation, and then (3) placing
additional information derived from those segments or proceedings. on
the record of the case before the agency. These regulations allow
interested parties to cite many different documents and sources,
including over 20 types of Commerce's public decision documents,
without placing those documents on the record, but also make clear that
interested parties have a responsibility to make certain that the
public versions of the factual information which support their
arguments from other segments or proceedings and not listed in the
relevant provisions of the regulation must be timely submitted on the
record to be considered by Commerce in making its determinations.
Accordingly, Commerce has determined to make no further modifications
to Sec. 351.104(a)(7), other than the changes explained above.
2. Commerce Has Modified Proposed Sec. 351.107 and Proposed Sec.
351.212(b)(1), Which Cover Cash Deposits and Assessment of Duties, To
Remove the Examples of Units Upon Which Cash Deposits and Assessment
Rates May Be Applied
Commerce significantly revised and updated its cash deposit
regulation in proposed Sec. 351.107 to more accurately and
holistically reflect Commerce's establishment and application of cash
deposit rates.\13\ Specifically, the revised regulation: (1) explains
that while Commerce normally calculates cash deposit rates on an ad
valorem basis, Commerce may calculate cash deposit rates on a per-unit
basis; (2) describes 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; (3) sets 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; and (4) describes the effective date for cash deposit rates
following the correction of ministerial errors in investigations and
administrative reviews.
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\13\ See Proposed Rule, 89 FR at 57290-93.
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In addition, Commerce also revised its assessment regulation
covering AD determinations, Sec. 351.212(b)(1), by dividing it into
two sections--one providing for the assessment of entries on an ad
valorem basis and another providing that if the information normally
used to calculate an ad valorem assessment rate is not available or the
use of an ad valorem rate is otherwise not appropriate, Commerce may
instruct USCBP to assess duties on a per-unit basis.\14\
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\14\ Id., 89 FR at 57301.
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Commerce received several comments supporting the proposed changes
to Sec. 351.107. One commenter supported the proposed rule as a
welcome clarification to Commerce's cash deposit procedures and
recognition of its authority to establish and tailor cash deposit rates
to properly effectuate the AD/CVD law. That commenter specifically
identified Commerce's proposed regulation as effectively codifying its
authority to use combination producer/exporter cash deposit rates to
address circumstances such as middleman dumping.
Another commenter specifically expressed support for proposed Sec.
351.107(c)(1), which would codify an exception to Commerce's normal ad
valorem practice where 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. The
commenter further noted that Commerce's practice of using such
alternate methodologies to calculate cash deposit rates results in more
accurate duty calculations and codifying that practice would provide
clear notice of this practice to interested parties.
A third commenter expressed support for the proposed regulation and
suggested additional modifications to Sec. 351.107(c)(1) and Sec.
351.107 generally. Regarding Sec. 351.107(c)(1), the commenter
proposed that, given the often technical nature of the products subject
to review, as well as scope and data issues related to the underlying
calculations and entries, Commerce should clarify that draft
instructions be accompanied by an explanation of (1) the basis for
Commerce's conclusion that the relevant information to calculate an ad
valorem rate is ``not available'' or the reason an ad valorem rate ``is
otherwise not appropriate'' and (2) a detailed description as to how
the per-unit basis is to be calculated, particularly in view of an AD/
CVD order's scope. The commenter noted that such an explanation would
allow parties to comment on any errors and Commerce to make any
appropriate modifications before final instructions are issued.
Regarding the Sec. 351.107 cash deposit regulation generally, the
commenter proposed that Commerce explicitly require draft Customs
instructions concerning cash deposit and assessment rates be placed on
the record for comment at or near the time of the publication of the
preliminary results to allow parties an opportunity to comment on the
proposed calculations and rates as part of their administrative case
briefs or, where Commerce is unable to issue draft instructions
sufficiently in advance of the deadline for case briefs, Commerce
establish an alternative process for submitting such comments. The
commenter emphasized that Commerce should require that draft
instructions be placed on the record for comment sufficiently in
advance of the final results so parties may comment on those
instructions and Commerce may address or respond to such comments as
part of the final issues and decision memorandum or notice of final
results.
[[Page 101698]]
One commenter expressed that while the proposed rule generally
codifies Commerce's existing practice, Commerce should clarify its
intent behind certain provisions. Regarding the proposed Sec.
351.107(c)(4), which would provide that USCBP may, upon receiving
instructions from Commerce, apply a cash deposit requirement that
reflects the record information and effectuates the administration and
purpose of a certification, the commenter noted that it appeared
Commerce intended to codify only its current practice of instructing
USCBP to collect cash deposits based on the implementation of a
certification requirement pursuant to a circumvention determination and
expressed that Commerce should confirm the scope of this provision.
That commenter also requested clarification regarding proposed
Sec. 351.107(d) and (e), which identify the hierarchies Commerce
utilizes to determine the appropriate cash deposit rate for entries
subject to AD/CVD investigations and orders. The commenter pointed out
that the regulation states that Commerce may instruct USCBP to use an
alternative methodology in applying cash deposit rates if Commerce
determines that a cash deposit rate other than that resulting from the
CVD cash deposit hierarchy should be applied based on the unique facts
in the underlying proceeding. The commenter suggested that, if Commerce
adopts the regulation as proposed, it should provide further
information and examples of the types of unique circumstances that
would warrant a different approach and the alternative approaches that
could be used. The commenter further suggested that Commerce confirm
that in such a circumstance, interested parties would be provided an
opportunity to comment on any such instructions.
Commerce received only one comment on the proposed modifications to
Sec. 351.212(b)(1). The same commenter that proposed that Commerce
should clarify that draft cash deposit instructions be accompanied by
an explanation of: (1) the basis for Commerce's conclusion that the
relevant information to calculate an ad valorem rate is ``not
available'' or why an ad valorem rate ``is otherwise not appropriate'';
and (2) a detailed description as to how the per-unit basis is to be
calculated, particularly in view of an AD/CVD order's scope, made the
same request for assessment instructions. The commenter noted that just
as such an explanation would allow parties to comment on any errors in
Commerce's cash deposit instructions, so too could parties comment on
any errors in Commerce's draft assessment instructions and allow
Commerce to make any appropriate modifications before the final
assessment instructions are issued.
Response
As noted above, all of the commenters on the revised Sec. 351.107
approved of the significant modifications which Commerce made to the
provision. Commerce agrees with the commenters that the new version of
the regulation will provide substantially more guidance to the public
on Commerce's application of cash deposit rates in the normal course of
its proceedings.
With respect to additional suggestions, one commenter suggested
that Commerce place draft cash deposit instructions to USCBP on the
record at or near the time of the publication of the preliminary
results on the record to allow interested parties an opportunity to
comment on those draft instructions. Commerce has determined not to
place this additional requirement in the regulation. However, Commerce
agrees that it is Commerce's normal practice to share draft Customs
instructions with interested parties and provide an opportunity to
comment on them in most cases. In accordance with that practice, when
appropriate, Commerce places draft Customs instructions on the record
prior to issuance of the final results of a given segment of a
proceeding with sufficient time for the parties to have an opportunity
to comment on those instructions. However, there is no statutory
obligation for Commerce to place draft Customs instructions on the
record immediately after a preliminary agency decision has been issued,
and sometimes, based on the facts on the record, it is either
unnecessary for Commerce to issue draft instructions, or Commerce may
be unable to issue draft instructions for a month's time or more after
the agency's preliminary decision has been issued. Accordingly,
Commerce has determined not to codify the commenter's suggestion into
the regulation.
Nonetheless, Commerce acknowledges the importance of interested
parties having the ability in most cases to consider draft Customs
instructions and to identify any potential inaccuracies in a submission
to Commerce before the final agency decision has been issued. Thus,
Commerce recommends and encourages that if interested parties in a
proceeding find that draft Customs instructions have not been placed on
the record for a significant period of time after Commerce has issued
its preliminary decision, those interested parties should request in
writing that the agency place draft Customs instructions on the record
while there is still sufficient time for parties to comment on them
when they submit their case and rebuttal briefs on the record to
Commerce in accordance with Sec. 351.309(c) and (d).
Relatedly, with respect to the commenter's suggestion that Commerce
provide an explanation and calculation when Commerce applies a cash
deposit rate on a per-unit basis under proposed Sec. 351.107(c)(1), as
well as that same commenter's suggestion that Commerce provide the same
explanation and calculation when Commerce determines an assessment rate
on a per-unit basis under proposed Sec. 351.212(b)(1)(ii), it is
Commerce's practice to provide interested parties with an opportunity
to comment on the calculation of cash deposit and assessment rates in
disclosure packages uploaded to the record, and Commerce normally
explains its cash deposit requirements in its Federal Register notices.
However, the Act does not require that Commerce issue such a detailed
disclosure in every case, and in fact there may be situations in which
the issuance of such a disclosure is simply not necessary. Accordingly,
Commerce has determined that it will not modify Sec. 351.107(c)(1) or
Sec. 351.212(b)(1)(ii) to codify the issuance of disclosure packages
regarding per-unit cash deposits in every case.
Commerce has, however, determined to modify those provisions as set
forth in the Proposed Rule to remove the examples of units ``to which a
cash deposit rate may be applied'' and ``on which duties may be
assessed.'' \15\ Commerce proposed those examples to provide greater
clarity to the issue, but has determined that those examples may have
instead been the source of some confusion. Accordingly, Commerce will
continue to determine the appropriate units on which to apply cash
deposits or assessment rates on a case-by-case basis and will forgo
listing examples in the regulation.
---------------------------------------------------------------------------
\15\ Id., 89 FR at 57323 and 57328.
---------------------------------------------------------------------------
In response to the comment that Commerce provide further
information and examples of the types of unique circumstances that
would warrant a different approach and the alternative approaches that
could be used under the AD and CVD cash deposit hierarchies set forth
in Sec. 351.107(d) and (e), in the regulation, Commerce must emphasize
that these exceptions to the cash deposit hierarchies will be highly
dependent on the unique circumstances and facts of a
[[Page 101699]]
particular segment of a proceeding. Thus, it would be inappropriate for
Commerce to provide examples in the regulation. However, if such a
situation arises and Commerce is considering application of an
alternative to the cash deposit hierarchy in a segment of the
proceeding, consistent with its practice, Commerce anticipates that it
would inform the interested parties of that possibility and provide
interested parties with an opportunity to provide commentary on such an
alternative approach.
Finally, Commerce does not agree with the comment that Commerce
intended for proposed Sec. 351.107(c)(4) to apply only to
certifications issued pursuant to circumvention determinations under
section 781 of the Act. Certifications issued under Sec. 351.228 may
be applied pursuant to circumvention determinations, of course, but
Commerce may also instruct USCBP to use certifications, for example, in
enforcing certain scope rulings, under Sec. 351.225, and there are
other situations in which Commerce may instruct USCBP to collect cash
deposits in accordance with an importer or interested party
certification. Accordingly, the language of proposed Sec.
351.107(c)(4) is appropriately broad enough to cover all situations in
which Commerce instructs USCBP to collect cash deposits in accordance
with a certification issued under Sec. 351.228 to effectively
administer and enforce the AD and CVD laws.
3. Commerce Has Revised Proposed Sec. 351.108, the Separate Rate
Regulation, To Clarify Various Provisions and To Address Third Country
Exporters of Subject Merchandise From Nonmarket Economies
In the Proposed Rule, Commerce proposed to codify its longstanding
practice of granting a separate rate to exporters of merchandise from
nonmarket economies in new Sec. 351.108.\16\ Commerce explained that
its practice was in accordance with section 771(18)(A) of the Act,
which defines a nonmarket economy country as a 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.'' \17\ Accordingly, as
Commerce explained in the Proposed Rule, 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). In this
regard, current Sec. 351.107(d) explicitly provides that in an
``antidumping proceeding involving imports from a nonmarket economy
country, `rates' may consist of a single dumping margin applicable to
all exporters and producers.''
---------------------------------------------------------------------------
\16\ Id., 89 FR at 57293.
\17\ Id.
---------------------------------------------------------------------------
Commerce explained in the Proposed Rule that it applies a separate
rate test in antidumping proceedings involving a nonmarket economy.
Under this test, Commerce considers whether an entity can demonstrate
that the foreign nonmarket economy government does not have either
legal (de jure) control or control in fact (de facto) over the entity's
export activities.\18\ Commerce explained that over the past decade,
Commerce has modified its practice to conclude that when a government
holds a majority ownership share, either directly or indirectly, in a
respondent exporting entity located in a nonmarket economy, 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.\19\ Commerce further explained that it was also
proposing to strengthen its separate rate practice to address
additional real-world factors through which a foreign government can
control or influence production decisions, pricing and sales decisions,
and export behavior.\20\ Commerce's practice in this regard has been
affirmed in multiple cases by the U.S. Court of Appeals for the Federal
Circuit (Federal Circuit).\21\
---------------------------------------------------------------------------
\18\ Id., 89 FR at 57293.
\19\ Id.
\20\ Id.
\21\ See., e.g., Sigma Corp. v. United States, 117 F. 3d 1401,
1405 (Fed. Cir. 1997) (Sigma v. United States); Transcom, Inc. v.
United States, 182 F. 3d 876, 882 (Fed. Cir. 1999) (Transcom v.
United States); Michaels Stores, Inc. v. United States, 776 F.3d
1388, 1390 (Fed. Cir. 2014) (Michaels v. United States); and
Changzhou Wujin Fine Chem. Factory Co. v. United States, 701 F.3d
1367, 1370 (Fed. Cir. 2012) (Changzhou v. United States).
---------------------------------------------------------------------------
Commerce received several comments on proposed Sec. 351.108.
Numerous commenters indicated their approval for Commerce's separate
rate practice and its codification of that practice in its regulations,
including its modification of that practice to deny the application of
a separate rate when a nonmarket economy government has less than a
majority ownership in a company but other indicia exist in conjunction
with that (minority) ownership to indicate that the government controls
or can control relevant decisions of the company.
Certain commenters identified concerns involving certain aspects of
the proposed separate rate regulation. In particular, several
commenters expressed concerns that the regulation did not address
situations in which a company owned in whole or in part by the
nonmarket economy government but located in a market economy other than
the United States, exports merchandise from the non-market economy to
the United States. One commenter stated that if the final regulations
did not address situations in which a company incorporated in a market
economy country exports merchandise from a nonmarket economy to the
United States, the lack of such guidance could have a negative impact
on U.S. import businesses seeking to comply with U.S. trade laws. That
commenter stated that by remaining silent on those scenarios,
Commerce's proposed regulations discourage the filing of separate rate
applications in the first place by third-country exporters of
merchandise from nonmarket economies. That commenter also suggested
that Commerce should additionally consider addressing Commerce's
practice when merchandise is substantially transformed in a third
country before exportation to the United States, as well as other
situations which might arise in a complex supply chain in the third
country with regard to merchandise from the nonmarket economy.
Another commenter recommended that Commerce clarify that the
separate rate test applies to all exporters, whether the exporter is
located in the nonmarket economy or a market economy other than the
United States, because the focus of the statute is on the merchandise
produced or exported from the nonmarket economy and not the geographic
location of the exporter. That commenter stated that regardless of
whether exporters are located in Hong Kong, Toronto, or Shanghai, if
the merchandise is exported from a nonmarket economy to the United
States, there is no reason to treat any of those exporters differently
with regard to the application of the separate rate test, especially if
the nonmarket economy government has any ownership interest in those
exporters. That commenter stated that under Commerce's proposed
regulation there is a significant risk that entities affiliated with
the nonmarket economy government exporting merchandise from the
nonmarket economy and sold to the United States could be treated
differently solely because of whether the entities are physically
located within or outside of the nonmarket economy.
