§ 351.416 - Determination of a particular market situation.

§ 351.416 xxx

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Determination of a particular market situation.

(a) Particular market situation defined. A particular market situation is a circumstance or set of circumstances that does the following as determined by the Secretary:

(1) Prevents or does not permit a proper comparison of sales prices in the home market or third country market with export prices and constructed export prices; or

(2) Contributes to the distortion of the cost of materials and fabrication or other processing of any kind, such that the cost of production of merchandise subject to an investigation, suspension agreement, or antidumping order does not accurately reflect the cost of production in the ordinary course of trade.

(b) Submission requirements when alleging the existence of a particular market situation. When an interested party submits a timely allegation as to the existence of a particular market situation in an antidumping duty proceeding, relevant information reasonably available to that interested party supporting the claim must accompany the allegation. If the particular market situation being alleged is similar to an allegation of a particular market situation made in a previous or ongoing segment of the same or another proceeding, the interested party must identify the facts and arguments in the submission which are distinguishable from those provided in the other segment or proceeding.

(c) A determination that a particular market situation prevented or did not permit a proper comparison of prices existed during the period of investigation or review. The Secretary may determine that a particular market situation, identified in paragraph (a)(1) of this section, existed during the period of investigation or review if a circumstance or set of circumstances prevented or did not permit a proper comparison between sales prices in the home market or third country market of the foreign like product and export prices or constructed export prices of subject merchandise for purposes of an antidumping analysis.

(1) Examples of particular market situations in the home market that may prevent or do not permit a proper comparison with U.S. price. Examples of a circumstance or set of circumstances in the home market that may prevent or not permit a proper comparison of prices, and are therefore particular market situations, include, but are not limited to, the following:

(i) The imposition of an export tax on subject merchandise;

(ii) Limitations on exports of subject merchandise from the subject country;

(iii) The issuance and enforcement of anticompetitive regulations that confer a unique status on favored producers or that create barriers to new entrants to an industry; and

(iv) Direct government control over pricing of subject merchandise to such an extent that home market prices for subject merchandise cannot be considered competitively set.

(2) Examples of particular market situations in a third country market that may prevent or not permit a proper comparison of prices. In situations where third country prices may be needed to calculate normal value in a dumping calculation, the Secretary may determine that third country prices cannot be properly compared to export prices or constructed export prices for reasons similar to those listed in paragraph (c)(1) of this section.

(3) The use of constructed value may be warranted if a proper comparison of prices is prevented or not permitted. If the Secretary determines that a particular market situation prevented or did not permit a proper comparison of sales prices in the home market or third country market with export prices or constructed export prices during the period of investigation or review, the Secretary may conclude that it is necessary to determine normal value by constructing a value in accordance with section 773(e) of the Act and § 351.405.

(d) A determination that a market situation existed during the period of investigation or review such that the cost of materials and fabrication or other processing of any kind does not accurately reflect the cost of production in the ordinary course of trade —

(1) In general. For purposes of this paragraph (d)(1), the Secretary will determine that a market situation, identified in paragraph (a)(2) of this section, existed during the period of investigation or review if the Secretary determines the following, based on information on the record:

(i) A circumstance or set of circumstances existed that may have impacted the costs of producing subject merchandise, or costs or prices of inputs into the production of subject merchandise;

(ii) The cost of materials and fabrication or other processing of any kind, including the prices of inputs used to produce subject merchandise, were not in accordance with market principles or distorted, and therefore did not accurately reflect the cost of production of subject merchandise in the ordinary course of trade; and

(iii) The circumstance or set of circumstances at issue contributed to the distortion of the cost of production of subject merchandise.

(2) The Secretary will determine if it is more likely than not that a circumstance or set of circumstances contributed to distorted costs or prices. In accordance with paragraph (d)(1)(iii), the Secretary will weigh the information on the record and determine whether it is more likely than not that the circumstance or set of circumstances contributed to the distortion in the cost of production of subject merchandise during the period of investigation or review, and therefore, that a market situation existed during that period.

(3) Information the Secretary may consider in determining the existence of a market situation. In determining whether a market situation existed in the subject country such that the cost of materials and fabrication or other processing did not accurately reflect the cost of production of subject merchandise in the ordinary course of trade during the period of investigation or review, the Secretary will consider all relevant information placed on the record by interested parties, including, but not limited to, the following:

(i) Comparisons of prices paid for significant inputs used to produce subject merchandise under the alleged market situation to prices paid for the same input under market-based circumstances, either in the home country or elsewhere;

(ii) Detailed reports and other documentation issued by foreign governments or independent international, analytical, or academic organizations indicating that lower prices for a significant input in the subject country would likely result from governmental or nongovernmental actions or inactions taken in the subject country or other countries;

(iii) Detailed reports and other documentation issued by foreign governments or independent international, analytical, or academic organizations indicating that prices for a significant input have deviated from a fair market value within the subject country, as a result, in part or in whole, of governmental or nongovernmental actions or inactions;

