ITA Refines its Proposed Changes for Valuing Market Economy Inputs for AD Proceedings Involving NMEs
The International Trade Administration (ITA) has issued a third notice on possible changes to its market economy inputs practice in antidumping (AD) proceedings involving non-market economy countries (NMEs). Written comments on its proposals are due by April 19, 2006.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
Proposal to Determine Case-by-Case Whether to Use Market Economy Input Price or Surrogate Value
The ITA states that it is considering beginning the formal procedures for amending its regulations to increase the ITA's discretion to use surrogate values to value the NME-produced portion of an input. According to the ITA, this regulatory change would increase the ITA's flexibility to weight average the market economy input purchase price with an appropriate surrogate value for the NME-produced portion of the input to determine the overall value to be used for the input.
The ITA believes that the most accurate approach to valuing market economy inputs in AD proceedings involving NMEs would be to make case-by-case determinations concerning whether a market economy input purchase price or an alternative surrogate value constitutes the best available information for valuing the portion of an input that is produced within the NME.
Interim Change to Clarify "Meaningful" Means 33% or More of Total Input Volume
Because amending the regulation in the above-described manner will be a lengthy process, the ITA also intends to introduce an interim change in its practice that is consistent with its regulations. Under this interim change, the ITA would clarify that the term "meaningful" will be interpreted by the ITA as being 33% or more of the total volume of the input used in production of the subject merchandise, unless there are case-specific reasons to conclude otherwise.
According to the ITA, the interim change would result in a flexible, rebuttable presumption that when market economy input purchases are 33% or more of the total volume of an input, the market economy input purchase prices represent the "best available information" to value the entire input. However, where market economy input purchases constitute less than 33% of the total volume of the input in question, the ITA's rebuttable presumption is that the market economy input purchases do not represent the "best available information" to value the input.
(In May and August 2005, the ITA issued notices seeking 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. The ITA states that its current revised proposal is being considered as a result of responses to its May and August 2005 notices. See ITT's Online Archives or 06/06/05 and 08/16/05 news, 05060615 and 05081615, for BP summaries of these earlier proposals.)
ITA Contact - Lawrence Norton (202) 482-1579
ITA Notice (FR Pub 03/21/06) available athttp://a257.g.akamaitech.net/7/257/2422/01jan20061800/edocket.access.gpo.gov/2006/pdf/E6-4069.pdf
BP Note on the ITA's Current Practice for Valuing Inputs, Etc.
The ITA has previously stated 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 06/27/05 news, 05062715, for BP summary of an additional ITA's notice seeking comments on possible changes to 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.)