[[Page 101700]]
Another commenter acknowledged that governments of certain
nonmarket economies, including the People's Republic of China (China),
have recently established corporate footholds and export platforms in
third country market economies, resulting in a significant increase in
circumvention and evasion inquiries conducted by Commerce and USCBP.
The commenter stated that Commerce's proposed regulation ``contains a
significant loophole'' in not addressing exporters of nonmarket economy
merchandise that are located in third countries and stated that
Commerce ``should not voluntarily limit its ability to remedy control
over a firm's export activities exercised by the government of a
nonmarket economy solely based on geography.'' Citing a separate rates
policy bulletin issued by Commerce in 2005, the commenter explained
that if a company physically located in a market economy country is
owned or otherwise controlled by the nonmarket economy government, then
that government could still be in a position to control the export
activities of the company, which it asserted is the precise ``situation
that the separate rate test is intended to address.'' \22\
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\22\ Citing Policy Bulletin 05.1, Separate-Rates Practice and
Application of Combination Rates in Antidumping Investigations
Involving Non-Market Economy Countries (April 5, 2005), available on
Commerce's ACCESS website at <a href="https://access.trade.gov/Resources/policy/bull04-1.html">https://access.trade.gov/Resources/policy/bull04-1.html</a>.
---------------------------------------------------------------------------
In addition, a few commenters expressed concerns with Commerce's
separate rate exception codified in proposed Sec. 351.108(c) for
entities wholly owned by market economy entities and incorporated and
headquartered in a market economy. One commenter stated that Commerce
failed to take into consideration in the proposed regulation that a
nonmarket economy government might exercise control through various
ownership interests or other means. That commenter advocated removing
the exception from the proposed regulations altogether.
Similarly, another commenter identified concerns with the same
language in proposed Sec. 351.108(c), suggesting that Commerce should
include an ``ultimate ownership'' analysis in the regulation looking
beyond ``one level of corporate control'' to upstream shareholders and
corporate owners to determine if the nonmarket economy government,
including through the use of state-owned enterprises, might be situated
in such a way as to evade Commerce's separate rate analysis.
A third commenter suggested that Commerce add language to the
provision that would allow Commerce to deny the application of the
exception if there was evidence on the record suggesting that the
company is otherwise controlled by the nonmarket economy government.
A fourth commenter expressed concerns that the exception might
allow for ``indirect'' ownership of an exporter of nonmarket economy
merchandise, which ``could be exploited by government-controlled''
nonmarket economy entities ``attempting to obscure their status by
routing ownership through one or more foreign holding companies with
some operations in a market economy country.'' Therefore, that
commenter recommended that Commerce add the terms ``directly and
indirectly'' before the descriptor ``wholly owned'' in Sec.
351.108(c).
Two commenters stated that they disagreed with Commerce's proposed
requirement in Sec. 351.108(d)(1), (2), and (3) that separate rate
applications and certifications be filed no later than 14 days
following publication in the Federal Register of a notice of
initiation, stating that Commerce's current practice of 30 days was
preferrable. In the Proposed Rule, Commerce explained that ``the
thirty-day deadline delays Commerce from selecting respondents in its
nonmarket economy proceedings because Commerce cannot select
respondents for individual examination in its nonmarket economy
proceedings until it first determines the pool of exporters who have
satisfied the separate rate analysis.'' \23\ One commenter stated that
it disagreed with Commerce's conclusion, stating that the thirty-day
requirement does not affect the selection of mandatory respondents
because it claimed that Commerce's practice is to choose the largest
exporters based on quantity and value questionnaires and that if a
company is selected as a mandatory respondent, Commerce can gather the
information it needs for a separate rate analysis from the mandatory
respondent's section A questionnaire response. In addition, that
commenter stated that gathering necessary information to complete a
separate rate application, in particular, is a difficult task, because
many exporters may have never participated in an antidumping proceeding
before, many companies have intermediate shareholders who may be
initially unwilling to report their ownership, and the proposed
regulations suggest that new information might be requested of
exporters in the future which might take even more time to collect,
report, and support with documentation.
---------------------------------------------------------------------------
\23\ See Proposed Rule, 89 FR at 57296.
---------------------------------------------------------------------------
A second commenter that disagreed with the fourteen-day deadline
focused on the hardship which that truncated deadline would have on
United States small businesses and, in particular, importers. The
commenter explained that many United States importers are caught by
surprise in antidumping investigations and have less-sophisticated
operations than larger importers, and it may take a lengthy amount of
time after a petition in an investigation has been filed to identify
smaller importers as interested parties. In addition, the commenter
explained that once those smaller importers realize that they are
interested parties, it can take some time for them to retain legal
counsel, fully understand the impact of antidumping and countervailing
duties on their business, identify relevant products covered by an
investigation being imported, and identify their upstream producers and
exporters that are ultimately responsible for completing the separate
rate application. Even after they identify those producers and
exporters, the commenter explained that communicating with those
parties and inducing them to file a timely separate rate application
also takes time. That commenter stated that this ``significant change''
would be ``likely to disproportionately and negatively impact small
U.S. businesses.'' Therefore, considering the financial impact of such
a change on U.S. importers and numerous steps which U.S. importers
would have to take under the proposed fourteen-day deadline, that
commenter stated that Commerce should retain the thirty-day deadline.
One commenter indicated its support for the fourteen-day deadline,
stating that it should not create any hardship for companies wishing to
submit a separate rate application or certification. That commenter
stated that the applications and certifications are available on
Commerce's website, and all importers, producers, and exporters should
be aware after the petition is filed in investigations, (before
initiation of the investigation), or after a review request is filed in
reviews, that they are subject to an antidumping proceeding. That
commenter agreed with Commerce that the new deadline would help prevent
delays in nonmarket economy investigations or reviews because it allows
Commerce to select respondents for individual examination earlier in
the proceeding.
In addition, Commerce received several suggestions from commenters
for smaller modifications to proposed
[[Page 101701]]
Sec. 351.108 to improve the regulations. One commenter recommended
that Commerce make the following modifications: Remove the term ``the
lack of'' in the header language for proposed Sec. 351.108(b)(3)
because the criteria listed in that section actually indicate de facto
control; remove the word ``no'' in proposed Sec. 351.108(b)(3)(vi)
because, again, that provision speaks to evidence of de facto control
or influence; remove the word ``must'' in Sec. 351.108(b)(3)(i) and
add the term ``or must maintain'' because the described situation
covers both existing and required maintenance of certain government
representatives in positions of control; include the term ``or
managers'' following the term ``officers'' throughout the regulation
because both officers and managers can influence corporate decisions;
and when addressing situations in which representative of the
governments may, in fact, be placed in positions of leadership or power
in a company, Commerce should include the term ``or their family
members,'' because Commerce has a long-standing practice of recognizing
that family members and family groupings may share a common business
interest and authority.\24\
---------------------------------------------------------------------------
\24\ That commenter cited Jinko Solar Co. v. United States, 279
F. Supp. 3d 1253, 1260 (CIT 2017), and Echjay Forgings Priv. Ltd. v.
United States, 475 F. Supp.3d 1350, 1366 (CIT 2020), for cases
affirming Commerce's determinations that family members can share a
common interest with a business.
---------------------------------------------------------------------------
Another commenter suggested that Commerce revise the regulation to
better clarify that the agency, and not the separate rate applicants or
certifiers, must be satisfied that the applications or certifiers have
shown that the degree of government control or influence is not
significant and to emphasize that the applicants or certifiers have the
sole responsibility to provide proof of lack of government control or
influence. That commenter also suggested that Commerce include
``government-appointed or controlled labor unions'' in the regulation
as types of governing authorities through which the nonmarket economy
government may exert control or influence, because Commerce has
indicated in the past that such unions are under the ``control and
direction of the All-China Federation of Trade Unions (ACFTU),'' which
is affiliated with the Chinese government and an organ of the Communist
Party of China.\25\
---------------------------------------------------------------------------
\25\ That commenter cited a memorandum drafted by Commerce,
``Memorandum on China's Status as a Non-Market Economy,'' dated
October. 26, 2017, available at <a href="https://enforcement.trade.gov/download/prc-nme-status/prc-nme-review-final-103017.pdf">https://enforcement.trade.gov/download/prc-nme-status/prc-nme-review-final-103017.pdf</a>.
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Finally, one commenter expressed concerns with proposed Sec.
351.108(e), which states that entities that submit separate rate
applications or certifications and are subsequently selected to be an
examined respondent in an investigation or review must fully respond to
Commerce's questionnaires to be eligible for separate rate status. That
commenter stated that Commerce should not adopt the proposed provision
and not ``automatically deem companies that failed to respond to all
questionnaires as part'' of the nonmarket economy entity. The commenter
stated that a failure to respond to all questionnaires would justify
the application of adverse facts available, pursuant to section 776(a)
and (b) of the Act, but would not necessarily justify the refusal of a
grant of separate rate eligibility. That commenter stated that treating
individually examined respondents differently from non-selected
exporters in this manner would create an ``arbitrary distinction'' and
would result in Commerce not considering ``the rate assigned'' to an
examined respondent in ``calculating the separate rate'' if the
examined respondent was ``deemed to be part'' of the nonmarket economy
entity. The commenter stated that such a practice would create a
``significant incentive for manipulation by exporters and permit
separate rate companies to potentially benefit from lower rates,
notwithstanding the selected respondent's deemed representativeness of
the non-individually examined companies.'' The commenter explained that
under this situation, parties with no intent to fully participate or
that anticipate substantial dumping margins would be incentivized to
submit a separate rate application or certification and, once selected
as an examined respondent, could withdraw from participation as a means
of manipulating the rate applied to the non-selected separate rate
companies.
Response
Commerce has made certain modifications to proposed Sec. 351.108
in light of the comments it received on the proposed regulation. With
respect to the concerns expressed by multiple commenters as to third
country exporters, Commerce respectfully disagrees with the commenters
who stated that there is no difference for purposes of Commerce's
separate rate practice between exporters of subject merchandise owned,
in whole or in part, by a nonmarket economy government located in the
nonmarket economy and those exporters located in a third country.
When an entity is physically located in a nonmarket economy, there
are multiple means by which the nonmarket economy government may,
directly or indirectly, influence and control the entity. In the Act,
Congress instructed Commerce to take into account at least six factors
in determining if a country is a nonmarket economy: (i) the extent to
which the currency of the foreign country is convertible into the
currency of other countries; (ii) the extent to which wage rates in the
foreign country are determined by free bargaining between labor and
management; (iii) the extent to which joint ventures or other
investments by firms of other foreign countries are permitted in the
foreign country; (iv) the extent of government ownership or control of
the means of production; (v) the extent of government control over the
allocation of resources and over the price and output decisions; and
(vi) such other factors as the administering authority considers
appropriate.\26\ Some of those factors are specific to the nonmarket
economy government's ownership and control of the producers and
exporters of the subject merchandise, but other factors reflect the
nature of the nonmarket economy itself.\27\ As Commerce has explained,
its practice is focused on ``the government's use of a variety of legal
and administrative levers to exert influence and control (both direct
and indirect) over the assembly of economic factors across the
economy.'' \28\
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\26\ See section 771(18)(B) of the Act.
\27\ In 1997, the Federal Circuit in Sigma v. United States
recognized that the Act ``recognizes a close correlation between a
nonmarket economy and government control of prices, output
decisions, and the allocation of resources.'' Sigma v. United
States, 117 F.3d at 1405-1406.
\28\ See Crystalline Silicon Photovoltaic Cells, Whether or Not
Assembled Into Modules, From the People's Republic of China: Final
Results of Antidumping Duty Administrative Review and Final
Determination of No Shipments; 2012-2013, 80 FR 40998 (July 14,
2015), and accompanying Issues and Decision Memorandum at Comment
42.
---------------------------------------------------------------------------
As noted above, Commerce has recognized in multiple cases the
ability of the nonmarket economy government to influence or control
production decisions, commercial decisions, or export activities within
the nonmarket economy, even when such influence or control is applied
through multiple entities and organizational relationships, and the
Federal Circuit has affirmed such findings.\29\ The nonmarket economy
government might control one producer directly, through a government
agency or a state-owned
[[Page 101702]]
enterprise, while indirectly influencing another producer through
privately-owned companies over which the nonmarket economy has
ownership interests or governing authority.
---------------------------------------------------------------------------
\29\ See., e.g., Sigma v. United States 117 F.3d at 1405;
Transcom v. United States, 182 F. 3d 876, 882; Michaels Stores v.
United States, 776 F.3d 1388, 1390; and Changzhou v. United States,
701 F.3d 1367, 1370.
---------------------------------------------------------------------------
However, when an exporting entity is physically located outside of
the nonmarket economy at issue, some of those conclusions may not
equally apply. In other words, the nonmarket economy government's
``legal and administrative levers'' in the nonmarket economy that
impact certain activities may differ from that government's ``legal and
administrative levers'' in a third country where that government is not
the legal authority. At the same time, Commerce recognizes that a
nonmarket economy government can, depending on the specific
circumstances, continue to exert substantial influence over the export
activities of state-owned firms incorporated in third countries. For
example, direct ownership of an exporter by a nonmarket economy
government or state-owned enterprise could imply control over the
selection of management of the exporter under the governing corporate
agreements or inform the extent to which that exporter retains the
proceeds of its export sales or repatriates them to the nonmarket
economy parent.
Accordingly, whether the exporting entity is located in a market
economy or a different nonmarket economy is a factor that can be
relevant to the analysis of whether a third country exporter is owned
or potentially controlled by the nonmarket economy government.
The focus of the separate rate test is ``if a respondent can
demonstrate the absence of both de jure and de facto government control
over its export activities.'' \30\ The ultimate question under the
separate rate test is whether the nonmarket economy government has
influence or control over important decisions of the entity, like the
``selection of management,'' which would be ``key'' in ``determining
whether a company has sufficient independence in its export activities
to merit a separate rate.'' \31\
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\30\ See Polyester Textured Yarn 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, 84 FR 31297 (July 1, 2019), and accompanying
Preliminary Decision Memorandum at ``Separate Rates.''
\31\ Id.
---------------------------------------------------------------------------
In the case of an entity located in a third country that exports
merchandise subject to an investigation or AD/CVD order and originating
from the nonmarket economy, the subject merchandise might be exported
directly to the United States from the nonmarket economy.
Alternatively, the subject merchandise might be exported to a third
country, either the one where the entity is located or another third
country, where it is held in a warehouse, stored in inventory or
otherwise retained for a period of time, before it is eventually
exported to the United States at a later date. A third option might be
that the subject merchandise undergoes some minor processing in a third
country, like the painting or marking of a product, without changing
the country of origin of the merchandise. In all of these potential
situations, unless record evidence demonstrates that the company is
wholly owned by a foreign entity and is incorporated and headquartered
in a market economy, in accordance with Sec. 351.108(c), Commerce
requires a separate rate application or certification from that
entity.\32\ This is because it is Commerce's experience that entities
in third countries that export merchandise from the nonmarket economy
to the United States commonly are owned, in part or in whole, by the
nonmarket economy government through the government's agencies or
state-owned enterprises.\33\ Additionally, based on experience, there
is a strong possibility that through that ownership relationship the
nonmarket economy government might control or influence the entity's
export activities and decisions with respect to the merchandise being
exported from the nonmarket economy. Such control might arise, for
example, through the appointment of officers, managers, and the board
of directors, but could also manifest through veto power or the use of
``golden shares'' and outsized voting rights within the company. Every
company is unique, so a state-owned enterprise or other government-
controlled entity might equally be able to direct or influence export-
related decisions of a third country company based on the unique nature
of its ownership share.
