[Federal Register Volume 77, Number 125 (Thursday, June 28, 2012)]
[Proposed Rules]
[Pages 38553-38556]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-15436]
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DEPARTMENT OF COMMERCE
International Trade Administration
19 CFR Part 351
Proposed Modification to Regulation Concerning the Use of Market
Economy Input Prices in Nonmarket Economy Proceedings
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Proposed rule; request for comments.
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SUMMARY: The Department of Commerce (``Department'') proposes to modify
its regulation which states that the Department normally will use the
price that a nonmarket economy (``NME'') producer pays to a market
economy supplier when a factor of production is purchased from a market
economy supplier and paid for in market economy currency, in the
calculation of normal value (``NV'') in antidumping proceedings
involving NME countries. The rule, if adopted, would establish (1) a
requirement that the input at issue be produced in one or more market
economy countries, and (2) a revised threshold requiring that
``substantially all'' of an input be purchased from one or more market
economy suppliers before the Department would use the purchase price
paid to value the entire factor of production. Through this proposed
modification, the Department is announcing its proposed definition of
``substantially all'' to be 85 percent of the total purchased volume of
the particular input. The Department invites public comment on this
proposed change.
[[Page 38554]]
DATES: To be assured of consideration, comments must be received no
later than July 30, 2012.
ADDRESSES: All comments must be submitted through the Federal
eRulemaking Portal at http://www.Regulations.gov, Docket No. ITA-2012-
0002, and the Department prefers this means of submitting comments.
However, if a commenter does not have access to the Internet, as an
alternative, he or she may submit the original and two copies of each
set of comments by mail or hand delivery/courier. All comments should
be addressed to Paul Piquado, Assistant Secretary for Import
Administration, Room 1870, Department of Commerce, 14th Street and
Constitution Ave. NW., Washington, DC 20230. The comments should be
identified by Regulation Identifier Number (RIN) 0625-AA89.
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 online at http://www.Regulations.gov 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
(202) 482-0866, email address: webmaster-support@ita.doc.gov.
FOR FURTHER INFORMATION CONTACT: Wendy Frankel at (202) 482-5849 or
Scott McBride at (202) 482-6292.
SUPPLEMENTARY INFORMATION:
Background
In antidumping proceedings involving NME countries, the Department
calculates NV by valuing the NME producer's 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. See section 773(c)(4) of the Tariff
Act of 1930, as amended (``the Act''). The goal of this surrogate
factor valuation is to use the ``best available information'' to
determine NV. See section 773(c)(1) of the Act; see also Dorbest Ltd,
et al. v. United States, 604 F.3d 1363 (Fed. Cir. 2010). Pursuant to 19
CFR 351.408(c)(1), as currently written, when an NME producer purchases
inputs from market economy suppliers and pays for those purchases in a
market economy currency, the Department normally uses the weighted-
average price paid by the NME producer for these inputs to value the
input in question, where possible. When a portion of the input is
purchased from a market economy supplier and the remainder from a
nonmarket economy supplier, the Department will normally use the price
paid for the input sourced from market economy suppliers to value all
of the input, provided that the volume of the market economy input as a
share of total purchases from all sources is ``meaningful.'' See
Antidumping Duties; Countervailing Duties, Final Rule, 62 FR 27296,
27366 (May 19, 1997); Shakeproof Assembly Components Div. of Ill. Tool
Works, Inc. v. United States, 268 F. 3d 1376 (Fed. Cir. 2001).
In Antidumping Methodologies: Market Economy Inputs, Expected Non-
Market Economy Wages, Duty Drawback; and Request for Comments, 71 FR
61716 (October 19, 2006), the Department instituted a rebuttable
presumption that market economy input prices are the best available
information for valuing all of an input when the total volume of the
input purchased by the respondent from all market economy sources
during the period of investigation or review exceeds 33 percent of the
total volume of the input purchased from all sources during the period.
Under this practice, unless case-specific facts provide adequate
grounds to rebut the Department's presumption, the Department uses the
weighted-average market economy purchase price to value all of the
input. Alternatively, when the volume of an NME firm's purchases of a
particular input from market economy suppliers during the period of
investigation/review does not exceed this 33 percent threshold, the
Department weight-averages the (weighted-average) market economy
purchase price and an appropriate surrogate value,\1\ using as weights
the relative quantities of the input imported and purchased from
domestic sources.
