Regulations To Improve Administration and Enforcement of Antidumping and Countervailing Duty Laws, 49472-49504 [2020-15283]
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Federal Register / Vol. 85, No. 157 / Thursday, August 13, 2020 / Proposed Rules
DEPARTMENT OF COMMERCE
International Trade Administration
19 CFR Part 351
[Docket No. 200626–0170]
RIN 0625–AB10
Regulations To Improve
Administration and Enforcement of
Antidumping and Countervailing Duty
Laws
Enforcement and Compliance,
International Trade Administration,
Department of Commerce.
ACTION: Proposed rule; request for
comments.
AGENCY:
Pursuant to its authority
under Title VII of the Tariff Act of 1930,
as amended (the Act), the Department of
Commerce (Commerce) proposes to
modify its regulations under Part 351 of
Title 19 to improve administration and
enforcement of the antidumping duty
(AD) and countervailing duty (CVD)
laws. Specifically, Commerce proposes
to modify its regulation concerning the
time for submission of comments
pertaining to industry support in AD
and CVD proceedings; to modify its
regulation regarding new shipper
reviews; to modify its regulation
concerning scope matters in AD and
CVD proceedings; to promulgate a new
regulation concerning circumvention of
AD and CVD orders; to promulgate a
new regulation concerning covered
merchandise referrals received from
U.S. Customs and Border Protection
(CBP); to promulgate a new regulation
pertaining to Commerce requests for
certifications from interested parties to
establish whether merchandise is
subject to an AD or CVD order; and to
modify its regulation regarding importer
reimbursement certifications filed with
CBP. Finally, Commerce proposes to
modify its regulations regarding letters
of appearance in AD and CVD
proceedings and importer filing
requirements for access to business
proprietary information. Commerce is
seeking public comments on this
proposed rule.
DATES: To be assured of consideration,
written comments must be received no
later than September 14, 2020.
ADDRESSES: Submit comments through
the Federal eRulemaking Portal at
https://www.Regulations.gov, Docket No.
ITA–2020–0001. Comments may also be
submitted by mail or hand delivery/
courier, addressed to Jeffrey I. Kessler,
Assistant Secretary for Enforcement and
Compliance, Room 1870, Department of
SUMMARY:
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Commerce, 1401 Constitution Ave. NW,
Washington, DC 20230.
Commerce will consider all comments
received before the close of the
comment period. All comments
responding to this document will be a
matter of public record and will
generally be available on the Federal
eRulemaking Portal at https://
www.Regulations.gov. Commerce 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. Therefore, do not submit
confidential business information or
otherwise sensitive or protected
information.
Any questions concerning the process
for submitting comments should be
submitted to Enforcement & Compliance
(E&C) Communications office at (202)
482–0063 or ECCOMMS@trade.gov.
FOR FURTHER INFORMATION CONTACT:
Scott McBride at (202) 482–6292; David
Mason at (202) 482–5051; or Jessica
Link at (202) 482–1411.
SUPPLEMENTARY INFORMATION:
General Background
Title VII of the Act vests Commerce
with authority to administer the AD/
CVD laws, known as trade remedies. In
particular, section 731 of the Act directs
Commerce to impose an AD order on
merchandise entering the United States
when it determines that a producer or
exporter is selling a class or kind of
foreign merchandise into the United
States at less than fair value (i.e.,
dumping), and material injury or threat
of material injury to that industry in the
United States is found by the
International Trade Commission (ITC).
Section 701 of the Act directs
Commerce to impose a CVD order when
it determines that a government of a
country or any public entity within the
territory of a country is providing,
directly or indirectly, a countervailable
subsidy with respect to the
manufacture, production, or export of a
class or kind of merchandise that is
imported into the United States, and
material injury or threat of material
injury to that industry in the United
States is found by the ITC.1
1 A countervailable subsidy is further defined
under section 771(5)(B) of the Act as existing when:
A government or any public entity within the
territory of a country provides a financial
contribution; provides any form of income or price
support; or makes a payment to a funding
mechanism to provide a financial contribution, or
entrusts or directs a private entity to make a
financial contribution, if providing the contribution
would normally be vested in the government and
the practice does not differ in substance from
practices normally followed by governments; and a
benefit is thereby conferred. To be countervailable,
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The purpose of the regulatory changes
proposed in this rulemaking is to
strengthen the administration and
enforcement of AD/CVD laws, make
such administration and enforcement
more efficient, and create new
enforcement tools for Commerce to
address circumvention and evasion of
trade remedies. If adopted, these
changes would equip Commerce to
better fulfill the Congressional intent
behind the AD/CVD laws—namely, to
protect U.S. companies, workers,
farmers, and ranchers from the injurious
effects of unfairly traded imports. In
addition, if adopted, these changes
would promote the Administration’s
objective to enforce the AD/CVD laws
rigorously, and to aggressively pursue
parties that seek to skirt them.
Moreover, the proposed regulations
facilitate a stronger and more efficient
administration of the AD and CVD laws
in the context of Commerce’s
proceedings. The proposed changes are
summarized briefly here, and discussed
further below:
• Modify section 351.203 to provide
for the establishment of a deadline by
which parties may file comments on
industry support. At present, comments
on industry support may be filed up to
and including the scheduled date of an
initiation determination, leaving
Commerce little or no time to consider
fully such comments for purposes of
determining whether the petition has
sufficient industry support. Therefore,
such modifications are necessary to
enhance Commerce’s ability to consider
and act upon such comments in a timely
manner.
• Revise numerous provisions to
section 351.214 concerning new shipper
reviews to address abuse of those
procedures and ensure that the sales to
be reviewed are, in fact, bona fide sales.
These changes are necessary to conform
the regulation to recent statutory
changes 2 and to ensure Commerce
expends its limited resources on new
shipper reviews only where warranted.
• Revise numerous provisions to
section 351.225 concerning scope
inquiries by adopting new procedures to
preserve resources, expedite deadlines,
and remove unnecessary and
burdensome notice and service
requirements. These revisions also
clarify and codify the substantive basis
for Commerce’s scope rulings pertaining
to country of origin, scope language
interpretation, and ‘‘mixed-media’’
a subsidy must be specific within the meaning of
section 771(5A) of the Act.
2 Trade Facilitation and Trade Enforcement Act of
2015, Public Law 114–125, 130 Stat. 122, 155
(2016).
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products, which incorporate subject
merchandise in some form, in light of
past practice and various court
decisions. These revisions also ensure
that AD/CVD duties are appropriately
applied to products determined to be
subject to the scope of the order.
• Adopt new section 351.226
concerning circumvention inquiries,
which largely mirrors the proposed
scope procedures. These provisions also
clarify Commerce’s authority to selfinitiate circumvention inquiries and
apply circumvention determinations on
a ‘‘country-wide’’ basis.
• Adopt new section 351.227
concerning ‘‘covered merchandise
referrals’’ from CBP under section 517 of
the Act, which largely mirror the
proposed scope and circumvention
procedures and allow Commerce
maximum flexibility to further develop
its procedures and practice as it gains
more experience in this new area of the
law.
• Adopt new section 351.228, which
is specifically targeted at improving
enforcement of AD and CVD orders and
ensuring the effectiveness of those
orders. Under new section 351.228,
Commerce may determine to impose a
certification requirement on an importer
or another interested party to further
ensure that entries of merchandise
subject to an AD/CVD order are
appropriately classified as subject
merchandise.
• Modify section 351.402 regarding
importer certifications for the payment
or reimbursement of AD/CVD duties on
entries subject to AD orders to account
for updated procedures.
• Adopt necessary changes,
consistent with certain substantive
proposed rules discussed above, to two
procedural provisions: Section
351.103(d)(1) pertaining to letters of
appearance and public service lists, and
section 351.305(d) pertaining to
importer filing requirements for access
to business proprietary information in
Commerce’s proceedings.
Explanation of the Proposed Rules
Comment Period on Industry Support
Prior to Initiation Determination—
Section 351.203
Once an AD petition under section
732(b) of the Act or a CVD petition
under section 702(b) is filed, the statute
provides Commerce with 20 days in
which to determine whether the
elements necessary for initiation of an
investigation have been satisfied,
including the requirement to
demonstrate industry support. In
exceptional circumstances, Commerce
may extend the 20-day period to a
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maximum of 40 days solely for purposes
of determining industry support. At
present, comments on industry support
may be filed up to and including the
scheduled date of an initiation
determination, leaving Commerce little
or no time to consider fully such
comments for purposes of determining
whether the petition has sufficient
industry support. To address this,
Commerce proposes to modify section
351.203 to provide for the establishment
of a deadline for comments no later than
five business days before the scheduled
date of initiation; and rebuttal
comments no later than two days
thereafter.
New Shipper Reviews—Section 351.214
Commerce proposes to modify its
regulation pertaining to new shipper
reviews under section 751(a)(2)(B) of the
Act and section 351.214. Section
751(a)(2)(B) of the Act provides a
procedure by which exporters or
producers who did not export the
product during the original AD or CVD
investigation can obtain their own
individual dumping margin or
countervailing duty rate on an
accelerated basis (referred to as a ‘‘new
shipper review’’). This provision was
enacted in the Uruguay Round
Agreements Act (URAA) in 1994,3 and
Commerce promulgated its
accompanying new shipper review
regulation, section 351.214, in 1997.4
This regulation provides the rules
regarding requests for new shipper
reviews and procedures for conducting
such reviews, and is largely unchanged
since 1997. Under this provision,
Commerce conducts a new shipper
review to establish an individual
weighted-average dumping margin or
countervailable subsidy rate if it
receives a properly documented request
for review.
In 2016, the Trade Facilitation and
Trade Enforcement Act of 2015 was
signed into law, which contains Title
IV—Prevention of Evasion of
Antidumping and Countervailing Duty
Orders (short title ‘‘Enforce and Protect
3 See Uruguay Round Agreements Act, Statement
of Administrative Action, H.R. Doc. No. 103–316,
vol. 1, at 816 (1994) (SAA) (‘‘Article 9.5 {of the
Anti-Dumping Agreement} establishes special
procedures for imposing antidumping duties on
exporters or producers who did not export the
product to the importing country during the
original period of investigation (so-called ‘new
shippers’).’’).
4 See Antidumping Duties; Countervailing Duties,
Proposed Rule, 61 FR 7308, 7317–18 (Feb. 27, 1996)
(1996 Proposed Rule) (discussing the proposed new
shipper review regulation); Antidumping Duties;
Countervailing Duties, Final Rule, 62 FR 27296,
27318–19 (May 19, 1997) (1997 Final Rule)
(discussing the finalized new shipper review
regulation).
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Act of 2015’’ or ‘‘EAPA’’).5 Section 433
of EAPA (entitled ‘‘Addressing
Circumvention by New Shippers’’)
made two important revisions to the
new shipper review procedures under
section 751(a)(2)(B) of the Act.
First, in legislative history explaining
these amendments, Congress expressed
concern regarding the abuse of new
shipper review procedures to avoid AD/
CVD duties.6 One area of abuse in
particular involved the ability of an
importer of a new shipper’s
merchandise to post a bond or security
in lieu of cash deposits for entries of
that merchandise for the duration of the
new shipper review.7 Therefore, to
prevent such abuse of these procedures,
section 433 of EAPA removed the ability
for importers to post AD/CVD-specific
bonds or security in lieu of AD/CVD
cash deposits by striking this provision
from section 751(a)(2)(B) of the Act.8
Second, section 433 added a
provision that the individual dumping
margin or countervailing duty rate
determined for a new shipper must be
based on bona fide sales in the United
States, and codified the factors that
Commerce has historically used to
determine whether a sale is bona fide.9
In explaining this proposed change,
Congress identified abuse of new
shipper review procedures where a new
shipper ‘‘enter{s} into a scheme to
structure a few sales to show little or no
dumping or subsidization when those
sales are reviewed . . . resulting in a
low or zero antidumping or
countervailing duty rate for that
5 Public
Law 114–125, 130 Stat. 122, 155 (2016).
H.R. Rep. No. 114–114, at 89 (2015) (‘‘The
Committee is concerned that the ability of new
exporters and producers to obtain their own
individual weighted average dumping margins or
individual countervailing duty rates from the
Department of Commerce on an expedited basis
(known as ‘new shipper reviews’) has been abused
to avoid antidumping and countervailing duties.’’)
7 Id. (‘‘One area of abuse is taking advantage of
the option to post a bond or security, rather than
the normally required cash deposit, while the
Department of Commerce conducts a new shipper
review. This allows an importer to bring in large
quantities of dumped or subsidized merchandise
from the exporter or producer under review without
having to provide in cash the full amount of
estimated duties that could be owed on those
imports. Having to put up less capital makes it
easier for unscrupulous importers to enter into
schemes to bring in dumped and subsidized
merchandise with the intent of disappearing or
otherwise not being available to pay the
antidumping and countervailing duties owed on the
imports. This loophole would be closed by
requiring importers of merchandise from a producer
or exporter in a new shipper review to provide a
cash deposit of estimated duties.’’)
8 See § 433, 130 Stat. at 171; see also H.R. Rep No.
114–376, at 192 (2015) (Conf. Rep.).
9 See § 433, 130 Stat. at 171; see also H.R. Rep.
No. 114–376 at 192–193.
6 See
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Federal Register / Vol. 85, No. 157 / Thursday, August 13, 2020 / Proposed Rules
producer or exporter.’’ 10 As a result of
such scheme: ‘‘An importer could then
bring in that producer or exporter’s
merchandise at highly dumped or
subsidized prices but with little or no
cash deposit. The problem is further
exacerbated if the importer disappears
or otherwise becomes unavailable to pay
the duties owed and U.S. Customs and
Border Protection (CBP) has little or no
cash deposit against which to recover
the owed duties.’’ 11 Accordingly, to
protect against such schemes,12 section
433 added section 751(a)(2)(B)(iv) to the
Act, providing that, in determining
whether the sales in the United States
of a new shipper made during the
period covered by the review is bona
fide, Commerce shall consider with
respect to such sales: Pricing,
commercial quantities, timing,
expenses, resale at profit, and arm’slength basis. Additionally, under
section 751(a)(2)(B)(iv), Commerce may
consider any other factor which it
determines to be relevant as to whether
such sales are, or are not, likely to be
typical of those the new shipper will
make after completion of the review.
As a result of the above, Commerce is
making conforming amendments to
section 351.214 discussed below. The
modifications to section 351.214 would
clarify the circumstances under which
Commerce will expend the resources
required to reach a determination in a
review conducted under section
751(a)(2)(B) of the Act, among other
issues.
Revised paragraph (a) would update
the introduction to section 351.214 by
including reference to current section
751(a)(2)(B) of the Act and the statutory
requirement for bona fide sales in a new
shipper review. Consistent with the
revised statutory language in section
751(a)(2)(B)(iv) of the Act, proposed
revisions to paragraph (b)(1), pertaining
to requests for new shipper reviews,
provide that, in requesting a new
shipper review, an exporter or producer
must not only satisfy the export or sale
requirement but must also demonstrate
the existence of a bona fide sale. With
regard to existing section 351.214(b),
Commerce explained in the 1996
Proposed Rule that it was requiring
certain certifications from the requestor
‘‘demonstrating that the party is a bona
10 H.R.
Rep. No. 114–114 at 89.
11 Id.
12 Id. (‘‘This provision would prevent such
arrangements by requiring that the U.S. sales in a
new shipper review be bona fide sales and setting
out criteria for identifying bona fide sales, reflecting
the Department of Commerce’s current regulations
and practices in this area.’’)
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fide new shipper.’’ 13 In doing so,
Commerce explained:
The purpose of these certifications is to
ensure that new shipper status is not
achieved through mere restructuring of
corporate organizations or channels of
distribution. In accordance with the SAA, at
875, this provision also makes clear that
parties will not be granted new shipper status
merely because they were not individually
examined during the investigation.14
In responding to comments in the
1997 Final Rule, Commerce noted that
it had received one request that
Commerce ‘‘clarify that a person can
request a new shipper review as long as
there is a bona fide sale of subject
merchandise to the United States, even
if that merchandise has not yet been
shipped to or entered the United
States.’’ 15 Although Commerce did not
address the ‘‘bona fide’’ nature of such
sale, Commerce explained:
The initiation of new shipper reviews and
the issuance of questionnaires requires an
expenditure of administrative resources by
the Department that is not inconsiderable
when cumulated across all AD/CVD
proceedings. In our view, the Department
should not expend these resources unless
there is a reasonable likelihood that there
ultimately will be a transaction for the
Department to review; namely, as discussed
below, an entry and sale to an unaffiliated
purchaser.16
Consistent with this earlier
discussion, and in light of the concerns
related to circumvention and abuse of
new shipper review procedures
expressed by Congress in enacting
section 751(a)(2)(B)(iv) of the Act,
Commerce proposes to expend its
resources in conducting a new shipper
review only where there is a reasonable
likelihood that there ultimately will be
a bona fide sale for Commerce to
review. Thus, proposed revisions to
paragraph (b)(1) provide that a producer
or exportermay request a new shipper
review if it can demonstrate the
existence of a bona fide sale. Commerce
expects that a producer or exporter
could make such a demonstration by
complying with the proposed
requirements in proposed paragraph
(b)(2)(iv), and proposed revisions to
paragraph (b)(2)(v).
Under proposed paragraph (b)(2)(iv), a
request for a new shipper review must
contain (1) a certification from the
unaffiliated customer in the United
States that it did not purchase the
subject merchandise from the producer
or exporter during the period of
investigation, and (2) a certification
1996 Proposed Rule, 61 FR at 7317–18.
1997 Final Rule, 62 FR at 27318–19.
15 Id., 62 FR at 27319.
16 Id.
from the unaffiliated customer in the
United States that it will provide
necessary information requested by
Commerce regarding its purchase of
subject merchandise. With respect to
(1), this language was previously
discussed in the 1997 Final Rule, among
a number of other suggestions which
were aimed at discouraging meritless
requests for new shipper reviews.17 At
the time, Commerce was beginning to
develop its practice with respect to new
shipper reviews, which was a new
procedure adopted in the URAA in
1994.18 In light of this limited
experience, Commerce declined to
adopt a proposal to require additional
documentation from an exporter
claiming to be a new shipper, or to
require certifications from the
purchaser, explaining that ‘‘{w}hile the
Department has no interest in dealing
with meritless claims for new shipper
reviews, by the same token, we do not
want to discourage meritorious
claims.’’ 19 However, in light of
Commerce’s past 20 years of practice in
this area, and the circumvention and
abuse of procedures concerns expressed
by Congress in adopting the 2016
amendments to the new shipper review
statute, we believe that the additional
requirements above are needed to
discourage meritless claims, and to
preserve Commerce’s resources in
conducting new shipper reviews where
there is a reasonable likelihood that the
unaffiliated customer will participate in
the review.
Consistent with these same
considerations, proposed paragraph
(b)(2)(v) (currently paragraph (b)(2)(iv))
requires specific documentation which
would allow Commerce to conduct a
bona fides analysis under section
751(a)(2)(B)(iv) of the Act. This includes
information pertaining to whether
shipments were made in commercial
quantities, the date of any subsequent
sales, circumstances surrounding the
sale, such as price, expenses, resale for
profit, and the arm’s-length basis of the
sale. Additionally, documentation
establishing the business activities of
the producer or exporter would also be
required under this proposed paragraph
(i.e., the producer’s or exporter’s offers
to sell merchandise in the United States,
identification of the complete
circumstances surrounding the
exporter’s or producers’ sales to the
United States, home market or any third
country markets (if applicable), an
explanation of any non-producing
exporter’s relationship with its
13 See
14 See
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17 Id.,
62 FR at 27319.
1996 Proposed Rule, 61 FR at 7317.
19 See 1997 Final Rule, 62 FR at 27319.
18 See
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producer/supplier, and identification of
the producer’s or exporter’s relationship
to the first unrelated U.S. customer).
Proposed revisions to paragraph (c)
provide a conforming amendment to
reflect the change in numbering in
paragraph (b)(2).
Proposed paragraph (d) would be
entitled ‘‘Initiation of new shipper
review.’’ Paragraph (d)(1) would clarify
that Commerce will initiate a new
shipper review if the requirements for a
request for new shipper review under
paragraph (b) are satisfied. Paragraphs
(d)(1)–(3), discussing time limits for the
initiation of a new shipper review,
would remain unchanged (with the
exception of a minor grammatical edit
in paragraph (d)(2)). These provisions
would require Commerce to initiate a
new shipper review in the calendar
month immediately following the
anniversary month, or semi-annual
anniversary month of the order, as
applicable. This is consistent with the
statement in the SAA that new exporters
or producers may request an accelerated
new shipper review at any time.20
Paragraph (d)(4) would provide that if
Commerce determines that the
requirements for a request for new
shipper review under paragraph (b)
have not been satisfied, the Secretary
will reject the request and provide a
written explanation of the reasons for
the rejection.
Proposed revisions to paragraph (e)
would eliminate language that requires
Commerce to allow, at the option of the
importer, the posting of an AD/CVDspecific bond or security in lieu of an
AD/CVD cash deposit for each entry of
the subject merchandise. This proposed
modification implements the same
amendment to section 751(a)(2)(B) of
the Act under section 433 of the EAPA
as discussed above, which eliminated
the option of posting an AD/CVD bond
or security in new shipper reviews.21
Proposed paragraph (e) would also
clarify that, when a new shipper review
is initiated, Commerce will direct CBP
to suspend or continue to suspend
liquidation of any relevant unliquidated
entry of subject merchandise at the
applicable cash deposit rate.
Proposed revisions to paragraph (f)
would expand on Commerce’s ability to
rescind new shipper reviews, in whole
or in part, where a producer or exporter
timely withdraws its request for a new
shipper review, or where Commerce
determines there is an absence of entry
or sale to an unaffiliated customer.
Proposed new paragraph (f)(3) would
20 See
SAA at 816.
§ 433, 130 Stat. at 171; see also H.R. Rep.
No. 114–376 at 192–193.
21 See
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provide that Commerce likewise may
rescind a new shipper review, in whole
or in part, where (1) information that
Commerce considers necessary to
conduct a bona fide sales analysis is not
on the record, or (2) the producer or
exporter at issue has failed to
demonstrate, to the satisfaction of
Commerce, the existence of a bona fide
sale to an unaffiliated customer. This
new provision would be consistent with
Commerce’s existing practice in both
new shipper reviews and administrative
reviews, that Commerce cannot conduct
a review where there is no bona fide
sale.22 This would also clarify that
Commerce has the option to rescind
where the information required for its
analysis is missing. However, nothing in
this provision is intended to preclude
Commerce from completing the new
shipper review by applying the
provision governing facts available in
section 776 of the Act where necessary.
Commerce proposes no changes to
paragraphs (g)–(j), and current
paragraphs (k) and (l) would be relettered to (l) and (m), respectively.
Further, re-lettered paragraph (l)
contains minor formatting amendments
and also removes reference to the
posting of an AD/CVD-specific bond or
security in lieu of an AD/CVD cash
deposit pursuant to the changes in
paragraph (e) discussed above.
Lastly, proposed paragraph (k) would
clarify the factors Commerce will
consider in making a bona fide sale
determination. This paragraph would
explain that Commerce shall consider
the enumerated factors in section
751(a)(2)(B)(iv) and identifies, for
purposes of section 751(a)(2)(B)(iv)(VII)
of the Act, the additional factors that
Commerce shall consider in
determining whether the examined sale
is typical, or not, of any future sales by
the new shipper. These additional
factors include whether the parties in
the transaction were established for
purposes of the sale(s) in question after
the imposition of the order, whether the
parties have other lines of business
unrelated to the subject merchandise,
whether there is an established history
of duty evasion with respect to new
shipper reviews under the order or
circumvention in the same or similar
industry, the quantity of sales, and any
other factor which Commerce
determines to be relevant with respect
to the future selling behavior of the
producer or exporter, including any
other indicia that the sale was not
commercially viable. These additional
22 See, e.g., Haixing Jingmei Chem. Prods. Sales
Co. v. United States, 357 F. Supp. 3d 1337, 1351
(Ct. Int’l Trade 2018).
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factors would aid Commerce in
developing a consistent practice of
evaluating typical behavior of the new
shipper. Additionally, we believe this
proposal reflects Commerce’s past
twenty years of practice in this area, and
would address the concerns regarding
circumvention, duty evasion, and abuse
of procedures expressed by Congress in
adopting the 2016 amendments to the
new shipper review statute.
Scope—Section 351.225
Upon issuance of an AD or CVD
order, the Act requires Commerce to
provide a description of the class or
kind of merchandise subject to the order
at issue (i.e., subject merchandise).23
That description is known as the scope
of the AD/CVD order. Because the
statute ‘‘does not require Commerce to
define the class or kind of foreign
merchandise in any particular
manner{,} Commerce has the authority
to fill that gap and define the scope of
an order consistent with the
countervailing duty and antidumping
duty laws.’’ 24 Further, ‘‘under the
statutory scheme, Commerce owes
deference to the intent of the proposed
scope of an antidumping investigation
as expressed in an antidumping
petition.’’ 25 Thus, Commerce retains
considerable discretion to define the
scope of the order to ensure that all
imports causing injury have been
addressed, and, additionally, may take
into account potential circumvention
and duty evasion concerns in crafting
the scope language.26
After issuance of an AD/CVD order,
Commerce directs CBP to ‘‘suspend
liquidation’’ and collect cash deposits,
or estimated amounts of duties, on
appropriate entries subject to the scope
of the order corresponding to the
margins of dumping established under
an AD order and the countervailable
duty rates established under a CVD
order.27 On a yearly basis, interested
parties may request that Commerce
conduct an administrative review to
determine the appropriate dumping
margin or CVD rate for entries subject to
23 See section 706(a)(2) of the Act; section
736(a)(2) of the Act; section 771(25) of the Act.
24 See Canadian Solar, Inc. v. United States, 918
F.3d 909, 917 (Fed. Cir. 2019) (internal citations
and punctuation omitted) (Canadian Solar).
25 Ad Hoc Shrimp Trade Action Committee v.
United States, 637 F. Supp. 2d 1166, 1174 (CIT
2009).
26 See Canadian Solar, 918 F.3d at 921–22 (‘‘It is
unnecessary for Commerce to engage in a game of
whack-a-mole when it may reasonably define the
class or kind of merchandise in a single set of
orders, and within the context of a single set of
investigations, to include all imports causing
injury.’’).
27 See generally section 706 of the Act; section
736 of the Act. See also 19 CFR 351.211.
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the order during the previous review
year.28 Commerce directs CBP to ‘‘lift
suspension of liquidation’’ and assess
final duties according to Commerce’s
administrative review procedures.29
Under this dual statutory framework,
Commerce is the agency charged with
establishing and interpreting the scope
of AD/CVD orders,30 and CBP is the
agency charged with applying and
enforcing the AD/CVD orders by—upon
instruction from Commerce—collecting
appropriate cash deposits and assessing
final duties on appropriate entries of
merchandise into the United States
covered by the scope of an order.31 As
part of its statutory responsibility ‘‘to fix
the amount of duty owed on imported
goods{,}’’ CBP ‘‘is both empowered and
obligated to determine in the first
instance whether goods are subject to
existing {AD/CVD orders}.’’ 32 Pursuant
to 19 U.S.C. 1514(b) (section 514 of the
Act), this ‘‘determination is then ‘final
and conclusive’ unless an interested
party seeks a scope ruling from
Commerce (which ruling would then be
reviewable pursuant to {19 U.S.C.
1516a}).’’ 33
28 See
section 751(a)(1) of the Act.
19 CFR 351.212–213.
30 See Xerox Corp. v. United States, 289 F.3d 792,
795 (Fed. Cir. 2002) (‘‘Commerce should in the first
instance decide whether an antidumping order
covers particular products, because the order’s
meaning and scope are issues particularly within
the expertise of that agency.’’) (internal citations
and punctuation omitted).
31 See Sunpreme Inc. v. United States, 892 F.3d
1186, 1188 (Fed. Cir. 2018) (Sunpreme I). In
Sunpreme I, the CAFC held that a party cannot
invoke the CIT’s jurisdiction under 28 U.S.C.