---------------------------------------------------------------------------
\32\ See Commerce's Separate Rate Application at 3, available at
<a href="https://access.trade.gov/Resources/nme/sep-rate-files/app-20190221/prc-sr-app-022119.pdf">https://access.trade.gov/Resources/nme/sep-rate-files/app-20190221/prc-sr-app-022119.pdf</a>.
\33\ See, e.g., Chinese Firms are expanding in South-Asia, The
Economist, dated April 24, 2024, available at <a href="https://economist.com/asia/2024/04/25/chinese-firms-are-expanding-in-south-east-asia">https://economist.com/asia/2024/04/25/chinese-firms-are-expanding-in-south-east-asia</a>.
---------------------------------------------------------------------------
On the other hand, because the nonmarket economy government may not
have the same legal and administrative levers in the third country
which it has in the subject country, the exercise of ownership and
control of the entity in the third country by the nonmarket economy
government may differ. Accordingly, after consideration of the
comments, Commerce has modified paragraph (a) of Sec. 351.108 to add a
paragraph (a)(3) which states that if a nonmarket economy government
has direct ownership or control, in whole or in part, of an entity
located in a third country market and that entity exports subject
merchandise from the nonmarket economy to the United States, Commerce
may determine on the basis of record information that such an entity is
part of the government-controlled entity and assign that entity the
nonmarket economy entity rate.
Furthermore, Commerce has modified Sec. 351.108(b) and divided it
into two provisions. Pursuant to paragraph (b)(1), Commerce will apply
an updated separate rate test and analysis to entities located in
nonmarket economies, as set forth in the Proposed Rule, and pursuant to
paragraph (b)(2), Commerce may analyze an entity directly owned or
controlled by a nonmarket economy government and located in a third
country and determine based on record information if that third country
exporter should be treated as part of the nonmarket economy entity and
receive the nonmarket economy entity rate or if it should be granted a
separate antidumping duty rate. This language is consistent with
Commerce's historical analysis and treatment of entities located in
nonmarket economies and allows for Commerce to consider the legal and
administrative levers present in third countries that might allow for
the control of an entity that exports subject merchandise to the United
States and is owned, in part or in whole, by the nonmarket economy
government.\34\
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\34\ See, De Facto Criteria for Establishing a Separate Rate in
Antidumping Proceedings Involving Nonmarket Economy Countries, 78 FR
40430, 40432 (July 5, 2013) (``We agree that there is a legitimate
concern that NME producers under government control selling through
affiliated third-country resellers may, in fact, control that
reseller and, in such cases, the reseller's exporting activities
would also be under government control'') and (``In circumstances
when the record indicates there may be government control through
the NME producer, we may require both the NME producer and the ME
exporter to provide'' separate rate de jure and de facto
information).
---------------------------------------------------------------------------
In response to the comments on proposed Sec. 351.108(c), Commerce
has clarified the language of the provision to explain that, in
accordance with our current practice, if an entity claims that it is
wholly owned by a foreign entity and headquartered and incorporated in
a market economy, it must complete and submit relevant, designated
sections of the separate rate application or
[[Page 101703]]
certification explaining as much and provide accompanying information
on the record that supports such a claim.\35\ Furthermore, Commerce has
modified the language of Sec. 351.108(d) to explain that all exporters
of subject merchandise to the United States, even those claiming the
``wholly owned'' exception applies, must submit a separate rate
application or certification, with the only difference being those
claiming that the ``wholly owned'' exception need only complete a
section of the application or certification explicitly designated for
that purpose by Commerce.
---------------------------------------------------------------------------
\35\ See Commerce's Separate Rate Application at 3, available at
<a href="https://access.trade.gov/Resources/nme/nme-separate.html">https://access.trade.gov/Resources/nme/nme-separate.html</a>.
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On the other hand, Commerce will not modify the regulations to
require further analysis or investigation under the ``wholly owned''
exception into possible ``ultimate owners'' of the foreign owners
themselves in every proceeding in which the issue arises, as suggested
by certain commenters. The facts of each antidumping proceeding are
unique, and the application of any such requirement to Commerce in
every case in which this arises, whether the foreign-owned entity is
located in the nonmarket economy or in a third country, would be
unreasonable and fail to take into consideration the time, record
constraints and overall difficulty which Commerce could be faced with
in pursuing such lines of inquiry in a proceeding involving multiple
parties or complicated facts. Commerce has an extensive history of
applying the foreign-owned exception in its separate rate practice,\36\
and Commerce will continue to apply that exception and consider the
evidence on the record in determining on a case-by-case basis whether
the exception should apply to a given exporter. Furthermore, for the
same reason, Commerce will not expand its normal analysis to mandate
inquiry in the regulation into ``indirect'' means of ownership or
control of foreign-owned entities by a nonmarket economy government
through potential holding companies or shareholder deception in every
case, as suggested by some commenters.
---------------------------------------------------------------------------
\36\ Commerce has allowed an exception for wholly-foreign-owned
exporters from the application of the separate rate analysis for
three decades. See Notice of Final Determination of Sales at Less
Than Fair Value: Bicycles From the People's Republic of China, 61 FR
19026 (April 30, 1996) (explaining that ``Four of the responding
exporters in this investigation are located outside the PRC . . .
Further, there is no PRC ownership of any of these companies.
Therefore, we determine that no separate rates analysis is required
for these exporters because they are beyond the jurisdiction of the
PRC government''); Certain Steel Threaded Rod from the People's
Republic of China: Preliminary Results and Partial Rescission of the
Antidumping Duty Administrative Review; 2014-2015, 81 FR 29843 (May
13, 2016), and accompanying Issues and Decision Memorandum at 5,
citing Final Results of Antidumping Administrative Review: Petroleum
Wax Candles from the People's Republic of China, 72 FR 52355
(September 13, 2011) (stating ``In its Section A response, the RMB/
IFI Group, reported that it is wholly-owned by individuals or
companies located in a market economy (``ME'') country. Therefore,
because it is wholly foreign-owned, and we have no evidence
indicating that it is under the control of the PRC government, a
separate rate analysis is not necessary to determine whether this
company is independent from government control. Accordingly, we
preliminarily grant a separate rate to the RMB/IFI Group''); and
Wooden Bedroom Furniture From the People's Republic of China:
Amended Final Results Pursuant to a Final Court Decision, 75 FR
72788 (November 26, 2010) (stating ``Wanvog provided evidence that
during the POR it was a wholly foreign-owned company. Therefore,
consistent with the Department's practice, further analysis is not
necessary to determine whether Wanvog's export activities are
independent from government control, and we have preliminarily
granted a separate rate to Wanvog'').
---------------------------------------------------------------------------
With regard to the comments on proposed deadlines for the filing of
separate rate applications and certifications under Sec. 351.108(d)(1)
and (2), Commerce has reconsidered its proposed deadline of 14 days
from publication of initiation in antidumping investigations in
agreement with the commenters who noted that many importers or
exporters who find themselves subject to an investigation might be
unfamiliar with the antidumping laws and procedures and may need more
than fourteen days after initiation to communicate with the appropriate
lawyers, company representatives or government officials and gather
information to submit necessary documentation with Commerce. Although
one commenter is correct that Commerce normally determines the
potential pool of respondents using Quantity and Value questionnaires
in nonmarket economy procedures, Commerce disagrees that the receipt of
those questionnaires, followed by the receipt of separate rate
applications, does not delay the selection of respondents. As Commerce
explained in the Proposed Rule, the longer Commerce must wait for
questionnaires, applications, and certifications, the longer it takes
for Commerce to select respondents and issue full questionnaires to
respondents selected for examination.\37\ Investigations,
administrative reviews and new shipper reviews are all conducted under
statutory deadlines, and the Act does not provide for extensions of
those deadlines due to response times of Quantity and Value
questionnaires and separate rate applications and certifications.
---------------------------------------------------------------------------
\37\ See Proposed Rule, 89 FR at 57296.
---------------------------------------------------------------------------
Commerce, therefore, continues to find that 30 days from initiation
of an investigation is still too lengthy of a period in which to wait
for separate rate applications in an investigation, but also agrees
with some of the commenters that in an investigation 14 days may be too
short of a time for importers and exporters to communicate and gather
the necessary data. Accordingly, Commerce has modified Sec.
351.108(d)(1) to allow for a separate rate application to be filed an
additional seven days from that proposed in the Proposed Rule.
Specifically, in antidumping investigations, interested parties will be
allowed to file separate rate applications no later than 21 days
following publication of initiation of the investigation in the Federal
Register. This means that from the time a petition is filed in an
investigation, interested parties will have notice that an
investigation might be conducted and start gathering necessary
information, and from the time the investigation notice is published in
the Federal Register, they will have 21 days to answer the questions in
Commerce's separate rate application, located on Commerce's website,
and file the application electronically with the agency. Commerce has
determined that this modification to the proposed regulation
appropriately takes into consideration the concerns raised by some of
the commenters, while also helping Commerce to prevent delays of its
procedures by a few days when conducting an AD investigation.
However, with respect to administrative reviews and new shipper
reviews, Commerce does not agree that the same issues exist as were
raised by the commenters with respect to investigations. After an
investigation is completed, an AD order is issued and published in the
Federal Register.\38\ Administrative reviews and new shipper reviews
are conducted pursuant to an existing AD order. U.S. importers and
foreign exporters alike are on notice that when merchandise subject to
an AD order is imported into the United States, cash deposits will be
collected on that merchandise, and duties will be assessed on that
merchandise at some point.\39\ Importers and exporters have an
obligation to be aware of potential duties on the merchandise which
they are importing or exporting, and ignorance of the existence of the
AD order or of their fiduciary duties to pay the applicable trade
remedies is not a
[[Page 101704]]
reasonable excuse. On the other hand, the fourteen-day deadline will
allow Commerce the opportunity to avoid certain existing delays in its
proceedings to the benefit of the participants who must answer
questionnaires and to Commerce officials in analyzing and considering
those parties' questionnaire responses and information. Accordingly,
Commerce has not modified the fourteen-day deadline from the
publication of initiation of an administrative review or new shipper
review set forth in Sec. 351.108(d)(2).
---------------------------------------------------------------------------
\38\ See section 736(a) of the Act.
\39\ Id.
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Commerce agrees with other suggestions and has adopted them as
follows: (1) Commerce has removed the term ``the lack of'' in the
header language for proposed Sec. 351.108(b)(1)(iii) because the
criteria listed in that section actually indicate de facto control; (2)
Commerce has removed the word ``no'' in proposed Sec.
351.108(b)(1)(iii) because, again, that provision speaks to evidence of
de facto control or influence and the inclusion of the word ``no''
spoke to the opposite meaning; (3) Commerce has revised Sec.
351.108(b)(1)(iii)(A) to read ``maintains or must maintain'' because
the described situation covers both existing and required maintenance
of certain government representatives in positions of control; (4)
Commerce has included the term ``or managers'' following the term
``officers'' throughout the regulation because both officers and
managers can influence corporate decisions; (5) Commerce has included
the term ``or their family members'' when addressing situations in
which representatives of the governments may, in fact, be placed in
positions of leadership or power in a company, in accordance with
Commerce's practice of recognizing that family members and family
groupings may share a common business interest and authority; and (6)
Commerce has included ``government-appointed or controlled labor
unions'' in the regulation as types of government authorities through
which a nonmarket economy may exert control or influence. In addition
to those modifications, Commerce has emphasized in Sec. 351.108(a)(2),
that its analysis is based on record information, clarified language
throughout the regulation when it was referring to a ``government''
that the government at issue is the ``nonmarket economy government,''
and removed the term ``or control'' from Sec. 351.108(b)(1)(i)(B)(2)
because that language is superfluous, as that particular provision
pertains to the veto power of the nonmarket economy government giving
it control over the decisions of the entity. Furthermore, Commerce has
also modified ``production and commercial'' decisions throughout the
regulation to be ``production, commercial and export'' decisions
because export decisions are always under consideration in Commerce's
separate rate analysis.
In addition, in response to a commenter's suggestion that Commerce
revise the regulation to clarify that Commerce, not the separate rate
applicants or certifiers, must be satisfied that the applications or
certifiers have shown that the degree of government control or
influence is not significant and that applicants or certifiers must
provide proof of lack of government control or influence, Commerce has
modified the text of Sec. 351.108(b) to indicate that Commerce must
determine ``that the exporter has demonstrated that it operates certain
activities sufficiently independent from nonmarket economy government
control.'' Commerce has also provided further language in Sec.
351.108(d) to explain that if no separate rate application or
certification is timely submitted by an exporter of merchandise subject
to an investigation or AD/CVD order, Commerce may apply the nonmarket
economy rate to that exporter's merchandise. Also, Commerce modified
the title language to the overall regulation to emphasize that
Commerce's separate rate analysis applies to entities, whether in the
nonmarket economy or in a third country, that export merchandise from
the nonmarket economy to the United States.
In response to the comment on proposed Sec. 351.108(e) that
entities that submit separate rate applications or certifications and
are subsequently selected to be an examined respondent in an
investigation or review by Commerce must fully respond to Commerce's
questionnaires in order to be eligible for separate rate status,
Commerce has expanded that proposed paragraph to not only require full
responses to questionnaires but also full participation in the
proceeding, as explained below.
With respect to Commerce's questionnaires, the full ``section A''
questionnaire asks more detailed questions specifically about corporate
structure than the separate rate application or certification. It asks
for an organizational chart on affiliation and has more comprehensive
questions about manufacturing facilities, locations, legal structure,
third parties, narrative history, capital verification reports, and
other information in addition to ownership and affiliation. Further,
the ``section C'' questionnaire requests information that supports
claims that a respondent retained the proceeds of their export sales
and made independent decisions regarding the disposition of profits or
financing of losses. In addition to requesting more data about the
company's corporate structure in the initial questionnaire, Commerce
frequently will issue supplemental questionnaires to learn even more
details about the affiliations and structure of the respondent being
examined. Much of the ``section A'' questionnaire is akin to a more
detailed request for information to supplement the separate rate
application or certification and allows Commerce to confirm or clarify
claims made in a separate rate certification or application.
In addition, full participation in the proceeding overall is
necessary to allow Commerce to be able to verify any information
relevant to determining separate rate eligibility, and it is not
unusual for Commerce to discover at verification that information
believed to be complete on the record before conducting verification
was, in fact, incomplete after consideration of an entity's complete
books and record. Accordingly, if a respondent selected for individual
examination fails to fully respond to Commerce's questionnaires or,
where applicable, fails to allow Commerce to verify information
submitted in response to Commerce's questionnaires, absent extenuating
circumstances, Commerce shall determine that it also has failed to
demonstrate its eligibility for a separate rate.
The commenter on Sec. 351.108(e) did not seem to take issue with
the provision itself, but instead indicated concerns with what Commerce
does after it has made a determination that the exporter is part of the
nonmarket economy entity. The commenter expressed concerns that non-
selected entities and examined respondents would collude in such a way
that if an examined respondent realized that review of its entries
could lead to a high dumping margin, which would in turn be used to
help calculate the rate applied to the non-selected exporters, the
examined respondent might choose not to answer questionnaires, thereby
pulling it into the nonmarket economy entity and pulling it out of the
non-selected exporters calculation, under Commerce's current practice
for determining that non-selected exporter rate.
Although Commerce appreciates the concerns expressed by the
commenter on this issue, Commerce disagrees that treating an examined
respondent differently for purposes of its separate
[[Page 101705]]
rate analysis from those exporters who only submit separate rate
applications and certifications is ``arbitrary.'' The distinction is in
no way arbitrary because examined respondents must provide a much
greater amount of information to Commerce to analyze and determine an
antidumping margin covering their merchandise. In addition, without
full participation by the examined respondent, including a response to
questionnaires, Commerce is unable to confirm, clarify, or verify
claims made in a separate rate certification or application.