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\1\ The Department will choose a surrogate value from a market
economy country which is at a level of economic development
comparable to that of the nonmarket economy country and is a
significant producer of comparable merchandise.
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In determining whether market economy purchases meet this 33
percent threshold, the Department compares the volume that the
respondent purchased from market economy sources during the period of
investigation or review with the respondent's total purchases during
the period. When a firm has made market economy input purchases that
may have been dumped (e.g., the country covered by our proceeding has
an antidumping measure on the input from the source country) or from a
country that the Department has a ``reason to believe or suspect''
maintains general export subsidies, are not bona fide, or are otherwise
not acceptable for use in a dumping calculation (i.e. if the purchases
are from an affiliate and are not made at arm's length), the Department
excludes them from the numerator of the ratio to ensure a fair
determination of whether valid market economy purchases meet the 33
percent threshold.
The Department now proposes to revise 19 CFR 351.408(c)(1) to
establish that where substantially all (i.e., 85 percent or more) of an
input is purchased from market economy suppliers (from one or more
market economy countries) as a share of total purchases of that input
from all sources during a particular period of investigation or review,
the Department will normally use the weighted-average purchase price
paid to the market economy supplier(s) to value all of the input. When
the 85 percent threshold is not met, the Department will weight-average
the market economy purchase price(s) and an appropriate surrogate
value, using the respective quantities of the input sourced, from
market economy and nonmarket economy suppliers. One reason for this
proposed revision is a concern that, when market economy purchases of
an input do not account for substantially all purchases of the input
(imported and domestically supplied), a market economy input price is
not the best available information, particularly since it would not be
possible to determine objectively whether the price for the input would
have been the same had the firm purchased solely from market economy
suppliers. The Department has confidence in the market economy purchase
price(s) only when the proportion of the total volume of the input that
is sourced from market economies is substantially all (i.e., for
purposes of this provision, 85 percent or more) of the total purchases
of that particular input.
The Department also proposes to add a requirement to 19 CFR
351.408(c)(1) that the market economy input at issue actually be
produced in one or more market economy countries, and not just sold
through market economy countries, to address concerns that the pricing
of an NME-produced input by a market economy supplier (or reseller) can
be
[[Page 38555]]
distorted by NME cost or supply factors. For example, NME input prices
that reflect non-profit objectives or low or suppressed capital, land,
energy or other factors of production costs in the NME country can be
reflected in, and therefore distort, the prices charged by market
economy suppliers or resellers of that input. That is not to say that
prices of market economy-produced inputs can never be distorted, but
only that they are normally not reflective of systemic, economy-wide
distortions, as are NME prices.
Explanation of Proposed Modification to 19 CFR 351.408
The second sentence of 19 CFR 351.408(c)(1) states that ``[w]here a
factor is purchased from a market economy supplier and paid for in a
market economy currency, the Secretary normally will use the price paid
to the market economy supplier.'' The Department proposes modifying the
existing sentence and adding two parts to that sentence. First, the
Department proposes adding ``produced in one or more market economy
countries'' after ``[w]here a factor is.'' Second, the Department
proposes changing the subsequent clauses to read ``purchased from one
or more market economy suppliers and paid for in market economy
currency, the Secretary normally will use the price(s) paid to the
market economy supplier(s).'' Third, the Department proposes adding the
following to the end of that sentence: ``If substantially all of the
total volume of the factor is purchased from one or more market economy
suppliers. For purposes of this provision, the Secretary defines the
term `substantially all' to be 85 percent or more of the total volume
of purchases of the factor used in the production of subject
merchandise.'' We view these additions as necessary to specify which
inputs qualify and useful to clearly define the proposed threshold.
The current third sentence of 19 CFR 351.408(c)(1) states ``In
those instances where a portion of the factor is purchased from a
market economy supplier and the remainder from a nonmarket economy
supplier, the Secretary normally will value the factor using the price
paid to the market economy supplier.'' The Department proposes deleting
``a portion of the factor'' from the beginning of that sentence and
replacing it with ``less than substantially all of the total volume of
the factor.'' The Department also proposes adding ``produced in one or
more market economy countries and'' before ``purchased from a market
economy supplier,'' and changing the latter clause to read ``purchased
from one or more market economy suppliers.'' In addition, the
Department proposes deleting ``and the remainder from a nonmarket
economy supplier.'' The Department also proposes deleting ``value the
factor using the price paid to the market economy supplier'' at the end
of that sentence. The Department is replacing these passages with
``weight-average the actual price(s) paid for the market economy
portion and the surrogate value for the nonmarket economy portion by
their respective quantities.'' We view these changes as necessary to
explain the methodology the Department will use when a respondent
purchases less than substantially all of the input from market economy
suppliers or only part of the input is produced in one or moremarket
economy countries.
