Commerce Announces Tougher Policies on NME Separate Rates in Antidumping Cases
The Commerce Department will take a closer look at companies in non-market economy (NME) countries to see if they're free from government control, toughening its procedures for seeing if companies qualify for separate rates in antidumping investigations and reviews, it said in a Federal Register notice. The new policy will include issuing supplemental questionnaires to the companies to delve deeper into government control when Commerce thinks it’s warranted. The change in policy follows a December 2010 request for comments on the agency’s NME separate rate determinations that garnered responses from several foreign governments and domestic industry associations.
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In antidumping investigations on NME countries, Commerce starts with the presumption that all companies and the government form a single entity under state control. At least one of the many producers of investigated goods included in that single entity inevitably doesn’t respond to Commerce’s lengthy questionnaires, so the rate assigned to the country-wide entity is usually an extremely high “adverse facts available” rate. In effect, Commerce punishes all companies that are part of the single entity for the lack of cooperation of one (or more) of those companies.
To avoid the country-wide rate, which can sometimes add double or triple the original value of the merchandise in antidumping duties, companies must prove to Commerce that they're not under government control. If they do so, they become eligible for a separate rate. To make its determination, Commerce looks at whether the company is legally (de jure) under government control, as well as whether the company is in effect under government control (de facto) even if there's no legal basis. To see whether a company is under de facto government control, Commerce currently looks at whether the government approves export prices, whether the company can negotiate its own contracts, whether the company can select its own management, and whether the company has control over profit. The agency asks these questions in separate rate applications that are completed at the beginning of NME investigations and administrative reviews.
Deeper Examination of State Control on 'Case-by-Case Basis'
In response to comments asking Commerce to toughen up its de facto separate rate determinations, the agency said it will now “consider, on a case-by-case basis,” issuing supplemental questionnaires on top of its separate rate applications. The additional questions will delve deeper into the issue of government control. “The specific facts of each case would be instructive to the Department in deciding to issue such questionnaires and what information such questionnaires would address,” Commerce said.
Commerce also said it will no longer automatically grant separate rates to companies with export offices in market economy countries. Comments raised the concern that under the current policy, NME companies could set up a shell country in a market economy country to avoid a separate rate analysis. Commerce said it isn’t completely changing its policy, but will instead in some cases look at whether more information is needed to determine whether the NME government controls companies with export offices in market economy countries. “In circumstances when the record indicates there may be government control through the NME producer, we may require both the NME producer and the [market economy] exporter to provide information similar to that requested in the NME separate rate application,” Commerce said.