1581(i) to challenge CBP’s decision to apply an AD/
CVD order to the party’s merchandise where the
party had an available remedy by seeking a scope
ruling from Commerce, which subsequently could
have been challenged under 28 U.S.C. 1581(c). Id.
at 1192–94. In Sunpreme Inc. v. United States, 924
F.3d 1198 (Fed. Cir. 2019) (Sunpreme II), the CAFC
upheld Commerce’s affirmative scope ruling,
however, a divided panel found that CBP had
exceeded its authority when it suspended
liquidation based on its interpretation of ambiguous
scope language prior to Commerce’s scope ruling,
and, therefore, Commerce could not lawfully order
the continuation of suspension of liquidation prior
to the initiation of Commerce’s scope inquiry. See
924 F.3d at 1212–15. In Sunpreme Inc. v. United
States, 946 F.3d 1300 (Fed. Cir. 2020) (Sunpreme
III), the CAFC vacated Sunpreme II in part and held
that ‘‘it is within Customs’{} authority to
preliminarily suspend liquidation of goods based
on an ambiguous {AD or CVD} order, such that the
suspension may be continued following a scope
inquiry by Commerce.’’ 946 F.3d at 1303.
32 See Sunpreme III, 946 F.3d at 1317 (citing 19
U.S.C. 1500(c); Section 500(c) of the Act).
33 See TR International Trading Co. v. United
States, Ct. No. 19–00022, Slip Op. 20–34 at *7 (CIT
Mar. 16, 2020) (citing Sunpreme III, 946 F.3d at
1318) (TR International) (appeal pending)
(referencing section 516 of the Act); see also Fujitsu
Ten Corp. v. United States, 957 F. Supp. 245, 248
(CIT 1997) (‘‘The statute recognizes Customs makes
the initial determination that an existing
antidumping order applies to a specific entry of
29 See
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Furthermore, each agency has its own
authority to ensure the effectiveness of
the trade remedy laws in accordance
with its statutory mandate. Congress,
and the courts, have long recognized
that Commerce has the vested authority
to administer the trade remedy laws in
accordance with their intent, and has
the discretion to take appropriate
enforcement measures to ensure the
effectiveness of its AD/CVD orders by
preventing duty evasion and
circumvention.34 As discussed below,
Commerce has several existing
mechanisms to ensure effective
enforcement of its AD/CVD orders,
while CBP has its own authority to
conduct civil administrative
investigations of duty evasion of AD/
CVD orders, including as provided for
in section 517 of the Act.35 In exercising
their separate authorities, Commerce
and CBP frequently work together to
ensure the effectiveness of the trade
remedy laws. In this proposed rule,
Commerce has taken additional steps to
ensure that it continues to exercise its
authority to administer the AD/CVD
laws, in cooperation with CBP, and in
accordance with its mandate to prevent
duty evasion and circumvention.
Because the scope of an AD/CVD
order is written in general terms,
questions may arise as to whether a
certain product is within the scope, and
therefore covered by the order. In such
cases, Commerce’s existing regulation,
section 351.225, describes the
applicable procedures and standards
concerning ‘‘scope rulings’’ that
Commerce will issue upon application
of an interested party, or by initiating a
‘‘scope inquiry.’’ Additionally, section
351.225 provides procedures concerning
circumvention proceedings conducted
pursuant to section 781 of the Act.
Under these provisions, Commerce may
merchandise. The statute states that such a decision
is ‘final and conclusive’ unless it is appealed by
petition to Commerce.’’ (citations omitted)).
34 See generally section 781 of the Act; SAA at
892–95; Tung Mung Development Co., Ltd. v.
United States, 219 F. Supp. 2d 1333, 1343 (CIT
2002) (Tung Mung) (‘‘Commerce has a duty to avoid
the evasion of antidumping duties. {Commerce}
‘has been vested with authority to administer the
antidumping laws in accordance with the
legislative intent. To this end, {Commerce} has a
certain amount of discretion {to act} . . . with the
purpose in mind of preventing the intentional
evasion or circumvention of the antidumping duty
law.’ ’’) (quoting Mitsubishi Elec. Corp. v. United
States, 700 F. Supp. 538, 555 (CIT 1988) (Mitsubishi
I), aff’d 898 F.2d 1577, 1583 (Fed. Cir. 1990)
(Mitsubishi II)). See also Torrington Co. v. United
States, 745 F. Supp. 718, 721 (CIT 1990), aff’d 938
F.2d 1276 (Fed. Cir. 1991).
35 Additionally, Homeland Security
Investigations (HSI), at the Department of
Homeland Security, has the authority to investigate
criminal violations related to illegal evasion of
payment of required duties, including payment of
AD/CV duties. See, e.g., 18 U.S.C. 542.
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determine that certain products are
circumventing existing AD/CVD orders,
and thus lawfully may be considered
within the scope of the order(s), even
when the products do not fall within the
literal scope language.36 Commerce
proposes to revise section 351.225 in its
entirety to clarify and improve
Commerce’s procedures and standards
related to scope matters which have
evolved since Commerce’s current scope
regulations were issued in 1997.37 As
discussed further below, Commerce
proposes to adopt new section 351.226
to address circumvention matters.
We propose revising paragraph (a) to
set forth the general purpose and rules
which govern scope proceedings. This is
distinguished from the current
paragraph (a), which governs both scope
proceedings and circumvention
proceedings. Commerce is now
proposing that circumvention
proceedings under section 781 of the
Act be covered by a new regulation,
proposed section 351.226. An additional
significant change in this proposed rule,
which would be codified in proposed
paragraph (a) and throughout revised
section 351.225, eliminates the
distinction between a simpler, or
informal, scope ruling procedure (i.e., a
ruling based upon the application) and
a formal scope inquiry. This is
discussed in further detail below.
Proposed paragraph (a) also explains
that, unless otherwise specified in
revised section 351.225, Commerce’s
existing procedures contained in
subpart C (i.e., relating to factual
information (sections 351.102(b)(21) and
351.301) and the extension of time
limits (section 351.302)) apply to scope
inquiries.
Additionally, regarding the term
‘‘clarify’’ in current paragraph (a), the
courts have used this term to try to draw
36 See Target Corp. v. United States, 609 F.3d
1352, 1355 (Fed. Cir. 2010).
37 See 1996 Proposed Rule, 61 FR at 7321–22;
1997 Final Rule, 62 FR at 27327–30. Section
351.225 in its current form adopted many of the
existing procedures from the preceding regulations,
sections 353.29 and 355.29, which were issued in
1990. See 1996 Proposed Rule, 61 FR at 7321
(‘‘With a few exceptions, section 351.225 is
substantively unchanged from existing §§ 353.29
and 355.29{.}’’); see also Antidumping and
Countervailing Duties, Interim Final Rule, 55 FR
9046 (March 9, 1990) (1990 Interim Final Rule) (‘‘To
implement section 781 of the Act (as added by
section 1321 of {the Omnibus Trade and
Competitiveness Act of 1988}), new §§ 353.29 and
355.29 establish procedures for the Secretary to
conduct inquiries to determine whether
merchandise is included within the scope of an
existing antidumping or countervailing duty finding
or order. The procedures apply to all scope
determinations, including those under section 781
of the Act. In applying these procedures to scope
determinations other than those under section 781,
{Commerce} is codifying existing practice.’’).
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a distinction between scope language
which is ‘‘unambiguous’’ and therefore
does not require ‘‘clarification’’ under
the section 351.225 procedures, and
scope language which is ‘‘ambiguous’’
and does require such ‘‘clarification.’’ In
practice, the procedures under section
351.225 are intended to cover a wide
variety of scope questions and are not
intended to be restrictive to only those
scenarios in which certain language in
the scope requires ‘‘clarification.’’
Therefore, we have removed the term
‘‘clarify’’ from proposed paragraph (a).
Additionally, proposed paragraph (a)
explains that a scope ruling that a
product is within the scope of the order
is a determination that the product has
always been within the scope of the
order. As explained further below in the
discussion of proposed section
351.225(l), the fact that an importer did
not declare merchandise as subject to an
AD and/or CVD order for a period of
time before Commerce issued a scope
ruling finding that such merchandise
was covered does not justify treating
entries that preceded that scope ruling
as non-subject merchandise.
Accordingly, scope rulings will be
applied to all unliquidated entries of
subject merchandise, as discussed
further below.
Furthermore, the procedures under
section 351.225 are not intended to be
the only means by which Commerce
may address scope questions that arise
in its proceedings. The language in
paragraph (b) in the current version of
section 351.225, which states that
Commerce ‘‘will’’ initiate a scope
inquiry if certain information is
available, also has raised questions
about the agency’s authority to address
scope questions outside the section
351.225 procedures. For example,
Commerce has the existing authority to
address scope issues in the context of
another segment of the proceeding
under the AD and/or CVD order, such
as an administrative review or
circumvention inquiry. Over time, there
have been questions about Commerce’s
discretion to self-initiate a scope inquiry
under the current regulation when an
interested party raises the possibility
that its product is not covered by an
order during the course of an
administrative review under section
751(a) of the Act. Commerce has always
argued that it has such authority under
current laws and regulations. This issue
would be addressed by revised
paragraphs (b) and (i). In particular,
revised paragraph (b) would clarify that
Commerce ‘‘may’’ self-initiate a scope
inquiry, if it believes such initiation is
warranted; revised paragraph (i)(1)
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would allow Commerce to address
scope questions in another segment of
the proceeding, such as an
administrative review under section
351.213, a circumvention inquiry under
new section 351.226, or a covered
merchandise referral under new section
351.227, without separately having to
initiate a scope inquiry under section
351.225. To be clear, Commerce would
retain discretion to determine if selfinitiation is warranted under section
351.225(b) or to address scope questions
outside the context of a scope inquiry.
Moreover, the onus would remain on
parties who wish to raise scope
questions in another segment of a
proceeding, such as an administrative
review under section 351.213, to
provide Commerce with the relevant
information needed to address such
matters (i.e., by submitting a scope
application and supporting information
as provided in paragraph (c)).
Paragraph (c) addresses the
information needed for interested
parties 38 to file a scope ruling
application. Domestic industries,
foreign exporters, foreign producers,
importers, and those considering
exporting or importing merchandise to
the United States all have different
interests in Commerce making scope
rulings on particular merchandise. This
paragraph proposes certain amendments
to address specific concerns which
Commerce has identified with the
current scope inquiry process. One
concern is that scope ruling requests do
not always include the requisite
sufficient description and supporting
information necessary for Commerce to
complete an analysis. This has resulted
in Commerce issuing numerous requests
for further clarification and supporting
evidence, which have further delayed
its proceedings. Commerce has
determined that one way to make this
less pervasive is to require parties to fill
out and file a standardized scope ruling
38 The term ‘‘interested party’’ is defined in
section 771(9) of the Act, and pertains, for example,
to ‘‘foreign manufacturers,’’ ‘‘producers,’’
‘‘exporters,’’ or ‘‘United States importers’’ ‘‘of
subject merchandise.’’ However, the nature of a
scope ruling is to determine whether the
merchandise produced, imported by, or exported by
a party is ‘‘subject’’ to an AD or CVD order. Thus,
in many cases, the question of whether a party is
an ‘‘interested party’’ is tied to the question of
whether the merchandise at issue is determined to
be subject merchandise or not. Accordingly, for
purposes of these scope regulations, reference to the
term ‘‘interested party’’ includes a party that
potentially meets the definition of ‘‘interested
party’’ under section 771(9) of the Act, depending
upon the outcome of the scope inquiry. This
clarification of the term ‘‘interested party’’ for
purposes of this regulation is in no way intended
to negate the requirement that the product is, or has
been, in actual production as of the filing of the
scope ruling application, as discussed below.
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application which would be available to
parties on Commerce’s website. Revised
paragraph (c)(2) would list the
information required which should be
contained in the scope ruling
application. It is understood that
interested parties requesting a scope
ruling may not have access to all of the
information that would be requested.
For example, a domestic interested
party seeking a scope ruling on a
product will not be likely to provide the
narrative history of the production of
the product at issue, including a history
of earlier versions of the product, if this
is not the first model of the product. For
this reason, the regulation would
require that the requested information
in the scope ruling application be
provided to the extent reasonably
available to the requestor. The applicant
would have to explain the reason it does
not have certain requested information
when filling out the scope ruling
application, and Commerce would
retain the ability to both ask
supplemental questions about those
explanations if necessary, as well as
reject a scope ruling application if the
information and explanations provided
are insufficient.
The use of the term ‘‘particular
product’’ in the current text of
paragraphs (a) and (c) of section 351.225
has also generated questions over time.
In practice, Commerce issues scope
rulings, which generally apply to a
particular interested party’s product,
relying on the description provided by
the interested party. Sometimes the
description of the product does not lend
itself to a broader ruling that applies to
all similar products (for instance, the
description of the product is specific to
a party’s specific description, product
number, contract, packaging, or
manufacturing process, etc.). To address
these concerns, proposed revisions to
paragraph (c)(2)(ii) would require
parties submitting scope ruling
applications to provide a concise public
description of the product at issue. It is
Commerce’s intent that the description
used throughout the scope inquiry and
in the final scope ruling will reflect the
‘‘particular product’’ at issue—thereby
enabling the public and CBP to more
easily identify the product at issue.
Proposed revisions to paragraph
(c)(2)(v) would also mandate that, in
requesting a scope ruling on
merchandise which has already been
imported into the United States as of the
filing of the scope ruling application, to
the extent reasonably available, an
applicant must provide a statement as to
whether an entry of the product has
been classified as subject to an AD/CVD
order by the filer or reclassified as
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subject to an AD/CVD order by CBP
along with documentation, including
print-outs of the CBP ACE entry
summary information, identifying the
product upon importation and other
related commercial documents.
Additionally, proposed paragraph
(c)(1) provides that the applicant must
demonstrate that the product is or has
been in actual production as of the filing
of the scope ruling application.39 It is
Commerce’s expectation that a party
will be able to satisfy this requirement
by providing the requisite information
under proposed paragraphs (c)(2)(iii),
concerning a narrative of the production
history, and (c)(2)(iv), concerning the
volume of annual production of the
product for the most recently completed
fiscal year.
Another procedural matter that has
arisen is a party’s reference to prior
agency scope rulings and
determinations in scope requests
without the placement of those scope
rulings, or the full source document, on
the record of the segment of the
administrative proceeding. Those
determinations, along with any other
relevant source document supporting
the party’s position, such as the petition
or relevant documents from the
underlying investigation, must be
placed on the record for Commerce to be
able to consider them as part of its
analysis. Accordingly, paragraph
(c)(2)(viii) would also require that full
copies of relevant prior determinations
by the Secretary (including scope
rulings) and relevant excerpts of other
documents identified in paragraph (k)(1)
be placed on the administrative record
if cited by an applicant for support of its
arguments.
Additional changes under paragraphs
(c), (d), and (e) deal with the distinction
between an informal scope ruling
procedure and a formal scope inquiry
procedure. In the context of its scope
ruling practice, there is a 45-day
deadline for Commerce to either (A)
issue a scope ruling based upon the
scope ruling application and
descriptions of the merchandise listed
under paragraph (k)(1) pursuant to
current paragraphs (c)(2) and (d), or (B)
initiate a formal inquiry pursuant to
current paragraph (e), which Commerce
39 See Antidumping and Countervailing Duty
Proceedings: Documents Submission Procedures;
APO Procedures, 73 FR 3634, 3639 (January 22,
2008) (‘‘{Commerce’s} practice is to issue a scope
ruling or conduct a scope inquiry when the party
requesting the ruling can show that the specific
product in question is actually in production. The
product need not be imported into the United States
so long as the requestor can show evidence that the
product is in production. {Commerce} will not
issue a scope ruling or conduct a scope inquiry on
a purely hypothetical product.’’).
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adopted in the 1997 rulemaking.40 This
was initially intended to streamline the
process and expedite review of certain,
less complex scope issues, but in
Commerce’s experience this has not
been the case. Instead, it has led to
unnecessary delay and questions on the
part of outside parties. For example, in
this 45-day window, Commerce often
solicits and receives new factual
information and comments from
numerous parties, leaving little time to
consider the evidence and argument,
and reach a well-reasoned decision
within the time allotted. Frequently,
Commerce must extend this deadline at
least once before ultimately determining
to formally initiate a scope inquiry (at
which point, a new round of comments
is triggered pursuant to paragraph (f),
further delaying Commerce’s decision).
This has also led to questions from
parties as to whether a decision to
formally initiate a scope inquiry is a
reflection of the difficulty of the issue,
thus warranting analysis of the
additional factors under paragraph
(k)(2). Instead, a decision to formally
initiate is often the result of the limited
window in which Commerce has to
consider the evidence and comments
and reach a well-reasoned decision,
even where the issue itself is neither
complex nor controversial.
Thus, one change in these proposed
regulations is that there would no longer
be a distinction between an informal
scope ruling procedure and a formal
scope inquiry procedure, as the
distinction between those two
procedures sometimes causes confusion
and adds unnecessary delay to the
proceedings. Proposed paragraph (d),
once a scope ruling application has been
filed and appropriately served on all
necessary parties, would allow
Commerce 30 days to determine
whether to accept or reject the scope
ruling application. If Commerce
determines that the scope ruling
application is deficient or otherwise
unacceptable, Commerce could reject it
with an explanation. The applicant may
correct the problems and refile the
scope ruling application, restarting the
regulatory deadlines. On the other hand,
if Commerce does not reject the scope
ruling application, then after 31 days, a
scope inquiry would be deemed
initiated. At that point, Commerce
cannot reject the scope ruling
application for deficiencies, but could
40 See 1996 Proposed Rule, 61 FR at 7321–22;
1997 Final Rule, 62 FR at 27327–30. These
procedures clarified Commerce’s existing practice
as codified in sections 353.29 and 355.29, adopted
in the 1990 rulemaking. See 1990 Interim Final
Rule, 55 FR at 9046.
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demand supplemental information if
necessary.
On a related matter, revised section
351.225 would provide that all scope
rulings be issued pursuant to a scope
inquiry consistent with this regulatory
provision, with certain exceptions. For
example, Commerce recognizes that
there may be instances in which
Commerce has already expressly
considered the product at issue, and
thus a new scope inquiry is not
necessary to address the issue. In such
instances, new paragraph (m)(1)
discussed below would allow for
Commerce to notify parties that it is
applying a prior scope ruling to
products with the identical physical
description from the same country of
origin. It is Commerce’s intent that this
notification would serve in place of a
final scope ruling under new paragraph
(h), but the requirements of paragraph
(h) would still apply. As another
example, as noted above and discussed
further below, under proposed
paragraph (i), Commerce would be able
to address scope questions in the
context of another segment of the
proceeding, as a means of preserving
departmental resources. Additionally,
under revised paragraph (f)(6) discussed
below, Commerce would be able to
rescind a scope inquiry under
appropriate circumstances.
Proposed revisions to paragraph (e)
would provide new deadlines for scope
inquiries. The current provision
indicates that informal scope rulings
based upon the application under the
current version of § 351.225(d) would be
completed within 45 days of receipt of
a scope ruling application. But years of
experience have shown Commerce that
this is a difficult and frequently
unworkable deadline, for the reasons
discussed above. Accordingly, the
proposed deadlines are timed off the
initiation of the scope inquiry, with
most scope inquiries being completed
within 120 days (which is consistent
with current paragraph (f)(5) of
§ 351.225). If good cause exists,
however, such as the need for further
information on the record, or the
issuance of a preliminary scope ruling,
Commerce would have the authority
under proposed paragraph (e)(2) to
extend the deadline an additional 180
days, up to 300 days—similar to the
deadlines allowed for circumvention
inquiries under section 781(f) of the Act.
Proposed revisions to paragraph (f)
would clarify certain procedures for
scope inquiries. As an initial matter, as
noted above, proposed paragraph (a)
explains that, unless otherwise specified
in proposed section 351.225,
Commerce’s existing procedures
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contained in subpart C apply to scope
inquiries. Proposed paragraph (f)
therefore identifies procedures which
otherwise deviate from subpart C,
including the deadlines for parties to
comment and submit new factual
information regarding Commerce’s selfinitiation of a scope inquiry under
paragraph (b) and a scope ruling
application. These deadlines would
generally maintain the deadlines of
current paragraph (f) (i.e., 20/10 day
comment/rebuttal periods).
Additionally, proposed paragraph (f)
would maintain Commerce’s ability to
issue questionnaires and conduct
verifications, as appropriate, as well as
its discretion to limit the number of
respondents in a scope inquiry, if
warranted. However, proposed
paragraph (f)(4) would also establish
deadlines regarding comments and
rebuttal comments after a preliminary
scope ruling under proposed paragraph
(g) if the preliminary scope ruling is not
issued concurrently with the initiation
of the scope inquiry. These deadlines
would be reduced from 20 to 10 days
and 10 to 5 days, respectively.
Proposed paragraph (f)(5) would
provide Commerce with the ability to
establish alternative procedures if the
preliminary scope ruling issued under
proposed paragraph (g) is issued
concurrently with the initiation of the
scope inquiry.41 Additionally, proposed
paragraph (f)(6) would allow Commerce
to maintain the discretion to rescind a
scope inquiry, as appropriate.
Commerce intends to exercise this
discretion as a means of preserving
departmental resources, for example, in
instances in which a scope matter may
be better addressed in another segment
of a proceeding (see revised paragraph
(i)(1)) or instances in which a new scope
inquiry or scope ruling is unnecessary
because of a related or prior scope
ruling (see revised paragraph (m)). In
addition, Commerce may rescind a
scope inquiry, for example, if an
interested party has failed to provide
information necessary for Commerce to
issue a scope ruling.42 Finally, proposed
paragraph (f)(7) would continue to
provide Commerce with the discretion
to consider extension requests and alter
the comment deadlines during the scope
inquiry, as appropriate.
Proposed revisions to paragraph (g)
address the potential issuance of a
41 To be clear, Commerce already has the
authority under existing regulations to issue a
preliminary scope ruling concurrently with
initiation.
42 Commerce also maintains the discretion to
apply facts available pursuant to section 776 of the
Act, as appropriate, rather than rescind a scope
inquiry.
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preliminary scope ruling and mostly
tracks paragraph (f)(3) of the current
regulation, with some exceptions. Under
current paragraph (f)(3), whenever
Commerce determines that a scope
inquiry presents an issue of significant
difficulty, Commerce will issue a
preliminary scope ruling, based upon
the available information at the time, as
to whether there is a reasonable basis to
believe or suspect that the product is
covered by the scope. Under proposed
paragraph (g), Commerce would,
pursuant to the same ‘‘reasonable basis
to believe or suspect’’ standard,
maintain the discretion to issue a
preliminary scope ruling, but Commerce
need not consider whether the inquiry
presents an issue of significant
difficulty. Similar to existing paragraph
(g), proposed paragraph (g) would allow
Commerce to issue a preliminary scope
ruling, based on available information at
the time, as to whether there is a
reasonable basis to believe or suspect
that the product is covered by the scope
of the order. Further, proposed
paragraph (g) would maintain
Commerce’s discretion to issue a
preliminary scope ruling at the same
time Commerce initiates a scope
inquiry. This could be done, for
example, if the scope question before
Commerce previously has been
addressed by Commerce, or Commerce
finds the issue to be relatively
straightforward. In determining whether
to issue a preliminary scope ruling,
Commerce may consider the complexity
of the issues and the arguments raised
by parties.
It is worth noting that, in accordance
with proposed paragraph (n)(4), if
Commerce issues a preliminary scope
ruling, it would no longer be required to
notify all parties on the scope service
list of that preliminary ruling. Instead,
only parties who are on the segmentspecific public service list or the APO
service list (see § 351.103(d)), as
applicable, would receive notice of the
preliminary scope ruling, as with any
other document that is placed on the
record by the agency, through
Commerce’s Antidumping and
Countervailing Duty Centralized
Electronic Service System (ACCESS)
system.
Proposed revisions to paragraph (h)
largely follow paragraph (f)(4) of the
current regulation concerning the
issuance of final scope rulings, with a
few exceptions. Significantly, proposed
paragraph (h) provides that Commerce
would ‘‘convey’’ the final scope ruling
in accordance with the requirements of
section 516A(a)(2)(A)(ii) of the Act,
which states that judicial review of
‘‘class or kind’’ determinations under
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section 516A(a)(2)(B)(vi) of the Act,
such as scope rulings, are based off of
the date of mailing of such
determination. Section 516A(a)(2)(A)(ii)
of the Act further provides that only ‘‘an
interested party who is a party to the
proceeding’’ may commence judicial
review procedures. Therefore,
Commerce proposes to convey the final
scope ruling in the manner prescribed
by section 516A(a)(2)(A)(ii) of the Act to
interested parties who are parties to the
proceeding (see § 351.102(b)(36)),
because these are the only parties that
have legal standing to appeal the final
scope ruling under section
516A(a)(2)(A)(ii) of the Act. However, as
noted above, as with any other
document that is placed on the record
by the agency, all parties on the
segment-specific service lists will be
notified of the final scope ruling
through Commerce’s electronic ACCESS
system.
Additionally, paragraph (h) states that
Commerce will ‘‘promptly’’ convey the
scope ruling to all parties to the
proceeding. The use of this term is
consistent with the use of the same term
in new §§ 351.226 and 227. It is
Commerce’s expectation that prompt
conveyance of the scope ruling normally
would occur no more than 5 business
days from the issuance of the final scope
ruling. Consistent with sections
516A(a)(2)(A)(ii) and (B)(vi) of the Act,
judicial review procedures would be
commenced based on the date of
conveyance, as opposed to the date of
receipt, of a scope ruling.
As noted above, proposed paragraph
(i) would clarify the interaction between
scope inquiries and other segments of
the proceeding and would replace
paragraphs (f)(6) and (l)(4). These
revisions acknowledge Commerce’s
discretion to determine after reviewing
all of the information on the record, on
a case-by-case basis, the most efficient
means of addressing a scope question in
an effort to preserve departmental
resources. For example, Commerce
would be able to address scope
questions in another segment of a
proceeding, such as an administrative
review under § 351.213, a
circumvention inquiry under new
§ 351.226, or a covered merchandise
inquiry under new § 351.227, without
invoking the § 351.225 procedures;
conduct a scope inquiry under § 351.225
in addition to another segment of the
proceeding; or align the deadlines,
maintaining them as separate segments
of the proceeding. Further, under
revised paragraph (i)(3), during the
pendency of a scope inquiry or upon
issuance of a final scope ruling,
Commerce could consider the products
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subject to the scope inquiry in an
ongoing administrative review, as
appropriate (i.e., if sufficient time
remains in the administrative review to
collect and analyze such information),
although it would not be required to do
so.
Proposed revisions to paragraphs (j)
and (k) address the substance of
Commerce’s scope ruling
determinations. Aside from the
description of the merchandise subject
to the scope of an order, an essential
element in determining whether a
product is covered by an order is the
country of origin of the product at issue.
Therefore, proposed paragraph (j) would
codify Commerce’s longstanding
‘‘substantial transformation’’ test or
analysis, which is used to determine the
country of origin of a product or
products.43 In particular, Commerce
generally uses a substantial
transformation analysis to determine
whether a product’s country of origin
has changed as a result of processing
that occurs in third countries before a
product is imported into the United
States. The courts have upheld
Commerce’s substantial transformation
analysis,44 which has, in different
iterations, looked at factors such as
whether the processed downstream
product is a different class or kind of
merchandise than the upstream product;
the technical, physical, and chemical
characteristics of the product and its
parts; the intended end-use of the
product; the cost of production and
value added to the product as a result
of further processing in third countries;
the nature and sophistication of
processing in third countries; the level
of investment in third countries; and
where the essential component of the
product is produced or where the
essential characteristics of the product
are imparted. In addition, Commerce
has considered other relevant casespecific factors in applying its
substantial transformation analysis
when necessary.
Additionally, Commerce continues to
recognize that, in addressing country of
origin issues in the context of
43 See Bell Supply Company, LLC v. United
States, 888 F.3d 1222, 1228–29 (Fed. Cir. 2018) (‘‘A
substantial transformation occurs where, ‘as a result
of manufacturing or processing steps . . . {,} the
{product} loses its identity and is transformed into
a new product having a new name, character and
use.’ ’’) (internal citations omitted).