(iv) Agency determinations or results in which the Secretary determined record information did or did not support the existence of the alleged particular market situation with regard to the same or similar merchandise in the subject country in previous proceedings or segments of the same proceeding; and

(v) Information that property (including intellectual property), human rights, labor, or environmental protections in the subject country are weak, ineffective, or nonexistent, those protections exist and are effectively enforced in other countries, and that the ineffective enforcement or lack of protections may contribute to distortions in the cost of production of subject merchandise or prices or costs of a significant input into the production of subject merchandise in the subject country. For purposes of this paragraph (d)(3)(v), the Secretary will normally look to cost effects on same or similar merchandise produced in economically comparable countries in analyzing the impact of such protections on the cost of production.

(4) No restrictions based on lack of precise quantifiable data, hypothetical prices or actions of governments and industries in other market economies. In determining whether a market situation exists in the subject country such that the cost of materials and fabrication or other processing do not accurately reflect the cost of production in the ordinary course of trade, the following will not preclude the finding of a market situation:

(i) The lack of precision in the quantifiable data relating to the distortion of prices or costs in the subject country;

(ii) The speculated cost of production of the subject merchandise, or the speculated prices or costs of a significant input into the production of the subject merchandise, unsupported by objective data, that a party claims would hypothetically exist in the subject country absent the alleged particular market situation or its contributing circumstances;

(iii) The actions taken or not taken by governments, government-controlled entities, or other public entities in other market economy countries in comparison with the actions taken or not taken by the government, state enterprise, or other public entity of the subject country, with the exception of information associated with the allegations addressed in paragraph (d)(3)(v) of this section; and

(iv) The existence of the same or similar government or nongovernment actions in the subject country that preceded the period of investigation or review.

(e) Factors to consider in determining if a market situation is particular —

(1) In general. If the Secretary determines that a market situation exists under paragraph (c) or (d), the Secretary must also determine if the market situation is particular. A market situation is particular if it impacts prices or costs for only certain parties or products in the subject country. In reaching this determination, the following applies:

(i) A particular market situation may exist even if a large number of certain parties or products are impacted by the circumstance or set of circumstances. The Secretary's analysis does not concern the specific number of products or parties, but whether the market situation impacts only certain parties or products, or the general population of parties or products, in the subject country;

(ii) The same or similar market situations can exist in multiple countries or markets and still be considered particular for purposes of this paragraph (e)(1) if the Secretary determines that a market situation exists which distorts sales prices or cost of production for certain parties or products specifically in the subject country; and

(iii) There are varied circumstances in which a market situation in a subject country can be determined to be particular, and a market situation may apply only to certain producers, importers, exporters, purchasers, users, industries, or enterprises, individually or in any combination.

(2) Information the Secretary may consider in determining if a market situation is particular. In determining if a market situation in the subject country is particular in accordance with paragraph (e)(1) of this section, the Secretary will consider all relevant information placed on the record by interested parties, including, but not limited to, the following:

(i) The size and nature of the market situation;

(ii) The volume of merchandise potentially impacted by the price or cost distortions resulting from the market situation; and

(iii) The number and nature of the entities potentially affected by the price or cost distortions resulting from a market situation.

(f) The Secretary may adjust its calculations to address distortions to which a particular market situation under paragraphs (d) and (e) of this section has contributed —

(1) In general. If the Secretary determines a particular market situation exists in the subject country which has contributed to a distortion in the cost of materials and fabrication or other processing, such that those costs do not accurately reflect the cost of production of subject merchandise in the ordinary course of trade, in accordance with sections 771(15) and 773(e) of the Act, the Secretary may address such distortions to the cost of production in its calculations.

(2) Imprecise quantification of the distortions. If, after consideration of the information on the record, the Secretary is unable to precisely quantify the distortions to the cost of production of subject merchandise in the ordinary course of trade to which the particular market situation has contributed, the Secretary may use any reasonable methodology based on record information to adjust its calculations to address those distortions.

(3) The Secretary may determine not to adjust its calculations. If the Secretary determines that a particular market situation exists in the subject country which has contributed to the distortions to the cost of production, but that an adjustment to its calculations of the cost of production of subject merchandise is not appropriate based on record information, the Secretary may determine not to adjust its calculations. In determining whether an adjustment is appropriate, the Secretary may consider the following:

(i) Whether the cost distortion is already sufficiently addressed in its calculations in accordance with another statutory provision, such as the transaction disregarded and major input rules of sections 773(f)(2) and (3) of the Act;

(ii) Whether a reasonable method for quantifying an adjustment to the calculations is absent from the record; and

(iii) Whether information on the record suggests that the application of an adjustment to the Secretary's calculations would otherwise be unreasonable.

