Commerce Issues Final Rule Amending AD/CVD Procedures, Updates NME Policy
The Commerce Department issued a final rule making various changes to its antidumping and countervailing duty procedures, notably altering its nonmarket economy policy in AD cases by allowing entities in third countries "owned or controlled" by nonmarket economies to be subject to the country-wide AD rate for that nation.
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Commerce said it made changes from its proposed rule light of comments it received on the proposal, which was issued in July. Under a new regulation, 19 C.F.R. Section 351.108(b)(2), the agency said it "may analyze an entity directly owned or controlled by a nonmarket economy government and located in a third country and determine based on record information if that third country exporter should be treated as part of the nonmarket economy entity" and receive the NME rate or be granted a separate AD rate.
The move will let the agency "consider the legal and administrative levers present in third countries" that could allow for control of the entity by NME governments, the rule said.
Commerce had said in its proposed rule to say that if a company claims to be wholly owned by a foreign entity but headquartered and incorporated in a market economy, "it must complete and submit relevant, designated sections of the separate rate application or certification explaining as much and provide accompanying information on the record that supports such a claim." The agency added that even exporters claiming the "wholly owned" exception applies must submit a separate rate application or certification, though firms claiming this exception "need only complete a section of the application or certification explicitly designated for that purpose by Commerce."
The final rule clarified that Commerce won't require further analysis into the possible "ultimate owners" of the foreign owners themselves in every case in which the issue is present. The agency also won't expand its analysis to mandate investigation into "indirect" means of ownership or foreign control by a NME government through "potential holding companies or shareholder deception in every case," as suggested by concerned parties.
The final rule additionally addressed elements of Commerce's practices relating to the collection of cash deposits, calculation of an all-others rate, respondent selection, attribution of subsidies received by cross-owned input suppliers and utility providers to CVD respondents, the treatment of affiliated entities and surrogate value selection, among others.
Regarding the treatment of affiliated parties as a single entity in AD proceedings, Commerce provided exceptions to its treatment of affiliated parties as one entity. The agency said it won't normally invoke this treatment if the parties don't produce similar or identical merchandise, and "are input suppliers, sellers of the foreign like product in the home market, or affiliated entities for which Commerce determines that treating those parties as a single entity would be otherwise inappropriate based on record information."
On the topic of surrogate country selection, Commerce added a new paragraph to its regulations to clarify that it will measure the economic comparability of potential surrogate nations by placing a primary emphasis on "per capita GDP." The agency also will consider "additional factors" where more analysis is needed, and it will consider the "totality" of the information if more than one economically comparable nation makes comparable merchandise, the rule said.
The regulation said that additional criteria to be considered include the "availability, accessibility, and quality of data from those countries and the similarity of products manufactured in the potential surrogate countries in comparison to the subject merchandise."