Classification
Executive Order 12866
This rule has been determined to be not significant for purposes of
Executive Order 12866.
Initial Regulatory Flexibility Act (IRFA)
Pursuant to Section 603 of the Regulatory Flexibility Act, the
Department has prepared the following IRFA to analyze the potential
impact that this proposed rule, if adopted, would have on small
entities.
Description of the Reasons Why Action Is Being Considered
The policy reasons for issuing this proposed rule are discussed in
the Background section of this document, and are not repeated here.
Statement of the Objectives of, and Legal Basis for, the Proposed Rule;
Identification of All Relevant Federal Rules That May Duplicate,
Overlap, or Conflict With the Proposed Rule
This proposed rule is intended to revise 19 CFR 351.408(c)(1) to
establish that in valuing factors of production in antidumping
proceedings involving nonmarket economies, if substantially all of an
input is purchased from market economy suppliers as a share of total
purchases of that input from all sources during the investigation or
review period, the Department will use the weighted-average purchase
price paid to market economy suppliers to value all of the input.
Further, the proposed rule is also intended to add a requirement to 19
CFR 351.408(c)(1) that the market economy input at issue actually be
produced in one or more market economy countries, and not just be sold
through market economy countries.
The legal basis for this rule is 5 U.S.C. 301; 19 U.S.C. 1202 note;
19 U.S.C. 1303 note; and 19 U.S.C. 1671 et seq. No other Federal rules
duplicate, overlap or conflict with this proposed rule.
Number and Description of Small Entities Regulated by the Proposed Rule
The proposed rule regulates entities that are: (1) Producing
merchandise in a nonmarket economy that is exported to the United
States and is subject to an antidumping duty order; (2) being
individually examined in an antidumping proceeding; and (3) claiming
that market economy purchase prices should be used to value a factor of
production in the calculation of the exporter's weighted average
dumping margin and antidumping duty assessment rate. The resulting
antidumping duty assessment rate determines the amount of antidumping
duties to be paid by importers of record of the subject merchandise
imported into the United States.
Entities that produce and export merchandise subject to U.S.
antidumping duty orders are rarely U.S. companies. Some producers and
exporters of subject merchandise do have U.S. affiliates, some of which
may be considered small entities under the appropriate Small Business
Administration (SBA) small business size standard. The Department is
not able to estimate the number of exporters and producer domestic
affiliates that may be considered small entities, but anticipates,
based on its experience in these proceedings, that the number will not
be substantial.
Importers may be U.S. or foreign companies, and some of these
entities may be considered small entities under the appropriate SBA
small business size standard. There are no means by which the
Department can readily determine whether or not a substantial number of
small importers will be impacted by this rule, as the effect of the
Department's change in methodology will differ from proceeding to
proceeding, on a case-by-case basis, and the importers depositing cash
deposits and/or paying antidumping duties will also differ from
proceeding to proceeding.
Description of the Projected Reporting, Recordkeeping, and Other
Compliance Requirements of the Proposed Rule
The proposed rule will require exporters or producers to establish
on the administrative record that 85 percent or more of an input has
been purchased from market economy suppliers from one or more market
economy countries as a share of total purchases of that input from all
sources (domestic and foreign) during a particular period of
investigation or
[[Page 38556]]
administrative review, if the exporter or producer wishes the
Department to use the weighted-average purchase price paid to the
market economy supplier(s) to value all of the input (from all
sources). Furthermore, the proposed rule will require that exporters or
producers also establish on the administrative record that the market
economy input at issue was produced in a market economy, rather than
merely being sold through a market economy supplier. There will be no
additional reporting or recordkeeping burdens on U.S. importers as a
result of this rule.