Furthermore, although Commerce has codified its methodology for
determining a rate to be applied to non-selected exporters in an
antidumping proceeding covering a nonmarket economy in general at Sec.
351.109(g), neither that provision nor Sec. 351.108(e) addresses the
use, or nonuse, of the nonmarket economy entity rate in determining a
rate to be applied to the non-selected exporters in an antidumping
investigation or administrative review. The commenters' concerns seem
to speak to that element of Commerce's calculation of a rate to apply
to non-selected exporters, but because Commerce is not codifying that
practice in this provision, Commerce has determined that this concern
should be addressed on a case-specific basis. Accordingly, other than
requiring full participation in the proceeding, Commerce has made no
further modifications to Sec. 351.108(e).
Finally, Commerce is not addressing in the new regulation or in the
preamble to the final rule situations in which an entity located in a
third country substantially transforms subject merchandise into a
different product in the third country, completes or assembles the
subject merchandise into a different product in the third country, or
alters the subject merchandise in form or appearance in minor respects
in the third country, as suggested by one of the commenters. All of
those scenarios are already addressed in scope and circumvention
proceedings by sections 781(b) and (c) of the Act and Sec. Sec.
351.225(j) and 351.226(i) and (j) of Commerce's regulations.
4. Commerce Has Made a Small Modification to Proposed Sec.
351.109(c)(2)(v), Which Applies to the Selection of Additional
Respondents
Proposed new Sec. 351.109 addresses Commerce's procedures for
selecting respondents, calculating the all-others rate in
investigations, calculating a rate for unexamined respondents in
various proceedings, and the selection of voluntary respondents.\40\
---------------------------------------------------------------------------
\40\ See Proposed Rule, 89 FR at 57296.
---------------------------------------------------------------------------
Commerce received several generally supportive comments on the
proposed new Sec. 351.109. With respect to the selection of additional
respondents, one commenter stated that the language ``soon after filing
questionnaire response'' and ``early in the segment of a proceeding''
in proposed Sec. 351.109(c)(2)(v) \41\ is open-ended and would likely
lead to debate over what counts as ``soon'' or ``early.'' That
commenter recommended that Commerce instead define the cutoff for
adding new respondents by stating Commerce would select a respondent
only after determining that there is sufficient time left before
deadlines in the proceedings to complete all of its procedures without
additional administrative burden. That commenter suggested that by
adding language that addressed timing and other such considerations,
Commerce would set realistic parameters for parties to understand when
Commerce may select additional respondents.
---------------------------------------------------------------------------
\41\ Id., 89 FR at 57296-57300.
---------------------------------------------------------------------------
That commenter stated that this revised language would also
establish a standard that is consistent with Commerce's approach
elsewhere in its regulations. For example, Sec. 351.311(b) provides
that Commerce ``will examine the practice, subsidy, or subsidy program
{discovered in the course of an investigation or review{time} if the
Secretary concludes that sufficient time remains before the scheduled
date for the final determination or final results of review.''
Similarly, Sec. 351.214(f)(2) states that Commerce may rescind a new
shipper review where ``{a{time} n expansion of the normal period of
review to include an entry and sale to an unaffiliated customer in the
United States of subject merchandise would be likely to prevent the
completion of the review within the time limits.''
The second commenter stated that it generally concurred with
Commerce's proposed rule but recommended that the regulation define the
parameters on the timing for the selection of additional respondents
under Sec. 351.109(c)(2)(v). For example, the proposed language does
not define how soon after the filing of questionnaire responses a
respondent could withdraw from participation and Commerce would
consider reviewing another exporter or producer for examination, how
early in the segment Commerce could determine that a selected exporter
or producer is no longer participating in the investigation or
administrative review and that there is sufficient time to pick another
respondent, or when in the segment Commerce could determine that the
exporter's or producer's sales of merchandise subject to an
investigation or AD/CVD order are not bona fide but that there remains
time to examine another respondent. Without a clear definition of what
``early in the segment'' means, the commenter explained the uncertainty
could result in the selection of additional respondents and the filing
of new questionnaire responses very late in a proceeding, thereby
providing insufficient time for domestic producers to provide
meaningful comment or for Commerce to issue supplemental questionnaires
prior to a preliminary determination or preliminary results. Therefore,
the second commenter recommended that Commerce add language to state
that Commerce will select additional respondents only if it is within
90 days of initiation, consistent with the 90-day deadline for parties
to withdraw requests for administrative reviews under Sec. 351.213(d).
Two other commenters suggested that Commerce codify that a
``reasonable number of respondents'' in an investigation or
administrative review where individual examination of all known
exporters or producers is not practicable must be more than one
respondent, consistent with recent holdings of the Court of
International Trade (CIT) and Federal Circuit.\42\
---------------------------------------------------------------------------
\42\ See YC Rubber Co. (North America) LLC v. United States, No.
2021-1489, 2022 WL 3711377 at 3 (Fed. Cir. 2022); see also
Schaeffler Italia S.R.L. v. United States, 781 F. Supp. 2d 1358,
1363 (CIT 2011).
---------------------------------------------------------------------------
Those two commenters also recommended that Commerce modify its
practice to enable more frequent use of sampling as a respondent
selection methodology. They stated that in many cases, selection of the
two largest producers or exporters results in selection of the same
respondents in proceeding after proceeding and allows those respondents
to tailor their operations or reporting in a manner that avoids
antidumping or countervailing duties without being representative of
the foreign industry.
The commenters also expressed concern with Commerce's rejection of
the use of sampling in most cases. In a 2013 notice, the agency stated
that it would not rely on sampling unless it ``has the resources to
examine individually at least three companies for the segment.'' \43\
One commenter stated
[[Page 101706]]
that Commerce rarely selects more than two respondents, particularly in
administrative reviews, and claims that Commerce has not conducted a
single proceeding since the issuance of the 2013 policy announcement in
which it used sampling to select respondents. One commenter also stated
that a system in which most foreign exporters will be excluded from
individual examination and thus able to ``free ride'' off the largest
respondents' margins creates a significant barrier to leveling the
playing field in the U.S. market.
---------------------------------------------------------------------------
\43\ See Antidumping Proceedings, 78 FR 65963, 65965 (November
4, 2013) (announcement of change in Commerce practice for respondent
selection in AD proceedings and conditional review of the nonmarket
economy entity in AD proceedings).
---------------------------------------------------------------------------
Another concern raised by one commenter was Commerce's normal
reliance on USCBP data to select respondents. That commenter stated
that while USCBP data is generally an appropriate starting point for
respondent selection, these data can also be highly problematic for the
purpose of respondent selection. For example, it is possible for
quantities to be reported in different units that are not easily
converted into a uniform unit of measurement. That commenter also
suggested that USCBP data may also contain errors or appear to be
incomplete, which can be evident on the face of the data or revealed
only in light of information submitted by interested parties.
Therefore, one commenter recommended that Commerce clarify in its
regulations that, when such problems with USCBP data are evident or
revealed by information placed on the record, Commerce will rely on
additional information for the purpose of respondent selection. That
commenter suggested that Commerce consider requiring all exporters
requesting an administrative review to provide with their request the
quantity and value of their shipments of subject merchandise during the
period of review in order to have a second set of reliable data on the
record from which to select respondents.
Lastly, one commenter expressed concerns regarding Commerce's
proposed regulation for calculating the all-others and non-selected
rates. That commenter referenced several past cases where Commerce used
either quantity or value in calculating the dumping margin assigned to
exporters and producers who were not individually reviewed and stated
that Commerce's calculations had been inconsistent. That commenter
stated that Commerce should clarify in the regulations the
circumstances in which it will rely on a weighted average of publicly
ranged U.S. sales values or the circumstances in which Commerce would
rely on a weighted average of sales quantities for calculating the all-
others rate and the non-selected respondents' rate.
Response
Commerce agrees with the commenter that suggested Commerce should
focus on the time remaining and actions which need to be taken in a
segment of a proceeding before selecting a new respondent. Accordingly,
in the last sentence of Sec. 351.109(c)(2)(v) Commerce has added
language to say that the Secretary may select the next respondent based
on the next largest volume or value ``if the Secretary determines that
such a selection will not inhibit or impede the timely completion of
that segment of the proceeding.''
On the other hand, Commerce does not agree with a commenter's
suggestion that Commerce should codify a hard deadline before which it
can select additional respondents. There is nothing in the Act which
would suggest such a restriction, and imposing such a deadline in the
regulation may curtail Commerce's ability to select respondents when
issues arise during a proceeding. As mentioned in the Proposed Rule,
considerable time and resources are necessary for issuing
questionnaires and analyzing data for purposes of respondent
selection.\44\ If Commerce were to codify a deadline as suggested and
then a respondent decided not to participate or to withdraw its request
for administrative review, or Commerce determined that the U.S. sales
reported by a selected respondent were not bona fide sales of subject
merchandise after that deadline, yet Commerce also determined that
there remained sufficient enough time for Commerce to select another
respondent, then such a deadline would be a hindrance to the agency.
Commerce should be able to select another respondent for examination in
any of those scenarios. Accordingly, Commerce does not believe the
codification of a hard deadline is advisable.
---------------------------------------------------------------------------
\44\ See Proposed Rule, 89 FR at 57297.
---------------------------------------------------------------------------
Section 777A(c)(1) and (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. If Commerce codified a hard deadline and for
whatever reason one or more respondents dropped out after that
deadline, Commerce might find itself with no ability to select
additional exporters or producers, despite the statutory preference to
review more exporters and producers and the fact that Commerce has
determined that it has the time and resources to examine another
exporter or producer. Such a restriction is illogical and would only
provide Commerce with fewer opportunities to exercise its statutory
authority to examine a reasonable number of respondents.\45\
Accordingly, Commerce has not adopted that recommendation in the final
rule.
---------------------------------------------------------------------------
\45\ See 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.'').
---------------------------------------------------------------------------
As mentioned in the Proposed Rule, the primary focus of respondent
selection is whether Commerce can effectively examine a reasonable
number of producers and exporters, as Congress intended, to calculate
an accurate dumping margin or countervailable subsidy rate.\46\ Certain
commenters requested that Commerce codify that when limiting individual
examination to the largest producers/exporters, Commerce will select
more than one respondent in every case. However, Commerce saw no need
to codify any such requirement in its Proposed Rule and continues to
see no benefit in codifying such a requirement into the regulation.
Accordingly, Commerce has not placed such a restriction in the
regulation.
---------------------------------------------------------------------------
\46\ See Proposed Rule, 89 FR at 57297.
---------------------------------------------------------------------------
With respect to the comments on sampling, section 777A(c) of the
Act states that if it is ``not practicable to make individual weighted
average dumping margin determinations'' because of ``the large number
of exporters or producers involved'' in an investigation or review,
Commerce may ``determine the weighted average dumping margins for a
reasonable number of exporters or producers by limiting its examination
to (A) a sample of exporters, producers or types of products that is
statistically valid based on the information available'' to Commerce at
the time of selection or (B) the exporters and producers accounting for
the ``largest volume of the subject merchandise from the exporting
country that can be reasonably examined.'' The Statement of
Administrative Action (SAA) states that ``the authority to select
samples rests exclusively with Commerce, but, to the greatest extent
possible, Commerce will consult with
[[Page 101707]]
exporters and producers regarding the method to be used.'' \47\
---------------------------------------------------------------------------
\47\ See Statement of Administrative Action Accompanying the
Uruguay Rounds Agreement Act, H. Doc. 316, Vol. 1, 103d Cong. (1994)
(SAA) at 872.
---------------------------------------------------------------------------
In its 2013 Change in Practice Notice, Commerce explained that it
will normally rely on sampling for respondent selection purposes in AD
administrative reviews when (1) there is a request by an interested
party for the use of sampling to select respondents, (2) Commerce has
the resources to examine individually at least three companies for the
segment, (3) the ``largest'' three companies (or more if Commerce
intends to select more than three respondents) by import volume of the
subject merchandise under review account for normally no more than 50
percent of total volume, and (4) information obtained by or provided to
Commerce provides a reasonable basis to believe or suspect that the
average export prices and/or dumping margins for the largest exporters
differ from such information that would be associated with the
remaining exporters.\48\ In the rare cases where Commerce relies on
sampling to select respondents, it is typically when there are
multiple, and often numerous, prior reviews to draw upon for evidence
of margin differentials attributable to size.
---------------------------------------------------------------------------
\48\ See Antidumping Proceedings: Announcement of Change in
Department Practice for Respondent Selection in Antidumping Duty
Proceedings and Conditional Review of the Nonmarket Economy Entity
in NME Antidumping Duty Proceedings, 78 FR 65963, 65964 (November 4,
2013) (2013 Change in Practice Notice).
---------------------------------------------------------------------------
An important part of any methodology using sampling to select
respondents is that the sampling must be ``statistically valid'' under
section 777A(c)(A) of the Act. The commenters who expressed concerns
with Commerce's respondent selection sampling methodology did not
explain why that methodology is not statistically valid, or, in the
alternative, provide an alternative methodology that would meet this
statutory requirement.\49\ Therefore, Commerce will continue to rely on
the criterion specified in the 2013 Change in Practice Notice and
consider sampling when Commerce can select a minimum of three
respondents to examine individually in light of resource constraints.
Despite statements by the commenters to the contrary, Commerce has in
fact completed a statistically valid sampling request since the
issuance of the 2013 Change in Practice Notice,\50\ and statistically
valid sampling for purposes of respondent selection remains a viable
option for parties to request and consider.
---------------------------------------------------------------------------
\49\ See SAA at 873 (``Commerce will employ a sampling
methodology designed to give representative results based on the
facts known at the time the sampling method is designed'').
\50\ See, e.g., Commerce's Memorandum, ``Antidumping Duty
Administrative Review of Steel Nails from the People's Republic of
China: Sampling Pool for Selection of Respondents and Selection
Methodology,'' dated April 1, 2019 (``In light of the particularly
large number of exporters that are under review in this segment, as
well as the history of margins in the prior segments of this
proceeding, discussed above, we find that using a sampling
methodology in this review addresses this enforcement concern'').
---------------------------------------------------------------------------
In the Proposed Rule, Commerce stated that it would normally base
respondent selection on information derived from USCBP.\51\ While one
commenter expressed concerns regarding Commerce's preference for USCBP
data, suggesting that USCBP data are susceptible to errors, no database
is perfect. Although the Act does not limit Commerce to relying only on
USCBP data in its reviews, Commerce weighs USCBP data more heavily
because they contain the actual entry documentation for the shipments,
including the CBP 7501 entry summary form (or its electronic
equivalent), invoice, and bill of lading.\52\ USCBP data are based on
information required by, and provided to, the U.S. government authority
responsible for permitting goods to enter into the United States.\53\
Moreover, significant penalties can be imposed on parties that report
entry information inaccurately.\54\ Furthermore, Commerce prefers USCBP
data because they are ``a primary source, as opposed to a secondary
source, which may be prone to errors in the data collection and
aggregation process.'' \55\ Given the aforementioned reasons,
Commerce's treatment of USCBP data will remain unchanged when selecting
that as a data source to determine the largest exporters or producers
of subject merchandise.
---------------------------------------------------------------------------
\51\ See Proposed Rule, 89 FR at 57297.