44 See E.I. DuPont de Nemours & Co. v. United
States, 8 F. Supp. 2d 854, 858 (CIT 1998) (‘‘The
‘substantial transformation’ rule provides a
yardstick for determining whether the processes
performed on merchandise in a country are of such
significance as to require the resulting merchandise
to be considered the product of the country in
which the transformation occurred.’’).
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Commerce proceedings, Commerce is
not bound by the country of origin
determinations of other agencies, such
as CBP.45 While such determinations
may be informative, when determining
the scope of AD/CVD orders,
Commerce’s country of origin analysis is
ultimately made independently and is
based upon the information on the
record of the proceeding.
Furthermore, if for some reason the
substantial transformation test is not
appropriate for purposes of determining
the country of origin of a particular
product, Commerce would continue to
retain the ability to apply another
reasonable test to determine the country
of origin of a specific product. This
would particularly be the case where
‘‘‘rote application’ of the substantial
transformation test would be inadequate
to remedy the unfair pricing decisions
and/or unfair subsidization because it
would exclude the very imports found
to injure the domestic industry.’’ 46
Paragraph (k) of current § 351.225
describes the substantive basis for
Commerce’s scope rulings, and, as a
result, has been the source of much
litigation over the life of the regulation.
Although the U.S. Court of International
Trade (CIT) and the U.S. Court of
Appeals for the Federal Circuit (CAFC)
have generally recognized that
Commerce has ‘‘substantial freedom to
interpret and clarify’’ the scope of AD/
CVD orders through scope rulings,47 the
Courts have held that Commerce’s scope
rulings must still be issued in
accordance with the requirements of its
scope ruling regulations, and in
particular, the sequence of factors to
consider set forth in paragraph (k). In
light of Commerce’s years of experience
drafting scope rulings, and numerous
holdings of the CIT and CAFC
addressing Commerce’s scope
determinations, Commerce is proposing
that certain modifications be made to
paragraph (k). As an initial matter,
current paragraph (k) makes no specific
reference to the scope language as the
starting point for any scope analysis.
However, the CAFC has added this
initial step, sometimes referred to as a
‘‘k(0)’’ analysis.48 Recently, the CAFC
45 While the ‘‘Department may consider the
decisions of Customs, it is not obligated to follow,
nor is it bound by, the classification determinations
of Customs. . . .’’ Wirth Ltd. v. United States, 5 F.
Supp. 2d 968, 973 (CIT 1998) (‘‘Commerce, not
Customs, has authority to clarify the scope of AD/
CVD orders and findings.’’).
46 See Canadian Solar, 918 F.3d at 919.
47 Duferco Steel, Inc. v. United States, 296 F.3d
1087, 1096 (Fed. Cir. 2002) (quotation marks and
citations omitted).
48 See Meridian Prods., LLC v. United States, 851
F.3d 1375, 1381 (Fed. Cir. 2017) (‘‘No specific
statutory provision governs the interpretation of the
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clarified the legal framework required of
a scope ruling determination:
First, the plain language of an antidumping
order is paramount in determining whether
particular products are included within its
scope. If the scope is unambiguous, it
governs. In reviewing the plain language of
a duty order, Commerce must consider the
descriptions of the merchandise contained in
the petition, the initial investigation, and the
determinations of the Secretary (including
prior scope determinations) and the
Commission. Second, if the above sources do
not dispositively answer the question,
Commerce may consider the (k)(2) factors.49
Accordingly, proposed paragraph (k)
would codify this judicially created and
affirmed framework, explaining that the
primary analysis in any scope inquiry is
the language of the scope itself. Revised
paragraph (k) also explains that
Commerce may issue its scope ruling on
this basis alone if the language of the
scope, including the descriptions of
merchandise expressly excluded from
the scope, and the language of the scope
as a whole, is dispositive. Furthermore,
in light of our experience and prior
court holdings, proposed paragraph
(k)(1) indicates that, in considering the
plain language of the scope, Commerce,
at its discretion, could also consider the
underlying petition, Commerce’s
investigation, prior Commerce
determinations (including but not
limited to prior scope rulings,50
memoranda, or clarifications),51 and
scope of antidumping or countervailing orders.
Commerce has filled the statutory gap with a
regulation that sets forth a two-step test for
answering scope questions, 19 CFR 351.225(k), and
our case law has added another layer to the
inquiry.’’) (internal citations and punctuation
omitted).
49 Meridian Prods., LLC v. United States, 890 F.3d
1272, 1277–78 (Fed. Cir. 2018) (Meridian) (internal
citations and punctuation omitted).
50 This is not limited to Commerce’s scope rulings
within the same order, and Commerce may consider
its analysis of the same or similar scope language
used in other orders.
51 Scope clarifications are not defined in the
statute or regulation. Scope clarifications are
sometimes issued during an ongoing investigation
if arguments or information pertaining to the scope
of an investigation comes to Commerce’s attention
following the issuance of a scope memorandum and
Commerce determines that it is necessary to place
a clarification on the administrative record to
address those scope claims. Scope clarifications
also may be issued after an AD/CVD order has been
in place for a period of time and Commerce has
found that multiple parties have requested scope
rulings over and over covering the same or similar
scope language. In that situation, Commerce may
issue a scope clarification addressing that particular
scope language, and then further memorialize that
clarification in the form of an interpretive footnote
to the scope of the order. Following the issuance
of a scope clarification in that context, the
interpretive footnote will normally accompany the
text of the scope itself when it is published in
Commerce’s administrative determinations and
instructions to CBP. The procedures and timetables
set forth in these regulations covering scope
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determinations of the ITC. In addition to
the (k)(1) sources, Commerce could also
consider traditional interpretive tools,
such as a dictionary and industry usage
of a particular word or phrase, or other
record evidence, to provide context and
understanding in considering the plain
language of the scope. However, in the
event of a conflict between these
interpretive tools or other record
evidence and the sources identified in
paragraph (k)(1), Commerce would
adopt the interpretation supported by
the (k)(1) sources.52
Proposed revisions to paragraph (k)(2)
would maintain that if, based on the
scope language and the factors
enumerated above, Commerce is unable
to determine whether a product is
covered by a scope, then Commerce
would consider the listed five
additional factors.53 These factors are
largely consistent with current
paragraph (k)(2), with some minor
clarifications. It is Commerce’s intent
that the first factor—the characteristics
of the product, including the technical,
physical, or chemical characteristics of
the product—may be given greater
weight than the other individual factors.
Nonetheless, Commerce should
consider each of the factors in making
its determination under paragraph
(k)(2).
Finally, proposed paragraph (k)(3)
would codify and clarify Commerce’s
analysis for certain products,
colloquially referred to as ‘‘mixed
media’’ products (i.e., subject
merchandise assembled or packaged
with non-subject merchandise), which
has been recognized by the courts.54 In
some instances, the scope language of
an order may clearly address these types
of products.55 In such cases, a ‘‘mixedinquiries and scope rulings do not apply to scope
clarifications, nor do they inhibit Commerce’s
ability or discretion to issue such scope
clarifications.
52 See Meridian, 890 F.3d at 1280–81 (overruling
a CIT decision that adopted the common and
commercial meaning and dictionary definition of a
scope term over Commerce’s interpretation in prior
scope rulings).
53 Those factors are sometimes referred to as the
Diversified Products factors because they were first
articulated in Diversified Prods. Corp. v. United
States, 572 F. Supp. 883 (CIT 1983). See Walgreen
Co. of Deerfield, IL v. United States, 620 F.3d 1350,
1355 & n.2 (Fed. Cir. 2010) (Walgreen).
54 See Mid Continent Nail Corporation v. United
States, 725 F.3d 1295, 1302–04 (Fed. Cir. 2013)
(Mid Continent Nail) (referencing the ‘‘mixedmedia’’ analysis); Walgreen, 620 F.3d at 1355–57
(same).
55 See, e.g., Aluminum Extrusions from the
People’s Republic of China: Antidumping Duty
Order, 76 FR 30650, 30651 (May 26, 2011) (‘‘The
scope includes the aluminum extrusion
components that are attached (e.g., by welding or
fasteners) to form subassemblies, i.e., partially
assembled merchandise unless imported as part of
the finished goods ‘kit’ defined further below. The
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media’’ analysis may not be necessary.
However, because scope language is
written in general terms, the language
itself may not contemplate assembled or
packaged items that contain subject
merchandise as a component. Therefore,
in conducting a scope inquiry,
Commerce may need to conduct a
‘‘mixed-media’’ analysis to determine
whether a combination of products or a
component thereof constitutes subject
merchandise. Under such situations, in
accordance with Commerce’s practice
and proposed paragraph (k)(3),
Commerce could first determine
whether the component product, if
separated from the other component
products, would be considered covered
by the scope. If the determination is that
the product would be covered by the
scope, then Commerce would conduct a
further analysis and determine if the
product is nonetheless excluded from
the scope through its inclusion in the
combined product. To determine if the
product is covered or excluded from the
scope of the order, Commerce would
consider the practicability of separating
the in-scope component for repackaging
or resale, the measurable value of the inscope component as compared to the
measurable value of the merchandise as
a whole, and the ultimate use or
function of the in-scope component
relative to the ultimate use or function
of the merchandise as a whole. If
Commerce determines that the
component product at issue is covered
by the scope of an order, but the other
components of the larger merchandise
are not covered by the scope of an order,
the value of the in-scope subject
component should be reported to CBP
for AD/CVD purposes in accordance
with CBP’s reporting requirements.
Paragraph (l) of the current regulation,
governing the suspension of liquidation
and requirement of cash deposits for
entries affected by Commerce’s scope
rulings, also has been the source of
varying interpretations and litigation
and requires revision.
As an initial matter, as discussed
above, AD and CVD orders provide the
legal basis for the suspension of
liquidation of importations of subject
merchandise that enter for consumption
on or after the date of publication of that
order, throughout the life of the order,
scope does not include the non-aluminum
extrusion components of subassemblies or subject
kits.’’); Narrow Woven Ribbons With Woven
Selvedge From Taiwan and the People’s Republic
of China: Amended Antidumping Duty Orders, 75
FR 56982, 56983 (September 17, 2010) (‘‘Narrow
woven ribbons subject to the orders may. . . be
included within a kit or set such as when packaged
with other products, including but not limited to
gift bags, gift boxes and/or other types of ribbon.’’).
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49481
and until the order is revoked.56
Further, the publication in the Federal
Register of Commerce’s preliminary and
final investigation determinations, as
well as the publication of the resulting
orders, serve as notice to producers,
exporters, and importers that their
merchandise might be covered by those
investigations and/or orders, and,
therefore, it is incumbent upon the
importing parties to (1) declare the
status of their merchandise truthfully to
CBP upon entry, or (2) seek a scope
ruling from Commerce if there is a
question as to whether the merchandise
is covered by an AD and/or CVD order.
As discussed above for proposed
paragraph (a), a scope ruling that a
product is within the scope of the order
is a determination that the product has
always been within the scope of the
order, and Commerce’s scope
regulations must reflect that
determination. Put another way, if a
party has imported merchandise and
declared that merchandise as not
covered by the scope of an order, and
then Commerce issues a scope ruling
finding that such merchandise is subject
to an order, under these proposed
regulations Commerce’s scope ruling
would apply to all unliquidated entries
of the merchandise, as discussed below.
Importing parties are already notified
through the publication in the Federal
Register of Commerce’s determinations
and/or order, and, therefore, cannot
claim ignorance or reliance on another
agency’s determinations or actions to
avoid the application of Commerce’s
scope ruling to their merchandise.
Commerce proposes to amend
paragraph (l) as necessary in light of
these considerations.
Additionally, current paragraph (l)
reflects the distinction between a formal
scope inquiry as provided under current
paragraphs (b), (e), and (f) and a final
scope ruling based on the application
under current paragraph (d) (also
referred to as an informal scope
inquiry). Although current paragraph (l)
expressly addresses suspension of
liquidation and requirement of cash
deposits under the first procedure, it is
largely silent with respect to scope
rulings based on the application—and
this silence has been the source of some
confusion and litigation. As discussed
above, we are proposing to eliminate the
distinction between these two
procedures, and, with these proposed
changes, we are proposing to adapt the
current structure of paragraph (l)
56 See Ugine & ALZ Belgium v. United States, 551
F.3d 1339, 1340–43 (Fed. Cir. 2009); Am. Power
Pull Corp. v. United States, 121 F. Supp. 3d 1296,
1300–02 (CIT 2015).
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accordingly to reflect a single scope
inquiry procedure. That is, all scope
rulings would be subject to the same
procedures under revised paragraph (l),
and there will no longer be any
distinction between formal and informal
scope inquiries (as discussed above).
Revised paragraph (l)(1) provides that
when Commerce initiates a scope
inquiry under proposed paragraphs (b)
or (d), it will notify CBP of the initiation
and direct CBP to continue the
suspension of liquidation of all
unliquidated entries of products subject
to the scope inquiry that are already
subject to the suspension of
liquidation,57 until appropriate
liquidation instructions are issued.58
Further, Commerce will direct CBP to
apply the cash deposit rate that would
be applicable if the product were
determined to be covered by the scope
of the order. These revisions are
consistent with current paragraph (l)(1)
to the extent that both call for the
suspension of liquidation and
application of cash deposits for already57 Entries may be already subject to the
suspension of liquidation under a variety of
scenarios. As recently affirmed by the CAFC and as
discussed in more detail above, CBP has
independent authority to suspend liquidation of
entries that CBP determines are within the scope of
an AD or CVD order; such determinations are ‘‘final
and conclusive’’ unless appealed to Commerce
through a request for a scope ruling. See Sunpreme
III, 946 F.3d at 1317–18. Additionally, section 517
of the Act (concerning CBP’s civil administrative
investigations of duty evasion of AD/CVD orders)
authorizes CBP to suspend liquidation of entries for
which it has reasonable suspicion, or, in the case
of final determination, substantial evidence, that
covered merchandise is entered into the United
States through evasion under section 517(e) and (d)
of the Act.
58 At the time Commerce initiates a scope inquiry,
there may be entries of products subject to the
scope inquiry that CBP has liquidated but for which
liquidation is not yet final (e.g., entries under
protest pursuant to 19 U.S.C. 1514). Consistent with
current practice and in accordance with CBP’s
statutory and regulatory authorities, Commerce
expects that CBP may stay its action on these
entries pending the outcome of the scope inquiry.
This is consistent with the CAFC’s decision in
Thyssenkrupp Steel North America, Inc. v. United
States, 886 F.3d 1215 (Fed. Cir. 2018). In
Thyssenkrupp, the CAFC recognized that
instructions revoking an antidumping duty order
superseded previously issued liquidation
instructions, as of the effective date of the
revocation, and applied to entries under protest that
entered the United States after the effective date of
the revocation. Id. at 1223–27. The CAFC explained
that this ‘‘serves the purpose of the protest
mechanism—to allow agency consideration of
issues after an initial liquidation determination—
and respects the longstanding principle . . . that
newly governing law, if retroactive to particular
events, is to be applied to those events in ordinary,
timely initiated direct-review proceedings.’’ Id. at
1224. A similar point was recognized in TR
International, Slip Op. 20–34 at *11, currently on
appeal, concerning CBP’s potential application of a
Commerce scope ruling to entries under protest.
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suspended entries to continue after
initiation of a formal scope inquiry.
However, this also deviates from
current paragraphs (l)(1) and (2), which
provide that when Commerce issues a
preliminary scope ruling finding the
product is not covered by the scope of
the AD and/or CVD order (i.e., a
‘‘negative’’ scope ruling), it will instruct
CBP to terminate suspension of
liquidation and refund all cash deposits
for already-suspended entries.
Notably, revised paragraph (l)(2)
(pertaining to preliminary scope rulings)
does not require Commerce to notify
CBP of a negative preliminary scope
ruling. In such instances, suspension of
liquidation and application of cash
deposits for already suspended entries
(if any) under revised paragraph (l)(1)
will remain in effect pending
Commerce’s subsequent issuance of a
final scope ruling and appropriate
instructions as described in revised
paragraphs (l)(3) or (4). Thus, any
suspension of liquidation prior to the
negative preliminary scope ruling will
remain in effect until the conclusion of
the scope inquiry to ensure appropriate
application of AD/CVD duties in the
event of a final scope ruling finding the
product is covered by the scope of the
AD and/or CVD order (i.e., an
‘‘affirmative’’ scope ruling). Further,
under revised paragraph (l)(4), if
Commerce issues a negative final scope
ruling that the product is not covered by
an order, and the product is not
otherwise subject to suspension as a
result of another segment of a
proceeding, such as a circumvention
inquiry under § 351.226 or a covered
merchandise inquiry under § 351.227,
for merchandise that was suspended
and for which cash deposit rates were
paid, Commerce would instruct CBP to
terminate suspension of liquidation and
refund cash deposits (if any) on entries
of this non-subject merchandise.
Paragraphs (l)(2) and (3) also have
been revised to address the
considerations highlighted above,
specifically, to ensure that the results of
affirmative scope rulings are
appropriately applied to all entries of
subject merchandise, which should be
covered by those rulings. Therefore,
under revised paragraphs (l)(2) and (3),
at the time of the first affirmative scope
ruling (preliminary or final), Commerce
will direct CBP to suspend liquidation
of all unliquidated entries of products
subject to the scope inquiry that are not
already subject to the suspension of
liquidation (and continue suspension of
liquidation for any entries already
suspended as provided under revised
paragraph (l)(1)). This action would
apply to all such entries dating back to
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the earliest suspension date under the
order, which is normally the
preliminary determination in the
underlying investigation. Further,
Commerce will direct CBP to apply the
applicable cash deposit rate to all such
entries. As provided under revised
paragraphs (l)(2) and (3), these
instructions will remain in place until
appropriate liquidation instructions are
issued pursuant to §§ 351.212 and
351.213.59
This deviates from current paragraph
(l) in certain respects. As stated above,
current paragraph (l) expressly
addresses suspension of liquidation and
requirement of cash deposits for entries
in a formal scope inquiry, but is less
clear when Commerce issues a final
scope ruling based upon the application
in an informal scope inquiry. For
instance, current paragraphs (l)(2) and
(3) provide that if Commerce issues an
affirmative preliminary or final scope
ruling pursuant to a formal scope
inquiry, then ‘‘any suspension of
liquidation’’ will continue. Where there
has been no previous suspension of
liquidation, Commerce will direct CBP
(in the event of an affirmative
preliminary or final scope ruling) to
suspend liquidation of unliquidated
entries dating back to the date of
initiation of the scope inquiry.
Current paragraph (l)(3) also provides
that if Commerce issues an affirmative
final scope ruling based on the
application, then ‘‘any suspension of
liquidation’’ will continue. However,
paragraph (l) does not expressly address
instances in which Commerce issues an
affirmative final scope ruling based
upon the application (and thus, there
has been no initiation of the scope
inquiry) and entries have not already
been suspended. Therefore, in such
instances Commerce may direct CBP to
suspend liquidation of all unliquidated
entries subject to the scope inquiry not
already subject to the suspension of
liquidation (and continue suspension of
liquidation for any entries already
suspended), and apply the applicable
cash deposit rates to such entries. This
action applies to all such entries dating
back to the earliest suspension date
59 As discussed above, consistent with current
practice and in accordance with CBP’s statutory and
regulatory authorities, CBP may stay its action on
entries of products that CBP has liquidated but for
which liquidation is not yet final pending the
outcome of a scope inquiry. Additionally, any
instructions issued by Commerce directing CBP to
‘‘lift suspension of liquidation’’ and assess duties at
the applicable AD/CVD rate would not limit CBP’s
ability to (1) suspend liquidation/assess duties/take
any other measures pursuant to CBP’s EAPA
investigation authority under section 517 of the Act
specifically, or (2) take any other action within
CBP’s or HSI’s authority with respect to AD/CVD
entries.
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under the order, which is normally the
preliminary determination in the
underlying investigation.
In short, under the current regulatory
framework, Commerce has employed
two distinct approaches for suspension
of liquidation and application of cash
deposits reflecting the different
procedures for informal and formal
scope inquiries. As Commerce proposes
to eliminate the distinction between
these different procedures, and, in light
of the considerations highlighted above,
revised paragraph (l) largely mirrors the
approach for informal scope inquiries
discussed above. Specifically, as stated
above, the proposed action under
paragraphs (l)(2) and (3) would apply to
all unliquidated entries dating back to
the earliest suspension date under the
order, which is normally the
preliminary determination in the
underlying investigation, as opposed to
the date of initiation of the scope
inquiry (i.e., the approach currently
taken in formal scope inquiries).
The reason that Commerce is
proposing to take this approach to
suspension of liquidation and
application of cash deposits is to
prevent a situation which, in the terms
of the CAFC, ‘‘would encourage
gamesmanship by importers’’ and
‘‘permit importers to potentially avoid
paying duties. . . .’’ 60 Under the
proposed approach, importers have an
incentive to seek a determination as
soon as possible whether a particular
product is subject to the scope of an
existing AD/CVD order. If they fail to do
so, then they may be liable for AD/CVD
duties if Commerce eventually
determines that the products are
covered by the scope of an existing AD/
CVD order. By contrast, the alternative
approach (i.e., the approach currently
taken in rulings based on a formal scope
inquiry) would encourage
gamesmanship, delay, and indeed, duty
evasion. Foreign producers and
exporters, as well as U.S. importers,
would understand that all entries not
already suspended prior to the date on
which Commerce initiates a scope
inquiry are essentially excused from
AD/CVD duties, even if Commerce finds
through the scope inquiry that such
duties should have applied. In turn, this
would lead parties to import as much as
possible before any request for a scope
60 Sunpreme III, 946 F.3d at 1317 and 1321. In
United Steel and Fasteners, Inc. v. United States,
947 F.3d 794 (Fed. Cir. 2020) (Fasteners), discussed
further below, the CAFC did not disagree with
Commerce’s concerns of potential ‘‘gamesmanship
and delay’’ if importers did not report their
merchandise to CBP as subject merchandise. See
Fasteners, 947 F.3d at 803 (finding narrowly that
‘‘we do not find that such gamesmanship occurred
in this case.’’)
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inquiry is filed, and then eliminate AD/
CVD duty liability for such imports by
requesting a scope inquiry. Such
manipulation of AD/CVD duty liability
would undermine the effectiveness and
remedial purpose of the AD/CVD laws.
Accordingly, Commerce proposes to
adopt the procedures discussed above.
We recognize that the CAFC recently
held that Commerce’s current
regulations did not allow for
‘‘retroactively suspending liquidation to
the issuance date’’ of the antidumping
order in that litigation, where
Commerce issued a final scope ruling
based on the application in an informal
scope inquiry.61 However, the CAFC
relied on the existing regulatory
framework that delineates between an
informal and formal scope inquiry
described above, and that Commerce is
now proposing to change in this
proposed rule.62 Therefore,
notwithstanding the CAFC’s holding in
Fasteners, Commerce is not precluded
from amending its regulations through
notice and comment procedures to
adopt the procedures discussed herein.
Additionally, to the extent the CAFC
relied on concerns in the 1997 Final
Rule regarding potential retroactive
suspension of liquidation,63 those
concerns pertained to the inconvenience
to importers and exporters if domestic
industries filed a scope request based
‘‘on nothing more’’ than a mere
‘‘allegation’’ and Commerce began
suspension of liquidation on entries not
already subject to suspension of
liquidation.64 This was in response to a
suggestion that, at the time Commerce
initiates a formal scope inquiry based on
a scope request, Commerce should
instruct CBP to suspend liquidation of
any unliquidated entries.65 However,
Commerce’s proposed regulation does
not adopt such a position. Rather,
Commerce proposes that only upon
issuance of an affirmative preliminary
or final scope ruling will Commerce
direct that any unliquidated entries
under the order (dating back to the
earliest suspension date under the
order) be suspended. This proposal is
consistent with the 1997 Final Rule
statement that ‘‘the Department will not
order the suspension of liquidation until
it makes either a preliminary or final
affirmative scope ruling, whichever
occurs first.’’ 66 The difference is that
the 1997 Final Rule as promulgated in
61 See
Fasteners, 947 F.3d at 800–03.
62 Id.
63 Id. at 802 (citing 1997 Final Rule, 62 FR at
27327–38).
64 See 1997 Final Rule, 62 FR at 27328.
65 Id., 62 FR at 27327–28.
66 Id., 62 FR at 27328.
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the current regulation imposes a ‘‘cutoff’’ of the initiation date of the scope
inquiry—the proposed regulation
removes this limitation so that any
unliquidated entries found within the
scope of the order appropriately will be
subject to duties, not just those that
entered after the initiation date.67
This exercise of Commerce’s
discretion is reasonable and balanced.
As explained above, Congress, and the
courts, have long recognized that
Commerce has the vested authority to
administer the trade remedy laws in
accordance with their intent, and has
the discretion to take appropriate
enforcement measures to ensure the
effectiveness of its AD/CVD orders by
preventing duty evasion and
circumvention.68 Further, over the last
twenty years, the United States has
faced various complications in fully
collecting AD and CVD duties from the
obligated parties.69 Although Commerce
is cognizant of the concerns raised in
the 1997 Final Rule regarding the risk of
potential unfairness to certain importers
who genuinely may not be aware that
their products are within the scope of an
order until Commerce issues a ruling,
Commerce cannot distinguish between
importers with a genuine
misunderstanding from those who (1)
have failed to do their due diligence by
reviewing Commerce scope descriptions
or past scope rulings, or (2) are aware of
their potential (or actual) AD/CVD
liability and have opted not to seek a
scope ruling or enter their merchandise
as subject to an AD/CVD order, so as to
avoid the likely application of AD/CVD
duties. On balance, Commerce has
determined that the very real risk and
concerns of duty evasion,
circumvention, and duty collection
should guide its updated regulations.
Commerce also has considered the
practical effect this change in policy
may have on importers’ liability.
Significantly, the statute generally
directs CBP to liquidate entries which
have not been declared as subject to an
AD/CVD order within one year of
entry.70 Therefore, practically speaking,
it is unlikely that once Commerce issues
67 As discussed above, consistent with current
practice and in accordance with CBP’s statutory and
regulatory authorities, CBP may stay its action on
entries of products that CBP has liquidated but for
which liquidation is not yet final pending the
outcome of a scope inquiry.
68 See generally section 781 of the Act; SAA at
892–95; Tung Mung, 219 F. Supp. 2d at 1343.
69 See, e.g., U.S. Gov’t Accountability Office,
Report to the Chairman, Committee on Finance,
U.S. Senate, GAO 16–542, Antidumping and
Countervailing Duties: CBP Action Needed to
Reduce Duty Processing Errors and Mitigate
Nonpayment Risk, at 13 (July 2016).
70 19 U.S.C. 1504(a); Section 504 of the Act.
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a preliminary or final scope ruling
finding a product covered by an AD/
CVD order that there will be any
unliquidated entries, other than those
already suspended, more than a year
old. In light of this, Commerce believes
that it has settled on a policy which will
effectuate its authority under the AD/
CVD laws, while mitigating the harm to
importers who may be acting in good
faith by importing without paying
duties. Moreover, should this change in
policy be adopted in any final rule, the
effective date of the policy change
would be 30 days after publication of
the final rule. Therefore, scope inquiries
initiated prior to this effective date
would maintain the initiation date of
the inquiry as the furthest potential
‘‘retroactive’’ date for unliquidated
entries not already suspended. That
said, given that this proposal involves
complex and technical issues, and given
that important trade enforcement
objectives are implicated, Commerce
invites public comment on revised
§ 351.225(l). We will carefully consider
all public comments before issuing a
final rule that revises the existing
regulation.
Proposed revisions to paragraph (m)
address the application of scope rulings
under two different scenarios. Paragraph
(m)(1) would clarify that if a scope
ruling application requests a scope
ruling on a product, which is physically
identical to that of another product for
which a scope ruling has already been
issued under the same order, Commerce
could apply the previous scope ruling
directly to the requested product
without conducting a new scope
inquiry. In that situation, for example,
Commerce may issue a letter to the
applicant and attach the scope ruling
upon which it has relied, making its
determination without the need of a
larger, more detailed scope ruling. In
such instances, the requirements for
issuing a final scope ruling under
paragraph (h) would apply.
