Market Economy Inputs Practice in Antidumping Proceedings involving Non-Market Economy Countries., 30418-30419 [E5-2677]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 70, Number 101 (Thursday, May 26, 2005)]
[Notices]
[Pages 30418-30419]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-2677]


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DEPARTMENT OF COMMERCE

International Trade Administration


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.

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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

[[Page 30419]]

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: https://
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.

    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.
[FR Doc. E5-2677 Filed 5-25-05; 8:45 am]
BILLING CODE: 3510-DS-S