ITA Seeks Comment on Wage Rate Methodology in NME AD Proceedings

(ITA currently considers the following countries to be NMEs: Armenia, Azerbaijan, Belarus, China, Georgia, Kyrgyzstan, Moldova, the Republic of the Socialist Republic of Vietnam, Tajikistan, Turkmenistan, and Uzbekistan.)

Comments are due March 21, 2011.

“Worldwide Regression Approach” for NME Wage Rate No Longer Used due to Court Ruling

Prior to a May 2010 Court of Appeals for the Federal Circuit (CAFC) ruling, the ITA states it calculated wages using a regression analysis that captured the worldwide relationship between per capita Gross National Income (GNI) and hourly wage rates in manufacturing pursuant to 19 CFR 351.408(c)(3).

(See ITT’s Online Archives or 05/19/10 news, 10051935, for BP summary of the CAFC ruling invalidating ITA’s method of valuing wages.)

Using “Industry-Specific, Comparable Economy” Approach as Interim Method

Since July 2010, ITA has been relying on an interim policy which is not the wage rate methodology described in its regulations.

Under this interim methodology, ITA uses earnings or wage data reported in Chapter 5B “Wages in Manufacturing’’ of the International Labor Organization (ILO) Yearbook of Labor Statistics to calculate an hourly wage rate by averaging industry-specific earnings and/or wages in countries that are economically comparable to the subject country and are significant producers of the comparable merchandise, pursuant to section 773(c)(4) of the Trade Act.¹ However, ITA makes certain adjustments to this data. (See ITA notice for details of its methodology.)

ITA Says Interim Method May Undercount Producer Labor Costs, be Impractical

ITA says that there are concerns that the interim policy’s reliance on data from Chapter 5B of the ILO may undercount the NME producer’s labor costs. In addition, ITA has encountered a number of challenges that must be considered in evaluating whether this methodology should be adopted for the longer term. For example, the interim method is a significant endeavor that requires screening hundreds of data points in each case. Given the statutory time constraints present in every proceeding, ITA will also be evaluating this methodology in relation to its long-term administrative feasibility.

Seeks Comments on Using More Complete Producer Cost Data in Permanent Method

Based on the challenges described above regarding the interim industry-specific wage rate methodology, ITA invites comments by parties on these issues.

In particular, ITA proposes relying on labor and wage data that include all costs incurred by the producer related to labor including wages, benefits, housing, training, etc. One example of such a data source is ‘‘Chapter 6A: Labor Cost in Manufacturing’’ from the ILO Yearbook of Labour Statistics.

¹Section 733(c) of the Tariff Act of 1930, as amended, provides that ITA will value the factors of production (FOPs) in NME cases using the best available information regarding the value of such factors in a market economy (ME) country or countries considered to be appropriate by the administering authority. The Act requires that when valuing the FOPs, the ITA utilize, to the extent possible, the prices or costs of factors of production in one or more ME countries that are (1) at a comparable level of economic development and (2) significant producers of comparable merchandise.

(See ITT’s Online Archives or 02/11/11 news, 11021111, for BP summary of the most recent Court of International Trade decision on ITA’s revised approach to NME labor values.)

(FR Pub 02/18/11)