Proposed paragraphs (m) and (n)
together address a problem that arises
when a scope ruling would apply
equally to companion AD and CVD
orders, which cover the same
merchandise from the same country. In
that scenario, an interested party
submitting a scope ruling application
pertaining to both orders pursuant to
paragraph (c) must file its scope ruling
application on the record of the AD
proceeding only, and serve its scope
ruling application to all parties on the
annual inquiry service list for both the
AD and CVD orders. The annual inquiry
service list and related procedures are
discussed in paragraph (n). Once
Commerce initiates the scope inquiry,
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Commerce would initiate and conduct
that inquiry pertaining to both orders
only on the record of the AD
proceeding.71 This is because
Commerce has noticed over the years
that, in certain inquiries, interested
parties have inadvertently placed
relevant information, for example, on
the AD proceeding record, but not on
the CVD proceeding record, or viceversa. Once Commerce issues a final
scope ruling on the record of the AD
proceeding, Commerce would include a
copy of that scope ruling on the record
of the CVD proceeding. By limiting the
scope inquiry only to the record of one
proceeding, the chances of incomplete
records, or confusing records being filed
with courts on appeal, should be
lessened.
Proposed revisions to paragraph (n)
addresses service requirements. The
current regulations require that any
party that has ever participated in
proceedings under an order must be
served with a scope request based on
the scope service list maintained on
Commerce’s website. However, because
some orders are decades old and the
scope service list contains dozens of
parties who have participated over the
years, the proposed regulations would
require that parties (other than the
petitioner) who wish to be served with
new scope ruling applications, under
paragraph (c), or be notified of
Commerce’s self-initiation of a scope
inquiry, under paragraph (b), would
have to take the affirmative step of filing
a request for inclusion on the annual
inquiry service list. Requests for
inclusion on the annual inquiry service
list must be filed with Commerce during
the anniversary month of the AD or CVD
order at issue, and Commerce would
update the list on an annual basis at that
time.
In addition, under proposed
paragraph (n), once a scope ruling
application is accepted by Commerce in
accordance with paragraph (d), and after
Commerce has notified parties on the
annual inquiry service list of its selfinitiation of a scope inquiry under
paragraph (b), a segment-specific service
list would be established, under
§ 351.103(d)(1), and the requirements of
§ 351.303(f) would apply. To be clear,
once the segment-specific service list is
established, parties on the annual
inquiry service list for all orders that
may be affected by the scope ruling
would no longer be served with filings
made pursuant to the scope inquiry,
unless they had followed the procedures
of § 351.103(d)(1) by filing an entry of
71 Commerce will follow the procedures of
paragraph (l) for both orders.
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appearance in the relevant scope
segment. However, as discussed further
below, Commerce proposes to amend
§ 351.103(d)(1) to reflect that an
interested party that submits a scope
ruling application need not file an entry
of appearance under § 351.103(d)(1), as
that interested party would be placed on
the segment-specific service list by
Commerce.
Finally, proposed revisions to
paragraphs (o) and (p) provide that
Commerce would publish in the Federal
Register on a quarterly basis a list of all
of the final scope rulings issued within
the previous three months and that
scope rulings may, as appropriate, apply
to suspension agreements as well, in
accordance with § 351.208.
Circumvention—Section 351.226
When the current scope regulations
were drafted, there was a belief that
there were similarities between scope
inquiries and circumvention inquiries
sufficient to place them both in the
same general regulatory provision.
Circumvention inquiries (sometimes
called anti-circumvention inquiries) are
conducted pursuant to section 781 of
the Act, while scope inquiries are
referenced only in sections
516a(a)(2)(A)(ii) and 516a(a)(2)(B)(vi) of
the Act. As the two latter provisions
pertain to determinations by Commerce
as to ‘‘whether a particular type of
merchandise is within the class or kind
of merchandise described in an existing
finding of dumping or antidumping or
countervailing duty order,’’ it is clear
that Commerce derives its authority to
conduct a scope ruling from multiple
sources, including, for example,
sections 771(25) (defining subject
merchandise as a ‘‘class or kind of
merchandise that is within the scope of
an investigation, a review, a suspension
agreement, (or) an order’’), 701(a)
(directing Commerce to impose duties
on a class or kind of merchandise being
subsidized), and 731(a) of the Act
(directing Commerce to impose duties
on a class or kind of merchandise being
dumped).
Because there is unique authority for
these different inquiries and
corresponding determinations, and we
conduct the two proceedings differently,
we have determined that it is
appropriate to establish separate
regulations for each type of proceeding.
With respect to circumvention inquiries
in particular, paragraphs (h), (i), (j), and
(k) of proposed new § 351.226 are
derived directly from section 781 of the
Act and current regulation
§§ 351.225(g), (h), (i), and (j).
Proposed paragraph (a) introduces
new § 351.226 and briefly addresses
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section 781 of the Act. Congress enacted
section 781 of the Act to combat certain
forms of circumvention of AD and CVD
orders. When Congress passed the
Omnibus Trade and Competitiveness
Act in 1988, it explained that ‘‘{a}n
order on an article presumptively
includes articles altered in minor
respects in form or appearance . . . .’’
The legislative history explains that the
purpose of the circumvention statute ‘‘is
to authorize the Commerce Department
to apply AD and {CVD} orders in such
a way as to prevent circumvention and
diversion of U.S. law.’’ 72 Further, it
indicates that Congress was concerned
with the existence of ‘‘loopholes,’’ i.e.,
foreign companies evading orders by
making slight changes in their method
of production, because such scenarios
‘‘seriously undermine the effectiveness
of the remedies provided by the
antidumping and countervailing duty
proceedings, and frustrated the
purposes for which these laws were
enacted.’’ 73 Congress also recognized
that ‘‘aggressive implementation of {the
circumvention statute} by the
Commerce Department can foreclose
these practices.’’ 74 When implementing
the Uruguay Round Agreements Act of
1994, the Administration expressed
similar concerns about scenarios
limiting the effectiveness of the AD duty
law (i.e., completion or assembly in a
country other than the subject
country).75 Accordingly, Commerce
‘‘has been vested with authority to
administer the antidumping laws in
accordance with the legislative intent’’
and, thus, ‘‘has a certain amount of
discretion {to act} . . . with the purpose
in mind of preventing the intentional
evasion or circumvention of the
antidumping duty law.’’ 76 Proposed
paragraph (a), as well as additional
paragraphs discussed below, would
codify these principles. Additionally,
proposed § 351.226(a) tracks proposed
§ 351.225(a), and explains that, unless
otherwise specified in proposed new
§ 351.226, Commerce’s existing
procedures contained in subpart C (i.e.,
relating to factual information
(§§ 351.102(b)(21) and 351.301) and the
extension of time limits (§ 351.302))
apply to circumvention inquiries.
Under proposed paragraph (b),
Commerce could self-initiate a
circumvention inquiry based on
72 Omnibus Trade Act of 1987, Report of the
Senate Finance Committee, S. Rep. No. 100–71, at
101 (1987).
73 Id.
74 Id.
75 See SAA at 892–95.
76 Tung Mung, 219 F. Supp. 2d at 1343 (quoting
Mitsubishi I, 700 F. Supp. at 555, aff’d 898 F.2d at
1583).
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information available to it, while under
proposed paragraph (c), Commerce
could initiate a circumvention inquiry
based on the filing of an inquiry request
by an interested party.77 If Commerce
self-initiates, it would publish a notice
of initiation in the Federal Register. If
a circumvention inquiry request is filed
with Commerce, the filing party would
have to notify all parties on the annual
inquiry service list, set forth in
proposed §§ 351.225(n) and 351.226(n).
Proposed paragraph (c)(2) would also
set forth the information to be included
in a circumvention inquiry request.
Commerce expects that such a request
would include not only a detailed
description of the merchandise
allegedly circumventing the order, but
also public identification of any
producers, exporters, or importers of the
merchandise.78 As with respect to the
revised scope ruling application
described in proposed § 351.225(c), it is
understood that not all of the
information listed will be available to
all interested parties requesting a
circumvention inquiry. For example, the
domestic industry may know certain
details about a company’s ‘‘further
manufacturing’’ of a product, but it may
not be able to supply ‘‘a description of
parts, materials, and the production
process employed in the production of
the product.’’ For this reason, proposed
paragraph (c)(2) would require that the
described information in the
circumvention inquiry request be
77 To be clear, Commerce already has the
authority to self-initiate anti-circumvention
inquiries under the current regulations. See 19 CFR
351.225(b). As noted above with respect to the
proposed changes to the scope regulations, the term
‘‘interested party’’ is defined in section 771(9) of the
Act, and pertains, for example, to ‘‘foreign
manufacturers,’’ ‘‘producers,’’ ‘‘exporters,’’ or
‘‘United States importers’’ ‘‘of subject
merchandise.’’ However, the nature of a
circumvention proceeding is to determine whether
the merchandise produced, imported by, or
exported by a party is circumventing an AD or CVD
order. Thus, in many cases, the question of whether
a party is an ‘‘interested party’’ is tied to the
question of whether the merchandise at issue is
determined to be subject merchandise, or not.
Accordingly, for purposes of these circumvention
regulations, the term ‘‘interested party’’ includes a
party that potentially meets the definition of
‘‘interested party’’ under section 771(9) of the Act,
depending upon the outcome of the circumvention
inquiry.
78 Commerce recognizes that the identity of the
producers, exporters and or importers alleged to be
participants to circumvention may not be public,
but that such information can be very important to
the conduct of a circumvention inquiry.
Accordingly, although the regulation requests
public names be provided, if available, it also
stresses that this provision is not intended to
restrict the inclusion of the business proprietary
names of those entities in the application if the
requester has access to that data.
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provided to the extent reasonably
available to the requestor.
Proposed paragraph (d) would
provide the deadlines for initiation of a
circumvention inquiry. The deadline for
initiation would be shortened from the
current 45 days to 20 days, with a
possible extension of up to a total of 35
days. However, initiation would only
occur if Commerce concludes that the
request properly alleges that the
elements necessary for a circumvention
determination under section 781 of the
Act exist and is accompanied by
information reasonably available to the
interested party supporting these
allegations. If the circumvention request
is incomplete or otherwise
unacceptable, the Secretary may reject
the request and will reconsider it if it is
resubmitted with sufficient
documentation. Additionally,
Commerce could defer its initiation of a
circumvention inquiry if it determines
that a scope question should first be
addressed in a new or ongoing segment
of a proceeding, such as a scope inquiry
under the proposed revisions to
§ 351.225.
Paragraph (d)(2) refers to proposed
§ 351.225(i)(1), which expressly allows
Commerce to address scope issues in
the context of a circumvention inquiry,
rather than conduct a separate scope
inquiry under § 351.225. In certain
circumstances, a party may submit a
request for a circumvention inquiry,
which requires Commerce to consider,
in the first instance, whether the
product at issue is already covered by
the scope of the order at issue in its
scope ruling procedures under
§ 351.225. If a product is already subject
to the scope of the order, a
circumvention inquiry may not be
necessary. To consolidate its resources
and avoid unnecessary duplication of
effort, proposed §§ 351.226(d)(2) and
351.225(i)(1) would allow Commerce to
address scope and circumvention issues
more efficiently, by allowing scope
issues to be addressed within the
context of a circumvention inquiry.
Proposed paragraph (e) would provide
the deadlines for Commerce to conduct
circumvention inquiries, consistent
with section 781(f) of the Act, which
sets a deadline for circumvention
determinations within 300 days from
the date of publication of the initiation
notice, to the maximum extent
practicable. Proposed paragraph (e)(1)
would establish a new deadline for
preliminary determinations of 150 days
from the date of publication of the
initiation notice. Proposed paragraph
(e)(2) restates the statutory deadline,
and also sets forth that Commerce
would only be able to extend the 300-
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day statutory deadline by no more than
65 days if it determined that an inquiry
was extraordinarily complicated. It is
Commerce’s understanding that for an
inquiry to be extraordinarily
complicated there would exist, for
example, novel facts or issues (such as
facilities being ravaged by natural
disasters or unusual or complicated
government or business practices), or a
large number of firms involved in the
inquiry.
Proposed paragraph (f) would provide
the procedures for circumvention
inquiries, and largely tracks the
proposed new scope inquiry procedures
provided under proposed § 351.225(f),
as well as the requirements provided
under current § 351.225(f)(7) concerning
notification to the ITC. This provision
also explains that Commerce could limit
the issuance of questionnaires to a
reasonable number of respondents. In
practice, Commerce could do this
through a respondent selection process.
Proposed paragraph (f)(4) would also
establish deadlines regarding comments
and rebuttal comments after a
preliminary circumvention
determination under proposed
paragraph (g) if the preliminary
circumvention determination is not
issued concurrently with the initiation
of the circumvention inquiry. Proposed
paragraph (f)(5) would provide
Commerce with the ability to establish
alternative procedures if the preliminary
circumvention determination issued
under proposed paragraph (g) is issued
concurrently with the initiation of the
circumvention inquiry.79 Additionally,
proposed paragraph (f)(6) would allow
Commerce to forego or rescind a
circumvention inquiry, in whole or in
part, if a circumvention request is
withdrawn or if Commerce issues a final
determination in another segment of the
proceeding under an AD and/or CVD
order that the merchandise at issue in
the circumvention inquiry is covered by
that order (or orders). Commerce could
also rescind if the basis for the initiation
of the circumvention inquiry included
multiple provisions under section 781
of the Act, and Commerce need only
reach a final determination with respect
to one of those provisions. This most
frequently happens if a circumvention
inquiry examines whether merchandise
is altered in minor respects or laterdeveloped merchandise, and Commerce
need only address one of those
provisions to reach an affirmative
determination. Proposed paragraph
79 To be clear, Commerce already has the
authority under existing regulations to issue a
preliminary circumvention determination
concurrently with initiation.
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(f)(7) would allow Commerce to alter
deadlines under this paragraph, as
appropriate, including to align the
deadlines of the circumvention inquiry
with another segment of the proceeding,
such as a scope inquiry, under proposed
new § 351.225.
Finally, proposed paragraph (f)(8)
would also maintain provisions
regarding notification to the ITC under
current § 351.225(f)(7). Unless otherwise
specified, Commerce’s current
procedural regulations concerning
factual information (19 CFR
351.102(b)(21) and 19 CFR 351.301),
including the extension of time limits
(19 CFR 351.302), apply to
circumvention procedures and would
continue to apply under the proposed
revisions.
Proposed paragraph (g) follows
proposed §§ 351.225(g) and (h) with
respect to preliminary and final
circumvention determinations.
However, unlike preliminary and final
scope rulings, preliminary and final
circumvention determinations will both
be published in the Federal Register.
Similar to proposed § 351.225(g),
proposed paragraph (g)(1) would allow
Commerce to issue a preliminary
circumvention determination, based on
available information at the time, as to
whether there is a reasonable basis to
believe or suspect that the elements
necessary for a circumvention
determination under section 781 of the
Act exist. Proposed paragraph (g)(2)
largely tracks the similar provision
under proposed § 351.225(h) concerning
the issuance of final scope rulings.
Thus, proposed paragraph (g)(2)
provides that Commerce would
‘‘convey’’ the final circumvention
determination in accordance with the
requirements of section 516A(a)(2)(A)(ii)
of the Act, which states that judicial
review of ‘‘class or kind’’
determinations under section
516A(a)(2)(B)(vi) of the Act, such as
scope rulings and circumvention
determinations, are based off of the date
of mailing of such determination.
Section 516A(a)(2)(A)(ii) of the Act
further provides that only ‘‘an interested
party who is a party to the proceeding’’
may commence judicial review
procedures. Therefore, aside from its
obligation to publish notice of the final
circumvention determination in the
Federal Register, Commerce proposes to
convey a copy of the final
circumvention determination in the
manner prescribed by section
516A(a)(2)(A)(ii) of the Act (i.e.,
mailing) to interested parties who are
parties to the proceeding (see
§ 351.102(b)(36)), because these are the
only parties that have legal standing to
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appeal the final circumvention
determination under section
516A(a)(2)(A)(ii) of the Act.
Furthermore, paragraph (g)(2) states
that Commerce will ‘‘promptly’’ convey
a copy of the final circumvention
determination after publication in the
Federal Register. The use of the term
‘‘promptly’’ is consistent with the use of
the same term in revised section 225
and new section 227. It is Commerce’s
expectation that prompt conveyance of
a copy of the final circumvention
determination normally would occur no
more than 5 business days from the
publication of the determination in the
Federal Register. Consistent with
sections 516A(a)(2)(A)(ii) and (B)(vi) of
the Act, judicial review procedures
would be commenced based on the date
of conveyance, as opposed to the date of
receipt, of a final circumvention
determination. Additionally, as with
any other document that is placed on
the record by the agency, all interested
parties on the segment-specific service
lists will be notified of the final
circumvention determination through
Commerce’s electronic ACCESS system.
Proposed paragraphs (h) and (i) relate
to the current regulatory provisions for
products completed or assembled in the
United States or other foreign countries
found in current §§ 351.225(g) and (h),
respectively, with two important
proposed revisions. First, we have
removed statements that no one single
factor under sections 781(a)(2) and
781(b)(2) of the Act will be controlling.
We recognize that this language adopts
similar language from the SAA.80
However, this statement alone, without
additional context, has raised questions.
In particular, the SAA states:
‘‘Commerce will evaluate each of {the
factors under sections 781(a)(2) and
781(b)(2) of the Act} as they exist either
in the United States or a third country,
depending on the particular
circumvention scenario. No single factor
will be controlling.’’ The SAA also
provides that these provisions ‘‘do not
establish rigid numerical standards for
determining the significance of the
assembly (or completion) activities in
the United States or for determining the
significance of the value of the imported
parts or components.’’ 81 Therefore,
although no one single factor should
control Commerce’s analysis, this
statement in the SAA should be
considered in light of the evidence
before Commerce in a given case and is
not intended to limit Commerce’s
discretion to evaluate the particularities
of the circumvention scenario.
80 See
81 Id.
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Accordingly, we are proposing to
remove the statement from paragraphs
(h) and (i).
Second, we propose removing specific
reference to the major input rule under
section 773(f)(3) of the Act in
paragraphs (h) and (i). Under current
§§ 351.225(g) and (h), in determining
the value of parts or components
purchased from an affiliated person
under sections 781(a)(1)(D) and
781(b)(1)(D) of the Act, or of processing
performed by an affiliated person under
sections 781(a)(2)(E) and 781(b)(2)(E) of
the Act, the value of the part or
component may be based on the cost of
producing the part or component under
section 773(f)(3) of the Act. The 1996
Proposed Rule added this reference to
the ‘‘transactions disregarded’’ and
‘‘major input’’ rules applicable to
affiliated transactions set forth in
773(f)(3) of the Act in response to
comments raised before Commerce at
the time.82 Additionally, the 1997 Final
Rule further explained that the SAA
clearly contemplates the use of the
major input rule in appropriate
circumstances, and, in response to
comments, also explained that cost of
production may be used as the basis of
the value for inputs from affiliated
persons.83 Based on our more recent
experience, we believe it would be
beneficial to codify that determinations
of the value of parts or components on
the basis of the cost of producing the
part or component may be conducted
under the various applicable provisions
of section 773—in this case, section
773(e) (constructed value) and 773(c)
(factors of production under the
nonmarket economy methodology) of
the Act. The major input rule under
section 773(f)(3) will still apply, as
appropriate, in accordance with this
applicable statutory framework.
Proposed paragraph (j) would
incorporate the current regulatory
provision, § 351.225(i), pertaining to
minor alteration of merchandise under
section 781(c) of the Act, with some
additions. Although the statute is silent
regarding what factors to consider in
determining whether alterations are
properly considered ‘‘minor,’’ the
legislative history of this provision
indicates there are certain criteria that
should be considered before reaching a
82 See 1996 Proposed Rule, 61 FR at 7322.
Clarifying edits to this language were made in the
1997 Final Rule. See 1997 Final Rule, 62 FR at
27328 (clarifying that application of the major input
rule is discretionary for purposes of both U.S. and
third country assembly).
83 See 1997 Final Rule, 62 FR at 27328 (citing
SAA at 894).
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circumvention determination.84
Previous circumvention cases
conducted by Commerce have relied on
those enumerated criteria.85 These
would now be incorporated into
paragraph (j). Additionally, in
conducting a minor alteration
circumvention inquiry, under section
781(c) of the Act, we have analyzed
other factors, as appropriate on a caseby-case basis, including the
circumstances under which the
products enter the United States, the
timing of the entries during the
circumvention review period, and the
quantity of merchandise entered during
the circumvention review period.86 We
would incorporate these additional
factors, which is a non-exhaustive list,
in paragraph (j).
Proposed paragraph (k) would
incorporate the current regulatory
provision, § 351.225(j), pertaining to
later-developed merchandise, under
section 781(d) of the Act, with some
additions. In conducting a laterdeveloped merchandise circumvention
inquiry, under section 78l(d)(l) of the
Act, and in determining whether the
merchandise is ‘‘later-developed,’’
Commerce first examines whether the
merchandise at issue was commercially
available at the time of the initiation of
the AD and CVD investigation.87 We
84 See Omnibus Trade Act of 1987, Report of the
Senate Finance Committee, S. Rep. No. 100–71, at
100 (1987) (stating that Commerce ‘‘should apply
practical measurements regarding minor alterations,
so that circumvention can be dealt with effectively,
even where such alterations to an article technically
transform it into a differently designated article{,}’’
and providing a list of criteria to be considered).
85 See, e.g., Final Results of Anti-Circumvention
Review of Antidumping Order: Corrosion-Resistant
Carbon Steel Flat Products From Japan, 68 FR
33676, 33677 (June 5, 2003).
86 See Preliminary Determination of
Circumvention of Antidumping Order; Cut to
Length Carbon Steel Plate from Canada, 65 FR
64926, 64929–31 (October 31, 2000), unchanged in
Final Determination of Circumvention of
Antidumping Order; Cut to Length Carbon Steel
Plate from Canada, 66 FR 7617 (January 24, 2001).
87 See Later-Developed Merchandise
Anticircumvention Inquiry of the Antidumping
Duty Order on Petroleum Wax Candles from the
People’s Republic of China: Affirmative Preliminary
Determination of Circumvention of the
Antidumping Duty Order, 71 FR 32033, 32037–40
(June 2, 2006), unchanged in Later-Developed
Merchandise Anticircumvention Inquiry of the
Antidumping Duty Order on Petroleum Wax
Candles from the People’s Republic of China:
Affirmative Final Determination of Circumvention
of the Antidumping Duty Order, 71 FR 59075
(October 6, 2006); Candles Anticircumvention
Final, 71 FR at 59077 and accompanying Issues and
Decision Memorandum at Comment 4, amended by
Redetermination Pursuant to Court Remand Order
in Target Corporation v. United States, 578 F. Supp.
2d 1369 (CIT 2008) (November 7, 2008), affirmed
by Target Corp. v. United States, 626 F. Supp. 2d
1285 (CIT 2009), and Target Corp., 609 F.3d at
1358–60 (holding that Commerce’s interpretation of
later-developed, as turning on whether the
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would incorporate the commercial
availability standard into paragraph (k),
as this is judicially-affirmed and wellestablished in our practice. Commerce
intends to consider whether a product is
‘‘commercially available’’ on a case-bycase basis in light of the record of the
proceeding. If Commerce determines
that such merchandise was not
commercially available at the time of
the investigation, and is, thus, laterdeveloped, Commerce would consider
whether the later-developed
merchandise is covered by the orders
pursuant to the statutory factors
identified in section 781(d)(1) of the
Act.
Proposed paragraph (l) of § 351.226
would alter the suspension of
liquidation requirements found in
current § 351.225(l) (which apply to
circumvention inquiries) and mirror the
proposals to § 351.225(l) pertaining to
scope, which have already been
described above.
Thus, proposed paragraph (l)(1) of
§ 351.226 provides that when Commerce
initiates a circumvention inquiry under
proposed paragraphs (b) or (d), it will
notify CBP of the initiation and direct
CBP to continue the suspension of
liquidation of all unliquidated entries of
products subject to the circumvention
inquiry that are currently suspended by
CBP 88 at the applicable cash deposit
rate that would apply if the product
were determined to be circumventing
the order.
Further, proposed paragraph (l)(2) of
§ 351.226 provides that if Commerce
issues a preliminary circumvention
determination under proposed
paragraph (g)(1) that the product at issue
is circumventing an AD and/or CVD
order, Commerce will direct CBP to: (1)
Continue suspension of liquidation of
already suspended entries; (2) suspend
merchandise was commercially available at the
time of the investigation, is reasonable). See also
Erasable Programmable Read Only Memories from
Japan; Final Scope Ruling, 57 FR 11599 (April 6,
1992); Electrolytic Manganese Dioxide from Japan;
Final Scope Ruling, 57 FR 395 (January 6, 1992);
Portable Electronic Typewriters from Japan, 55 FR
47358 (November 13, 1990).
88 As discussed above, entries may be ‘‘currently
suspended by CBP’’ under a variety of scenarios.
See Sunpreme III, 946 F.3d at 1317–18 (discussing
CBP’s authority to suspend liquidation of entries
that CBP determines are within the scope of an AD/
CVD order unless appealed to Commerce); section
517 of the Act (authorizing CBP to suspend
liquidation of entries for which it has reasonable
suspicion, or, in the case of final determination,
substantial evidence, that covered merchandise is
entered into the United States through evasion
under section 517(e) and (d) of the Act).
Additionally, as discussed above, consistent with
current practice and in accordance with CBP’s
statutory and regulatory authorities, CBP may stay
its action on entries of products that CBP has
liquidated but for which liquidation is not yet final
pending the outcome of a circumvention inquiry.
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liquidation of all other products at issue
that are unliquidated; and (3) apply the
applicable cash deposit rate under the
order to unliquidated entries.
Proposed paragraph (l)(4) provides
that if Commerce issues a negative final
determination under paragraph (g)(2),
and the product is not otherwise subject
to suspension as a result of another
segment of a proceeding, such as a
covered merchandise inquiry under
§ 351.227, for merchandise that was
suspended and for which cash deposit
rates were paid, Commerce would
instruct CBP to terminate suspension of
liquidation and refund cash deposits (if
any) on entries of this non-subject
merchandise.
On the other hand, if Commerce
concludes in a final determination
under proposed paragraph (g)(2) that
circumvention has occurred, then under
proposed paragraph (l)(3) Commerce
would direct CBP to: (1) Continue
suspension of liquidation of already
suspended entries, including those
entries subject to suspension of
liquidation as a result of another
segment of a proceeding, such as an
administrative review under § 351.213;
(2) suspend liquidation of all products
at issue which are unliquidated; and (3)
apply the applicable cash deposit rate
under the order to unliquidated entries,
until appropriate liquidation
instructions are issued pursuant to
§§ 351.212 and 351.213.89
As described in further detail above in
the discussion of proposed paragraph (l)
of § 351.225, these procedures deviate
from the current § 351.225 framework in
two key respects. First, upon an
affirmative preliminary or final
circumvention determination,
Commerce will instruct CBP to suspend
liquidation of any unliquidated entries,
not only those that entered on or after
the date of initiation of the
circumvention inquiry. Second, the
proposed regulation does not require
Commerce to notify CBP of a negative
preliminary circumvention
determination, and, therefore,
suspension of liquidation for already
suspended entries (if any) will remain
89 As discussed above, consistent with current
practice and in accordance with CBP’s statutory and
regulatory authorities, CBP may stay its action on
entries of products that CBP has liquidated but for
which liquidation is not yet final pending the
outcome of a circumvention inquiry. Additionally,
any instructions issued by Commerce directing CBP
to ‘‘lift suspension of liquidation’’ and assess duties
at the applicable AD/CVD rate are not intended to
impugn CBP’s ability to (1) suspend liquidation/
assess duties/take any other measures pursuant to
CBP’s EAPA investigation authority under section
517 of the Act specifically, or (2) take any other
action within CBP’s or HSI’s authority with respect
to AD/CVD entries.
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in effect pending Commerce’s issuance
of a final circumvention determination.
