ITA Proposes Change For Valuing Market Economy Inputs For AD Proceedings Involving NMEs

According to the ITA, in AD proceedings involving NMEs, it calculates normal value by valuing the NME factors of production, to the extent possible, using prices from a market economy that is at a comparable level of development and that is also a significant producer of comparable merchandise.

In May 2005, the ITA requested comments on possible changes to its current policy and practice regarding the use of market economy import prices to value inputs in AD proceedings involving NMEs. (See ITT's Online Archives or 06/06/05 news, 05060615, for BP summary of ITA's request for comments.)

ITA Proposes Change When Less Than a Majority of the Input is Sourced from Market Economy Countries

The ITA states that upon consideration of the comments it received in response to its May 2005 notice, the ITA is proposing to continue its practice of using respondents' market economy purchase prices to value all of the input (provided that the ITA's specified requirements are met - see BP note for details) when the majority of each input by volume is sourced from market economy countries.

However, ITA sources have clarified by phone that they are proposing a change to current practice when respondents source less than a majority of the total volume of an input from market economy countries in transactions meeting the ITA's specified requirements (as applicable, see BP note below).

Specifically, the ITA is proposing that when respondents source less than a majority of the total volume of an input from market economy countries, in transactions meeting certain of the ITA's requirements, the ITA will weight-average the portion that was purchased from market economy countries, using the actual price paid, with the portion sourced domestically, using a surrogate value.

- comments are due by 09/06/05

ITA contact - Lawrence Norton (202) 482-1579

ITA notice (FR Pub 08/11/05) available at http://a257.g.akamaitech.net/7/257/2422/01jan20051800/edocket.access.gpo.gov/2005/pdf/E5-4357.pdf.

BP Notes on the ITA's Current Practice for Valuing Inputs, Etc.

The ITA states that where an NME producer purchases inputs from market economy suppliers and pays in a market economy currency, the ITA normally uses the actual price paid for these inputs to value the input in question, where possible.

Currently, where a portion of the input is purchased from a market economy supplier and the remainder from a non-market economy supplier, the ITA will normally use the average price paid for the inputs sourced from market economy suppliers to value all of the input, provided the following four conditions are met:

1. the volume of the imported input as a share of total purchases from all sources must be "meaningful;"
2. this average import price must reflect arms-length, bona fide sales;
3. the ITA has disregarded all input values it has reason to believe or suspect might be dumped or subsidized; and
4. the ITA has disregarded the prices of inputs that could not possibly have been used in the production of subject merchandise during the period of investigation or review.

The ITA has previously explained that it is involved in an ongoing effort to consider modifications to its policies and practices for AD proceedings involving NMEs. The ITA instituted two changes of practice in April 2005 and issued notices in May and June 2005 seeking comments on other possible changes involving NMEs.

(See ITT's Online Archives or 04/11/05 news, 05041110, for BP summary of the ITA's two changes in practice regarding AD duty investigations involving NMEs. See ITT's Online Archives or 06/06/05 and 06/27/05 news, 05060615 and 05062715, for BP summaries of the ITA's notices seeking comments on possible changes to its NME practices regarding AD duty proceedings. See ITT's Online Archives or 07/06/05 news, 05070625, for BP summary of ITA notice seeking comments on duty drawback adjustments and calculation of expected NME wages.)