CHANGES TO ANTIDUMPING AND COUNTERVAILING DUTY PROCEDURES
The U.S. Department of Commerce (DOC) has finalized a rule that revises several aspects of its antidumping (AD) and countervailing duty (CVD) procedures, with a focus on non-market economy (NME) policy. This update primarily impacts AD cases. It allows third-country entities, owned or controlled by non-market economies, to potentially face the country-wide AD rate of the non-market economy nation. Per Title VII of the Tariff Act of 1930, as amended (the Act), the DOC is updating its trade remedy regulations to improve the administration of AD and CVD laws. The revisions aim to clarify existing procedures and revise key regulations in several areas, including the collection of cash deposits, the selection of respondents, and how antidumping rates are applied in NME cases.
Non-market economy (NME) is an economic system where the government heavily controls production, pricing, and distribution of goods and services, rather than letting market forces like supply and demand determine prices. In NMEs, industries are often state-owned or influenced by the government, which differs from market economies where competition sets prices.
KEY REVISIONS TO NON-MARKET ECONOMY POLICY
Under the final rule, 19 C.F.R. Section 351.108(b)(2), the DOC can now evaluate entities in third countries directly owned or controlled by a non-market economy government. The agency will determine whether these third-country exporters should be treated as part of the non-market economy and thus receive the same AD rate, or whether they should be given a separate AD rate. This change allows the DOC to consider the legal and administrative structures in third countries that could enable NME governments to control entities. The rule “codifies existing procedures and methodologies and creates or revises regulatory provisions relating to several matters, including the application of antidumping rates in non-market economy proceedings,” signifying a significant shift in the DOC’s handling of NME cases.
The DOC has clarified that companies claiming to be wholly owned by foreign entities but headquartered in a market economy must submit relevant sections of the separate rate application or certification to back up their claims. The final rule also makes it clear that the DOC will not require a detailed investigation into the “ultimate owners” of foreign entities or expand its analysis to include indirect forms of ownership or control by a non-market economy government, unless necessary in certain situations.
MODIFICATIONS IN CASH DEPOSIT AND SUBSIDY CALCULATION PRACTICES
SURROGATE COUNTRY SELECTION CRITERIA
In response to feedback on surrogate country selection, the DOC introduced a new regulation that emphasizes using per capita GDP as the main measure to assess the economic comparability of potential surrogate countries. The DOC will also consider other factors if necessary, including the availability and quality of data from those countries and how closely the products made in potential surrogate countries match the subject merchandise.
The rule revises the indicators used in surrogate country selection, aligning with the DOC’s broader revisions to ensure that decisions are based on accurate and comprehensive data. This revised approach provides flexibility while ensuring that surrogate countries are economically comparable to the subject countries.
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