These suspension of liquidation
procedures and cash deposit
requirements will result in a more
effective application of circumvention
determinations. As discussed above,
Congress enacted section 781 of the Act
to combat certain forms of
circumvention of AD and CVD orders,
however, neither section 781 of the Act
nor any other provision of the Act
contains specific guidance regarding
when merchandise found to be
circumventing an AD and/or CVD order
should be subject to suspension of
liquidation and cash deposit
requirements. When Congress passed
the Omnibus and Trade
Competitiveness Act of 1988, it
explained that the purpose of the
circumvention statute ‘‘is to authorize
the Commerce Department to apply
antidumping and countervailing duty
orders in such a way as to prevent
circumvention and diversion of U.S.
law.’’ 90 Congress also recognized that
‘‘aggressive implementation of {the
circumvention statute} by the
Commerce Department can foreclose
these practices.’’ 91 Consistent with
Congress’s intent when enacting the
circumvention statute, these proposals
for paragraph (l) of § 351.226 will help
prevent companies from eluding the
payment of duties if Commerce
ultimately concludes that the
merchandise is circumventing an AD
and/or CVD order.
Proposed paragraph (m) would
address the effect and application of
circumvention determinations. In its
experience, Commerce has witnessed
scenarios in which the circumvention
determined to exist was unique to the
interested party under review. In that
situation, a company-specific
circumvention determination is
warranted. However, Commerce has
also found circumvention to exist in
other cases in which the circumvention
warranted a country-wide
determination. Accordingly, the
regulation would recognize that section
781 of the Act provides Commerce with
the discretion to apply a circumvention
decision on a country-wide basis, and
therefore allows for Commerce to
consider whether a country-wide
application is warranted on a case-bycase basis in circumvention inquiries.
One of the factors Commerce may
consider in making such a
determination is the possibility of
90 Omnibus Trade Act of 1987, Report of the
Senate Finance Committee, S. Rep. No. 100–71, at
101 (1987).
91 Id.
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subsequent circumvention by other
producers, exporters, or importers
following the issuance of an affirmative
company-specific circumvention
determination.
Proposed paragraph (m) would also
address the potential overlap between a
circumvention inquiry and other
segments of the proceeding and would
allow Commerce to take appropriate
action in such other proceedings. For
example, Commerce could request
information concerning the product that
is the subject of the circumvention
inquiry for purpose of an administrative
review under § 351.213.
Proposed paragraphs (m) and (n)
would together address a problem that
arises when a circumvention
determination would apply equally to
companion AD and CVD orders, which
cover the same merchandise from the
same country, and largely mirror the
same paragraphs under the proposed
revisions to § 351.225. In that scenario,
an interested party requesting a
circumvention inquiry pertaining to
both orders pursuant to paragraph (c)
must file its request on the record of the
AD duty proceeding only, and serve its
circumvention inquiry request to all
parties on the annual inquiry service list
for both the AD and CVD orders. The
annual inquiry service list and related
procedures are discussed in proposed
§ 351.225(n). Once Commerce initiates
the circumvention inquiry, Commerce
would initiate and conduct that inquiry
pertaining to both orders only on the
record of the AD duty proceeding.92
Once Commerce issues a final
circumvention determination on the
record of the AD proceeding, Commerce
would include a copy of that
determination on the record of the CVD
proceeding and notify CBP in
accordance with paragraph (l). As noted
above, by limiting the circumvention
inquiry only to the record of one
proceeding, the chances of incomplete
records, or confusing records being filed
with courts on appeal, should be
lessened.
Proposed paragraph (n) would
address service requirements and
largely tracks the same provision under
proposed § 351.225(n), i.e., interested
parties filing a circumvention inquiry
request must serve all parties on the
annual inquiry service list for that order
and any companion order. Under
proposed paragraph (n), once a
circumvention inquiry is initiated under
paragraph (b) or (d), a segment-specific
service list would be established, under
§ 351.103(d)(1), and the requirements of
92 Under that scenario, Commerce would follow
the procedures of paragraph (l) for both orders.
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§ 351.303(f) would apply. Once the
segment-specific service list is
established, parties on the annual
inquiry service list would no longer be
served with filings made pursuant to the
circumvention inquiry, unless they
follow the procedures of § 351.103(d)(1)
by filing an entry of appearance in the
relevant circumvention segment.
However, as discussed further below,
Commerce proposes to amend
§ 351.103(d)(1) to reflect that an
interested party that submits a request
for circumvention inquiry need not file
an entry of appearance under
§ 351.103(d)(1), as that party will be
placed on the segment-specific service
list by Commerce. Additionally, as
discussed further below, Commerce
proposes to amend § 351.305(d) to adopt
special filing requirements for importers
seeking access to business proprietary
information in circumvention inquiries.
Finally, proposed paragraph (o)
would allow for the circumvention
inquiry procedures of § 351.226,
discussed above, to apply to suspended
investigations and suspension
agreements.
Covered Merchandise Referrals—
Section 351.227
As discussed above, Commerce and
CBP work together to ensure the
effectiveness of AD/CVD orders, and
both agencies have their own
independent authority to examine
potential circumvention and duty
evasion of existing orders.93 Pursuant to
section 421 of the Enforce and Protect
Act of 2015,94 effective August 22, 2016,
section 517 was added to the Act, which
establishes a formal process for CBP to
conduct civil administrative
investigations of potential duty evasion
of AD and CVD orders on the basis of
an allegation by an interested party or
upon referral by another Federal agency
(referred to herein as an ‘‘EAPA
investigation’’).95 Pursuant to section
517(b)(4)(A) of the Act, if CBP is
conducting an EAPA investigation
based on an allegation from an
interested party, and is unable to
determine whether the merchandise at
issue is ‘‘covered merchandise’’ within
the meaning of section 517(a)(3) of the
Act, it shall refer the matter to
Commerce to make a covered
merchandise determination (referred to
93 Additionally,
HSI has the authority to
investigate criminal violations related to illegal
evasion of payment of required duties, including
payment of AD/CV duties. See, e.g., 18 U.S.C. 542.
94 Public Law 114–125, 130 Stat. 122, 155 (2016).
95 Id., sections 421(a)-(d), 130 Stat. at 161–169.
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herein as a ‘‘covered merchandise
referral’’).96
Section 421 of the EAPA requires that
the Secretary of the Treasury prescribe
regulations as necessary to implement
the amendments.97 Although the EAPA
does not mandate that Commerce
promulgate regulations, in order to
provide clarity and consistency to the
public, Commerce proposes to adopt
§ 351.227, a new regulation to address
procedures and standards specific to
Commerce’s consideration of covered
merchandise referrals. In particular, this
new regulation would govern
Commerce’s receipt of a covered
merchandise referral, Commerce’s
initiation and conduct of a covered
merchandise inquiry, and Commerce’s
covered merchandise determination,
pursuant to section 517(b)(4) of the Act.
The proposed rulemaking is intended to
provide for efficient notice and service
requirements, expedited deadlines, and
streamlined opportunities to solicit
information and comment from
interested parties. These proposed
changes are procedural in nature and
pertain to the agency’s internal process
in conducting its covered merchandise
inquiry. In addition, these changes
would not alter the current statutory or
regulatory framework under which
Commerce may already request
participation of interested parties and
issue a substantive determination that
certain merchandise is within the scope
of an AD/CVD order, as detailed above.
In promulgating the proposed
procedures, Commerce is mindful of
three aspects of the EAPA. First, as
discussed above, section 517(b)(4) of the
Act requires CBP to make a covered
merchandise referral to Commerce if it
is unable to determine whether the
merchandise at issue is covered
merchandise within the meaning of
section 517(a)(3) of the Act. To date,
Commerce has received only a few
covered merchandise referrals,98 and,
96 See H.R. Rep. No. 114–376, at 190 (2015)
(EAPA Conf. Rep.) (‘‘If the Commissioner is unable
to determine whether the merchandise at issue is
covered merchandise, the Commissioner shall refer
the matter to the Department of Commerce to
determine whether the merchandise is covered
merchandise. The Department of Commerce is to
make this determination pursuant to its applicable
statutory and regulatory authority, and the
determination shall be subject to judicial review
under 19 U.S.C. 1516a(a)(2). The Conferees intend
that such determinations include whether the
merchandise at issue is subject merchandise under
19 U.S.C. 1677j.’’) (referencing sections 516 and 781
of the Act).
97 See also Investigation of Claims of Evasion of
Antidumping and Countervailing Duties, Interim
Regulations, 81 FR 56477 (August 22, 2016) (setting
forth CBP’s interim regulations under section 517
of the Act).
98 See Wooden Bedroom Furniture From the
People’s Republic of China: Notice of Covered
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49489
thus, we are still familiarizing ourselves
with the facts and circumstances that
would lead CBP to choose to make such
a referral, as well as the facts and
circumstances that would be
appropriate for Commerce to consider in
reaching its covered merchandise
determination. For instance, there may
be a need for Commerce to seek further
information to establish a more detailed
description of the merchandise at issue,
or engage in a complex analysis, before
determining whether the merchandise is
covered merchandise. Commerce,
therefore, needs to maintain flexibility
in both its opportunities to request
information and the issues that it
considers in its analysis, before reaching
a covered merchandise determination.
Second, the EAPA does not prescribe
timing requirements for Commerce to
reach its covered merchandise
determination. Nevertheless, section
517(b)(4)(B) of the Act instructs
Commerce to promptly transmit its
determination to CBP. In addition, the
EAPA (section 517(b)(4)(C) of the Act)
provides that CBP’s own deadlines to
complete its EAPA investigation will be
stayed pending completion of
Commerce’s covered merchandise
determination. In drafting the proposed
regulations, Commerce is taking
timeliness into account, which we
believe is consistent with the intent of
Congress in drafting the EAPA.
Third, section 517(b)(4)(D) of the Act
provides that the statutory scheme for
judicial review under section 516A(a)(2)
of the Act applies to Commerce’s
covered merchandise determinations.99
Under the applicable standard of
review, Commerce’s determinations
must be supported by substantial
evidence and in accordance with law
(see section 516A(b)(1)(B) of the Act).
Thus, to ensure that its covered
merchandise determinations meet this
standard, Commerce intends to ensure
that parties are afforded opportunities to
submit evidence and argument for
Commerce’s consideration in reaching
its determination. Further, Commerce
intends to allow sufficient time for it to
consider such evidence and arguments
for purposes of drafting a well-reasoned
determination that may be subject to
judicial review.
In short, in proposing new § 351.227,
we have taken into account
considerations relating to: (1) Flexibility
Merchandise Referral, 83 FR 9272 (March 5, 2018);
Hydrofluorocarbon Blends From the People’s
Republic of China: Notice of Covered Merchandise
Referral, 83 FR 9277 (March 5, 2018); and Diamond
Sawblades and Parts Thereof From the People’s
Republic of China: Notice of Covered Merchandise
Referral, 83 FR 9280 (March 5, 2018).
99 See EAPA Conf. Rep. at 190.
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in Commerce’s ability to request
information necessary for its analysis in
reaching a covered merchandise
determination; (2) timeliness; and (3)
scheduling that allows Commerce
sufficient time to analyze the issues and
the record evidence and issue a
determination that may be subject to
judicial review. However, although we
are setting forth these proposed
regulations, as noted above, covered
merchandise inquiries constitute a new
type of segment of a proceeding at
Commerce and, therefore, Commerce
will continue to develop its practice and
procedures in this area. Further, as
detailed below, Commerce recognizes
the potential significant overlap
between a covered merchandise inquiry,
scope inquiry and circumvention
inquiry procedures discussed above
under §§ 351.225 and 351.226, and
possibly any other segment of a
proceeding that may address scope
issues.100 Therefore, in crafting these
regulations, Commerce has allowed for
the flexibility to address CBP’s covered
merchandise referrals in the context of
another segment of the proceeding, or to
otherwise rely on the standards under
section 351.225 and 226, in issuing a
covered merchandise determination.
Proposed section 351.227(a) would
introduce the new section and briefly
describes the framework of CBP’s EAPA
investigations and covered merchandise
referrals under section 517 of the Act.
Additionally, paragraph (a) tracks the
similar provision in proposed sections
351.225 (scope inquiries) and 351.226
(circumvention inquiries), explaining
that, unless otherwise specified in new
section 351.227, Commerce’s existing
procedures contained in subpart C (i.e.,
relating to factual information (sections
351.102(b)(21) and 351.301) and the
extension of time limits (section
351.302)), apply to covered merchandise
inquiries.
Proposed paragraph (b) would
provide that, within 15 days after
receiving a covered merchandise referral
that Commerce determines to be
sufficient, Commerce will take one of
three actions. First, under paragraph
(b)(1), Commerce may initiate a covered
merchandise inquiry and will publish
notice of its initiation in the Federal
Register. Second, under paragraph
(b)(2), Commerce may self-initiate a
circumvention inquiry in accordance
100 Id. (‘‘The Department of Commerce is to make
this determination pursuant to its applicable
statutory and regulatory authority, and the
determination shall be subject to judicial review
under 19 U.S.C. 1516a(a)(2). The Conferees intend
that such determinations include whether the
merchandise at issue is subject merchandise under
19 U.S.C. 1677j.’’).
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with proposed section 351.226(b) and
publish notice of its initiation in the
Federal Register. Third, under
paragraph (b)(3), if Commerce
determines that the covered
merchandise referral can be addressed
in an ongoing segment of a proceeding,
such as a scope inquiry, under the
proposed revisions to section 351.225,
or circumvention inquiry, under
proposed section 351.226, Commerce
will publish a notice in the Federal
Register that it intends to address the
referral in the context of such other
segment.
In determining whether a covered
merchandise referral is sufficient,
Commerce may consider, among other
things, whether the referral has
provided the name and contact
information of the parties to CBP’s
EAPA investigation, including the name
and contact information of any known
representative acting on behalf of such
parties; an adequate description of the
alleged covered merchandise;
identification of the applicable AD or
CVD orders; and any necessary
information reasonably available to CBP
regarding whether the merchandise at
issue is covered merchandise.
Additionally, Commerce will review the
covered merchandise referral and any
accompanying documentation to ensure
any business proprietary information is
properly redacted in accordance with
Commerce’s statutory and regulatory
requirements. Regardless of which of
the three actions Commerce takes with
respect to the covered merchandise
referral, Commerce will place the
documents on the record of the segment
of the proceeding under which
Commerce intends to address the
referral.
Proposed paragraph (c) would provide
the deadline for Commerce to conduct
covered merchandise inquiries and
would also set forth that Commerce
could only extend the deadline if it
determines that the inquiry is
extraordinarily complicated. This tracks
similar language under new section
351.226 (circumvention inquiries).
Proposed paragraph (d) would
provide the procedures for covered
merchandise inquiries, and largely
tracks the new procedures provided
under proposed sections 351.225(f)
(scope inquiries) and 351.226(f)
(circumvention inquiries), with some
exceptions. For example, paragraph
(d)(5) would allow Commerce to forego
or rescind a covered merchandise
inquiry, in whole or in part, for one of
three reasons: First, if CBP withdraws
its covered merchandise referral;
second, if the Secretary issues a final
determination in another segment of a
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proceeding, which can provide the basis
for the Secretary’s covered merchandise
determination, thus negating the need
for a separate covered merchandise
inquiry; and, third, where Commerce
otherwise determines that it is not
necessary to initiate or conduct a
covered merchandise inquiry in
response to a covered merchandise
referral because the matter at issue may
be addressed by other means. With
respect to this third category, this could
happen where Commerce believes a
prior scope ruling or circumvention
determination can provide the basis for
Commerce’s covered merchandise
determination. In such instances,
Commerce will issue a final covered
merchandise determination in
accordance with the requirements of
paragraph (e)(2) of this section.
Proposed paragraph (e) would
incorporate preliminary and final
covered merchandise determinations,
which will both be published in the
Federal Register, and largely tracks the
requirements under proposed section
351.226 pertaining to circumvention
inquiries. Similar to proposed section
351.226(g)(1), proposed paragraph (e)(1)
would allow Commerce to issue a
preliminary covered merchandise
determination, based on available
information at the time, as to whether
there is a reasonable basis to believe or
suspect that the product that is the
subject of the covered merchandise
inquiry is covered by the scope of the
order. Proposed paragraph (e)(2), which
tracks proposed section 351.226(g)(2),
would provide that, promptly after
publication of the final covered
merchandise determination, Commerce
would convey a copy of the final
determination, in the manner prescribed
by section 516A(a)(2)(A)(ii) of the Act,
to all parties to the proceeding, and
transmit a copy of the final
determination to CBP, thus fulfilling its
obligation under section 517(b)(4)(B) of
the Act. The use of the term ‘‘promptly’’
is not defined in section 517(b)(4)(B) of
the Act. Consistent with the use of the
same term in revised section 351.225
and new section 351.226, it is
Commerce’s expectation that prompt
conveyance and transmittal of a copy of
the final covered merchandise
determination normally would occur no
more than 5 business days from the
publication of the determination in the
Federal Register. Consistent with
sections 516A(a)(2)(A)(ii) and (B)(vi) of
the Act, judicial review procedures
would be commenced based on the date
of conveyance, as opposed to the date of
receipt, of a final covered merchandise
determination.
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Paragraph (e)(3) would also clarify
that if Commerce addresses the covered
merchandise referral in the context of
another segment of the proceeding, or
issues a scope ruling, under section
351.225, or a circumvention
determination, under section 351.226,
which provides the basis for the covered
merchandise determination, Commerce
would promptly transmit a copy of the
final action in that segment to CBP in
accordance with section 517(b)(4)(B) of
the Act.
Proposed paragraph (f) would explain
that, if Commerce issues a covered
merchandise determination after
conducting a covered merchandise
inquiry, Commerce may rely on the
standards provided under proposed
sections 351.225(j) (country of origin) or
(k) (scope rulings). Commerce also
could rely on the provisions of section
781 of the Act regarding the four forms
of circumvention (proposed sections
351.226(h), (i), (j), or (k)). We believe
this is consistent with the legislative
history, which specifically identifies
that Commerce may follow its existing
statutory and regulatory authority in
issuing a covered merchandise
determination.101
To maintain consistency with
proposed sections 351.225 and 351.226,
proposed paragraphs (g)–(k) would be
reserved. Additionally, the following
paragraphs would largely mirror the
same provisions in proposed sections
351.225 and 351.226, which have been
discussed in detail above: Paragraph (l)
concerning suspension of liquidation;
paragraph (m) concerning applicability
of covered merchandise determinations;
other segments of the proceeding, and
companion AD and CVD orders;
paragraph (n) concerning service; and
paragraph (o) concerning suspended
investigations and suspension
agreements. Additionally, with respect
to proposed paragraph (l), as discussed
above, any instructions issued by
Commerce directing CBP to ‘‘lift
suspension of liquidation’’ and assess
duties at the applicable AD/CVD rate are
not intended to impugn CBP’s ability to
(1) suspend liquidation/assess duties/
take any other measures pursuant to
CBP’s EAPA investigation authority
under section 517 of the Act
specifically, or (2) take any other action
within CBP’s or HSI’s authority with
respect to AD/CVD entries.
Certifications—Section 351.228
At various points throughout its
history of administering the AD and
CVD laws, Commerce has determined
that the establishment of a certification
101 See
id. at 190.
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scheme is necessary to ensure the
enforcement of the AD/CVD orders or
suspension agreements. For example, to
carry out the terms of certain
suspension agreements, Commerce has
required importers, producers, and
exporters to certify to certain
requirements with respect to the entries
and sales of merchandise subject to the
agreement.102 Commerce has also
required certifications for various AD
and CVD orders.103 Additionally,
Commerce has established a
certification scheme in the context of its
circumvention inquiries to ensure that
parties claiming merchandise is not
subject to an AD/CVD order, as a result
of a circumvention determination, must
certify and maintain documentation to
that effect.104
Proposed section 351.228 would
codify and enhance Commerce’s
existing authority and practice to
require certifications by importers and
other interested parties as to whether
merchandise is subject to an AD/CVD
order. Under proposed section
351.228(b), where that party fails to
comply with the certification
requirements by failing to provide the
certification upon request, or providing
a certification that contains materially
false, fictitious, or fraudulent statements
or representations, or material
omissions, to Commerce or CBP, as
appropriate, Commerce would have the
authority to instruct CBP to collect from
the importer cash deposits for the AD or
CVD at the applicable rate. Commerce
recognizes that CBP has its own
independent authority to address import
documentation related to negligence,
gross negligence, or fraud.105 This
provision is not intended to supplant
CBP’s authority, nor is a formal finding
by CBP required for Commerce to
determine, within its own authority,
that the certification is deficient and
unreliable for the reasons discussed
above. Whether a certification contains
‘‘material’’ or ‘‘fraudulent’’ information
is a determination that would be made
by Commerce pursuant to its own
102 See, e.g., Sugar From Mexico: Suspension of
Countervailing Duty Investigation, 79 FR 78044
(December 29, 2014).
103 See, e.g., Notice of Amended Final
Determination of Sales at Less Than Fair Value and
Antidumping Duty Order: Low Enriched Uranium
From France, 67 FR 6680 (February 13, 2002)
(requiring certifications of the importer and end
user).
104 See, e.g., Glycine From the People’s Republic
of China: Final Partial Affirmative Determination of
Circumvention of the Antidumping Duty Order, 77
FR 73426 (December 10, 2012).
105 Additionally, HSI has the authority to
investigate criminal violations related to illegal
evasion of payment of required duties, including
payment of AD/CV duties. See, e.g., 18 U.S.C. 542.
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authority and consideration of the
normal meaning of those terms.106
Importer Reimbursement Certification—
Section 351.402(f)(2)
Section 351.402(f)(1)(i) of Commerce’s
regulations provide that in calculating
the export price, or constructed export
price in determining an AD margin,
Commerce will deduct any AD or CVD
duties that the exporter or producer
paid on behalf of the importer or
reimbursed to the importer. Section
351.402(f)(1)(ii) provides an exception
that in calculating export price or
constructed export price, Commerce
will not deduct AD or CVD duties if an
exporter or producer granted to the
importer before initiation of the AD
investigation in question a warranty of
nonapplicability of AD/CVD duties with
respect to subject merchandise (1) sold
before the date of publication of the
notice of first suspension of liquidation,
and (2) exported before the date of
publication of the final AD
determination.
Section 351.402(f)(2) currently
requires importers of AD entries to file
prior to liquidation a certificate with
CBP that identifies whether the importer
has or has not entered into an agreement
for the payment or reimbursement of AD
or CVD duties. This certificate is
required for each entry (or a group of
entries) subject to AD duties, and must
identify the relevant merchandise to
which it relates. Consistent with section
351.402(f)(1)(i), if an importer certifies
that it has entered into an agreement for
the payment or reimbursement of AD or
CVD duties, Commerce will deduct any
AD or CVD duties that the exporter or
producer paid on behalf of the importer
or reimbursed to the importer. However,
consistent with section 351.402(f)(2)(ii),
Commerce will not deduct AD or CVD
duties paid or reimbursed with respect
to subject merchandise (1) sold before
the date of publication of the notice of
first suspension of liquidation, and (2)
exported before the date of publication
of the final AD determination where,
before the initiation of the AD
investigation in question, the exporter
or producer granted a warranty of
nonapplicability of AD or CVD duties
with respect to the merchandise.
Additionally, under section
351.402(f)(3), if the importer does not
provide the certificate prior to
liquidation, Commerce presumes that
the exporter or producer paid or
reimbursed such duties and will deduct
106 Commerce does not intend to be restricted by
the interpretations or policies set forth by other
agencies in interpreting those terms in applying
other areas of law.
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the applicable AD or CVD duties that
the exporter or producer is presumed to
have paid on behalf of the importer or
reimbursed to the importer. The current
regulation, which is largely unchanged
as it existed 40 years ago,107 is
otherwise silent regarding the specific
filing requirements for the certificate.
Section 405 of the Security and
Accountability for Every (SAFE) Port
Act of 2006, Public Law 109–347,
established the International Data Trade
System (ITDS), the purpose of which ‘‘is
to eliminate redundant information
requirements, to efficiently regulate the
flow of commerce, and to effectively
enforce laws and regulations relating to
international trade, by establishing a
single portal system, operated by CBP,
for the collection and distribution of
standard electronic import and export
data required by all participating
Federal agencies.’’ Flowing from this,
one goal of the ITDS is to encourage and
facilitate the transition of paper filing
requirements for certain import
documentation to electronic format.
Accordingly, Commerce proposes to
modify section 351.402(f)(2) to clarify
that for all entries subject to AD duties,
the importer must file a reimbursement
certification in either electronic or paper
form in accordance with CBP’s
requirements, as applicable.
Additionally, Commerce proposes to
remove the requirement for specific
certification language, and instead allow
importers to certify to the substance of
the certification. Moreover, for ease of
administration, Commerce proposes to
clarify that a certification is required for
each entry of merchandise subject to AD
duties imported on or after the date of
the first suspension of liquidation.108
Furthermore, although such certification
is required prior to liquidation,
Commerce proposes to clarify that CBP
may also accept the reimbursement
certification in accordance with its
protest procedures under 19 U.S.C.
1514. Commerce is also proposing nonsubstantive restructuring of the
regulation.
107 See 19 CFR 153.49 (‘‘Reimbursement of
dumping duties’’) (1979).
108 Sections 351.402(f)(1(i) and (ii) are unchanged
in this proposed rule. Therefore, Commerce will not
deduct AD or CVD duties paid or reimbursed with
respect to subject merchandise (1) sold before the
date of publication of the notice of first suspension
of liquidation, and (2) exported before the date of
publication of the final AD determination where,
before the initiation of the AD investigation in
question, the exporter or producer granted a
warranty of nonapplicability of AD or CVD duties
with respect to the merchandise.
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Other Procedural Amendments—
Sections 351.103(d)(1) and 305(d)
Consistent with the substantive
proposed rules discussed above,
Commerce proposes to adopt necessary
changes to two procedural regulations,
section 351.103(d)(1) pertaining to
letters of appearance and public service
lists, and section 351.305(d) pertaining
to importer filing requirements for
access to business proprietary
information in Commerce’s proceedings.
As discussed above, under revised
section 351.225, pertaining to scope
inquiries, Commerce proposes to amend
section 351.103(d)(1) to reflect that an
interested party that submits a scope
ruling application need not file an entry
of appearance, under section
351.103(d)(1), as that interested party
will be placed on the segment-specific
service list for that scope inquiry by
Commerce. Similarly, as discussed
above, under revised section 351.226,
pertaining to circumvention inquiries,
Commerce proposes to amend section
351.103(d)(1) to reflect that an
interested party that submits a request
for a circumvention inquiry need not
file an entry of appearance under
section 351.103(d)(1) to be placed on the
segment-specific service list for that
circumvention inquiry. We have also
made minor amendments to section
351.103(d)(1) to reflect the filing of an
‘‘entry of appearance,’’ rather than a
‘‘letter of appearance,’’ to more
accurately describe Commerce’s
electronic filing process.
Further, current section 351.305(d)
would provide special filing
requirements for importers seeking
access to business proprietary
information in Commerce’s proceedings,
and would mandate that for scope
segments of a proceeding, under
existing section 351.225, an applicant
seeking access to business proprietary
information on behalf of an importer
must demonstrate that the party is an
importer, or has taken steps to import,
the merchandise subject to the scope
inquiry. This language would be
unchanged with respect to importers in
scope inquiries, but we have added
similar language for importers in
circumvention inquiries, under
proposed section 351.226.
Lastly, with respect to covered
merchandise inquiries under proposed
section 351.227, we propose changes to
both sections 351.103(d)(1) and 305(d).
Specifically, under revised section
351.103(d)(1), any publicly identified
parties in a covered merchandise
referral from CBP, under section 517 of
the Act, need not file an entry of
appearance in the covered merchandise
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inquiry to be added to the segmentspecific service list for that segment of
the proceeding. Additionally, under
revised section 351.305(d), an applicant
for access to business proprietary
information on behalf of a party that has
been publicly identified by CBP as the
importer in a covered merchandise
referral is exempt from the requirements
of demonstrating that the party is an
importer for purposes of a covered
merchandise inquiry.
Classifications
Executive Order 12866
OMB has determined that this
proposed rule is significant for purposes
of Executive Order 12866.
Executive Order 13771
This rule is not subject to the
requirements of E.O. 13771 because this
rule results in no more than de minimis
costs.
Paperwork Reduction Act
This proposed rule contains no
collection of information subject to the
Paperwork Reduction Act, 44 U.S.C.
chapter 35.