Description of Any Significant Alternatives to the Proposed Rule That
Accomplish the Stated Objectives of Applicable Statutes and That
Minimize Any Significant Economic Impact of the Proposed Rule on Small
Entities
As required by 5 U.S.C. 603(c), the Department's analysis
considered significant alternatives. The alternatives which the
Department considered are: (1) The preferred alternative of modifying
19 CFR 351.408(c)(1) to (a) establish that if substantially all of an
input is purchased from market economy suppliers as a share of total
purchases of that input from all sources during the investigation or
review period, the Department will use the weighted-average purchase
price paid to market economy suppliers to value all of the input and
(b) require that the market economy input at issue actually be produced
in one or more market economy countries, and not just be sold through
market economy countries; (2) modify the regulation with respect to
(1)(a), but not (1)(b); (3) modify the regulation with respect to
(1)(b), but not (1)(a); or (4) maintain the status quo with respect to
the valuation of inputs purchased from a market economy supplier and
paid for in a market economy currency.
Factors of production for the subject merchandise will be assigned
a value in the calculation of the weighted average dumping margin and
antidumping duty assessment rate, whether the assigned value is a
market economy purchase price, a surrogate value from a market economy
country, or a combination of the two. Accordingly, the economic impact
of providing information and argument to the Department in relation to
the valuation of the factors of production for entities individually
examined in the Department's antidumping proceedings is roughly
equivalent under each of the above-noted alternatives.
In relation to the possible impact of the alternatives on the
amount of antidumping duties to be paid by importers of record of the
subject merchandise, the value of a factor of production is one of
numerous elements in the calculation of a weighted average margin of
dumping. Whether a particular factor value will have any impact on the
resulting weighted average dumping margin is not certain. To the extent
that a small U.S. importer will be economically impacted by this rule,
it will only be through an increase or decrease in the cash deposits
and duties posted by that importer as a result in the change of a
weighted average dumping margin. In those circumstances where a change
in the value of an input as a result of this regulatory modification
does have an impact on the weighted average dumping margin, the impact
to the small U.S. importer will depend on whether the publicly sourced
value is higher or lower than the market economy purchase price(s).
In this regard, the Department is required by 19 U.S.C.
1677b(c)(1)(b) to rely on the best information available for valuing
the producer's factors of production. The proposed modification to the
regulation addresses the Department's concerns that a market economy
input price may not be the best available information when: (1) Market
economy purchases of an input are insufficient in proportion to NME
purchases for the Department to objectively conclude that the purchase
price for the input would have been the same had the firm purchased
solely from market economy suppliers and (2) the reported pricing of an
NME-produced input purchased from a market economy supplier (or
reseller) can be distorted by NME cost or supply factors. Accordingly,
the Department considers that the first, preferred alternative is the
only alternative that fully addresses the Department's policy concerns
explained in the Background section of this Notice.
Paperwork Reduction Act
This rule does not contain a collection of information for purposes
of the Paperwork Reduction Act of 1980, as amended (44 U.S.C. 3501 et
seq.)
List of Subjects in 19 CFR Part 351
Administrative practice and procedure, Antidumping, Business and
industry, Cheese, Confidential business information, Countervailing
duties, Freedom of information, Investigations, Reporting and
recordkeeping requirements.
Dated: June 15, 2012.
Paul Piquado,
Assistant Secretary for Import Administration.
For the reasons stated, 19 CFR part 351 is proposed to be amended
as follows:
PART 351--ANTIDUMPING AND COUNTERVAILING DUTIES
1. The authority citation for 19 CFR part 351 continues to read as
follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 1202 note; 19 U.S.C. 1303
note; 19 U.S.C. 1671 et seq.; and 19 U.S.C. 3538.
2. In Sec. 351.408, revise paragraph (c)(1) to read as follows:
Information used to value factors. The Secretary normally will use
publicly available information to value factors. However, where a
factor is produced in one or more market economy countries, purchased
from one or more market economy suppliers and paid for in market
economy currency, the Secretary normally will use the price(s) paid to
the market economy supplier(s) if substantially all of the total volume
of the factor is purchased from the market economy supplier(s). For
purposes of this provision, the Secretary defines the term
``substantially all'' to be 85 percent or more of the total purchase
volume of the factor used in the production of subject merchandise. In
those instances where less than substantially all of the total volume
of the factor is produced in one or more market economy countries and
purchased from one or more market economy suppliers, the Secretary
normally will weight-average the actual price(s) paid for the market
economy portion and the surrogate value for the nonmarket economy
portion by their respective quantities.
[FR Doc. 2012-15436 Filed 6-27-12; 8:45 am]
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