(g) Examples of particular market situations which contribute to distortions in the cost of materials and fabrication or other processing of any kind, such that those costs do not accurately reflect the cost of production in the ordinary course of trade. Examples of particular market situations which may contribute to the distortion of the cost of production of subject merchandise in the subject country, alone or in conjunction with others, include, but are not limited to, the following:

(1) A significant input into the production of subject merchandise is produced in such amounts that there is considerably more supply than demand in international markets for the input and the Secretary concludes, based on record information, that regardless of the impact of such overcapacity of the significant input on other countries, such overcapacity contributed to distortions of the price or cost of that input in the subject country during the period of investigation or review;

(2) A government, government-controlled entity, or other public entity in the subject country owns or controls the predominant producer or supplier of a significant input used in the production of subject merchandise and the Secretary concludes, based on record information, that such ownership or control of the producer or supplier contributed to price or cost distortions of that input in the subject country during the period of investigation or review;

(3) A government, government-controlled entity, or other public entity in the subject country intervenes in the market for a significant input into the production of subject merchandise and the Secretary concludes, based on record information, such that the intervention contributed to price or cost distortions of that input in the subject country during the period of investigation or review;

(4) A government in the subject country limits exports of a significant input into the production of subject merchandise and the Secretary concludes, based on record information, that such export limitations contributed to price or cost distortions of that input in the subject country during the period of investigation or review;

(5) A government in the subject country imposes export taxes on a significant input into the production of subject merchandise and the Secretary concludes, based on record information, that such taxes contributed to price or cost distortions of that input in the subject country during the period of investigation or review;

(6) A government in the subject country exempts an importer, producer, or exporter of subject merchandise from paying duties or taxes associated with trade remedies established by the government relating to a significant input into the production of subject merchandise during the period of investigation or review;

(7) A government in the subject country rebates duties or taxes paid by an importer, producer or exporter of subject merchandise associated with trade remedies established by the government related to a significant input into the production of subject merchandise during the period of investigation or review;

(8) A government, government-controlled entity, or other public entity in the subject country provides financial assistance or other support to the producer or exporter of subject merchandise, or to a producer or supplier of a significant input into the production of subject merchandise and the Secretary concludes, based on record information, that such assistance or support contributed to cost distortions of subject merchandise or distortions in the price or cost of a significant input into the production of subject merchandise in the subject country during the period of investigation or review;

(9) A government, government-controlled entity, or other public entity in the subject country mandates, through law or in practice, the use of a certain percentage of domestic-manufactured inputs, the sharing or use of certain intellectual property or production processes, or the formation of certain business relationships with other entities to produce subject merchandise or a significant input into the production of subject merchandise and the Secretary concludes, based on record information, that those requirements contributed to cost distortions of subject merchandise or distortions in the price or cost of a significant input into the production of subject merchandise in the subject country during the period of investigation or review;

(10) A government, government-controlled entity, or other public entity in the subject country does not enforce its property (including intellectual property), human rights, labor, or environmental protection laws and policies, or those laws and policies are otherwise shown to be ineffective with respect to either a producer or exporter of subject merchandise, or to a producer or supplier of a significant input into the production of subject merchandise in the subject country and the Secretary concludes, based on record information, that the lack of enforcement or effectiveness of such laws and policies contributed to cost distortions of subject merchandise or distortions in the price or cost of a significant input into the production of subject merchandise during the period of investigation or review;

(11) A government, government-controlled entity, or other public entity in the subject country does not implement property (including intellectual property), human rights, labor, or environmental protection laws and policies and the Secretary concludes, based on record information, that the absence of such laws and policies contributed to cost distortions of subject merchandise, or distortions in the price or cost of a significant input into the production of subject merchandise in the subject country during the period of investigation or review; and

(12) Nongovernmental entities take actions which the Secretary concludes, based on record information, contributed to cost distortions of subject merchandise or distortions in the price or cost of a significant input into the production of subject merchandise in the subject country during the period of investigation or review. Actions that result in distortive prices and costs by nongovernmental entities covered by this example include, but are not limited to, the formation of business relationships between one or more producers of subject merchandise and suppliers of significant inputs to the production of subject merchandise, including mutually-beneficial strategic alliances or noncompetitive arrangements, as well as sales by third-country exporters of significant inputs into the subject country for prices for less than fair value.

(h) A particular market situation which contributes to distortions in the cost of materials and fabrication or other processing of any kind, such that the costs do not accurately reflect the cost of production in the ordinary course of trade, may also contribute to a particular market situation that prevents or does not permit a proper comparison of prices. If the Secretary determines that a particular market situation existed during the period of investigation or review such that the cost of materials and fabrication or other processing of any kind did not accurately reflect the cost of production of subject merchandise in the ordinary course of trade, the Secretary may consider, based on record information, whether that particular market situation also contributed to the circumstance or set of circumstances that prevented, or did not permit, a proper comparison of home market or third country sales prices with export prices or constructed export prices, in accordance with section 771(15)(C) of the Act.

[89 FR 20837, Mar. 25, 2024

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