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Notice

Market Economy Inputs Practice in Antidumping Proceedings involving Non-Market Economy Countries

Document Details

Information about this document as published in the Federal Register.

Published Document

This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

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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 and that 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 or producer of subject merchandise 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 (or the producers of the subject merchandise), provided certain conditions are met.

The Department announced that is was considering options to change certain aspects of its policy and practice regarding market economy input prices and solicited public comment in a May 26, 2005 notice published in the Federal Register (70 FR 30418). In response to this first notice, the Department received 21 submissions from interested parties. After considering these comments, the Department is requesting comments regarding a proposed change to the Department's market economy inputs practice, which is detailed below.

DATES:

Comments must be submitted by September 6, 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.

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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, respectively.

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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 to the NME country 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 normally uses the actual price paid for these inputs to value the input in question, where possible. See 19 CFR 351.408(c)(1); See also 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 input is purchased from a market economy supplier and the remainder from a non-market economy supplier, the Department will normally us the average price paid for the inputs sourced from market economy suppliers to value all of the input1, provided four conditions are met. First, the volume of the imported input as a share of total purchases from all sources must be Start Printed Page 46817“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) (Shakeproof). Second, this average import price must reflect arms-length, bona fide sales. See Shakeproof at 14. Third, the Department has disregarded all input values it has reason to believe or suspect might be dumped or subsidized. See China National Machinery Import & Export Corporation v, United States, 293 F. Supp 2d 1334 (CIT 2003), as affirmed by Federal Circuit, 104 Fed. Appx. 183 (Fed. Cir. 2004). Fourth, the Department has disregarded the prices of inputs that could not possibly have been used in the production of subject merchandise during the period of investigation or review. See, e.g., Final Determination of Sales at Less Than Fair Value: Certain Frozen and Canned Warmwater Shrimp from the Socialist Republic of Vietnam, 69 FR 71005 (December 8, 2004).

In comments submitted in response to the Department's May 26 Federal Register notice requesting comment on our current practice, seventeen interested parties argued that the prices paid for that portion of an input that was purchased from market economy countries often constitutes the “best information available” required by the statute for valuing domestically sourced inputs. In particular, these parties contended that using surrogate values in place of actual market economy purchase prices to value an entire input would result in less accurate calculation of normal value. These parties also stressed that the Department already requires that the quantity purchased from market economy suppliers be significant and that the transactions be bona fide and conducted in market economy currency. According to these parties, the aforementioned requirements already ensure that the market economy purchase prices the Department accepts constitute the “best available information”.

Other interested parties responding to the request for comment, however, submitted arguments that the Department's current case-by-case assessment of what constitutes a “meaningful” quantity does not ensure that the prices paid by respondents for the portion of the input sourced from market economy countries are an accurate valuation of the entire input. In particular, these parties have alleged that it may be possible, under the Department's current practice, for respondents to source a small amount of an input on favorable terms with the goal of manipulating the Department's margin calculations. Alternatively, these parties claim, market economy suppliers may sometimes offer limited quantities of an input at prices that are much lower than the price at which respondents could acquire the total amount of the input in question. Where situations such as these occur, these parties claim that it would be distortive to use the prices paid for a portion of an input sourced from market economy suppliers to value the entire input.

Upon consideration of these comments, the Department proposes to continue to value respondents' entire input with the prices paid by them to market economy suppliers of the input, as long as the purchases reflect bona fide sales, were made in market economy currency, constitute a “meaningful” quantity, and could have been used in the production of the subject merchandise. However, the Department's goal is to better ensure that the market economy input purchase prices it accepts are as free as possible from distortions and constitute the best available information. Accordingly, we are now proposing a change in the Department's practice that is intended to reduce potential distortions in the Department's current market economy inputs practice while continuing to use the average price paid for the inputs sourced from market economy suppliers to value an entire input.

The Department is now proposing to use respondents' market economy purchase prices to value all of the input (provided the Department's four other requirements described above are met) when the majority of each input by volume is sourced from market economy countries. Where respondents source less than a majority of the total volume of an input from market economy countries in transactions meeting the Department's other requirements, the Department will weight-average the portion that was purchased from market economy countries, using the actual price paid, with the portion sourced domestically, using a surrogate value. The Department welcomes comments on whether this proposal would appropriately address distortions that have been identified in the Department's market economy inputs practice and whether this proposal would be consistent with the Department's regulations.

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. 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 website 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 (202) 482-0866, email address: webmaster-support@ita.doc.gov.

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Dated: August 5, 2005.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

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Footnotes

[FR Doc. E5-4357 Filed 8-10-05; 8:45 am]

BILLING CODE 3510-DS-S