Executive Order 13132
This proposed rule does not contain
policies with federalism implications as
that term is defined in section 1(a) of
Executive Order 13132, dated August 4,
1999 (64 FR 43255 (August 10, 1999)).
Regulatory Flexibility Act
The Chief Counsel for Regulation has
certified to the Chief Counsel for
Advocacy of the Small Business
Administration under the provisions of
the Regulatory Flexibility Act, 5 U.S.C.
605(b), that the proposed rule would not
have a significant economic impact on
a substantial number of small business
entities. A summary of the need for,
objectives of, and legal basis for this rule
is provided in the preamble, and is not
repeated here.
The entities upon which this
rulemaking could have an impact
include foreign governments, foreign
exporters and producers, some of whom
are affiliated with U.S. companies, and
U.S. importers. Enforcement &
Compliance currently does not have
information on the number of entities
that would be considered small under
the Small Business Administration’s
size standards for small businesses in
the relevant industries. However, some
of these entities may be considered
small entities under the appropriate
industry size standards. Although this
proposed rule may indirectly impact
small entities that are parties to
individual AD and CVD proceedings, it
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will not have a significant economic
impact on any such entities because the
proposed rule applies to administrative
enforcement actions, only clarifying and
establishing streamlined procedures; it
does not impose any significant costs on
regulated entities. Therefore, the
proposed rule would not have a
significant economic impact on a
substantial number of small business
entities. For this reason, an Initial
Regulatory Flexibility Analysis is not
required and one has not been prepared.
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: July 7, 2020.
Jeffrey I. Kessler,
Assistant Secretary for Enforcement and
Compliance.
§ 351.203
petition.
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. Revise paragraph (d)(1) of § 351.103
to read as follows:
■
§ 351.103 Central Records Unit and
Administrative Protective Order and
Dockets Unit.
*
*
*
*
(d) * * *
(1) With the exception of a petitioner
filing a petition in an investigation
pursuant to § 351.202, an interested
party filing a scope ruling application
pursuant to § 351.225(c), an interested
party filing a request for a
circumvention inquiry pursuant to
§ 351.226(c), and those relevant parties
identified by the Customs Service in a
covered merchandise referral pursuant
to § 351.226, all persons wishing to
participate in a segment of a proceeding
must file an entry of appearance. The
entry of appearance must identify the
name of the interested party, how that
party qualifies as an interested party
under § 351.102(b)(29) and section
771(9) of the Act, and the name of the
firm, if any, representing the interested
party in that particular segment of the
proceeding. All persons who file an
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Determination of sufficiency of
*
For the reasons stated in the
preamble, the Department of Commerce
proposes to amend 19 CFR part 351 as
follows:
*
entry of appearance and qualify as an
interested party will be included in the
public service list for the segment of the
proceeding in which the entry of
appearance is submitted. The entry of
appearance may be filed as a cover letter
to an application for APO access. If the
representative of the interested party is
not requesting access to business
proprietary information under APO, the
entry of appearance must be filed
separately from any other document
filed with the Department. If the
interested party is a coalition or
association as defined in subparagraph
(A), (E), (F) or (G) of section 771(9) of
the Act, the entry of appearance must
identify all of the members of the
coalition or association.
*
*
*
*
*
■ 3. Add paragraph (g) to § 351.203 to
read as follows:
*
*
*
*
(g) Time limits for filing interested
party comments on industry support.
For purposes of sections 702(c)(4)(E)
and 732(c)(4)(E) of the Act, the Secretary
will consider comments or information
on the issue of industry support
submitted no later than 5 business days
before the date referenced in paragraph
(b)(1) of this section by any interested
party under section 771(9) of the Act.
The Secretary will consider rebuttal
comments or information to rebut,
clarify, or correct such information on
industry support submitted by any
interested party no later than two
calendar days from the time limit for
filing comments.
■ 4. Revise § 351.214 to read as follows:
§ 351.214 New shipper reviews under
section 751(a)(2)(B) of the Act.
(a) Introduction. Section 751(a)(2)(B)
of the Act provides a procedure by
which so-called ‘‘new shippers’’ can
obtain their own individual dumping
margin or countervailable subsidy rate
on an expedited basis. In general, a new
shipper is an exporter or producer that
did not export, and is not affiliated with
an exporter or producer that did export,
to the United States during the period
of investigation. Furthermore, section
751(a)(2)(B)(iv) requires that the
Secretary make a determination of
whether the sales under review are bona
fide. This section contains rules
regarding requests for new shipper
reviews and procedures for conducting
such reviews, as well as requirements
for determining whether sales are bona
fide under section 751(a)(2)(B)(iv) of the
Act. In addition, this section contains
rules regarding requests for expedited
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reviews by non-investigated exporters in
certain countervailing duty proceedings
and procedures for conducting such
reviews.
(b) Request for new shipper review—
(1) Requirement of sale or export.
Subject to the requirements of section
751(a)(2)(B) of the Act and this section,
an exporter or producer may request a
new shipper review if it has exported,
or sold for export, subject merchandise
to the United States and can
demonstrate the existence of a bona fide
sale.
(2) Contents of request. A request for
a new shipper review must contain the
following:
(i) If the person requesting the review
is both the exporter and producer of the
merchandise, a certification that the
person requesting the review did not
export subject merchandise to the
United States (or, in the case of a
regional industry, did not export the
subject merchandise for sale in the
region concerned) during the period of
investigation;
(ii) If the person requesting the review
is the exporter, but not the producer, of
the subject merchandise:
(A) The certification described in
paragraph (b)(2)(i) of this section; and
(B) A certification from the person
that produced or supplied the subject
merchandise to the person requesting
the review that that producer or
supplier did not export the subject
merchandise to the United States (or, in
the case of a regional industry, did not
export the subject merchandise for sale
in the region concerned) during the
period of investigation;
(iii)(A) A certification that, since the
investigation was initiated, such
exporter or producer has never been
affiliated with any exporter or producer
who exported the subject merchandise
to the United States (or in the case of a
regional industry, who exported the
subject merchandise for sale in the
region concerned) during the period of
investigation, including those not
individually examined during the
investigation; and
(B) In an antidumping proceeding
involving imports from a nonmarket
economy country, a certification that the
export activities of such exporter or
producer are not controlled by the
central government;
(iv)(A) A certification from the
unaffiliated customer in the United
States that it did not purchase the
subject merchandise from the producer
or exporter during the period of
investigation; and
(B) A certification from the
unaffiliated customer in the United
States that it will provide necessary
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information requested by the Secretary
regarding its purchase of subject
merchandise.
(v) Documentation establishing:
(A) The date on which subject
merchandise of the exporter or producer
making the request was first entered, or
withdrawn from warehouse, for
consumption, or, if the exporter or
producer cannot establish the date of
first entry, the date on which the
exporter or producer first shipped the
subject merchandise for export to the
United States;
(B) The volume of that and
subsequent shipments, including
whether such shipments were made in
commercial quantities;
(C) The date of the first sale, and any
subsequent sales, to an unaffiliated
customer in the United States; and
(D) The circumstances surrounding
such sale(s), including but not limited
to:
(1) The price of such sales;
(2) Any expenses arising from such
sales;
(3) Whether the subject merchandise
involved in such sales was resold in the
United States at a profit;
(4) Whether such sales were made on
an arms-length basis;
(E) Additional documentation
regarding the business activities of the
producer or exporter, including but not
limited to:
(1) The producer or exporter’s offers
to sell merchandise in the United States;
(2) An identification of the complete
circumstance surrounding the producer
or exporter’s sales to the United States,
as well as any home market or third
country sales;
(3) In the case of a non-producing
exporter, an explanation of the
exporter’s relationship with its
producer/supplier; and
(4) An identification of the producer’s
or exporter’s relationship to the first
unrelated U.S. purchaser;
(vi) In the case of a review of a
countervailing duty order, a certification
that the exporter or producer has
informed the government of the
exporting country that the government
will be required to provide a full
response to the Department’s
questionnaire.
(c) Deadline for requesting review. An
exporter or producer may request a new
shipper review within one year of the
date referred to in paragraph (b)(2)(v)(A)
of this section.
(d) Initiation of new shipper review—
(1) In general. If the requirements for a
request for new shipper review under
paragraph (b) of this section are
satisfied, the Secretary will initiate a
new shipper review under this section
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in the calendar month immediately
following the anniversary month or the
semiannual anniversary month if the
request for the review is made during
the 6–month period ending with the end
of the anniversary month or the
semiannual anniversary month
(whichever is applicable).
(2) Semiannual anniversary month.
The semiannual anniversary month is
the calendar month that is 6 months
after the anniversary month.
(3) Example. An order is published in
January. The anniversary month would
be January, and the semiannual
anniversary month would be July. If the
Secretary received a request for a new
shipper review at any time during the
period February–July, the Secretary
would initiate a new shipper review in
August. If the Secretary received a
request for a new shipper review at any
time during the period August–January,
the Secretary would initiate a new
shipper review in February.
(4) Exception. If the Secretary
determines that the requirements for a
request for new shipper review under
paragraph (b) of this section have not
been satisfied, the Secretary will reject
the request and provide a written
explanation of the reasons for the
rejection.
(e) Suspension of liquidation. When
the Secretary initiates a new shipper
review under this section, the Secretary
will direct the Customs Service to
suspend or continue to suspend
liquidation of any unliquidated entries
of the subject merchandise from the
relevant exporter or producer at the
applicable cash deposit rate.
(f) Rescission of new shipper review—
(1) Withdrawal of request for review.
The Secretary may rescind a new
shipper review under this section, in
whole or in part, if a producer or
exporter that requested a review
withdraws its request not later than 60
days after the date of publication of
notice of initiation of the requested
review.
(2) Absence of entry and sale to an
unaffiliated customer. The Secretary
may rescind a new shipper review, in
whole or in part, if the Secretary
concludes that:
(i) As of the end of the normal period
of review referred to in paragraph (g) of
this section, there has not been an entry
and sale to an unaffiliated customer in
the United States of subject
merchandise; and
(ii) An expansion of the normal
period of review to include an entry and
sale to an unaffiliated customer in the
United States of subject merchandise
would be likely to prevent the
completion of the review within the
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time limits set forth in paragraph (i) of
this section;
(3) Absence of bona fide sale to an
unaffiliated customer. The Secretary
may rescind a new shipper review, in
whole or in part, if the Secretary
concludes that:
(i) Information that the Secretary
considers necessary to conduct a bona
fide sale analysis is not on the record;
or
(ii) The producer or exporterseeking a
new shipper review has failed to
demonstrate to the satisfaction of the
Secretary the existence of a bona fide
sale to an unaffiliated customer.
(4) Notice of Rescission. If the
Secretary rescinds a new shipper review
(in whole or in part), the Secretary will
publish in the Federal Register notice of
‘‘Rescission of Antidumping
(Countervailing Duty) New Shipper
Review’’ or, if appropriate, ‘‘Partial
Rescission of Antidumping
(Countervailing Duty) New Shipper
Review.’’
(g) Period of review—(1) Antidumping
proceeding—(i) In general. Except as
provided in paragraph (g)(1)(ii) of this
section, in an antidumping proceeding,
a new shipper review under this section
normally will cover, as appropriate,
entries, exports, or sales during the
following time periods:
(A) If the new shipper review was
initiated in the month immediately
following the anniversary month, the
twelve-month period immediately
preceding the anniversary month; or
(B) If the new shipper review was
initiated in the month immediately
following the semiannual anniversary
month, the period of review will be the
six-month period immediately
preceding the semiannual anniversary
month.
(ii) Exceptions. (A) If the Secretary
initiates a new shipper review under
this section in the month immediately
following the first anniversary month,
the review normally will cover, as
appropriate, entries, exports, or sales
during the period from the date of
suspension of liquidation under this
part to the end of the month
immediately preceding the first
anniversary month.
(B) If the Secretary initiates a new
shipper review under this section in the
month immediately following the first
semiannual anniversary month, the
review normally will cover, as
appropriate, entries, exports, or sales
during the period from the date of
suspension of liquidation under this
part to the end of the month
immediately preceding the first
semiannual anniversary month.
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(2) Countervailing duty proceeding. In
a countervailing duty proceeding, the
period of review for a new shipper
review under this section will be the
same period as that specified in
§ 351.213(e)(2) for an administrative
review.
(h) Procedures. The Secretary will
conduct a new shipper review under
this section in accordance with
§ 351.221.
(i) Time limits—(1) In general. Unless
the time limit is waived under
paragraph (j)(3) of this section, the
Secretary will issue preliminary results
of review (see § 351.221(b)(4)) within
180 days after the date on which the
new shipper review was initiated, and
final results of review (see
§ 351.221(b)(5)) within 90 days after the
date on which the preliminary results
were issued.
(2) Exception. If the Secretary
concludes that a new shipper review is
extraordinarily complicated, the
Secretary may extend the 180-day
period to 300 days, and may extend the
90-day period to 150 days.
(j) Multiple reviews. Notwithstanding
any other provision of this subpart, if a
review (or a request for a review) under
§ 351.213 (administrative review),
§ 351.214 (new shipper review),
§ 351.215 (expedited antidumping
review), or § 351.216 (changed
circumstances review) covers
merchandise of an exporter or producer
subject to a review (or to a request for
a review) under this section, the
Secretary may, after consulting with the
exporter or producer:
(1) Rescind, in whole or in part, a
review in progress under this subpart;
(2) Decline to initiate, in whole or in
part, a review under this subpart; or
(3) Where the requesting producer or
exporter agrees in writing to waive the
time limits of paragraph (i) of this
section, conduct concurrent reviews, in
which case all other provisions of this
section will continue to apply with
respect to the exporter or producer.
(k) Determinations based on bona fide
sales. In determining whether the U.S.
sales of an exporter or producer made
during the period covered by the review
are bona fide, the Secretary shall
consider the factors identified at section
752(a)(2)(B)(iv) of the Act. In accordance
with section 751(a)(2)(B)(iv)(VII) of the
Act, the Secretary shall consider the
following factors:
(1) Whether the producer, exporter, or
customer was established for purposes
of the sale(s) in question after the
imposition of the relevant antidumping
or countervailing duty order;
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(2) Whether the producer, exporter, or
customer has lines of business unrelated
to the subject merchandise;
(3) Whether there is an established
history of duty evasion with respect to
new shipper reviews or circumvention
under the relevant antidumping or
countervailing duty order;
(4) Whether there is an established
history of duty evasion with respect to
new shipper reviews or circumvention
under any antidumping or
countervailing duty orders in the same
or similar industry;
(5) The quantity of sales; and
(6) Any other factor that the Secretary
determines to be relevant with respect
to the future selling behavior of the
producer or exporter, including any
other indicia that the sale was not
commercially viable.
(l) Expedited reviews in
countervailing duty proceedings for
noninvestigated exporters—(1) Request
for review. If, in a countervailing duty
investigation, the Secretary limited the
number of exporters or producers to be
individually examined under section
777A(e)(2)(A) of the Act, an exporter
that the Secretary did not select for
individual examination or that the
Secretary did not accept as a voluntary
respondent (see § 351.204(d)) may
request a review under this paragraph
(l). An exporter must submit a request
for review within 30 days of the date of
publication in the Federal Register of
the countervailing duty order. A request
must be accompanied by a certification
that:
(i) The requester exported the subject
merchandise to the United States during
the period of investigation;
(ii) The requester is not affiliated with
an exporter or producer that the
Secretary individually examined in the
investigation; and
(iii) The requester has informed the
government of the exporting country
that the government will be required to
provide a full response to the
Department’s questionnaire.
(2) Initiation of review—(i) In general.
The Secretary will initiate a review in
the month following the month in
which a request for review is due under
paragraph (l)(1) of this section.
(ii) Example. The Secretary publishes
a countervailing duty order on January
15. An exporter would have to submit
a request for a review by February 14.
The Secretary would initiate a review in
March.
(3) Conduct of review. The Secretary
will conduct a review under this
paragraph (l) in accordance with the
provisions of this section applicable to
new shipper reviews, subject to the
following exceptions:
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(i) The period of review will be the
period of investigation used by the
Secretary in the investigation that
resulted in the publication of the
countervailing duty order (see
§ 351.204(b)(2));
(ii) The final results of a review under
this paragraph (l) will not be the basis
for the assessment of countervailing
duties; and
(iii) The Secretary may exclude from
the countervailing duty order in
question any exporter for which the
Secretary determines an individual net
countervailable subsidy rate of zero or
de minimis (see § 351.204(e)(1)),
provided that the Secretary has verified
the information on which the exclusion
is based.
(m) Exception from assessment in
regional industry cases. For procedures
relating to a request for the exception
from the assessment of antidumping or
countervailing duties in a regional
industry case, see § 351.212(f).
■ 5. Revise § 351.225 to read as follows:
§ 351.225
Scope rulings.
(a) Introduction. Questions sometimes
arise as to whether a particular product
is covered by the scope of an
antidumping or countervailing duty
order. Such questions may arise for a
variety of reasons given that the
description of the merchandise subject
to the scope is written in general terms.
The Secretary will initiate and conduct
a scope inquiry and issue a scope ruling
to determine whether or not a product
is covered by the scope of an order at
the request of an interested party or on
the Secretary’s initiative. A scope ruling
that a product is within the scope of the
order is a determination that the
product has always been within the
scope of the order. This section contains
rules and procedures regarding scope
rulings, including scope ruling
applications, scope inquiries, and
standards used in determining whether
a product is covered by the scope of an
order. Unless otherwise specified, the
procedures as described in subpart C of
this part (§§ 351.301 through 351.308
and §§ 351.312 through 351.313) apply
to this section.
(b) Self-initiation of a scope inquiry.
If the Secretary determines from
available information that an inquiry is
warranted to determine whether a
product is covered by the scope of an
order, the Secretary may initiate a scope
inquiry and notify, electronically or
otherwise, all parties on the annual
inquiry service list (see paragraph (n) of
this section).
(c) Scope ruling application—(1)
Contents. An interested party may
submit a scope ruling application
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requesting that the Secretary conduct a
scope inquiry to determine whether a
product, which is or has been in actual
production by the time of the filing of
the application, is covered by the scope
of an order. The Secretary will make
available a scope ruling application,
which the applicant must fully
complete and serve in accordance with
the requirements of paragraph (n) of this
section. To the extent reasonably
available to the applicant, the scope
ruling application must include the
requested information under paragraph
(c)(2) of this section and relevant
supporting documentation.
(2) Requested information. (i) A
detailed physical description of the
product, including:
(A) The characteristics (including
technical, physical, chemical or
otherwise) of the product;
(B) The uses of the product;
(C) The product’s tariff classification
under the Harmonized Tariff Schedule
of the United States;
(D) Clear and legible photographs,
schematic drawings, specifications,
standards, marketing materials, and any
other exemplars providing a visual
depiction of the product; and
(E) A description of parts, materials,
and the production process employed in
the production of the product.
(ii) A concise public description of
the product and public identification of
the name and address of the producer,
exporter, and importer of the product, if
reasonably available to the applicant.
(iii) A narrative history of the
production of the product at issue,
including a history of earlier versions of
the product if this is not the first model
of the product.
(iv) The volume of annual production
of the product for the most recently
completed fiscal year.
(v) If the product has been imported
into the United States as of the date of
the filing of the scope ruling
application:
(A) An explanation as to whether an
entry of the product has been classified
as subject to an order; and
(B) Relevant documentation,
including dated copies of the Customs
and Border Protection entry summary
forms (or electronic entry processing
system documentation) identifying the
product upon importation and other
related commercial documents,
including, but not limited to, invoices
and contracts, which reflect the details
surrounding the sale and purchase of
that imported product.
(vi) A statement as to whether the
product undergoes any additional
processing in the United States after
importation, or in a third country before
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importation, and a statement as to the
relevance of this processing to the scope
of the order.
(vii) The applicant’s statement as to
whether the product is covered by the
scope of the order, including:
(A) An explanation with specific
reference to paragraph (j) and (k) of this
section, as appropriate;
(B) Citations to any applicable legal
authority; and
(C) Whether there are companion
orders as described in paragraph (m)(2)
of this section.
(viii) Factual information supporting
the applicant’s position, including full
copies of prior scope determinations
and relevant excerpts of other
documents identified in paragraph (k)(1)
of this section.
(d) Initiation of a scope inquiry based
on a scope ruling application. (1)
Within 30 days after the filing of a scope
ruling application, the Secretary will
determine whether to accept or reject
the scope ruling application. If the
Secretary determines that a scope ruling
application is incomplete or otherwise
unacceptable, the Secretary may reject
the scope ruling application and will
provide a written explanation of the
reasons for the rejection. If the scope
ruling application is rejected, the
applicant may resubmit the full
application at any time, with all
identified deficiencies corrected.
(2) If the Secretary does not reject the
scope ruling application, it will be
deemed accepted 31 days after filing
and the scope inquiry will be deemed
initiated.
(e) Time limits—(1) In general. The
Secretary shall issue a final scope ruling
within 120 days after the date on which
the scope inquiry was initiated under
paragraph (b) or (d) of this section. (2)
Extension. The Secretary may extend
the deadline in paragraph (e)(1) of this
section by no more than 180 days if the
Secretary determines that good cause
exists to warrant an extension.
Situations in which good cause has been
demonstrated may include, but are not
limited to, the following:
(i) If the Secretary has issued
questionnaires to the applicant or other
interested parties; received responses to
those questionnaires; and determined
that an extension is warranted to request
further information or consider and
address the parties’ responses on the
record adequately; or
(ii) The Secretary has issued a
preliminary scope ruling (see paragraph
(g) of this section).
(f) Scope inquiry procedures. (1)
Within 20 days of the Secretary’s selfinitiation of a scope inquiry under
paragraph (b) of this section, interested
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parties are permitted one opportunity to
submit comment and factual
information addressing the selfinitiation. Within 10 days of the filing
of such comments, any interested party
is permitted one opportunity to submit
comment and factual information to
rebut, clarify, or correct factual
information submitted by the other
interested parties.
(2) Within 20 days of the initiation of
a scope inquiry under paragraph (d)(2)
of this section, an interested party other
than the applicant is permitted one
opportunity to submit comment and
factual information to rebut, clarify, or
correct factual information contained in
the scope ruling application. Within 10
days of the filing of such rebuttal,
clarification, or correction, the applicant
is permitted one opportunity to submit
comment and factual information to
rebut, clarify, or correct factual
information submitted in the interested
party’s rebuttal, clarification or
correction.
(3) Following initiation of a scope
inquiry under paragraph (b) or (d) of
this section, the Secretary may issue
questionnaires and verify submissions
received, where appropriate. The
Secretary may limit issuance of
questionnaires to a reasonable number
of respondents. Questionnaire responses
are due on the date specified by the
Secretary. Within 10 days after a
questionnaire response has been filed
with the Secretary, an interested party
other than the original submitter is
permitted one opportunity to submit
comment and factual information to
rebut, clarify, or correct factual
information contained in the
questionnaire response. Within five
days of the filing of such rebuttal,
clarification, or correction, the original
submitter is permitted one opportunity
to submit comment and factual
information to rebut, clarify, or correct
factual information submitted in the
interested party’s rebuttal, clarification
or correction.
(4) If the Secretary issues a
preliminary scope ruling under
paragraph (g) of this section, which is
not issued concurrently with the
initiation of the scope inquiry, the
Secretary will establish a schedule for
the filing of scope comments and
rebuttal comments. Unless otherwise
specified, any interested party may
submit scope comments within 10 days
after the issuance of the preliminary
scope ruling, and any interested party
may submit rebuttal comments within 5
days thereafter. Unless otherwise
specified, no factual information will be
accepted in the scope or rebuttal
comments.
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(5) If the Secretary issues a
preliminary scope ruling concurrently
with the initiation of a scope inquiry
under paragraph (g) of this section,
paragraphs (f)(1) through (4) of this
section will not apply. In such a
situation, the Secretary will establish
appropriate procedures on a casespecific basis.
(6) If the Secretary determines it is
appropriate to do so, the Secretary may
rescind a scope inquiry under this
section.
(7) The Secretary may alter any
deadlines under this paragraph or
establish a separate schedule for the
filing of comments and/or factual
information during the scope inquiry, as
appropriate.
(g) Preliminary scope ruling. The
Secretary may issue a preliminary scope
ruling, based upon the available
information at the time, as to whether
there is a reasonable basis to believe or
suspect that the product subject to a
scope inquiry is covered by the scope of
the order. In determining whether to
issue a preliminary scope ruling, the
Secretary may consider the complexity
of the issues and arguments raised in
the scope inquiry. The Secretary may
issue a preliminary scope ruling
concurrently with the initiation of a
scope inquiry under paragraph (b) or (d)
of this section.
(h) Final scope ruling. The Secretary
will issue a final scope ruling as to
whether the product that is the subject
of the scope inquiry is covered by the
scope of the order, including an
explanation of the factual and legal
conclusions on which the final scope
ruling is based. The Secretary will
promptly convey a copy of the final
scope ruling in the manner prescribed
by section 516A(a)(2)(A)(ii) of the Act to
all parties to the proceeding (see
§ 351.102(b)(36)).
(i) Other segments of the proceeding.
(1) Notwithstanding any other provision
of this section, the Secretary may, but is
not required to, address scope issues in
another segment of the proceeding, such
as an administrative review under
§ 351.213, a circumvention inquiry
under § 351.226, or a covered
merchandise inquiry under § 351.227,
without initiating or conducting a scope
inquiry under this section. For example,
the Secretary may forego or rescind a
scope inquiry under this section and
determine whether the product at issue
is covered by the scope of the order in
another segment of the proceeding
(including another scope inquiry, see
paragraph (m)(1) of this section).
(2) Notwithstanding any other
provision of this section, the Secretary
may modify the deadlines of the scope
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inquiry to align with the deadlines of
another segment of the proceeding or
make no changes to its scope inquiry
deadlines.
(3) During the pendency of a scope
inquiry or upon issuance of a final
scope ruling under paragraph (h) of this
section, the Secretary may take any
further action, as appropriate, with
respect to another segment of the
proceeding. For example, if the
Secretary considers it appropriate, the
Secretary may request information
concerning the product that is the
subject of the scope inquiry for purpose
of an administrative review under
§ 351.213.
(j) Country of origin determinations.
In considering whether a product is
covered by the scope of the order at
issue, the Secretary may need to
determine the country of origin of the
product. To make such a determination,
the Secretary may use any reasonable
method and is not bound by the
determinations of any other agency,
including tariff classification and
country of origin marking rulings issued
by the Customs Service. In determining
the country of origin, the Secretary may
conduct a substantial transformation
analysis that considers relevant factors
that arise on a case-by-case basis,
including:
(1) Whether the processed
downstream product is a different class
or kind of merchandise than the
upstream product;
(2) The characteristics (including
technical, physical, chemical or
otherwise) and intended end-use of the
product;
(3) The cost of production/value
added of further processing in the third
country or countries;
(4) The nature and sophistication of
processing in the third country or
countries; and
(5) The level of investment in the
third country or countries.
In conducting a country of origin
determination, the Secretary also may
consider where the essential component
of the product is produced or where the
essential characteristics of the product
are imparted.
(k) Scope rulings. In determining
whether a product is covered by the
scope of the order at issue, the Secretary
will consider the language of the scope
and may make its determination on this
basis alone if the language of the scope,
including the descriptions of
merchandise expressly excluded from
the scope, is dispositive.
(1) In considering the language of the
scope, at the Secretary’s discretion, the
following may also be considered:
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(i) The descriptions of the
merchandise contained in the petition;
(ii) The descriptions of the
merchandise contained in the initial
investigation;
(iii) Determinations of the Secretary,
including, but not limited to, prior
scope rulings, memoranda, or
clarifications; and
(iv) Determinations of the
Commission, including reports issued
pursuant to the Commission’s initial
investigation.
(2) If the Secretary determines that the
above sources are not dispositive, the
Secretary will then further consider:
(i) The characteristics (including
technical, physical, chemical or
otherwise) of the product;
(ii) The expectations of the ultimate
purchasers;
(iii) The ultimate use of the product;
(iv) The channels of trade in which
the product is sold; and
(v) The manner in which the product
is advertised and displayed.