\52\ See, e.g., Certain Frozen Fish Fillets From the Socialist
Republic of Vietnam: Final Results of Antidumping Duty
Administrative Review; Final Determination of No Shipments; 2020-
2021, 87 FR 55996 (September 13, 2022) (Fish Fillets from Vietnam),
and accompanying Issues and Decision Memorandum (``Although the
petitioners assert that ship manifest data it placed on the record
`raises questions' regarding the CBP data, it is well-established
that mere speculation does not constitute substantial evidence,
which is the standard for Commerce to make a finding.'').
\53\ See, e.g., Certain Frozen Warmwater Shrimp from India:
Final Results and Partial Rescission of Antidumping Duty
Administrative Review, 74 FR 33409 (July 13, 2009), and accompanying
Issues and Decision Memorandum, at Comment 2.
\54\ See Fish Fillets from Vietnam Issues and Decision
Memorandum at Comment: Commerce Should Ensure that All Subject
Merchandise Is Subject to the Appropriate Duties.
\55\ See, e.g., Certain Cut-to-Length Carbon Steel Plate from
the People's Republic of China: Preliminary Results of Antidumping
Administrative Review and Preliminary Determination of No Shipments,
77 FR 47593 (August 9, 2012).
---------------------------------------------------------------------------
In addition, Commerce will not include in the regulation a
requirement that respondents that request an administrative review file
a quantity and value questionnaire response when making a review
request, as suggested by a domestic industry commenter. Such further
information submissions from foreign exporters would be unnecessary and
create an additional burden on Commerce to consider and analyze such
submissions, regardless of whether such additional information on the
record actually adds value to the case at hand.
Commerce agrees that for some imported products, problems arise in
relying on certain USCBP volume data because different importers will
report their entries in quantities that are denominated in different
units of measure (UOMs). For example, in the 2023 CVD administrative
review of softwood lumber from Canada, Commerce acknowledged that
certain importers reported their imports based on cubic meters, others
on square meters, others on kilograms, and still others based on number
of pieces.\56\ Commerce also explained that ``in addition to missing
volumes, the various UOMs are problematic because, for example,
measurements of weight (e.g., kilograms) cannot be converted to
measurements of volume (e.g., cubic meters) without making certain
assumptions, and `number of pieces' simply cannot be converted to a
measurement of volume.'' \57\ On the other hand, the USCBP data in that
review did contain ``value amounts for all entries of subject
merchandise in the same unit of currency.'' \58\ Therefore, as it had
in prior review periods, Commerce determined to rely ``on the value
data as a proxy for quantity and selecting respondents accounting for
the largest value.'' \59\ Commerce explained that using value as a
proxy for quantity when there are issues with reported UOMs for entry
quantities ``is transparent and consistent with Commerce's approach in
other proceedings as well as the prior administrative reviews of this
order.'' \60\ For this reason, Sec. 351.109(c)(2)(ii) specifically
provides that if Commerce determines that ``volume data are
[[Page 101708]]
unreliable or inconsistent, depending on the product at issue,''
Commerce ``may instead select the largest exporter of subject
merchandise based on the value of the imported products instead of the
volume of the imported products.'' The value data, however, will still
normally originate from the USCBP. Thus, on this basis as well,
Commerce sees no reason to second-guess its normal preference of using
data derived from USCBP if possible.
---------------------------------------------------------------------------
\56\ See Memorandum, ``Administrative Review of the
Countervailing Duty Order on Certain Softwood Lumber Products from
Canada; 2023: Respondent Selection,'' dated April 19, 2024 (ACCESS
Barcode: 4546196-01).
\57\ Id.
\58\ Id.
\59\ Id.
\60\ Id.
---------------------------------------------------------------------------
Lastly, one commenter claimed that Commerce has been inconsistent
on whether it relies on a weighted-average using publicly ranged U.S.
sales values or on a weighted-average using U.S. sales quantities in
calculating all-others and non-selected rates. That commenter requested
that Commerce set a clear test in the regulation as to the
circumstances in which Commerce will base its calculations on sales
values and when it will base its calculations on sales quantities.
Upon consideration of this comment, Commerce has determined not to
adopt this proposed addition to its regulations but clarifies here that
the agency's practice is to calculate the all-others and non-selected
rates using a weighted-average based on publicly ranged U.S. sales
values. To the extent that Commerce chooses to use, instead, a weighted
average using U.S. sales quantities in determining the all-others rate
or a rate to apply to respondents who are not individually examined,
such an application is an exception to Commerce's practice and would be
case-specific and based on the unique facts to the record before the
agency. If Commerce determines to calculate the all-others rate or rate
for respondents who are not individually examined based on U.S.
quantities instead of U.S. sales-values, Commerce will provide an
explanation in its determination.
5. Commerce Has Made No Modifications to the Proposed Change to Sec.
351.214, Which Covers Expedited CVD Reviews
In the Proposed Rule, Commerce proposed modifying the heading of
Sec. 351.214, which currently reads ``New shipper reviews under
section 751(a)(2)(B) of the Act,'' by adding the phrase ``and expedited
reviews in countervailing duty proceedings.'' \61\ Commerce proposed
such a change because section 751(a)(2)(B) of the Act provides Commerce
the authority to determine dumping margins and CVD 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.'' However, 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. Instead, the Federal Circuit in Comm. Overseeing
Action for Lumber Int'l Trade Investigations v. United States, 66 F.4th
968, 977 (Fed. Cir. 2023) (COALITION v. U.S.) 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,\62\ explicitly provide Commerce with the authority
to promulgate Sec. 351.214(l).\63\ Therefore, Commerce proposed
modifying the heading to Sec. 351.214 to make it consistent with the
holding in COALITION v. U.S.
---------------------------------------------------------------------------
\61\ See Proposed Rule, 89 FR at 57302.
\62\ See Uruguay Round Agreements Act, Public Law 103-465, 108
Stat. 4809 (1994) (URAA).
\63\ See COALITION v. U.S., 66 F.4th at 977.
---------------------------------------------------------------------------
One party commented on this change, stating that the Federal
Circuit in COALITION v. U.S. held that expedited CVD administrative
reviews are not prescribed by the Act. Accordingly, that commenter
stated that Commerce should remove Sec. 351.214(l) entirely from the
regulation to conserve agency resources, instead of modifying the
heading to Sec. 351.214 as proposed.
Response
Commerce proposed to only revise the heading to Sec. 351.214 and
not to remove an entire provision pursuant to which Commerce has
conducted expedited CVD administrative reviews. As the Federal Circuit
held in COALITION v. U.S., that provision was added consistent with
language in the WTO Agreement on Subsidies and Countervailing Measures
(the SCM Agreement),\64\ and Commerce does not believe it would be
reasonable to remove that language in this final rule. Accordingly,
Commerce will not modify the regulation as suggested by the commenter
and will modify the heading of Sec. 351.214 as set forth in the
Proposed Rule.
---------------------------------------------------------------------------
\64\ See Agreement on Subsidies and Countervailing Measures (SCM
Agreement); 19 U.S.C. 3511 (Approval and entry into force of Uruguay
Round Agreements'') (December 9, 1994).
---------------------------------------------------------------------------
6. Commerce Has Made Certain Small Modifications to Proposed Sec.
351.301(b)(2), Covering the Submission of Rebuttal Information
Commerce proposed a modification to one of its reporting
regulations, Sec. 351.301(b)(2), to require greater detail from
interested parties filing factual information to rebut, clarify, or
correct factual information on the record.\65\ The existing regulatory
language does not require the submitter of such information to explain
what information on the record the alleged rebuttal/clarification/
correction information actually rebuts, clarifies, or corrects, and the
lack of such an explanation has created 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
responsive to the information already on the record.\66\ Accordingly,
Commerce proposed adding a sentence to the regulation that stated that
the submitter ``must also provide a narrative summary explaining how
the factual information provided under this paragraph rebuts,
clarifies, or corrects the factual information already on the record.''
\67\
---------------------------------------------------------------------------
\65\ See Proposed Rule, 89 FR at 57302.
\66\ Id.
\67\ Id.
---------------------------------------------------------------------------
Two commenters expressed concerns with this proposed modification
to the regulation, stating that the proposed additional requirement
would hinder the submission of relevant information and delay
proceedings because frequently parties that initially submit factual
information in response to Commerce's questionnaires do not provide the
detailed explanation required by the proposed language. They stated
that the difference between what is required of those submitting
initial factual information on the record and what would be required of
those submitting rebuttal factual information would be inherently
unfair. Furthermore, the commenters stated that to require submitters
rebutting that information to prepare a detailed narrative before the
record is complete would require parties to also prematurely disclose
arguments in an ongoing segment of the proceeding, basically
emboldening parties to ``litigate their arguments'' early in a segment
of the proceeding in the guise of objections to the scope of rebuttal
factual information. They stated that those submitting factual
information on the record for the first time often may not provide a
specific explanation for how the submitted factual information supports
their questionnaire responses. Thus, those filing rebuttal information
are often forced to submit information that they think might be
responsive, but they may not learn until the time for filing new
factual information has passed the specific capacity for which the
initial facts on the record were actually submitted in the first place.
[[Page 101709]]
The commenters also stated that such a requirement would push those
submitting rebuttal information to request extensions from Commerce to
prepare a detailed narrative. The commenters stated that placing such a
requirement in the regulation would create a burden for Commerce with
no real benefit, and, as such, they requested that Commerce reject the
proposed modification to its regulations, or at minimum, have the
required explanation only address how the information is ``relevant''
to the factual information already on the record.
Response
Commerce retains the view that the failure to identify the
information being rebutted creates a burden on Commerce or other
interested parties. Under the current regulatory language parties may
submit information with no explanation as to what it rebuts, clarifies
or corrects, thereby permitting the submission of information that does
not meet those requirements despite the restrictions of the regulation.
Having information on the record without an explanation of how it ties
to the initial facts on record complicates Commerce's ability to
analyze and enforce the limitations of submitting factual information
under Sec. 351.301. Accordingly, Commerce will continue to include
language addressing this concern in the regulation.
With respect to the perceived unfairness of the reporting
requirements of those submitting information in the first instance on
the record in response to questionnaires, Commerce emphasizes two
points. First, normally, when a respondent submits information on the
record in response to a specific Commerce question, the reason that the
information was submitted on the record in the first place is evident.
That may not be the case, however, with rebuttal information submitted
on the record with no explanation. Therefore, by their nature these two
types of factual information submissions are different, and Commerce
requires specific explanation from those submitting rebuttal
information to identify the information already on the record that is
being rebutted (or clarified or corrected).
Second, if an interested party reviewing the record does not
believe that factual information submitted on the record in the first
instance by another interested party supports or is relevant to the
question asked by Commerce, the interested party has the ability to
bring that concern to Commerce's attention in a timely fashion.
Commerce may reject new factual information submitted on the record in
the first instance if Commerce determines that it is not relevant to
the questions or information request made of the respondent. In short,
the record should be clear as to the reasons new factual information is
being submitted, either through a response to an agency questionnaire,
or in a rebuttal, clarification, or correction explanation. Commerce
has determined, therefore, that the regulation should reflect that
understanding of new factual information and the administrative record.
Commerce has made certain small changes, however, to the language
set forth in the Proposed Rule. The opening paragraph of Sec.
351.301(b) requires those submitting factual information in the first
instance to provide a ``written explanation identifying the subsection
of 351.102(b)(21) under which the information is being submitted.''
Commerce has revised the new language in Sec. 351.301(b)(2) to state
that the submitter of rebuttal, clarifying or correction factual
information must ``provide a written explanation describing how the
factual information'' rebuts, clarifies, or corrects the factual
information already on the record. This language provides greater
symmetry in the parties' obligations in the regulation while
emphasizing the type of information Commerce is seeking from those
submitting rebuttal factual information--not a long narrative
submission, but rather a concise and complete explanation describing
specifically what factual information on the record the new factual
information rebuts, clarifies or corrects.
7. Commerce Has Made No Changes to the New Deadlines in Proposed Sec.
351.301(c)(3), Covering the Submission of Benchmark and Surrogate Value
Data, But Has Added Language Permitting Commerce To Issue a Schedule
With New Deadlines in Unique Circumstances
Commerce proposed a revision to Sec. 351.301(c)(3) to update
deadlines for filing certain information on the record.\68\ Current
Sec. 351.301(c)(3)(i) and (ii) establish a thirty-day time limit
before the scheduled dates of preliminary determinations and results of
review 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.
---------------------------------------------------------------------------
\68\ See Proposed Rule, 89 FR at 57302-57303.
---------------------------------------------------------------------------
The Proposed Rule explained that those submissions sometimes
contain hundreds, if not thousands, of pages of information that
Commerce must analyze in a short amount of time prior to issuing a
preliminary determination or preliminary results.\69\ Because the
volume of information often contained in these submissions can be so
large, it makes it difficult for Commerce to meet its statutory
deadlines to determine the appropriate surrogate values or benchmarks
in the preliminary determination or preliminary results.\70\ Commerce
also explained that since the 30-day deadlines were codified, Commerce
has experienced a large increase in AD and CVD proceedings and orders
which it must administer.\71\ Accordingly, to effectively administer
and enforce the AD and CVD laws, Commerce proposed modifying these time
limits to allow Commerce additional time to more fully analyze these
voluminous submissions for purposes of its preliminary decisions.\72\
Specifically, Commerce proposed revising Sec. 351.301(c)(3)(i) to
create both a paragraph (c)(3)(i)(A) and (B) covering investigations.
Under the proposal, the time limit for parties to submit factual
information to value factors of production under Sec. 351.408(c) in AD
investigations under Sec. 351.301(c)(3)(i)(A) would be no later than
60 days before the scheduled date of the preliminary determination, and
the time limit for parties to submit factual information to measure the
adequacy of remuneration under Sec. 351.511(a)(2) in CVD
investigations would be no later than 45 days before the scheduled date
of the preliminary determination in proposed Sec.
351.301(c)(3)(i)(B).\73\
---------------------------------------------------------------------------
\69\ Id.
\70\ Id.
\71\ Id.
\72\ Id.
\73\ Id.
---------------------------------------------------------------------------
Furthermore, for administrative reviews, new shipper reviews, and
changed circumstances reviews, proposed Sec. 351.301(c)(3)(ii) would
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.\74\
---------------------------------------------------------------------------
\74\ Id.
---------------------------------------------------------------------------
Commerce received several comments on the proposed change in
deadlines. One party supported the change, stating that the
modifications would enhance Commerce's ability to enforce trade laws in
a timely and efficient manner and
[[Page 101710]]
would provide interested parties with a more complete preliminary
determination, as the agency would have more time to consider and
analyze its benchmark and surrogate value determinations for purposes
of the preliminary agency decision. That commenter agreed with Commerce
that the agency does not currently have sufficient time to review the
benchmark and surrogate value data provided in either submissions or
rebuttal submissions, and therefore, Commerce frequently cannot address
those submissions in part or in whole in the preliminary determination
or results, to the disservice of the interested parties. That commenter
stated that it disagrees with the claim that the revisions will unduly
affect the ability of interested parties to gather and submit necessary
factual information on the record and emphasized that if Commerce's
preliminary determinations contain more analysis and information as a
result of this change in the deadlines, it will provide interested
parties with an opportunity to submit fulsome, better comments in
anticipation of a final determination or results of review.
