E5-2677. Market Economy Inputs Practice 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, the Department of Commerce (“the Department”) calculates normal value by valuing the NME producers' factors of production, to the extent possible, using prices from a market economy that is at a comparable level of economic development which is also a significant producer of comparable merchandise. The goal of this surrogate factor valuation is to use the “best available information.” See section 773(c)(1) of the Tariff Act of 1930; Shangdong Huraong General Corp. v. United States, 159 F. Supp.2d 714, 719 (CIT 2001). Normally, if a respondent sources an input from a market-economy supplier, the Department will use the average input price paid by the respondent to market economy suppliers (in market economy currency) to value all of the given input (both imported and domestically-sourced) used by respondents, provided three conditions are met. First, the volume of the imported input as a share of total purchases from all sources must be “meaningful,” a term used in the Preamble to the Regulations but which is interpreted by the Department on a case-by-case basis. See Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27366 (May 19, 1997) (Preamble). See, also, Shakeproof v. United States, 268 F.3d 1376, 1382 (Fed. Cir. 2001). Second, this average import price must reflect bona fide sales. Third, the Department disregards all inputs it has reason to believe or suspect might be dumped or subsidized. The Department is now considering options to change certain aspects of its current policy and practice regarding market economy input prices, and through this notice, invites public comment on the options detailed below. This notice is part of an ongoing effort by which the Department is considering modifications to its NME policy and practice. The Department may solicit additional public comment on other possible changes, as well.

DATES:

Comments must be submitted by June 24, 2005.

ADDRESSES:

Written comments (original and six copies) should be sent to Joseph A. Spetrini, Acting Assistant Secretary for Import Administration, U.S. Department of Commerce, Central Records Unit, Room 1870, Pennsylvania Avenue and 14th Street NW, Washington, DC 20230.

FOR FURTHER INFORMATION CONTACT:

Lawrence Norton, Economist, or Anthony Hill, Senior International Economist, Office of Policy, Import Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington DC, 20230, 202-482-1579 or 202-482-1843.

SUPPLEMENTARY INFORMATION:

Background

In an NME antidumping proceeding, the Department bases its calculation of normal value on the NME producers' factors of production, valued, to the extent possible, using prices from a market economy that is at a comparable level of economic development and that is also a significant producer of comparable merchandise. See section 773(c)(1) of the Tariff Act of 1930. Where an NME producer purchases inputs from market economy suppliers and pays in a market-economy currency, however, the Department uses the actual price paid for these inputs, where possible. See Final Determination of Sales at Less Than Fair Value: Oscillating Fans and Ceiling Fans from the People's Republic of China, 56 FR 55271 (October 25, 1991). Where a portion of the factor input is purchased from a market economy supplier and the remainder from a nonmarket economy supplier, the Department will normally value the factor using the price paid to the market-economy supplier. See 19 CFR 351.408(c)(1). The Department declines to value a given factor using prices paid to market economy suppliers when the quantity is not “meaningful”, because, in such cases, the NME producer may not be able to purchase all of the inputs it needs for the input at that price. See Preamble, 62 FR at 27366. In keeping with its standard practice concerning factor valuation, the Department also declines to accept prices when it believes the transaction was not conducted at arm's length. Finally, the Department does not accept prices of goods sold when it has reason to believe or suspect that the goods may be dumped or subsidized.

The Department is considering changes to the policy and practice detailed above, in particular, to its interpretation of what constitutes a “meaningful” quantity of an input sourced from a market economy country. Under current practice, a “meaningful” quantity above which the Department will use market economy input prices to value all of an input is determined on a case-by-case basis. To address a concern that basing the entire input value on a small amount of purchases might not be the most accurate reflection of what a company pays to source the entire input, the Department is considering whether to apply certain criteria in determining whether the amounts purchased from a market economy supplier are “meaningful.” There is further concern that our current practice may allow parties to manipulate the Department's margin calculations by sourcing just enough of an input from market economy suppliers so that the market economy price is used to value the entire input, even though that party does not source the entire input from foreign (market economy) suppliers in the normal course of business. In such situations, concern has been expressed that the market economy prices the Department would use to value an entire input may not be reflective of actual prices.

These concerns, along with a general effort by the Department to examine its long-standing policies, have prompted the Department to review its practice concerning the use of prices paid by a respondent to market economy input suppliers. The appendix to this notice describes two broad approaches for revising the Department's practice in this area. The first approach would use market economy prices for inputs, but would limit their use to the valuation of the imported portion of the input only. Under the second approach, the Department would continue to use market economy import prices to value an entire input if it found the quantity of imports to be meaningful, but would apply certain criteria for determining what constitutes a “meaningful” amount. We invite comment on these and any other options regarding the Department's practice concerning market economy inputs in NME antidumping cases.

Comments

Persons wishing to comment should file a signed original and six copies of each set of comments by the date specified above. The Department will consider all comments received before the close of the comment period. Comments received after the end of the comment period will be considered, if possible, but their consideration cannot be assured. The Department will not accept comments accompanied by a request that a part or all of the material be treated confidentially because of its business proprietary nature or for any other reason. The Department will return such comments and materials to the persons submitting the comments and will not consider them in the development of any changes to its practice. All comments responding to this notice will be a matter of public record and will be available for public inspection and copying at Import Administration's Central Records Unit, Room B-099, between the hours of 8:30 a.m. and 5 p.m. on business days. The Department requires that comments be submitted in written form. The Department recommends submission of comments in electronic form to accompany the required paper copies. Comments filed in electronic form should be submitted either by e-mail to the webmaster below, or on CD-ROM, as comments submitted on diskettes are likely to be damaged by postal radiation treatment.

Comments received in electronic form will be made available to the public in Portable Document Format (PDF) on the Internet at the Import Administration Web site at the following address: http://ia.ita.doc.gov/​.

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], email address: [e-mail].

Dated: May 19, 2005.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

Appendix

(1) Is it appropriate for the Department to change its regulations and end its long-standing practice of using market economy import prices to value an entire input? For example, should the Department use market economy import prices to value only the portion of the input that was imported, and use surrogate country prices to value the remainder of the input?

(2) Assuming the Department continues its long-standing practice of using market economy import prices to value an entire input, what should the threshold be for the share or volume of a given input sourced from market economy suppliers to qualify as “meaningful” in order for the import price to be used to value all of the input?

(3) Please provide any additional views on any other matter pertaining to the Department's practice concerning the use of market economy import prices.