(3) If merchandise contains two or
more components and the product at
issue in the scope inquiry is a
component of that merchandise, the
Secretary will first analyze the scope
language and the criteria above to
determine if the product, standing
alone, would be covered by an order. If
the Secretary determines that a
component product would otherwise be
covered by the scope of an order, the
Secretary next will examine the same
criteria to determine if the component
product’s inclusion in the larger
merchandise is directly addressed by
the scope of the order for purposes of
inclusion or exclusion from the
coverage of the scope. Finally, if the
scope language and the criteria above do
not address that situation, then the
Secretary will consider, as appropriate,
relevant factors that may arise on a
product-specific basis to determine
whether the component product’s
inclusion in the larger merchandise
results in its exclusion from the scope
of the order, or leaves it within the
coverage of the scope. Such relevant
factors include:
(i) The practicability of separating the
in-scope component for repackaging or
resale;
(ii) The measurable value of the inscope component as compared to the
measurable value of the merchandise as
a whole; and
(iii) The ultimate use or function of
the in-scope component relative to the
ultimate use or function of the
merchandise as a whole.
(l) Suspension of liquidation. (1)
When the Secretary initiates a scope
inquiry under paragraph (b) or (d) of
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this section, the Secretary will notify the
Customs Service of the initiation and
direct the Customs Service to continue
the suspension of liquidation of entries
of products subject to the scope inquiry
that were already subject to the
suspension of liquidation, and to apply
the cash deposit rate that would be
applicable if the product were
determined to be covered by the scope
of the order, until appropriate
liquidation instructions are issued.
(2) If the Secretary issues a
preliminary scope ruling under
paragraph (g) of this section that the
product at issue is covered by the scope
of the order, the Secretary will direct the
Customs Service as follows:
(i) To continue the suspension of
liquidation of previously suspended
entries of the product at issue as
directed under paragraph (l)(1) of this
section; and
(ii) To suspend liquidation of all other
unliquidated entries of the product at
issue, and apply the applicable cash
deposit rate under the order to those
entries.
(3) If the Secretary issues a final scope
ruling under paragraph (h) of this
section that the product at issue is
covered by the scope of the order, the
Secretary will direct the Customs
Service as follows:
(i) To continue the suspension of
liquidation of entries suspended as
directed under paragraph (l)(1) and/or
(l)(2) of this section (including entries of
the product at issue that are subject to
suspension of liquidation as a result of
another segment of a proceeding, such
as an administrative review under
§ 351.213 or a circumvention inquiry
under § 351.226) and apply the
applicable cash deposit rate under the
order until appropriate liquidation
instructions are issued pursuant to
§§ 351.212 and 351.213; and
(ii) To suspend liquidation of all other
unliquidated entries of the product at
issue that are not otherwise subject to
suspension of liquidation, and apply the
applicable cash deposit rate under the
order until appropriate liquidation
instructions are issued pursuant to
§§ 351.212 and 351.213.
(4) If the Secretary issues a final scope
ruling under paragraph (h) of this
section that the product is not covered
by the scope of the order, and entries of
the product at issue are not otherwise
subject to suspension of liquidation as
a result of another segment of a
proceeding, such as a circumvention
inquiry under § 351.226 or a covered
merchandise inquiry under § 351.227,
the Secretary will direct the Customs
Service to terminate the suspension of
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liquidation and refund any cash
deposits for such entries.
(m) Applicability of scope rulings;
companion orders—(1) In general. To
the extent practicable, the Secretary
normally will initiate and conduct a
single scope inquiry and issue a single
scope ruling for an order under this
section with respect to all products with
the identical physical description from
the same country of origin as the
particular product at issue, regardless of
producer, exporter, or importer. If the
Secretary has previously issued a scope
ruling for an order with respect to a
particular product, the Secretary may
apply that scope ruling to all products
with the identical physical description
from the same country of origin as the
particular product at issue, regardless of
producer, exporter, or importer, without
initiating or conducting a new scope
inquiry under this section. In such
instances, the requirements of paragraph
(h) of this section will apply.
(2) Companion antidumping and
countervailing duty orders. If there are
companion antidumping and
countervailing duty orders covering the
same merchandise from the same
country of origin, the requesting
interested party under paragraph (c) of
this section must file the scope ruling
application pertaining to both orders
only on the record of the antidumping
duty proceeding. Should the Secretary
determine to initiate a scope inquiry
under paragraph (b) or (d) of this
section, the Secretary will initiate and
conduct a single inquiry with respect to
the merchandise at issue for both orders
only on the record of the antidumping
proceeding. Once the Secretary issues a
final scope ruling on the record of the
antidumping duty proceeding, the
Secretary will include a copy of that
scope ruling on the record of the
countervailing duty proceeding.
(n) Service of scope ruling
application; annual inquiry service list;
entry of appearance. (1) The
requirements of § 351.303(f) apply to
this section, except that an interested
party that submits a scope ruling
application under paragraph (c) of this
section must serve a copy of the
application on all persons on the annual
inquiry service list for that order, as
well as the companion order, if any, as
described in paragraph (m)(2) of this
section. If a scope ruling application is
rejected and resubmitted pursuant to
paragraph (d)(1) of this section, service
of the resubmitted application is not
required under this paragraph, unless
otherwise specified.
(2) For purposes of this section, the
‘‘annual inquiry service list’’ will
include the petitioner(s) and those
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parties that file a request for inclusion
on the annual inquiry service list for a
proceeding, in accordance with the
Secretary’s established procedures. (3) A
new ‘‘annual inquiry service list’’ will
be established on a yearly basis. Parties
filing a request for inclusion on that list
must file a request during the
anniversary month of the publication of
the antidumping or countervailing duty
order. Only the petitioner will be
automatically placed on the new annual
inquiry service list once the previous
year’s list has been replaced.
(4) Once a scope ruling application is
accepted by the Secretary, a segmentspecific service list will be established
and the requirements of § 351.303(f) will
apply. Parties other than the scope
ruling applicant that wish to participate
in the scope inquiry must file an entry
of appearance in accordance with
§ 351.103(d)(1).
(o) Publication of list of final scope
rulings. On a quarterly basis, the
Secretary will publish in the Federal
Register a list of final scope rulings
issued within the previous three
months. This list will include the case
name, and a brief description of the
ruling. The Secretary also may include
complete public versions of its scope
rulings on its website, should the
Secretary determine such placement is
warranted.
(p) Suspended investigations;
suspension agreements. The Secretary
may, as appropriate, apply the
procedures set forth in this section in
determining the scope of a suspended
investigation or a suspension agreement
(see § 351.208).
■ 6. Add § 351.226 as follows:
§ 351.226
Circumvention inquiries.
(a) Introduction. Section 781 of the
Act addresses the circumvention of
antidumping and countervailing duty
orders. This provision recognizes that
circumvention seriously undermines the
effectiveness of the remedies provided
by the antidumping and countervailing
duty proceedings, and frustrates the
purposes for which these laws were
enacted. Section 781 of the Act allows
the Secretary to apply antidumping and
countervailing duty orders in such a
way as to prevent circumvention by
including within the scope of the order
four distinct categories of merchandise.
The Secretary will initiate and conduct
a circumvention inquiry at the request
of an interested party or on the
Secretary’s initiative, and issue a
circumvention determination as
provided for under section 781 of the
Act and the rules and procedures in this
section. Unless otherwise specified, the
procedures as described in subpart C of
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this part (§§ 351.301 through 351.308
and §§ 351.312 through 351.313) apply
to this section.
(b) Self-initiation of circumvention
inquiry. If the Secretary determines from
available information that an inquiry is
warranted into the question of whether
the elements necessary for a
circumvention determination under
section 781 of the Act exist, the
Secretary may initiate a circumvention
inquiry and publish a notice of
initiation in the Federal Register.
(c) Circumvention inquiry request—(1)
In general. An interested party may
submit a request for a circumvention
inquiry that alleges that the elements
necessary for a circumvention
determination under section 781 of the
Act exist and that is accompanied by
information reasonably available to the
interested party supporting these
allegations. The circumvention inquiry
request must be served in accordance
with the requirements of paragraph (n)
of this section.
(2) Contents of request. To the extent
reasonably available to the requestor, a
circumvention inquiry request must
include the requested information under
paragraph (c)(1) of this section and the
following:
(i) A detailed physical description of
the merchandise allegedly
circumventing the antidumping or
countervailing duty order, including:
(A) The characteristics (including
technical, physical, chemical or
otherwise) of the product;
(B) The uses of the product;
(C) The product’s tariff classification
under the Harmonized Tariff Schedule
of the United States;
(D) Clear and legible photographs,
schematic drawings, specifications,
standards, marketing materials, and any
other exemplars providing a visual
depiction of the product; and
(E) A description of parts, materials,
and the production process employed in
the production of the product.
(ii) A concise public description of
the product and public identification of
the name and address of any producer,
exporter, and importer of the product
allegedly circumventing the
antidumping or countervailing duty
order if reasonably available to the
requesting interested party. If the full
universe of parties allegedly
circumventing the order(s) is unknown,
then examples are sufficient.
Furthermore, this provision is not
intended to restrict the inclusion of
business proprietary information in the
request where appropriate.
(iii) A statement of the requestor’s
position as to the nature of the alleged
circumvention under section 781 of the
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Act, such as a description of the
procedures, channels of trade, and
foreign countries involved (including a
description of the processes occurring in
each country), as appropriate.
(iv) A statement of the requestor’s
position as to whether the
circumvention inquiry, if initiated,
should be conducted on a country-wide
basis.
(iv) Factual information supporting
this position, including import and
export data relevant to the merchandise
allegedly circumventing the
antidumping or countervailing duty
order.
(d) Initiation of a circumvention
inquiry based on a request. Within 20
days after the filing of a request for a
circumvention inquiry, the Secretary
will determine whether to accept or
reject the request. If it is not practicable
to determine whether to accept or reject
a request within 20 days, the Secretary
may extend that deadline by an
additional 15 days.
(1) If the Secretary determines that the
request is incomplete or otherwise
unacceptable, the Secretary may reject
the request, and will provide a written
explanation of the reasons for the
rejection. If the request is rejected, the
requestor may resubmit the full request
at any time, with all identified
deficiencies corrected.
(2) If the Secretary determines upon
review of a request for a circumvention
inquiry that a scope ruling is warranted
before the Secretary can conduct a
circumvention analysis, the Secretary
may either, in accord with
§ 351.225(i)(1), initiate the
circumvention inquiry and address
scope issues in the context of the
circumvention inquiry, or defer
initiation of the circumvention inquiry
pending the completion of any ongoing
or new segment of the proceeding
addressing the scope issue. When
initiation is deferred pending another
segment of the proceeding, if the result
of that other segment is that the product
at issue is not covered by the scope of
the antidumping and/or countervailing
duty order(s) at issue, the Secretary may
immediately initiate the circumvention
inquiry upon the issuance of the final
decision in that other segment.
(3) If the Secretary determines that a
request for a circumvention inquiry
satisfies the requirements of paragraph
(c) of this section, the Secretary will
accept the request and initiate a
circumvention inquiry. The Secretary
will publish a notice of initiation in the
Federal Register.
(e) Time limits—(1) Preliminary
Determination. The Secretary will issue
a preliminary determination under
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49499
paragraph (g)(1) of this section no later
than 150 days from the date of
publication of the notice of initiation of
a circumvention inquiry under
paragraph (b) or (d) of this section.
(2) Final Determination. In
accordance with section 781(f) of the
Act, the Secretary shall, to the
maximum extent practicable, issue a
final determination under paragraph
(g)(2) of this section no later than 300
days from the date of publication of the
notice of initiation of a circumvention
inquiry under paragraph (b) or (d) of
this section. If the Secretary concludes
that the inquiry is extraordinarily
complicated and additional time is
necessary to issue a final circumvention
determination, then the Secretary may
extend the 300-day deadline by no more
than 65 days.
(f) Circumvention inquiry procedures.
(1) Within 20 days of the publication of
the Secretary’s self-initiation of a
circumvention inquiry under paragraph
(b) of this section, interested parties are
permitted one opportunity to submit
comment and factual information
addressing the self-initiation. Within 10
days of the filing of such comments, any
interested party is permitted one
opportunity to submit comment and
factual information to rebut, clarify, or
correct factual information submitted by
the other interested parties.
(2) Within 20 days of the publication
of the initiation of a circumvention
inquiry under paragraph (d) of this
section, an interested party other than
the requestor is permitted one
opportunity to submit comment and
factual information to rebut, clarify, or
correct factual information contained in
the request. Within 10 days of the filing
of such rebuttal, clarification, or
correction, the requestor is permitted
one opportunity to submit comment and
factual information to rebut, clarify, or
correct factual information contained in
the interested party’s rebuttal,
clarification or correction.
(3) Following initiation of a
circumvention inquiry under paragraph
(b) or (d) of this section, the Secretary
may issue questionnaires and verify
submissions received, where
appropriate. The Secretary may limit
issuance of questionnaires to a
reasonable number of respondents.
Questionnaire responses are due on the
date specified by the Secretary. Within
10 days after a questionnaire response
has been filed with the Secretary, an
interested party other than the original
submitter is permitted one opportunity
to submit comment and factual
information to rebut, clarify, or correct
factual information contained in the
questionnaire response. Within 5 days
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of the filing of such rebuttal,
clarification, or correction, the original
submitter is permitted one opportunity
to submit comment and factual
information to rebut, clarify, or correct
factual information contained in the
interested party’s rebuttal, clarification
or correction.
(4) If the Secretary issues a
preliminary circumvention
determination under paragraph (g)(1) of
this section, which is not issued
concurrently with the initiation of the
circumvention inquiry, the Secretary
will establish a schedule for the filing of
comments and rebuttal comments.
Unless otherwise specified, any
interested party may submit comments
within 10 days after the issuance of the
preliminary circumvention
determination, and any interested party
may submit rebuttal comments within 5
days thereafter. Unless otherwise
specified, no factual information will be
accepted in the comments or rebuttal
comments.
(5) If the Secretary issues a
preliminary circumvention
determination concurrently with the
initiation of the circumvention inquiry
under paragraph (g)(1) of this section,
paragraphs (g)(1) through (4) will not
apply. In such a situation, the Secretary
will establish appropriate procedures on
a case-specific basis.
(6) Notwithstanding any other
provision of this section, the Secretary
may forego or rescind a circumvention
inquiry, in whole or in part, under this
section for the following reasons:
(i) The requestor timely withdraws its
request for a circumvention inquiry
under paragraph (c) of this section;
(ii) The Secretary issues a final
determination in another segment of a
proceeding, and has determined that the
merchandise at issue in the
circumvention inquiry is covered by the
scope of the antidumping or
countervailing duty order;
(iii) Where the Secretary has initiated
a circumvention inquiry under
paragraph (b) or (d) of this section to
examine circumvention under two or
more provisions under paragraphs (h),
(i), (j), or (k) of this section, and
determines that it is not necessary to
issue a final circumvention
determination with respect to one of
those paragraphs. For example, if the
Secretary initiates a circumvention
inquiry to examine whether
merchandise is altered in minor respects
under paragraph (j) of this section or
later-developed merchandise under
paragraph (k) of this section, the
Secretary may rescind the inquiry in
part to address only one of those
provisions.
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(7) The Secretary may alter any
deadlines under this paragraph or
establish a separate schedule for the
filing of comments and/or factual
information during the circumvention
inquiry, as appropriate.
Notwithstanding any other provision of
this section, the Secretary may modify
the deadlines of the circumvention
inquiry to align with the deadlines of
another segment of the proceeding or
make no changes to its inquiry
deadlines.
(8)(i) The Secretary will notify the
Commission in writing of the proposed
inclusion of products in an order prior
to issuing a final determination under
paragraph (g)(2) of this section based on
a determination under:
(A) Section 781(a) of the Act
(paragraph (h) of this section) with
respect to merchandise completed or
assembled in the United States (other
than minor completion or assembly);
(B) Section 781(b) of the Act
(paragraph (i) of this section) with
respect to merchandise completed or
assembled in other foreign countries; or
(C) Section 781(d) of the Act
(paragraph (k) of this section) with
respect to later-developed products that
incorporate a significant technological
advance or significant alteration of an
earlier product.
(ii) If the Secretary notifies the
Commission under paragraph (f)(7)(i) of
this section, upon the written request of
the Commission, the Secretary will
consult with the Commission regarding
the proposed inclusion, and any such
consultation will be completed within
15 days after the date of such request.
If, after consultation, the Commission
believes that a significant injury issue is
presented by the proposed inclusion of
a product within an order, the
Commission may provide written advice
to the Secretary as to whether the
inclusion would be inconsistent with
the affirmative injury determination of
the Commission on which the order is
based.
(g) Circumvention determinations—
(1) Preliminary determination. The
Secretary will issue a preliminary
determination, based upon the available
information at the time, as to whether
there is a reasonable basis to believe or
suspect that the elements necessary for
a circumvention determination under
section 781 of the Act exist. The
preliminary determination will be
published in the Federal Register. The
Secretary may publish notice of a
preliminary determination concurrently
with the notice of initiation of a
circumvention inquiry under paragraph
(b) or (d) of this section.
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(2) Final determination. The Secretary
will issue a final determination as to
whether the elements necessary for a
circumvention determination under
section 781 of the Act exist, in which
case the merchandise at issue will be
included within the scope of the order.
As part of its determination, the
Secretary will include an explanation of
the factual and legal conclusions on
which the final determination is based.
The final determination will be
published in the Federal Register.
Promptly after publication, the
Secretary will convey a copy of the final
determination in the manner prescribed
by section 516A(a)(2)(A)(ii) of the Act to
all parties to the proceeding (see
§ 351.102(b)(36)).
(h) Products completed or assembled
in the United States. Under section
781(a) of the Act, the Secretary may
include within the scope of an
antidumping or countervailing duty
order imported parts or components
referred to in section 781(a)(1)(B) of the
Act that are used in the completion or
assembly of the merchandise in the
United States at any time such order is
in effect. In determining the value of
parts or components (including such
purchases from another person) under
section 781(a)(1)(D) of the Act, or of
processing performed (including by
another person) under section
781(a)(2)(E) of the Act, the Secretary
may determine the value of the part or
component on the basis of the cost of
producing the part or component under
section 773(e) of the Act—or, in the case
of nonmarket economies, on the basis of
section 773(c) of the Act.
(i) Products completed or assembled
in other foreign countries. Under section
781(b) of the Act, the Secretary may
include within the scope of an
antidumping or countervailing duty
order, at any time such order is in effect,
imported merchandise completed or
assembled in a foreign country other
than the country to which the order
applies. In determining the value of
parts or components (including such
purchases from another person) under
section 781(b)(1)(D) of the Act, or of
processing performed (including by
another person) under section
781(b)(2)(E) of the Act, the Secretary
may determine the value of the part or
component on the basis of the cost of
producing the part or component under
section 773(e) of the Act—or, in the case
of nonmarket economies, on the basis of
section 773(c) of the Act.
(j) Minor alterations of merchandise.
Under section 781(c) of the Act, the
Secretary may include within the scope
of an antidumping or countervailing
duty order articles altered in form or
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appearance in minor respects. The
Secretary may consider such criteria
including, but not limited to, the overall
physical characteristics of the
merchandise, the expectations of the
ultimate users, the use of the
merchandise, the channels of marketing
and the cost of any modification relative
to the total value of the imported
products. The Secretary also may
consider the circumstances under which
the products enter the United States,
including but not limited to the timing
of the entries and the quantity of
merchandise entered during the
circumvention review period.
(k) Later-developed merchandise. In
determining whether later-developed
merchandise is within the scope of an
antidumping or countervailing duty
order, the Secretary will apply section
781(d) of the Act. In determining
whether merchandise is ‘‘laterdeveloped’’ the Secretary will examine
whether the merchandise at issue was
commercially available at the time of
the initiation of the underlying
antidumping or countervailing duty
investigation.
(l) Suspension of liquidation. (1)
When the Secretary publishes a notice
of initiation of a circumvention inquiry
under paragraph (b) or (d) of this
section, the Secretary will notify the
Customs Service of the initiation and
direct the Customs Service to continue
the suspension of liquidation of entries
of products subject to the circumvention
inquiry that were already subject to the
suspension of liquidation, and to apply
the cash deposit rate that would be
applicable if the product were
determined to be covered by the scope
of the order, until appropriate
liquidation instructions are issued.
(2) If the Secretary issues an
affirmative preliminary determination
under paragraph (g)(1) of this section,
the Secretary will direct the Customs
Service as follows:
(i) To continue the suspension of
liquidation of previously suspended
entries of the product at issue as
directed under paragraph (l)(1) of this
section; and
(ii) To suspend liquidation of all other
unliquidated entries of the product at
issue, and apply the applicable cash
deposit rate under the order to those
entries.
(3) If the Secretary issues an
affirmative final determination under
paragraph (g)(2) of this section, the
Secretary will direct the Customs
Service as follows:
(i) To continue the suspension of
liquidation of entries suspended as
directed under paragraph (l)(1) and/or
(l)(2) of this section (including entries of
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the product at issue that are subject to
suspension of liquidation as a result of
another segment of a proceeding, such
as an administrative review under
§ 351.213) and apply the applicable cash
deposit rate under the order until
appropriate liquidation instructions are
issued pursuant to §§ 351.212 and
351.213; and
(ii) To suspend liquidation of all other
unliquidated entries of the product at
issue that are not otherwise subject to
suspension of liquidation, and apply the
applicable cash deposit rate under the
order until appropriate liquidation
instructions are issued pursuant to
§§ 351.212 and 351.213.
(4) If the Secretary issues a negative
final determination under paragraph
(g)(2) of this section, and entries of the
product are not otherwise subject to
suspension of liquidation as a result of
another segment of a proceeding, such
as a covered merchandise inquiry under
§ 351.227, the Secretary will order the
Customs Service to terminate the
suspension of liquidation and refund
any cash deposits for such entries.
(m) Applicability of circumvention
determination; other segments of the
proceeding; companion orders—(1)
Applicability of circumvention
determination. In conducting a
circumvention inquiry under this
section, the Secretary shall consider,
based on the available record evidence,
whether the circumvention
determination should be applied on a
country-wide basis.
(2) Other segments of the proceeding.
During the pendency of a circumvention
inquiry or upon issuance of a final
circumvention determination under
paragraph (g)(2) of this section, the
Secretary may take any further action, as
appropriate, with respect to another
segment of the proceeding. For example,
if the Secretary considers it appropriate,
the Secretary may request information
concerning the product that is the
subject of the circumvention inquiry for
purpose of an administrative review
under § 351.213.
(3) Companion antidumping and
countervailing duty orders. If there are
companion antidumping and
countervailing duty orders covering the
same merchandise from the same
country of origin, the requesting
interested party under paragraph (c) of
this section must file the request
pertaining to both orders only on the
record of the antidumping duty
proceeding. Should the Secretary
determine to initiate a circumvention
inquiry under paragraph (b) or (d) of
this section, the Secretary will initiate
and conduct a single inquiry with
respect to the merchandise at issue for
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both orders only on the record of the
antidumping proceeding. Once the
Secretary issues a final circumvention
determination on the record of the
antidumping duty proceeding, the
Secretary will include a copy of that
determination on the record of the
countervailing duty proceeding.
(n) Service of circumvention inquiry
request; annual inquiry service list;
entry of appearance. (1) The
requirements of § 351.303(f) apply to
this section, except that an interested
party that submits a circumvention
inquiry request under paragraph (c) of
this section must serve a copy of that
inquiry request on all persons on the
annual inquiry service list for that order,
as well as the companion order, if any,
as described in paragraph (m)(3) of this
section. The procedures and description
pertaining to the ‘‘annual inquiry
service list’’ are set forth in
§ 351.225(n)(1)–(3).
(2) Once a circumvention inquiry
request is accepted by the Secretary, a
segment-specific service list will be
established and the requirements of
§ 351.303(f) will apply. Parties other
than the interested party requesting a
circumvention inquiry that wish to
participate in the circumvention inquiry
must file an entry of appearance in
accordance with § 351.103(d)(1).
(o) Suspended investigations;
suspension agreements. The Secretary
may, in accordance with section 781 of
the Act, apply the procedures set forth
in this section in determining whether
the elements necessary for a
circumvention determination under
section 781 of the Act exist with respect
to a suspended investigation or a
suspension agreement (see § 351.208).
■ 7. Add § 351.227 to read as follows:
§ 351.227
Covered merchandise referrals.
(a) Introduction. The Trade
Facilitation and Trade Enforcement Act
of 2015 contains Title IV-Prevention of
Evasion of Antidumping and
Countervailing Duty Orders (short title
‘‘Enforce and Protect Act of 2015’’ or
‘‘EAPA’’) (Pub. L. 114–125, sections
401, 421, 130 Stat. 122, 155, 161 (2016)).
The Enforce and Protect Act of 2015
added section 517 to the Act, which
established a new framework by which
the Customs Service can conduct civil
administrative investigations of
potential duty evasion of an
antidumping and/or countervailing duty
order (referred to herein as an ‘‘EAPA
investigation’’). Section 517(b)(4)(A)(i)
of the Act provides a procedure
whereby if, during the course of an
EAPA investigation, the Customs
Service is unable to determine whether
the merchandise at issue is covered
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merchandise within the meaning of
section 517(a)(3) of the Act, it shall refer
the matter to the Secretary to make such
a determination (referred to herein as a
‘‘covered merchandise referral’’).
Section 517(b)(4)(B) of the Act directs
the Secretary to determine whether the
merchandise is covered merchandise
and promptly transmit the
determination to the Customs Service.
The Secretary shall consider a covered
merchandise referral and issue a
covered merchandise determination in
accordance with the rules and
procedures in this section. Unless
otherwise specified, the procedures as
described in subpart C of this part
(§§ 351.301 through 351.308 and
§§ 351.312 through 351.313) apply to
this section.
(b) Actions with respect to covered
merchandise referral. Within 15 days
after receiving a covered merchandise
referral from the Customs Service
pursuant to section 517(b)(4)(A)(i) of the
Act that the Secretary determines to be
sufficient, the Secretary will take the
following action.
(1) Initiate a covered merchandise
inquiry (the Secretary will publish a
notice of initiation in the Federal
Register);
(2) Self-initiate a circumvention
inquiry pursuant to § 351.226(b) to
address the covered merchandise
referral; or
(3) If the Secretary determines upon
review of the covered merchandise
referral that the question before the
Secretary can be addressed in an
ongoing segment of the proceeding,
such as a scope inquiry under § 351.225
or a circumvention inquiry under
§ 351.226, the Secretary will publish a
notice of its intent to address the
covered merchandise referral in the
context of such other segment in the
Federal Register.
(c) Time limits—(1) In general. When
the Secretary initiates a covered
merchandise inquiry under paragraph
(b)(1) of this section, the Secretary shall
issue a final covered merchandise
determination within 120 days from the
date of publication of the notice of
initiation.
(2) Extension. If the Secretary
concludes that the inquiry is
extraordinarily complicated and
additional time is necessary to issue a
final covered merchandise
determination, then the Secretary may
extend the deadline in paragraph (c)(1)
by no more than 60 days.
(d) Covered merchandise inquiry
procedures. (1) Within 20 days of the
date of publication of the notice of a
covered merchandise inquiry under
paragraph (b)(1) of this section,
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interested parties are permitted one
opportunity to submit comment and
factual information addressing the
initiation. Within 10 days of the filing
of such comments, any interested party
is permitted one opportunity to submit
comment and factual information to
rebut, clarify, or correct factual
information submitted by the other
interested parties.
(2) Following initiation of a covered
merchandise inquiry under paragraph
(b)(1) of this section, the Secretary may
issue questionnaires and verify
submissions received, where
appropriate. The Secretary may limit
issuance of questionnaires to a
reasonable number of respondents.
Questionnaire responses are due on the
date specified by the Secretary. Within
10 days after a questionnaire response
has been filed with the Secretary, an
interested party other than the original
submitter is permitted one opportunity
to submit comment and factual
information to rebut, clarify, or correct
factual information contained in the
questionnaire response. Within five
days of the filing of such rebuttal,
clarification, or correction, the original
submitter is permitted one opportunity
to submit comment and factual
information to rebut, clarify, or correct
factual information submitted in the
interested party’s rebuttal, clarification
or correction.