The other commenters indicated that they were opposed to the change
in deadlines for submitting benchmark and surrogate value data, and
instead advocated for Commerce to retain its current thirty-day
deadlines. There were essentially four concerns or suggestions which
they expressed pursuant to the proposed change. First, if Commerce
needs an additional 15 days for CVD investigations and an additional 30
days for surrogate values and CVD administrative reviews, that is 15
days and 30 days, respectively, which interested parties will no longer
have to gather benchmarks and surrogate value information and then
submit it to Commerce. Domestic industries stated that Commerce's
proposal was biased against them because respondents are already
familiar with their factors of production in an AD case and would be
able to consider possible surrogate values even before they have filed
their questionnaire responses and supplemental questionnaire responses,
creating a disadvantage for domestic industries with a shorter period
of time to gather information in AD proceedings. Likewise, domestic
industries said they were also disadvantaged in CVD cases because
respondents would have time to consider benchmarks while answering
Commerce's questionnaires. With respect to both types of proceedings,
domestic industries expressed concerns that respondents would have an
incentive to request extensions and thereby run out the clock, making
it impossible for domestic industries to find and submit appropriate
benchmarks and surrogate values based on the questionnaire responses.
On the other hand, a foreign government stated that respondents are
at a disadvantage in CVD investigations with a shorter period of time
to gather potential benchmark data because domestic industries that
file a petition have already had an opportunity to consider benchmarks
for a less than adequate remuneration (LTAR) allegation, and in both
CVD investigations and reviews, petitioners have time before they make
new subsidy allegations to gather potential benchmark information.
Further, another commenter stated that the shortened deadlines would be
unfair for respondents that spend extensive amounts of time answering
questions and gathering data. That commenter stated that that providing
such a short period in which to file benchmark and surrogate value data
would add unreasonably to respondents' burden and impact the quality of
their responses.
In both AD and CVD cases, the commenters stated that the ultimate
submissions would be of lesser quality and accuracy because the time
period in which to gather sufficient data would be too short, thereby
impeding Commerce's ability to issue supplemental questionnaires and
the domestic industry's ability to identify deficiencies in the
respondents' questionnaire responses. They also expressed concerns that
it would be more difficult to analyze foreign government responses to
Commerce's questionnaires and determine if a tier-one or tier-two
benchmark under Sec. 351.511 would be appropriate, and if supplemental
questionnaires were issued to respondents with respect to their
reported factors of production in an AD case, there may be little to no
time for domestic parties to consider potential surrogate values so
late in the proceeding within the proposed deadlines.
Some commenters noted that Commerce sometimes sets an earlier
deadline for surrogate value submissions and then allows further
submissions subsequently within the 30-day deadline. This proposed
change, they stated, would make that entire process more difficult,
therefore reducing the potential surrogate value information on the
administrative record. The commenters, therefore, stated that the
proposed shorter deadlines would result in less complete administrative
records, less accurate preliminary determinations and results of
administrative reviews, and more extension requests from parties to
submit necessary information, with no clear benefit to Commerce.
The second expressed concern involved the postponement or extension
of preliminary determinations or results of administrative reviews. The
commenters stated that 60 days and 45 days before a preliminary
determination or results of administrative review is issued,
petitioners may not have yet requested postponement or, in
administrative reviews, Commerce may not have yet decided to extend the
preliminary results. If the preliminary determination or results were
extended, so too would be the benchmark and surrogate value submission
deadlines. They stated that the result might be that interested parties
work quickly to find proposed benchmarks or surrogate values, submit
them on time, and then discover that the preliminary determination or
results or review have been extended. Had the interested parties known
that an extension was forthcoming, the commenters stated that parties
could have used the additional time to find potentially better quality
and more accurate information. They noted that with respect to the
extension of preliminary results of reviews in administrative reviews,
Commerce normally issues an extension 30 days before the preliminary
results are set to be issued, which would result in the described
situation if that practice was retained. They stated that adding this
amount of uncertainty to Commerce's procedures is unnecessary and
should be avoided. Accordingly, the commenters requested that if
Commerce retains the proposed changes, it should modify the dates upon
which extensions to preliminary determinations or results would be
granted so that parties would be aware if the benchmark and surrogate
value deadlines had been extended as well.
The third comment on this proposed change to deadlines was a
suggestion for Commerce to instead tie deadlines for submitting
surrogate value information or market benchmarks to other points in the
proceedings, including supplemental responses, which would allow the
record regarding factors of production specifications and subsidy
programs to be fully developed by the deadline. The commenter providing
this suggestion stated that it would both achieve the stated goal of
giving Commerce more time to analyze submissions and would avoid
creating delays or a lack of adequate surrogate
[[Page 101711]]
value or benchmark information on the record.
The final group of suggestions Commerce received on this issue was
that if Commerce insisted on maintaining the changes in deadlines, it
should make certain other changes to its regulations and practice, such
as allowing for rebuttal benchmark and surrogate value submissions to
be submitted on the record after those regulatory deadlines have passed
if subsidy program information or factors of production end up being
placed on the record on or after those deadlines. In addition, the same
commenter suggested that Commerce also consider limiting extension
deadlines for questionnaire responses so that late filings do not chip
away at the opportunity for the domestic industry to file adequate
responsive benchmark or surrogate value submissions.
Response
Although Commerce recognizes the concerns expressed by the
commenters, it continues to find that setting the deadline to submit
surrogate value comments and information 60 days prior to the scheduled
due date of the preliminary determination and preliminary results in AD
nonmarket economy proceedings is reasonable, as is setting the deadline
for the submission of benchmark comments and information 45 days before
the scheduled date of the preliminary determination in a CVD
investigation, and 60 days prior to the scheduled preliminary results
in a CVD administrative review.
Commerce's determinations are based on the facts on the
administrative record and they are frequently challenged before the
CIT, Federal Circuit, and various World Trade Organization (WTO) and
United States-Mexico-Canada Agreement (USMCA) dispute panels.
Accordingly, Commerce must have sufficient time to consider and analyze
the facts on the record when it issues preliminary or final
determinations or results, to be certain that its decisions are
accurate and based on the substantial evidence on the record. In short,
Commerce needs the additional 15 and 30 days which it has proposed
adding to Sec. 351.301(c)(3).
While interested parties will have less time to gather and submit
benchmark data and surrogate value information, both the domestic
industry and respondents to the agency's proceedings produce the
domestic like product/subject merchandise and therefore have an acute
understanding of the inputs that are required to produce subject
merchandise in a nonmarket economy AD or similar proceeding.
With respect to surrogate value submissions specifically, Commerce
disagrees that the 60-day deadline will result in parties having to
submit surrogate values and comments prior to the submission of a
section D questionnaire response, specific to nonmarket economy cases,
containing workable factors of production information. In the vast
majority of cases, parties have sufficient time to prepare and submit
surrogate value comments and information well after a section D
questionnaire response is submitted to the respondent. However, if
there is a timing concern, parties should request in writing that the
agency extend the deadline for the submission of surrogate value
comments and information.
With respect to the deadlines for benchmarks in CVD investigations,
most of the alleged subsidy programs at issue in a CVD investigation
are known on the date the petition is filed, and Commerce indicates the
alleged subsidy programs that it has determined to investigate in the
initiation checklist, issued concurrently with the date Commerce signs
the initiation notice. Further, in Commerce's experience a domestic
industry's allegation that a product has been sold for LTAR includes
information regarding an appropriate benchmark.
Additionally, in CVD investigations where a LTAR subsidy is
alleged, Commerce's initial questionnaire solicits information as to
whether market conditions in the subject country permit the use of
certain benchmarks. Thus, parties should be on notice at the early
stages of the investigation that they may need to submit comments and
information regarding certain benchmark information.
Likewise, with respect to administrative reviews, Commerce finds
that requiring parties to submit benchmark and surrogate value
information 60 days prior to the scheduled due date of the preliminary
results is reasonable given that the timeline for CVD and AD reviews is
substantially longer than the timeline for CVD and AD investigations.
Under section 751(a)(3)(A) of the Act, Commerce has 245 days to issue
its un-extended CVD and AD preliminary results of review and 365 days
to issue fully extended CVD and AD preliminary results of review. These
schedules provide ample time for Commerce to solicit, and respondents
to provide, information on benchmarks and surrogate values, thereby
permitting parties to meaningfully comment on such information by the
revised 60-day deadline.
Notwithstanding the above, Commerce agrees that it will have to
make adjustments to its practice as a result of these changes in some
instances, as raised by one of the commenters. For example, as some of
the commenters noted, there may be instances in AD nonmarket economy
proceedings in which the initial section D questionnaire response has
not been submitted by the 60-day deadline. In such situations, Commerce
will adjust the comment schedule to allow for parties to have
sufficient time to submit surrogate value comments and information.
Likewise, in certain CVD investigations, it is possible that a
respondent or foreign government may submit its initial response
regarding a LTAR subsidy allegation on a date that occurs on or after
the proposed 45-day deadline. In such instances, again, Commerce may
need to adjust the comment schedule to allow for parties to have
sufficient time to submit benchmark information for that alleged LTAR
program.
Furthermore, with respect to new subsidy allegations, under Sec.
351.301(c)(2)(iv)(A), domestic industries must make new subsidy
allegations in CVD investigations no later than 40 days before the
scheduled date of the preliminary determination. This results in a
second potential situation in which Commerce's proposal to require
benchmark information to be submitted no later than 45 days prior to
the scheduled date of the preliminary determination will not be
feasible. Accordingly, if the new deadlines for benchmark submissions
found in Sec. 351.301(c)(3) have already passed or are imminent,
Commerce will determine that they do not apply in that case to new
subsidy LTAR allegations filed near or on the due date specified under
Sec. 351.301(c)(2)(iv)(A). In addition, if the domestic industry files
new subsidy allegations at an earlier stage of an initiated CVD
investigation, it may occur that Commerce's initiation, issuance of the
new subsidy allegation questionnaire, and receipt of the respondents'
responses to the new subsidy allegation questionnaire are not completed
in time for interested parties to submit benchmark information by the
forty-five-day deadline. In both of those instances, Commerce agrees
that it would likely need to establish a separate schedule for the
interested parties to provide them with sufficient time to submit
benchmark information.
Accordingly, in the final rule, Commerce has added Sec.
351.301(c)(3)(i)(C) which states that if
[[Page 101712]]
Commerce determines that interested parties will not have sufficient
time to submit factual information in investigations under the
deadlines set forth in paragraph (c)(3)(i)(A) or (B) because of
circumstances unique to the segment of the proceeding, Commerce may
issue a schedule with alternative deadlines for parties to submit
factual information on the record.
With respect to administrative reviews, Commerce acknowledges that
there may be cases in which it will also have to issue a separate
schedule for interested parties to have sufficient time to submit new
factual information in this regard. For example, in AD nonmarket
economy administrative reviews, if the initial section D questionnaire
response is submitted on or after the revised sixty-day deadline,
Commerce may need to issue a separate schedule for the interested
parties to submit surrogate value comments and information. Likewise,
in CVD administrative reviews, Commerce may also need to issue a
separate schedule for parties to submit benchmark comments and
information when the domestic industry alleges a LTAR subsidy and
Commerce has yet to issue an initiation decision memorandum or
questionnaire responses concerning such an allegation were not
submitted until a date on or after the revised sixty-day deadline.
Accordingly, Commerce has also divided Sec. 351.301(c)(3)(ii) into
two paragraphs, with Sec. 351.301(c)(3)(ii)(A) reflecting the
previously proposed language and Sec. 351.301(c)(3)(ii)(B) to add new
language similar to that of Sec. 351.301(c)(3)(i)(C), stating that if
Commerce determines that interested parties will not have sufficient
time to submit factual information in administrative reviews, new
shipper reviews, and changed circumstances reviews under the deadlines
set forth in paragraph (c)(3)(i)(A) because of circumstances unique to
the segment of the proceeding, Commerce may issue a schedule with
alternative deadlines for parties to submit factual information on the
record.
Commerce disagrees, however, with the concern that these new
deadlines will disadvantage interested parties because it is Commerce's
practice to grant postponement or extensions of preliminary
determinations or results of administrative review 30 days before the
preliminary determination or results, which would fall after benchmarks
and surrogate values are due. The scenario that commenters describe
already occurs under the current 30-day comment deadline, and thus,
Commerce does not find this argument to be a valid basis to refrain
from the 45- and 60-day benchmark and surrogate value deadlines in CVD
and AD nonmarket economy investigations. However, Commerce acknowledges
that the scenario described by parties has the potential to occur more
frequently in the context of CVD and AD nonmarket economy
administrative reviews. Therefore, in CVD and AD nonmarket economy
administrative reviews in which the 60-day deadline to submit benchmark
and surrogate values information is approaching, and Commerce has yet
to extend the due date of the preliminary results, parties may file a
request for Commerce to extend the deadline to file benchmark and
surrogate value information.
Commerce also disagrees that basing the deadline for parties to
submit benchmark comments and information in CVD investigations on the
receipt of the last questionnaire response pertaining to the LTAR
subsidy and surrogate value comments, and information in AD nonmarket
economy investigations on the last section D questionnaire response
would be preferable to deadlines for submissions being tied to the
issuance of preliminary determination or results. Commerce finds that
such an approach would be impractical, as it would require Commerce and
parties to track different benchmark and surrogate value comment
deadlines across cases. Such an approach also assumes that Commerce
would be able to easily determine the point in CVD and AD nonmarket
economy investigations when the ``last'' such questionnaire responses
were submitted, as an insightful deficiency submission from a party
could lead to Commerce determining that that yet another supplemental
questionnaire is needed.
Such an approach could also lead to outcomes where different
respondents have a different number of days between the date when
benchmark and surrogate value comments are submitted and the
preliminary determination due date, which means that interested parties
would not have the same number of days across cases to prepare comments
for consideration in the preliminary determination or results that
parties often submit, and which often address benchmark and surrogate
value issues.
Furthermore, Commerce disagrees with the suggestion that if it
proceeds with the revised benchmark and surrogate value deadlines, then
it should allow rebuttal benchmark and surrogate value submissions to
be submitted on the record after those regulatory deadlines have passed
if factors of production or subsidy program information is submitted on
the record on or after those deadlines. As noted above, based on the
agency's experience with AD nonmarket economy investigations and
reviews, Commerce believes that in most cases it will be able to
solicit section D questionnaire information from respondents such that
parties will have sufficient time with the initial section D
questionnaire response, first section D supplemental questionnaire
supplemental response, and any additional supplemental section D
questionnaire response to submit surrogate value information by the
revised deadlines. Further, as discussed above, because the nature of
the good alleged to have been provided for LTAR and the potential need
for tier-one, tier-two, and tier-three benchmarks is known at the
outset of CVD investigations and reviews, Commerce expects interested
parties will normally be able to submit their LTAR benchmark
information by the revised deadlines.
However, as explained above, should a respondent submit a
supplemental questionnaire response containing new factual information
regarding factors of production information or LTAR benchmarks on or
after the revised deadlines, then pursuant to Sec. 351.301(c)(1)(v)
Commerce will normally allow other interested parties a sufficient
amount of time to submit rebuttal, clarifying, or corrected factual
information on the record pertaining to the benchmark and the factors
of production information contained in those supplemental submissions.
Finally, the same commenter also suggested that Commerce consider
limiting extension deadlines for questionnaire responses in the
regulation so that late filings do not reduce the opportunity for the
domestic industry to file adequate responsive benchmark or surrogate
value submissions. It is Commerce's practice to respond to respondents'
extension requests with consideration of the deadlines that Commerce
and parties face in CVD investigations and reviews and AD nonmarket
economy investigations and reviews, and the agency will continue to do
so under the current regulations. Therefore, Commerce has elected not
to adopt additional language in the regulation to limit extension
deadlines for questionnaire responses as suggested.
Accordingly, for the reasons described above, Commerce determines
that requiring benchmark and surrogate value comments and information
to be submitted 45 days and 60 days prior to the scheduled due date of
preliminary determinations and administrative
[[Page 101713]]
review results to be a practical and necessary modification to the
regulation to allow Commerce to accurately and sufficiently consider
the information and make its determination on these issues.
