2010-31644. De Facto Criteria for Establishing a Separate Rate in Antidumping Proceedings Involving Non-Market Economy Countries

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Request for comments.

SUMMARY:

In antidumping proceedings involving non-market economy (“NME”) countries,^[1] the Department of Commerce (“the Department”) has a rebuttable presumption that the export activities of all companies within the country are subject to government control and, thus, should be assessed a single antidumping duty rate (i.e., the NME-Entity rate). It is the Department's policy to assign to all exporters of merchandise subject to investigation in an NME country this single rate unless an exporter can demonstrate that it is sufficiently independent so as to be entitled to a “separate rate” (i.e., a dumping margin separate from the margin assigned to the NME-Entity). Exporters can demonstrate this independence through the absence of both de jure and de facto governmental control over their export activities.

The Department is now considering revising its current policy and practice with respect to the de facto criteria examined for purposes of determining whether to grant separate rate status to individual exporters in antidumping proceedings involving NME countries. Through this notice, the Department invites the public to comment on amending the test as discussed below. Interested parties are invited to comment on this proposal.

DATES:

To be assured of consideration, comments must be received no later January 31, 2011.^[2]

FOR FURTHER INFORMATION CONTACT:

Albert Hsu, Senior International Economist, Office of Policy or Eugene Degnan, Program Manager, Office 8, Office of Antidumping and Countervailing Duty Operations, Import Administration, U.S. Department of Commerce, at 202-482-4491 or 202-482-0414, respectively.

SUPPLEMENTARY INFORMATION:

Background

In proceedings involving NME countries, the Department has a rebuttable presumption that the export activities of all companies within the country are subject to government control and, thus, should be assessed a single antidumping duty rate (i.e., the NME-Entity rate). It is the Department's policy to assign all exporters of merchandise subject to an antidumping investigation or review in an NME country this single rate unless an exporter can demonstrate that it is sufficiently independent so as to be entitled to a “separate rate” (i.e., a dumping margin separate from the margin assigned to the NME-Entity). Exporters can demonstrate this independence through the absence of both de jure and de facto governmental control over their export activities. The Department analyzes each entity exporting the subject merchandise that applies for a separate rate under a test first articulated in Final Determination of Sales at Less Than Fair Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 6, 1991) (“Sparklers”), as further developed in Final Determination of Sales at Less Than Fair Value: Silicon Carbide from the People's Republic of China, 59 FR 22585 (May 2, 1994) (“Silicon Carbide”).^[3] However, if the Department determines that an exporter of NME-produced merchandise is wholly foreign-owned or located in a market economy country, under current practice a separate-rate analysis is not necessary to determine whether it is independent from government control.

The Department is not revisiting the de jure criteria currently examined for purposes of establishing a company's separate rate. The Department is considering, however, the extent to which it might incorporate additional de facto criteria into its analysis when assessing and verifying whether a foreign producer/exporter in a non-market economy is sufficiently free of government control to be granted separate rate status.

Typically, the Department considers four factors in evaluating whether a respondent is subject to de facto governmental control of its export functions. They are: (1) Whether the export prices are set by or are subject to the approval of a governmental agency; (2) whether the respondent has authority to negotiate and sign contracts and other agreements; (3) whether the respondent has autonomy from the government in making decisions regarding the selection of management; and (4) whether the respondent retains the proceeds of its export sales and makes independent decisions regarding disposition of profits or financing of losses.^[4] The Department has determined that an analysis of de facto control is critical in determining whether exporters or producers are, in fact, subject to a degree of governmental control which would preclude the Department from assigning separate rates.

Currently, when conducting its de facto separate rate analysis, the Department asks of those being considered for separate rate status questions regarding: (1) Ownership and whether any individual owners hold office at any level of the NME government; (2) export sales negotiations and prices; (3) selection of company management and whether any managers held government positions; (4) disposition of profits; and (5) affiliations with any companies involved in the production or sale in the home market, third-country markets, or the United States of merchandise which would fall under the description of merchandise covered by the scope of the proceeding. The Department's full Separate Rate Status Application is available on the Department's Web site at http://www.trade.gov/​ia.

The Department's current practice focuses on direct government involvement in a firm's export activities and, to that extent, it may not take sufficient account of the government's role in the NME and how that role may impact an exporter's behavior with regard to its export activities and setting prices. For this reason, the Department is considering modifying the de facto criteria to look beyond direct government control of export activities in assessing whether an entity should be granted separate rate status. The Department welcomes comments on this proposed reassessment of its current practice. Further, the Department invites comments and suggestions regarding additional de facto criteria to examine in assessing a company's eligibility for separate rate status. Comments should include a description of the criteria parties propose the Department examine, specific questions the Department might ask a separate rate applicant, and the type of documentation the Department would expect to review, and procedures followed, at verification.

Submission of Comments:

As specified above, to be assured of consideration, comments must be received no later than January 31, 2011. All comments must be submitted through the Federal eRulemaking Portal at http://www.regulations.gov,, Docket No. ITA-2010-0010, unless the commenter does not have access to the Internet. Commenters that do not have access to the Internet may submit the original and two copies of each set of comments by mail or hand delivery/courier. All comments should be addressed to the Secretary of Commerce, Attention: Wendy J. Frankel, Director, Office 8, Antidumping and Countervailing Duty Operations, Room 1870, Import Administration, U.S., Department of Commerce, 14th Street and Constitution Ave., NW., Washington, DC 20230.

The Department will consider all comments received before the close of the comment period. The Department will not accept comments accompanied by a request that part or all of the material be treated confidentially because of its business proprietary nature or for any other reason. All comments responding to this notice will be a matter of public record and will be available for inspection at Import Administration's Central Records Unit (Room 7046 of the Herbert C. Hoover Building) and on the Department's Web site at http://www.trade.gov/​ia/​.

Any questions concerning file formatting, document conversion, access on the Internet, or other electronic filing issues should be addressed to Andrew Lee Beller, Import Administration Webmaster, at [phone], e-mail address: [e-mail].

Dated: December 10, 2010.

Ronald K. Lorentzen,

Deputy Assistant Secretary for Import Administration.

Footnotes

1.  The Department currently considers the following countries to be non-market economy countries—Armenia, Belarus, Georgia, Kyrgyzstan Republic, Moldova, the People's Republic of China, the Republic of Azerbaijan, the Socialist Republic of Vietnam, Tajikistan, Turkmenistan and Uzbekistan.

2.  The Department typically allows 30 days for filing comments in instances such as this. However, due to the intervening holiday season, the Department is allowing 45 days in this particular instance to ensure that all parties have adequate time to comment.

3.  See also Policy Bulletin 05.1, which states: “[w]hile continuing the practice of assigning separate rates only to exporters, all separate rates that the Department will now assign in its NME investigations will be specific to those producers that supplied the exporter during the period of investigation. Note, however, that one rate is calculated for the exporter and all of the producers which supplied subject merchandise to it during the period of investigation. This practice applies both to mandatory respondents receiving an individually calculated separate rate as well as the pool of non-investigated firms receiving the weighted-average of the individually calculated rates. This practice is referred to as the application of “combination rates” because such rates apply to specific combinations of exporters and one or more producers. The cash-deposit rate assigned to an exporter will apply only to merchandise both exported by the firm in question and produced by a firm that supplied the exporter during the period of investigation.”

4.  See Final Determination of Sales at Less Than Fair Value: Silicon Carbide from the People's Republic of China, 59 FR 22585 (May 2, 1994); see also Notice of Final Determination of Sales at Less Than Fair Value: Furfuryl Alcohol From the People's Republic of China, 60 FR 22544, 22545 (May 8, 1995).