ITA Extends Comment Period on its AD Review Non-Zeroing Methods Proposal

Comments are now due by February 18, 2011 (from January 27, 2011). (See ITT’s Online Archives or 12/29/10 news, 10122918, for original BP summary of ITA’s proposal.)

(Currently, in a review of an administrative, new shipper, or expedited review of an AD duty order, the ITA usually makes comparisons between transaction-specific export prices and average normal values and does not offset any dumping that is found with the results of comparisons for which the transaction-specific export price exceeds the average normal value (i.e., denial of offsetting or “zeroing”).

Similarly, in its most recent original AD duty investigation in which it calculated the weighted average margins of dumping using transaction-to-transaction comparisons, the ITA did not grant offsets for non-dumped comparisons.)

ITA Already Applies Non-Zeroing Methodology to Investigations

In response to prior findings of inconsistency by the World Trade Organization with respect to zeroing in original investigations, the ITA previously modified its methodology such that it now provides offsets for non-dumped comparisons when using average-to-average comparisons in original investigations. (See ITT's Online Archives or 01/08/07 and 01/29/07 news, 07010825 and 07012930, for BP summaries of the ITA's final modification and the delay of its effective date.)

ITA Proposes to Apply Similar Non-Zeroing Methodology to Reviews

Several WTO dispute settlement reports have also found that the U.S. application of zeroing in reviews is inconsistent with WTO obligations¹. In response to these findings, the ITA now proposes to modify its methodology for calculating weighted average margins of dumping and assessment rates to provide offsets for non-dumped comparisons while using monthly average-to-average comparisons in reviews, in a manner that parallels the WTO-consistent methodology the ITA currently applies in original investigations.

Proposed Changes in Practice Would Grant Offsets, Withdraw Prior Zeroing Practices

Except where the ITA determines that application of a different comparison method is more appropriate, in reviews, the ITA proposes to compare monthly weighted average export prices with monthly weighted average normal values and to grant an offset for such comparisons that show export price exceeds normal value in the calculation of the weighted average margin of dumping and assessment rate. Where the weighted average margin of dumping is zero or de minimis, no antidumping duties will be assessed.

In addition, to the extent that any prior original AD duty investigations using transaction-to-transaction comparisons could be considered as establishing a practice of the ITA with respect to the granting or denial of offsets for non-dumped comparisons when calculating the weighted average margin of dumping, the ITA proposes to withdraw any such practice.

(With respect to the findings of inconsistency in certain of the ITA's five-year (sunset) reviews, the ITA notes that the underlying issue is the methodology for calculating weighted average dumping margins in investigations and reviews, which is addressed by the modifications the ITA has made with respect to investigations and is proposing herein to make with respect to reviews.)

Regs Would Need to be Amended to Preference Average-to-Average Method

The proposed modified methodology for reviews would require the ITA to revise certain provisions of its regulations. In particular, 19 CFR 351.414(c) would need to indicate a preference for making average-to-average comparisons in administrative and new shipper reviews, in addition to investigations.

Currently, 19 CFR 351.414(c) states:

"Preferred Method. (1) In an investigation, the Secretary normally will use the average-to-average method. The Secretary will use the transaction-to-transaction method only in unusual situations, such as when there are very few sales of subject merchandise and the merchandise sold in each market is identical or very similar or is custom-made.

(2) In a review, the Secretary normally will use the average-to-transaction method."

Proposed amended paragraph (c) would state:

"Choice of Method. (1) In an investigation or review, the Secretary will use the average-to-average method unless the Secretary determines another method is appropriate in a particular case.

(2) The Secretary will use the transaction-to-transaction method only in unusual situations, such as when there are very few sales of subject merchandise and the merchandise sold in each market is identical or very similar or is custom-made."

Averages Would be Permitted to be Calculated on a Monthly Basis

The ITA also proposes to modify 19 CFR 351.414(d)(3) to permit weighted averages to normally be calculated on a monthly basis in reviews, regardless of the comparison method used, and to make conforming changes to 19 CFR 351.414(e) to ensure 351.414(d)(3) and (e) do not contain redundant language.

(See ITA's proposed rule for complete proposed regulatory amendments, including the proposed removal of language referencing investigations only in introductory paragraph 19 CFR 351.414(a), etc.)

¹The ITA is proposing modifications in response to WTO dispute settlement findings regarding zeroing against the U.S. and for the European Union (DS294 and DS35), Japan (DS322), and Mexico (DS344), among others. See ITT's Online Archives or 10/16/08, 02/04/10, 08/19/09, and 05/15/08 news, 08101630, 10020405, 09081925, and 08051525, for BP summaries of these rulings, respectively. See ITT's Online Archives or 09/10/10 news, 10091049, for BP summary of the U.S. and EU's joint request to the WTO to suspend arbitration in DS294.)

ITA contact - Quentin Baird (202) 482-0834

(D/N 101130598-1052-02)