8. Commerce Has Made No Modifications to Proposed Sec. 351.306(a)(3),
Which Covers the Sharing of Data With U.S. Customs and Border
Protection
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. Thus, Commerce proposed amending
Sec. 351.306(a)(3) to expand the covered investigations to negligence
and gross negligence investigations as well as fraud
investigations.\75\
---------------------------------------------------------------------------
\75\ See Proposed Rule, 89 FR at 57303.
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One commenter suggested that Commerce add further language to the
regulation and include the phrase ``or any other action specifically
contemplated in section 777(b)(1)(A)(ii) of the Act'' to, in the words
of the commenter, ``eliminate the need for similar updates in the
future should the Act be further amended.'' However, if the Act is
modified in the future, Commerce will be able to revise its regulations
at that time in accordance with any new statutory language and
obligations.
9. Commerce Has Made Small Revisions to Proposed Sec. 351.308(i),
Which Covers the Application of Facts Available in AD and CVD
Proceedings
In the Proposed Rule Commerce updated Sec. 351.308(g) to reflect
its practice of applying either partial facts available or total facts
available and added Sec. 351.308(h) and (i) to reflect changes to
section 776 of the Act by Congress in 2015.\76\ Two parties commented
on this regulation, with one expressing its full support as written,
and the other, although indicating its support for the changes,
providing suggested edits to revise one possible inconsistency and to
prevent redundancy. Specifically, proposed Sec. 351.308(i)(2) states
that Commerce ``may'' use the highest CVD rate available if it
determines that such an application is warranted, whereas Sec.
351.308(j) states that Commerce ``will normally select the highest
program rate available using a hierarchical analysis.'' Second, the
commenter recommended various revisions to Sec. 351.308(i)(2) to avoid
certain perceived redundancies.
---------------------------------------------------------------------------
\76\ See Trade Preferences Extension Act (TPEA) of 2015, Public
Law 114-27, 129 Stat. 362, 384 (2015), section 502, codified at 19
U.S.C.1677(e) and Proposed Rule, 89 FR at 57303-04.
---------------------------------------------------------------------------
Response
After consideration of the comments on this provision, Commerce
agreed that certain small changes to Sec. 351.308(i)(2) were
warranted. First, Commerce has replaced the phrase ``The Secretary may
use the highest countervailing duty rate available'' with ``The
Secretary will normally apply the highest calculated above-de minimis
countervailing duty rate available'' to be in accordance with the
language of the CVD adverse facts available hierarchy, found at Sec.
351.308(j). In addition, Commerce has moved the phrase ``in accordance
with the hierarchy set forth in paragraph (j) of this section'' from
the second sentence in the paragraph to the first sentence of the
paragraph, because the entire paragraph relates to Commerce's CVD
adverse facts available hierarchy, and not just the second sentence.
10. Commerce Has Modified Proposed Sec. 351.401(f) To Reflect That It
Is Concerned About the Significant Potential for Manipulation of
Prices, Production, or Export Decisions, and That It Will Not Normally
Collapse Certain Affiliated Input Suppliers and Home Market Resellers
of the Domestic Like Product
When affiliated producers share ownership or 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.\77\ 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.
---------------------------------------------------------------------------
\77\ 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) (Shrimp from Brazil), and
accompanying Issues and Decision Memorandum 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.\78\
---------------------------------------------------------------------------
\78\ See Rebar Trade Action Coalition, 475 F. Supp. at 1368.
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However, as Commerce explained in the Proposed Rule, affiliated
non-producers such as exporters and processors can also manipulate and
influence prices and production through their mutual relationships.\79\
Accordingly, to prevent manipulation of prices and production, and 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.\80\ 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.\81\
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\79\ See Proposed Rule, 89 FR at 57305 (citing, as an example,
Shrimp from Brazil Issues and Decision Memorandum at Comment 5).
\80\ 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) (Hontex)).
\81\ See Queen's Flowers, 981 F. Supp. at 622.
---------------------------------------------------------------------------
Commerce, therefore, proposed 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 significant potential
for the manipulation of prices or production between two or more
affiliated parties.\82\
---------------------------------------------------------------------------
\82\ See Proposed Rule, 89 FR at 57305 (citing United States
Steel Corp. v. United States, 179 F. Supp. 3d 1114, 1135 (CIT
2016)).
---------------------------------------------------------------------------
Commerce received three comments on proposed Sec. 351.401(f). Two
commenters agreed with the decision to modify Sec. 351.401(f) to
address Commerce's ability to collapse
[[Page 101714]]
producers and non-producers but suggested certain additional
modifications to Commerce's proposed rule. Another commenter expressed
concerns that Commerce's decision to modify Sec. 351.401(f) may
undermine Commerce's ability to apply its transactions disregarded rule
or major input rule, pursuant to sections 773(f)(2) and (3) of the Act.
The first commenter suggested a change to Sec. 351.401(f)(3) to
expand Commerce's ability to consider the extent of necessary retooling
in its analysis of affiliated parties' production facilities that are
used for similar or identical products. The commenter proposed that
Commerce clarify that its analysis will go beyond evaluating
``manufacturing priorities'' to also consider the possibility of a
shift in production among affiliated facilities or any other commercial
activities related to production. As an example, it referred to an
administrative review where Commerce found that the respondent had the
potential to rearrange selling and producing roles between affiliated
producers and non-producers.\83\
---------------------------------------------------------------------------
\83\ See, e.g., Shrimp from Brazil Issues and Decision
Memorandum at Comment 5.
---------------------------------------------------------------------------
A second commenter agreed that the proposed modification reflected
Commerce's current practice and authorities but expressed concerns that
the expansion of Commerce's practice of collapsing entities to include
non-producers could unintentionally result in less accurate dumping
margins. Specifically, under section 773(f)(2) and (3) of the Act,
Commerce may disregard direct or indirect transactions between
affiliated parties that do not fairly represent the market costs and
the full costs of production in such transactions. These are commonly
called the ``transactions disregarded'' and ``major input'' rules. They
are frequently applied in consideration of transactions between
affiliated input suppliers and producers of subject merchandise. The
current regulation addresses only affiliated entities that both might
produce the subject merchandise, while the proposed revision to the
regulation would allow for the collapsing of affiliated input suppliers
and producers of subject merchandise. Accordingly, the commenter
expressed concerns that Commerce might elect to collapse such
affiliated entities rather than apply the transactions disregarded or
major input rules, thereby allowing the respondent to manipulate
Commerce's calculations, with the result being a less accurate dumping
margin.\84\ The commenter stated that such an application of the
collapsing regulation would expand the number of non-market prices and
below-cost affiliated-entity transactions that Commerce would not
disregard, with resulting calculations that include more transactions
between affiliated entities at values not reflective of the market
prices producers would pay for the same transaction with a non-
affiliated entity. It cautioned that this proposal could create a
situation wherein the exception could swallow the rule, contrary to
sections 773(f)(2) and (3) of the Act, and therefore suggested that
Commerce not codify its current collapsing practice with respect to
non-producers and producers.
---------------------------------------------------------------------------
\84\ See AK Steel Corp. v. United States, 226 F.3d 1361, 1375-76
(Fed. Cir. 2000) (``once Commerce has decided to treat the companies
as one `person' for purposes of the anti-dumping analysis, it is not
statutorily required to apply the provisions'').
---------------------------------------------------------------------------
A third commenter praised the proposed modification to Sec.
351.401(f) and stated that the new language would permit Commerce to
address the evasion and manipulation of duties by affiliated parties.
That commenter, however, also expressed concerns that the proposed
language could result in the manipulation of Commerce's calculation of
dumping margins for the same reason as the second commenter. That
commenter stressed that the purpose of Sec. 351.401(f) is to prevent
the manipulation of dumping margins, and thus Commerce should add
language in the regulation to the effect that if record evidence
suggested collapsing would result in the manipulation of Commerce's
calculations, Commerce could decline to collapse the affiliated
entities. Furthermore, the commenter recommended that Commerce include
a non-exhaustive list of entity relationships that might result in a
collapsing decision.
Response
After consideration of the comments on the regulation, Commerce is
adding a new paragraph to Sec. 351.401(f) to address exceptions to
Commerce's collapsing practice and making certain other minor edits.
Specifically, Commerce is amending proposed Sec. 351.401 to add a
paragraph (f)(4), titled ``Exceptions.'' Commerce has a practice of not
collapsing affiliated input suppliers with other affiliated parties if
the input suppliers do not produce similar or identical products to the
subject merchandise or export subject merchandise to the United
States.\85\ Likewise, Commerce also has a practice of not collapsing
affiliated sellers of the foreign like product in the home market with
other affiliated parties, if those sellers (including resellers) of the
foreign like product in the home market do not produce similar or
identical products to the subject merchandise or export subject
merchandise to the United States.\86\ Commerce has therefore codified
both exceptions to its collapsing practice in the regulation as Sec.
351.401(f)(4)(i) and (ii). To be clear, although Commerce will normally
not collapse such entities, Commerce might still apply the transactions
disregarded rule or the major input rule, in accordance with sections
773(f)(2) and (3) of the Act, if such an application is warranted.
---------------------------------------------------------------------------
\85\ See, e.g., Light-Walled Rectangular Pipe and Tube from
Turkey: Notice of Final Determination of Sales at Less Than Fair
Value, 69 FR 53675 (September 2, 2004), and accompanying Issues and
Decision Memorandum at Comment 5; Certain Fabricated Structural
Steel from Canada: Final Determination of Sales at Less Than Fair
Value, 85 FR 5373 (January 30, 2020), and accompanying Issues and
Decision Memorandum at Comment 6: and Notice of Final Determination
of Sales at Less Than Fair Value: Live Swine from Canada, 70 FR
12181 (March 11, 2005), and accompanying Issues and Decision
Memorandum at Comment 41.
\86\ See Steel Concrete Reinforcing Bar from Mexico: Final
Results of Antidumping Duty Administrative Review; 2021-2022, 89 FR
40467 (May 10, 2024), and accompanying Issues and Decision
Memorandum at Comment 5.
---------------------------------------------------------------------------
In addition, pursuant to the concerns of possible evasion or
manipulation, Commerce has decided to include a third ``catch-all''
provision at Sec. 351.401(f)(4)(iii), which states that if Commerce
determines that treating certain affiliated entities as a single entity
would otherwise be inappropriate based on record information, Commerce
may decide not to collapse those affiliated entities. Collapsing
determinations are case-specific, and frequently Commerce makes its
determinations based on proprietary information that reflects complex
and unique relationships between affiliated entities. Commerce agrees
with the commenters that the overarching purpose of Sec. 351.401(f) is
to prevent manipulation of prices, production, or export decisions
among affiliated entities. Further, the factors listed in Sec.
351.401(f)(2) are non-exhaustive and Commerce may consider additional
factors as evidence that there is significant potential for
manipulation, or even determine that not all of the factors listed are
identified to find evidence of significant potential for
manipulation.\87\ In examining the factors that pertain to significant
potential for manipulation, Commerce considers both actual manipulation
in
[[Page 101715]]
the past and the possibility of future manipulation.\88\ As Commerce
stated in the preamble to the regulation when it was issued in 1997,
the standard in looking at potential manipulation is focused ``on what
may transpire in the future;'' thus Commerce may consider the record in
total, covering past, present and future potential manipulation of
prices, production or other commercial activities.\89\ Given the wide
array of possible affiliations between producers, exporters, and other
entities in various channels of trade, the concerns expressed by the
commenters, and Commerce's intention to prevent potential manipulation,
whether it be through collapsing or, in some cases, not collapsing
affiliated entities, the regulation now includes a collapsing-exception
provision that covers any situation in which the collapsing of entities
would be ``otherwise inappropriate based on record information.''
---------------------------------------------------------------------------
\87\ See Antidumping Duties: Countervailing Duties; Final Rule,
62 FR 27296, 27346 (May 19, 1997).
\88\ Id. at 27345-45.
\89\ Id.
---------------------------------------------------------------------------
In addition to that change, Commerce is correcting a typographical
error that resulted in publishing Sec. 351.401(f)(2)(iii) as a second
Sec. 351.401(f)(2)(ii).\90\
---------------------------------------------------------------------------
\90\ See Proposed Rule, 89 FR 57329.
---------------------------------------------------------------------------
Finally, Commerce proposed to modify the phrase ``potential
manipulation of price or production'' in Sec. 351.401(f)(1) and (2) to
encompass ``potential manipulation of prices, production or other
commercial activities.'' The reason for this change was to address the
collapsing of non-producing affiliated exporters that, given the nature
of their affiliations, might not lead to the manipulation of prices or
production but might lead to the manipulation of various export
decisions.\91\ Upon further reflection, Commerce has determined that
the term ``other commercial activities'' is too broad a term to
describe that scenario and might lead to confusion. Accordingly,
Commerce is modifying Sec. 351.401(f)(1) and (2) to apply to the
``potential manipulation of prices, production, or export decisions.''
Commerce has determined that such language more accurately reflects the
concerns that led to the proposed revision.
---------------------------------------------------------------------------
\91\ See, e.g., Hontex, 248 F. Supp. 2d 1323, 1345-1350.
---------------------------------------------------------------------------
With respect to the suggestion that Commerce clarify that it can
make a determination based on more than just a restructuring of
``manufacturing priorities,'' including a focus on the shifting of
production among facilities of affiliated entities or a restructuring
of commercial activities among affiliated parties related to
production, Commerce disagrees that such a change is necessary. The
term ``restructure manufacturing priorities'' has been in the
regulation since it was initially proposed in 1996.\92\ In the decades
that followed, as the commenter explained, Commerce has found the term
``restructure manufacturing priorities'' to cover various factual
scenarios, including the shifting of production between affiliated
producers and the restructuring of commercial activities among
affiliated parties related to production. ``Manufacturing priorities''
is not a defined term, and may cover both production and non-production
actions, if those potential actions might lead to the manipulation of
prices, production, or other commercial activities among affiliated
entities. Accordingly, Commerce has not adopted this proposed
modification to Sec. 351.401(f).
---------------------------------------------------------------------------
\92\ See Antidumping Duties; Countervailing Duties; Proposed
Rule, 61 FR 7308, 7381 (February 27, 1996).
---------------------------------------------------------------------------
In addition, Commerce will not include a non-exhaustive list of
entity relationships that might result in a collapsing decision as
suggested by one of the commenters. As explained above, there are many
ways by which entities might be affiliated, and likewise there are many
unique entity relationships that can lead to the potential manipulation
of prices, production or export decisions. Collapsing decisions are
best left analyzed on a case-by-case basis and frequently can be far
more complex than can be summarized in a simple list of examples.
Accordingly, Commerce has determined that a non-exhaustive list of
examples in the regulation would likely lead to greater confusion than
provide clarity, and it has therefore not included such a list in the
final rule.
11. Commerce Has Made Small Adjustments to Proposed Sec.
351.404(g)(2), Which Applies to the Determination of Normal Value and
Certain Multinational Corporations
Section 773(d) of the Act provides a special rule for certain
multinational corporations when Commerce is determining the appropriate
normal value to use in its antidumping calculations. The Act states
that if, in the course of an investigation, Commerce determines that
three criteria exist, Commerce ``shall determine the normal value of
the subject merchandise by reference to the normal value at which the
foreign like product is sold in substantial quantities outside the
exporting country.''
Those three criteria are: (1) subject merchandise exported to the
United States is being produced in facilities which are owned or
controlled, directly or indirectly, by a person, firm, or corporation
which also owns or controls, directly or indirectly, other facilities
for the production of the foreign like product which are located in
another country or countries; (2) the foreign like product is not sold
(or offered for sale) for consumption in the exporting country or is
sold in the exporting country for insufficient amounts to allow for a
proper comparison with the United States, and, therefore, Commerce
should look to third country sales to determine normal value (or a
sales-based particular market situation exists); and (3) the normal
value of the foreign like product produced in one or more of the
facilities outside the exporting country is higher than the normal
value of the foreign like product produced in the facilities located in
the exporting country.\93\
---------------------------------------------------------------------------
\93\ See section 773(d) of the Act; see also section
773(a)(1)(C) of the Act.
---------------------------------------------------------------------------
Section 773(d) of the Act requires that Commerce make adjustments
for the differences in the costs of production between the exporting
country and the third country where the merchandise is also produced.
It states that for ``purposes of this subsection, in determining the
normal value of the foreign like product produced in a country outside
the exporting country,'' Commerce shall determine its price ``at the
time of exportation from the exporting country'' and make any
adjustments ``required by subsection (a) for the cost of all containers
and coverings and all other costs, charges and expenses incident to
placing the merchandise in condition packed ready for shipment to the
United States by reference to such costs in the exporting country.''
\94\
---------------------------------------------------------------------------
\94\ See section 773(d) of the Act.
---------------------------------------------------------------------------
Although Commerce has applied the special rule for certain
multinational corporations (``MNC provision'') in determining normal
value for many years, none of Commerce's regulations address the MNC
provision. Commerce proposed the addition of Sec. 351.404(g) to
address the filing requirements for those alleging the applicability of
the MNC provision and to clarify that the MNC provision is only
applicable when the non-exporting country is a market economy and not a
nonmarket economy.\95\
---------------------------------------------------------------------------
\95\ See Proposed Rule, 89 FR at 57305-06.
---------------------------------------------------------------------------
Specifically, Commerce proposed codifying its practice directing
parties alleging that the MNC provision should
[[Page 101716]]
apply to submit their allegations in accordance with the filing
requirements set forth in Sec. 351.301(c)(2)(i). Moreover, Commerce
explained that the provision does not apply when the non-exporting
country at issue is a nonmarket economy country because, in accordance
with Sec. 351.408, when the non-exporting country is a nonmarket
economy, Commerce will apply the factors of production methodology
described in section 773(c) of the Act.\96\
---------------------------------------------------------------------------
\96\ Id.
---------------------------------------------------------------------------
Two parties submitted comments regarding the proposed addition of
Sec. 351.404(g). The first commenter requested not that Commerce
modify Sec. 351.404(g), but rather modify Sec. 351.301(c)(2)(i),
which provides that in general, market viability allegations, and
through Sec. 351.404(g)(1), allegations that the MNC provision
applies, should be due ``10 days after the respondent interested party
files the response to the relevant section of the questionnaire, unless
the Secretary alters this time limit.'' The commenter maintained that
requiring parties to review questionnaire responses, research
independent factual information, and prepare allegations within 10 days
creates a significant burden. Accordingly, that commenter requested
that Commerce increase the dates for market viability and MNC provision
allegations from 10 days to 30 days in Sec. 351.301(c)(2)(i).
The second commenter requested that Commerce revisit its practice
of not applying the MNC provision to AD proceedings in which the non-
exporting country would be a nonmarket economy. The commenter
acknowledged that the Federal Circuit in Ad Hoc Shrimp Trade Action
Committee v. United States, 596 F. 3d 1365, 1370 (Fed. Cir. 2010) (Ad
Hoc) affirmed Commerce's interpretation of the Act to apply to market
economies only as permissible, but the commenter noted that the dissent
in that case disagreed that Commerce's interpretation was consistent
with the Act, reasoning that if the Congress had intended for the
provision to not apply to nonmarket economy non-exporters, Congress
would have clearly stated as such in the Act.\97\ The commenter stated
that Commerce's practice, as reflected in proposed Sec. 351.404(g)(2),
unduly and unnecessarily limits Commerce's ability to apply the MNC
provision when the non-exporter is located in a nonmarket economy to
the disservice of domestic industries seeking trade remedy relief from
the dumping of merchandise produced and exported by a multinational
corporation. Accordingly, the commenter requested that Commerce revise
Sec. 351.404(g)(2) to apply the MNC provision equally to multinational
corporations and their affiliates located in market and nonmarket
economies.
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\97\ See Ad Hoc, 596 F.3d at 1373 (J. Prost dissenting). The
commenter pointed out that in 1996, Commerce had a different
interpretation of the Act, stating in Melamine Institutional
Dinnerware Products from the People's Republic of China, 61 FR
43337, 43340 (August 22, 1996), Commerce determined that the Act was
silent and therefore to both market economy and nonmarket economy
cases.
---------------------------------------------------------------------------
Response
With respect to the first commenter's request, Commerce has
determined not to modify the ten-day deadline set forth in Sec.
351.301(c)(2)(i). Investigations and administrative reviews are
extremely fact intensive and restricted by statutory deadlines. Adding
20 days to that deadline would take away from the time Commerce needs
to analyze and consider the allegation. Notably, Sec. 351.301(c)(2)(i)
states that Commerce may ``alter this time limit.'' Accordingly, if a
party wishing to allege that the MNC provision should be applied in a
case believes that it needs more time to submit an allegation, before
the 10 days have passed that party may request an extension from
Commerce to do so. In requesting an extension, the party should provide
Commerce with the reason it needs additional time to file an allegation
and specify the actions it will take in the extended time to ensure
that its MNC provision allegation is complete when it is submitted to
the agency.
In response to the second commenter, the MNC provision includes
citations to section 773(a) of the Act, which covers a determination of
normal value based on third country sales and makes no reference to
section 773(c) of the Act, which applies to nonmarket economies.\98\
Further, the provision explicitly includes adjustments for costs of
production, but the statutory nonmarket economy analysis, which
incorporates surrogate values and factors of production, does not
involve costs of production. For that reason, Commerce has concluded
that the MNC provision, by its very terms, cannot apply if the non-
exporting country is a nonmarket economy. As the commenter notes, the
Federal Circuit affirmed that determination in Ad Hoc.\99\
---------------------------------------------------------------------------
\98\ See section 773(c) of the Act (``Nonmarket Economy
Countries'').
\99\ See Ad Hoc, 596 F. 3d at 1370.
---------------------------------------------------------------------------
Specifically, the Federal Circuit reasoned that the MNC provision
was ``silent regarding nonmarket economies,'' but the Act ``instructs
Commerce to determine the normal value of the subject merchandise by
reference to the normal value at which the foreign like product is
`sold in substantial quantities' and its `price at the time of
exportation from the exporting country,' '' and that ``sold'' and
``price'' are terms ``not used to describe calculating the normal value
in a nonmarket economy.'' \100\ The majority also referred approvingly
to Commerce's reasoning that because the case before the Court involved
a market economy (Thailand), to use a nonmarket economy as the
alternative producer would be the same as ``treating a market economy
country as a nonmarket economy and would, therefore, circumvent'' the
Act which only provides for a nonmarket economy analysis when the
country at issue is a nonmarket economy.\101\
---------------------------------------------------------------------------
\100\ Id.
\101\ Id. at 1371. The Federal Circuit also affirmed Commerce's
interpretation of the legislative history of the provision that
``Congress was concerned with the practice of discriminatory pricing
where a home market was not viable and yet a respondent's low-priced
exports to the United States market were supported by higher priced
sales of its affiliates in a third country market.'' (citing Senate
Committee on Finance Report on Trade Reform Act of 1974, S. Rep. No.
93-1298, at 175 (November 16, 1974)). The Court agreed with Commerce
that ``Congress was addressing the problem of discriminatory pricing
practices of multinational corporations, but pricing practices are
generally irrelevant in nonmarket economies.''
---------------------------------------------------------------------------
As Commerce has stated before in analyzing the MNC provision, it is
of no consequence whether some of a respondent's affiliated parties are
located in nonmarket economy countries and some are located in market
economy countries, or whether all of a respondent's affiliated parties
are located in a nonmarket economy country.\102\ The Act, as
interpreted in relevant case law, requires that the MNC provision be
applied in cases where prices and costs are disregarded in favor of the
factors of production methodology. If Congress had intended for the MNC
provision to apply equally to nonmarket economy and market economy
countries, it could have included language in the MNC provision that
applied to nonmarket economies, but it did not do so.\103\ Accordingly,
Commerce will not modify its interpretation of the MNC provision in
proposed Sec. 351.404(g)(2) or change its practice in this regard.
---------------------------------------------------------------------------
\102\ See Utility Scale Wind Towers from Malaysia: Final Results
of Antidumping Duty Administrative Review; 2021-2022, 89 FR 56735
(July 10, 2024), as amended 89 FR 65848, at accompanying Issues and
Decision Memoranda at Comment 8.
\103\ Id.
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Commerce has, however, made certain small changes to the language
to provide further clarity that if the
[[Page 101717]]
Secretary determines that the non-exporting country is a nonmarket
economy and that normal value would be determined using a factors of
production methodology if the MNC provision was applied, Commerce will
not apply the MNC provision in that situation.
12. Commerce Has Revised Certain Language in Proposed Sec.
351.405(b)(3), Which Covers the Calculation of Constructed Value Profit
As set forth in proposed Sec. 351.405(a), pursuant to section
773(e) and (f) 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
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.'' \104\
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 profit, in connection with the production
and sale of a foreign like product, in those instances.\105\ The Act
provides Commerce with the discretion to select from any of the three
alternative methods, depending on the information available on the
record.\106\
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\104\ See section 773(e)(2)(A) of the Act.
\105\ 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'').
\106\ See 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 Issues and
Decision Memorandum 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 profit 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.'' This
limitation on profit used in constructed value is frequently called the
``profit cap.''
The SAA states that in applying ``any other reasonable method''
under the Act, ``Commerce will develop this alternative through
practice,'' \107\ and as Commerce explained in the Proposed Rule, it
has done just that for many years.\108\ It has been Commerce's practice
to consider four criteria in selecting sources for selling, general,
and administrative expenses, as well as for profits, under ``any other
reasonable method.'' In the Proposed Rule, Commerce determined to
codify that criteria in proposed Sec. 351.405(b)(3).\109\ Accordingly,
under the proposed regulation, Commerce will ``normally consider'': (A)
the similarity of the potential surrogate companies' business
operations and products to the examined producer's or exporter's
business operations and products; (B) 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; (C) the contemporaneity of
the surrogate company's data to the period of investigation or review;
and (D) the extent of similarity between the customer base of the
surrogate company and the customer base of the examined producer or
exporter in selecting such sources.
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\107\ See SAA at 841.
\108\ See Proposed Rule, 89 FR at 57306.
\109\ Id., 89 FR at 57306-07.
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Upon review of the Proposed Rule, however, Commerce has concluded
that its preamble language may have confused two different aspects of
its analysis under the Act. In the Proposed Rule, Commerce described
these criteria as relating not only to the sources for ``any other
reasonable method'' for selecting selling, general, and administrative
expenses, as well as profit, but also pertaining to ``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.''
\110\ In other words, Commerce correctly referred to the use of these
criteria in determining what sources to use when relying on ``any
reasonable method,'' but incorrectly also referred to the use of this
criteria in selecting a ``profit cap.'' \111\ That mischaracterization
also was reflected in proposed Sec. 351.405(b)(3). Commerce is
therefore modifying the regulation to remove that ``profit cap''
language and to clarify that the four criteria pertain to the selection
of sources for determining amounts for selling expenses and for profit
under section 773(e)(2)(B)(iii) of the Act.
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\110\ See Proposed Rule, 89 FR at 57288 and 57306.
\111\ See SAA at 841 (addressing the ``any other reasonable
method'' statutory option, as well as the profit cap: ``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'').
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Two commenters expressed their support for the new regulation,
finding it to be timely and useful in achieving Commerce's stated goal
of enhancing the administration of the AD and CVD laws. One of those
commenters provided a suggestion that Commerce state that the list of
criteria is not exhaustive in the regulation, or in the alternative add
a fifth criteria that states that Commerce might also consider other
factors and information as appropriate in selecting sources for
selling, general and administrative expenses and profit as ``any other
reasonable method'' under the Act.
Response
Other than the modifications Commerce has made to proposed Sec.
351.405(b)(3) described above, Commerce has made no further changes to
the provision. The language states that Commerce will ``normally
consider the following criteria,'' and thus, by its terms the
regulation is already clear that the list is not exhaustive. Likewise,
because the list of criteria is not exhaustive, it is unnecessary to
add a fifth ``catch-all'' criterion to the regulatory list. Normally,
as the regulation states, and consistent with Commerce's long-standing
practice, Commerce will consider the four listed criteria in selecting
a profit amount for its constructed value calculations, but if Commerce
determines that there is some additional information on the record that
might be relevant to its analysis, the regulation does not prevent or
prohibit Commerce from considering that information as well in its
analysis.
[[Page 101718]]
13. Commerce Has Revised Proposed Sec. 351.408(b) To Describe the
Methodology for Selecting Surrogate Countries and the Use of Gross
Domestic Product To Determine Economic Comparability
In the Proposed Rule, Commerce indicated that it was modifying
Sec. 351.408(b) to reflect that Commerce may consider either per
capita gross national income (GNI) or per capita gross domestic product
(GDP) in selecting potential surrogate countries for purposes of
antidumping investigations and administrative reviews of nonmarket
economies.\112\ Currently, 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.\113\ Commerce's use of GNI has
been recognized and affirmed as reasonable by the U.S. Court of
International Trade as a measure to determine economic comparability in
multiple holdings.\114\ 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.\115\ 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.\116\ The
Proposed Rule explained either per capita GNI or per capita GDP can be
reasonably used to determine comparable economies, depending on the
facts before the agency.\117\ Proposed Sec. 351.408(b) also provided
that Commerce could consider additional factors in selecting comparable
economies and explained that consideration of these factors would
assist it in avoiding distortive economic comparisons.\118\
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\112\ See Proposed Rule, 89 FR at 57330.
\113\ See Antidumping Methodologies in Proceedings Involving
Nonmarket Economy Countries: Surrogate Country Selection and
Separate Rates; Request for Comment, 72 FR 13246, 13246 n.2 (March
21, 2007).
\114\ See, e.g., Clearon Corp v. United States, 38 CIT 1122,
1137-1140 (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).
\115\ See World Bank. (2024). GNI per capita (current US$),
available at <a href="https://data.worldbank.org/indicator/NY.GNP.PCAP.CD">https://data.worldbank.org/indicator/NY.GNP.PCAP.CD</a>
(see ``details'' section in chart); comparable definition is in IMF,
``IMF Glossary'', available at <a href="https://www.imf.org/en/About/Glossary">https://www.imf.org/en/About/Glossary</a>.
\116\ See World Bank. (2024). GDP per capita (current US$),
available at <a href="https://data.worldbank.org/indicator/NY.GDP.PCAP.CD">https://data.worldbank.org/indicator/NY.GDP.PCAP.CD</a>
(see ``details'' section in chart); comparable definition is in IMF,
``IMF Glossary'', available at <a href="https://www.imf.org/en/About/Glossary">https://www.imf.org/en/About/Glossary</a>.
\117\ See Proposed Rule, 89 FR at 57330.
\118\ Id.
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Commerce received several comments on the proposed modifications to
Sec. 351.408(b). Numerous commenters indicated their appreciation of
Commerce's codification of its established practice and its goal of
considering additional factors to determine which countries may be
deemed economically comparable to a non-market economy. However,
commenters also expressed concern that including the option of using
both GNI and GDP and identifying the additional factors adds
uncertainty to the selection of surrogate countries. Most commenters
were not opposed to the use of GDP
[…truncated; see source link]Indexed from Federal Register on December 16, 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.