(3) If the Secretary issues a
preliminary covered merchandise
determination under paragraph (e)(1) of
this section, which is not issued
concurrently with a covered
merchandise inquiry, the Secretary will
establish a schedule for the filing of
comments and rebuttal comments.
Unless otherwise specified, any
interested party may submit comments
within 10 days after the issuance of the
preliminary covered merchandise
determination, and any interested party
may submit rebuttal comments within
five days thereafter. Unless otherwise
specified, no factual information will be
accepted in the comments or rebuttal
comments.
(4) If the Secretary issues a
preliminary covered merchandise
determination concurrently with the
initiation of the covered merchandise
inquiry under paragraph (e)(1) of this
section, paragraphs (e)(1) through (3)
will not apply. In such a situation, the
Secretary will establish appropriate
procedures on a case-specific basis.
(5) Notwithstanding any other
provision of this section, the Secretary
may forego or rescind a covered
merchandise inquiry, in whole or in
part, under this section for the following
reasons:
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Fmt 4701
Sfmt 4702
(i) The Customs Service withdraws its
request for a covered merchandise
inquiry under paragraph (b) of this
section;
(ii) The Secretary issues a final
determination in another segment of a
proceeding that can provide the basis
for the Secretary’s covered merchandise
determination.
(iii) Where the Secretary otherwise
determines that it is not necessary to
initiate or conduct a covered
merchandise inquiry to address the
covered merchandise referral, in which
case the requirements of paragraph
(e)(2) of this section will apply.
(6) The Secretary may alter any
deadlines under this paragraph or
establish a separate schedule for the
filing of comments and/or factual
information during the covered
merchandise inquiry, as appropriate.
Notwithstanding any other provision of
this section, the Secretary may modify
the deadlines of the covered
merchandise inquiry to align with the
deadlines of another segment of the
proceeding or make no changes to its
inquiry deadlines.
(e) Covered merchandise
determinations—(1) Preliminary
determination. The Secretary may issue
a preliminary determination, based
upon the available information at the
time, as to whether there is a reasonable
basis to believe or suspect that the
product that is the subject of the
covered merchandise inquiry is covered
by the scope of the order. In
determining whether to issue a
preliminary determination, the
Secretary may consider the complexity
of the issues and arguments raised in
the context of the covered merchandise
inquiry. The preliminary determination
will be published in the Federal
Register. The Secretary may publish
notice of a preliminary determination
concurrently with the notice of
initiation of a covered merchandise
inquiry under paragraph (b)(1) of this
section.
(2) Final determination. The Secretary
will issue a final determination as to
whether the product that is the subject
of the covered merchandise inquiry is
covered by the scope of the order. As
part of its determination, the Secretary
will include an explanation of the
factual and legal conclusions on which
the final determination is based. The
final determination will be published in
the Federal Register. Promptly after
publication, the Secretary will:
(i) Convey a copy of the final
determination in the manner prescribed
by section 516A(a)(2)(A)(ii) of the Act to
all parties to the proceeding (see
§ 351.102(b)(36)); and
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(ii) Transmit a copy of the final
covered merchandise determination to
the Customs Service in accordance with
section 517(b)(4)(B) of the Act.
(3) Covered merchandise
determinations in other segments of the
proceeding. If the Secretary addresses
the covered merchandise referral in the
context of another segment of the
proceeding as provided for under this
section, or issues a scope ruling under
§ 351.225 or a circumvention
determination under § 351.226 that can
provide the basis for the Secretary’s
covered merchandise determination, the
Secretary will promptly transmit a copy
of the final action in that segment to the
Customs Service in accordance with
section 517(b)(4)(B) of the Act.
(f) Basis for covered merchandise
determination. In issuing a
determination under paragraph (e)(1) or
(2) of this section, the Secretary may
base its determination on paragraphs (j)
and (k) of § 351.225 or any provision
under section 781 of the Act (paragraphs
(h), (i), (j), or (k) of § 351.226).
(g)–(k) [Reserved]
(l) Suspension of liquidation. (1)
When the Secretary publishes a notice
of initiation of a covered merchandise
inquiry under paragraph (b)(1) of this
section, the Secretary will notify the
Customs Service of the initiation and
direct the Customs Service to continue
the suspension of liquidation of entries
of products subject to the covered
merchandise inquiry that were already
subject to the suspension of liquidation,
and to apply the cash deposit rate that
would be applicable if the product were
determined to be covered by the scope
of the order until appropriate
liquidation instructions are issued.
(2) If the Secretary issues an
affirmative preliminary determination
under paragraph (e)(1) of this section
that the product at issue is covered by
the scope of the Order, the Secretary
will direct the Customs Service as
follows:
(i) To continue the suspension of
liquidation of previously suspended
entries of the product at issue as
described under paragraph (l)(1) of this
section; and
(ii) To suspend liquidation of all other
unliquidated entries of the product at
issue, and apply the applicable cash
deposit rate under the order to those
entries.
(3) If the Secretary issues an
affirmative final determination under
paragraph (e)(2) of this section that the
product at issue is covered by the scope
of the order, the Secretary will direct the
Customs Service as follows:
(i) To continue the suspension of
liquidation of entries suspended as
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18:14 Aug 12, 2020
Jkt 250001
directed under paragraph (l)(1) and/or
(l)(2) of this section (including entries of
the product at issue that are subject to
suspension of liquidation as a result of
another segment of a proceeding, such
as an administrative review under
§ 351.213) and apply the applicable cash
deposit rate under the order until
appropriate liquidation instructions are
issued pursuant to §§ 351.212 and
351.213; and
(ii) To suspend liquidation of all other
unliquidated entries of the product at
issue that are not otherwise subject to
suspension of liquidation, and apply the
applicable cash deposit rate under the
order until appropriate liquidation
instructions are issued pursuant to
§§ 351.212 and 351.213.
(4) If the Secretary issues a negative
final determination under paragraph
(e)(2) of this section, and entries of the
product are not otherwise subject to
suspension of liquidation as a result of
another segment of a proceeding, such
as a circumvention inquiry under
§ 351.226, the Secretary will direct the
Customs Service to terminate the
suspension of liquidation and refund
any cash deposits for such entries.
(m) Applicability of covered
merchandise determination; other
segments of the proceeding; companion
orders—(1) Applicability of covered
merchandise determination. In
conducting a covered merchandise
inquiry under this section, the Secretary
shall consider, based on the available
record evidence, whether the covered
merchandise determination should be
applied on a country-wide basis.
(2) Other segments of the proceeding.
During the pendency of a covered
merchandise inquiry or upon issuance
of a final covered merchandise
determination under paragraph (e)(2) of
this section, the Secretary may take any
further action, as appropriate, with
respect to another segment of the
proceeding. For example, if the
Secretary considers it appropriate, the
Secretary may request information
concerning the product that is the
subject of the covered merchandise
inquiry for purpose of an administrative
review under § 351.213.
(3) Companion antidumping and
countervailing duty orders. If there are
companion antidumping and
countervailing duty orders covering the
same merchandise from the same
country of origin, and should the
Secretary determine to initiate a covered
merchandise inquiry under paragraph
(b)(1) of this section, the Secretary will
initiate and conduct a single inquiry
with respect to the merchandise at issue
only on the record of the antidumping
duty proceeding. Once the Secretary
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Fmt 4701
Sfmt 4702
49503
issues a final covered merchandise
determination on the record of the
antidumping duty proceeding, the
Secretary will include a copy of that
determination on the record of the
countervailing duty proceeding, and
notify the Customs Service in
accordance with paragraph (l) of this
section.
(n) Service list. Once the Secretary
initiates a covered merchandise inquiry
under paragraph (b)(1) of this section, a
segment-specific service list will be
established and the requirements of
§ 351.303(f) will apply. Parties other
than those relevant parties identified by
the Customs Service in the covered
merchandise referral that wish to
participate in the covered merchandise
inquiry must file an entry of appearance
in accordance with § 351.103(d)(1).
(o) Suspended investigations;
suspension agreements. The Secretary
may apply the procedures set forth in
this section in determining whether the
elements necessary for a circumvention
determination under section 781 of the
Act exist with respect to a suspended
investigation or a suspension agreement
(see § 351.208).
■ 8. Add § 351.228 to read as follows:
§ 351.228 Certification by importer or other
interested party.
(a) Certification Requirements. The
Secretary may determine in the context
of an antidumping or countervailing
duty proceeding that an importer or
other interested party shall:
(1) Maintain a certification for entries
of merchandise into the customs
territory of the United States; or
(2) Provide a certification by
electronic means at the time of entry or
entry summary; or
(3) Otherwise demonstrate
compliance with a certification
requirement as determined by the
Secretary, in consultation with the
Customs Service. Where the
certification is required to be
maintained by the importer or other
interested party, the Secretary and/or
the Customs Service may require the
importer or other interested party to
provide such a certification to the
requesting agency upon request.
(b) Consequences For No Provision of
a Certificate; Provision of a False
Certificate. The Secretary may instruct
the Customs Service to suspend
liquidation of an importer’s or other
interested party’s entries and require the
importer to post a cash deposit for the
antidumping duty or countervailing
duty at the applicable rate if:
(1) The importer or other interested
party has not provided to the Secretary
or the Customs Service, as appropriate,
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the certification required under
paragraph (a) of this section upon
request; or
(2) The importer or other interested
party provided a certification in
accordance with paragraph (a) of this
section, but the certification contained
materially false, fictitious or fraudulent
statements or representations, or
contained material omissions. Under
either of these scenarios, the Secretary
may also instruct the Customs Service to
assess an antidumping duty or
countervailing duty at the applicable
rate at the time of liquidation or
reliquidation of the entry.
■ 9. Revise paragraph (d) of § 351.305 to
read as follows:
§ 351.305 Access to business proprietary
information.
*
*
*
*
*
(d) Additional filing requirements for
importers. If an applicant represents a
party claiming to be an interested party
by virtue of being an importer, then the
applicant shall submit, along with the
Form ITA–367, documentary evidence
demonstrating that during the
applicable period of investigation or
period of review the interested party
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18:14 Aug 12, 2020
Jkt 250001
imported subject merchandise. For a
scope segment of a proceeding pursuant
to § 351.225 or a circumvention segment
of a proceeding pursuant to § 351.226,
the applicant must present documentary
evidence that the interested party
imported subject merchandise, or that it
has taken steps towards importing the
merchandise subject to the scope or
circumvention inquiry. For a covered
merchandise referral segment of a
proceeding pursuant to § 351.227, an
applicant representing an interested
party that has been identified by the
Customs Service as the importer in a
covered merchandise referral is exempt
from the requirements of providing
documentary evidence to demonstrate
that it is an importer for purposes of that
segment of a proceeding.
■ 10. Revise paragraph (f)(2) of
§ 351.402 to read as follows:
§ 351.402 Calculation of export price and
constructed export price; reimbursement of
antidumping and countervailing duties.
*
*
*
*
*
(f) * * *
(2) Reimbursement Certification. (i)
The importer must certify with the
Customs Service prior to liquidation
whether the importer has or has not
PO 00000
Frm 00034
Fmt 4701
Sfmt 9990
been reimbursed or entered into any
agreement or understanding for the
payment or for the refunding to the
importer by the manufacturer, producer,
seller, or exporter for all or any part of
the antidumping and countervailing
duties, as appropriate. Such
certifications should identify the
commodity, the country, and the
relevant entry number(s).
(ii) The reimbursement certification
may be filed either electronically or in
paper in accordance with the Customs
Service’s requirements, as applicable.
(iii) If an importer does not provide its
reimbursement certification prior to
liquidation, the Customs Service may
accept the reimbursement certification
in accordance with its protest
procedures under 19 U.S.C. 1514.
(iv) Reimbursement certifications are
applicable to entries for the relevant
commodity that has been imported on
or after the date of publication of the
antidumping notice in the Federal
Register that first suspended liquidation
in that proceeding.
*
*
*
*
*
[FR Doc. 2020–15283 Filed 8–12–20; 8:45 am]
BILLING CODE 3510–DS–P
E:\FR\FM\13AUP2.SGM
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Agencies
[Federal Register Volume 85, Number 157 (Thursday, August 13, 2020)]
[Proposed Rules]
[Pages 49472-49504]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-15283]
[[Page 49471]]
Vol. 85
Thursday,
No. 157
August 13, 2020
Part III
Department of Commerce
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International Trade Administration
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19 CFR Part 351
Regulations To Improve Administration and Enforcement of Antidumping
and Countervailing Duty Laws; Proposed Rule
Federal Register / Vol. 85, No. 157 / Thursday, August 13, 2020 /
Proposed Rules
[[Page 49472]]
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DEPARTMENT OF COMMERCE
International Trade Administration
19 CFR Part 351
[Docket No. 200626-0170]
RIN 0625-AB10
Regulations To Improve Administration and Enforcement of
Antidumping and Countervailing Duty Laws
AGENCY: Enforcement and Compliance, International Trade Administration,
Department of Commerce.
ACTION: Proposed rule; request for comments.
-----------------------------------------------------------------------
SUMMARY: Pursuant to its authority under Title VII of the Tariff Act of
1930, as amended (the Act), the Department of Commerce (Commerce)
proposes to modify its regulations under Part 351 of Title 19 to
improve administration and enforcement of the antidumping duty (AD) and
countervailing duty (CVD) laws. Specifically, Commerce proposes to
modify its regulation concerning the time for submission of comments
pertaining to industry support in AD and CVD proceedings; to modify its
regulation regarding new shipper reviews; to modify its regulation
concerning scope matters in AD and CVD proceedings; to promulgate a new
regulation concerning circumvention of AD and CVD orders; to promulgate
a new regulation concerning covered merchandise referrals received from
U.S. Customs and Border Protection (CBP); to promulgate a new
regulation pertaining to Commerce requests for certifications from
interested parties to establish whether merchandise is subject to an AD
or CVD order; and to modify its regulation regarding importer
reimbursement certifications filed with CBP. Finally, Commerce proposes
to modify its regulations regarding letters of appearance in AD and CVD
proceedings and importer filing requirements for access to business
proprietary information. Commerce is seeking public comments on this
proposed rule.
DATES: To be assured of consideration, written comments must be
received no later than September 14, 2020.
ADDRESSES: Submit comments through the Federal eRulemaking Portal at
https://www.Regulations.gov, Docket No. ITA-2020-0001. Comments may also
be submitted by mail or hand delivery/courier, addressed to Jeffrey I.
Kessler, Assistant Secretary for Enforcement and Compliance, Room 1870,
Department of Commerce, 1401 Constitution Ave. NW, Washington, DC
20230.
Commerce will consider all comments received before the close of
the comment period. All comments responding to this document will be a
matter of public record and will generally be available on the Federal
eRulemaking Portal at https://www.Regulations.gov. Commerce 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. Therefore, do not submit confidential
business information or otherwise sensitive or protected information.
Any questions concerning the process for submitting comments should
be submitted to Enforcement & Compliance (E&C) Communications office at
(202) 482-0063 or [email protected].
FOR FURTHER INFORMATION CONTACT: Scott McBride at (202) 482-6292; David
Mason at (202) 482-5051; or Jessica Link at (202) 482-1411.
SUPPLEMENTARY INFORMATION:
General Background
Title VII of the Act vests Commerce with authority to administer
the AD/CVD laws, known as trade remedies. In particular, section 731 of
the Act directs Commerce to impose an AD order on merchandise entering
the United States when it determines that a producer or exporter is
selling a class or kind of foreign merchandise into the United States
at less than fair value (i.e., dumping), and material injury or threat
of material injury to that industry in the United States is found by
the International Trade Commission (ITC). Section 701 of the Act
directs Commerce to impose a CVD order when it determines that a
government of a country or any public entity within the territory of a
country is providing, directly or indirectly, a countervailable subsidy
with respect to the manufacture, production, or export of a class or
kind of merchandise that is imported into the United States, and
material injury or threat of material injury to that industry in the
United States is found by the ITC.\1\
---------------------------------------------------------------------------
\1\ A countervailable subsidy is further defined under section
771(5)(B) of the Act as existing when: A government or any public
entity within the territory of a country provides a financial
contribution; provides any form of income or price support; or makes
a payment to a funding mechanism to provide a financial
contribution, or entrusts or directs a private entity to make a
financial contribution, if providing the contribution would normally
be vested in the government and the practice does not differ in
substance from practices normally followed by governments; and a
benefit is thereby conferred. To be countervailable, a subsidy must
be specific within the meaning of section 771(5A) of the Act.
---------------------------------------------------------------------------
The purpose of the regulatory changes proposed in this rulemaking
is to strengthen the administration and enforcement of AD/CVD laws,
make such administration and enforcement more efficient, and create new
enforcement tools for Commerce to address circumvention and evasion of
trade remedies. If adopted, these changes would equip Commerce to
better fulfill the Congressional intent behind the AD/CVD laws--namely,
to protect U.S. companies, workers, farmers, and ranchers from the
injurious effects of unfairly traded imports. In addition, if adopted,
these changes would promote the Administration's objective to enforce
the AD/CVD laws rigorously, and to aggressively pursue parties that
seek to skirt them. Moreover, the proposed regulations facilitate a
stronger and more efficient administration of the AD and CVD laws in
the context of Commerce's proceedings. The proposed changes are
summarized briefly here, and discussed further below:
Modify section 351.203 to provide for the establishment of
a deadline by which parties may file comments on industry support. At
present, comments on industry support may be filed up to and including
the scheduled date of an initiation determination, leaving Commerce
little or no time to consider fully such comments for purposes of
determining whether the petition has sufficient industry support.
Therefore, such modifications are necessary to enhance Commerce's
ability to consider and act upon such comments in a timely manner.
Revise numerous provisions to section 351.214 concerning
new shipper reviews to address abuse of those procedures and ensure
that the sales to be reviewed are, in fact, bona fide sales. These
changes are necessary to conform the regulation to recent statutory
changes \2\ and to ensure Commerce expends its limited resources on new
shipper reviews only where warranted.
---------------------------------------------------------------------------
\2\ Trade Facilitation and Trade Enforcement Act of 2015, Public
Law 114-125, 130 Stat. 122, 155 (2016).
---------------------------------------------------------------------------
Revise numerous provisions to section 351.225 concerning
scope inquiries by adopting new procedures to preserve resources,
expedite deadlines, and remove unnecessary and burdensome notice and
service requirements. These revisions also clarify and codify the
substantive basis for Commerce's scope rulings pertaining to country of
origin, scope language interpretation, and ``mixed-media''
[[Page 49473]]
products, which incorporate subject merchandise in some form, in light
of past practice and various court decisions. These revisions also
ensure that AD/CVD duties are appropriately applied to products
determined to be subject to the scope of the order.
Adopt new section 351.226 concerning circumvention
inquiries, which largely mirrors the proposed scope procedures. These
provisions also clarify Commerce's authority to self-initiate
circumvention inquiries and apply circumvention determinations on a
``country-wide'' basis.
Adopt new section 351.227 concerning ``covered merchandise
referrals'' from CBP under section 517 of the Act, which largely mirror
the proposed scope and circumvention procedures and allow Commerce
maximum flexibility to further develop its procedures and practice as
it gains more experience in this new area of the law.
Adopt new section 351.228, which is specifically targeted
at improving enforcement of AD and CVD orders and ensuring the
effectiveness of those orders. Under new section 351.228, Commerce may
determine to impose a certification requirement on an importer or
another interested party to further ensure that entries of merchandise
subject to an AD/CVD order are appropriately classified as subject
merchandise.
Modify section 351.402 regarding importer certifications
for the payment or reimbursement of AD/CVD duties on entries subject to
AD orders to account for updated procedures.
Adopt necessary changes, consistent with certain
substantive proposed rules discussed above, to two procedural
provisions: Section 351.103(d)(1) pertaining to letters of appearance
and public service lists, and section 351.305(d) pertaining to importer
filing requirements for access to business proprietary information in
Commerce's proceedings.
Explanation of the Proposed Rules
Comment Period on Industry Support Prior to Initiation Determination--
Section 351.203
Once an AD petition under section 732(b) of the Act or a CVD
petition under section 702(b) is filed, the statute provides Commerce
with 20 days in which to determine whether the elements necessary for
initiation of an investigation have been satisfied, including the
requirement to demonstrate industry support. In exceptional
circumstances, Commerce may extend the 20-day period to a maximum of 40
days solely for purposes of determining industry support. At present,
comments on industry support may be filed up to and including the
scheduled date of an initiation determination, leaving Commerce little
or no time to consider fully such comments for purposes of determining
whether the petition has sufficient industry support. To address this,
Commerce proposes to modify section 351.203 to provide for the
establishment of a deadline for comments no later than five business
days before the scheduled date of initiation; and rebuttal comments no
later than two days thereafter.
New Shipper Reviews--Section 351.214
Commerce proposes to modify its regulation pertaining to new
shipper reviews under section 751(a)(2)(B) of the Act and section
351.214. Section 751(a)(2)(B) of the Act provides a procedure by which
exporters or producers who did not export the product during the
original AD or CVD investigation can obtain their own individual
dumping margin or countervailing duty rate on an accelerated basis
(referred to as a ``new shipper review''). This provision was enacted
in the Uruguay Round Agreements Act (URAA) in 1994,\3\ and Commerce
promulgated its accompanying new shipper review regulation, section
351.214, in 1997.\4\ This regulation provides the rules regarding
requests for new shipper reviews and procedures for conducting such
reviews, and is largely unchanged since 1997. Under this provision,
Commerce conducts a new shipper review to establish an individual
weighted-average dumping margin or countervailable subsidy rate if it
receives a properly documented request for review.
---------------------------------------------------------------------------
\3\ See Uruguay Round Agreements Act, Statement of
Administrative Action, H.R. Doc. No. 103-316, vol. 1, at 816 (1994)
(SAA) (``Article 9.5 {of the Anti-Dumping Agreement{time}
establishes special procedures for imposing antidumping duties on
exporters or producers who did not export the product to the
importing country during the original period of investigation (so-
called `new shippers').'').
\4\ See Antidumping Duties; Countervailing Duties, Proposed
Rule, 61 FR 7308, 7317-18 (Feb. 27, 1996) (1996 Proposed Rule)
(discussing the proposed new shipper review regulation); Antidumping
Duties; Countervailing Duties, Final Rule, 62 FR 27296, 27318-19
(May 19, 1997) (1997 Final Rule) (discussing the finalized new
shipper review regulation).
---------------------------------------------------------------------------
In 2016, the Trade Facilitation and Trade Enforcement Act of 2015
was signed into law, which contains Title IV--Prevention of Evasion of
Antidumping and Countervailing Duty Orders (short title ``Enforce and
Protect Act of 2015'' or ``EAPA'').\5\ Section 433 of EAPA (entitled
``Addressing Circumvention by New Shippers'') made two important
revisions to the new shipper review procedures under section
751(a)(2)(B) of the Act.
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\5\ Public Law 114-125, 130 Stat. 122, 155 (2016).
---------------------------------------------------------------------------
First, in legislative history explaining these amendments, Congress
expressed concern regarding the abuse of new shipper review procedures
to avoid AD/CVD duties.\6\ One area of abuse in particular involved the
ability of an importer of a new shipper's merchandise to post a bond or
security in lieu of cash deposits for entries of that merchandise for
the duration of the new shipper review.\7\ Therefore, to prevent such
abuse of these procedures, section 433 of EAPA removed the ability for
importers to post AD/CVD-specific bonds or security in lieu of AD/CVD
cash deposits by striking this provision from section 751(a)(2)(B) of
the Act.\8\
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\6\ See H.R. Rep. No. 114-114, at 89 (2015) (``The Committee is
concerned that the ability of new exporters and producers to obtain
their own individual weighted average dumping margins or individual
countervailing duty rates from the Department of Commerce on an
expedited basis (known as `new shipper reviews') has been abused to
avoid antidumping and countervailing duties.'')
\7\ Id. (``One area of abuse is taking advantage of the option
to post a bond or security, rather than the normally required cash
deposit, while the Department of Commerce conducts a new shipper
review. This allows an importer to bring in large quantities of
dumped or subsidized merchandise from the exporter or producer under
review without having to provide in cash the full amount of
estimated duties that could be owed on those imports. Having to put
up less capital makes it easier for unscrupulous importers to enter
into schemes to bring in dumped and subsidized merchandise with the
intent of disappearing or otherwise not being available to pay the
antidumping and countervailing duties owed on the imports. This
loophole would be closed by requiring importers of merchandise from
a producer or exporter in a new shipper review to provide a cash
deposit of estimated duties.'')
\8\ See Sec. 433, 130 Stat. at 171; see also H.R. Rep No. 114-
376, at 192 (2015) (Conf. Rep.).
---------------------------------------------------------------------------
Second, section 433 added a provision that the individual dumping
margin or countervailing duty rate determined for a new shipper must be
based on bona fide sales in the United States, and codified the factors
that Commerce has historically used to determine whether a sale is bona
fide.\9\ In explaining this proposed change, Congress identified abuse
of new shipper review procedures where a new shipper ``enter{s{time}
into a scheme to structure a few sales to show little or no dumping or
subsidization when those sales are reviewed . . . resulting in a low or
zero antidumping or countervailing duty rate for that
[[Page 49474]]
producer or exporter.'' \10\ As a result of such scheme: ``An importer
could then bring in that producer or exporter's merchandise at highly
dumped or subsidized prices but with little or no cash deposit. The
problem is further exacerbated if the importer disappears or otherwise
becomes unavailable to pay the duties owed and U.S. Customs and Border
Protection (CBP) has little or no cash deposit against which to recover
the owed duties.'' \11\ Accordingly, to protect against such
schemes,\12\ section 433 added section 751(a)(2)(B)(iv) to the Act,
providing that, in determining whether the sales in the United States
of a new shipper made during the period covered by the review is bona
fide, Commerce shall consider with respect to such sales: Pricing,
commercial quantities, timing, expenses, resale at profit, and arm's-
length basis. Additionally, under section 751(a)(2)(B)(iv), Commerce
may consider any other factor which it determines to be relevant as to
whether such sales are, or are not, likely to be typical of those the
new shipper will make after completion of the review.
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\9\ See Sec. 433, 130 Stat. at 171; see also H.R. Rep. No. 114-
376 at 192-193.
\10\ H.R. Rep. No. 114-114 at 89.
\11\ Id.
\12\ Id. (``This provision would prevent such arrangements by
requiring that the U.S. sales in a new shipper review be bona fide
sales and setting out criteria for identifying bona fide sales,
reflecting the Department of Commerce's current regulations and
practices in this area.'')
---------------------------------------------------------------------------
As a result of the above, Commerce is making conforming amendments
to section 351.214 discussed below. The modifications to section
351.214 would clarify the circumstances under which Commerce will
expend the resources required to reach a determination in a review
conducted under section 751(a)(2)(B) of the Act, among other issues.
Revised paragraph (a) would update the introduction to section
351.214 by including reference to current section 751(a)(2)(B) of the
Act and the statutory requirement for bona fide sales in a new shipper
review. Consistent with the revised statutory language in section
751(a)(2)(B)(iv) of the Act, proposed revisions to paragraph (b)(1),
pertaining to requests for new shipper reviews, provide that, in
requesting a new shipper review, an exporter or producer must not only
satisfy the export or sale requirement but must also demonstrate the
existence of a bona fide sale. With regard to existing section
351.214(b), Commerce explained in the 1996 Proposed Rule that it was
requiring certain certifications from the requestor ``demonstrating
that the party is a bona fide new shipper.'' \13\ In doing so, Commerce
explained:
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\13\ See 1996 Proposed Rule, 61 FR at 7317-18.
The purpose of these certifications is to ensure that new
shipper status is not achieved through mere restructuring of
corporate organizations or channels of distribution. In accordance
with the SAA, at 875, this provision also makes clear that parties
will not be granted new shipper status merely because they were not
individually examined during the investigation.\14\
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\14\ See 1997 Final Rule, 62 FR at 27318-19.
In responding to comments in the 1997 Final Rule, Commerce noted
that it had received one request that Commerce ``clarify that a person
can request a new shipper review as long as there is a bona fide sale
of subject merchandise to the United States, even if that merchandise
has not yet been shipped to or entered the United States.'' \15\
Although Commerce did not address the ``bona fide'' nature of such
sale, Commerce explained:
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\15\ Id., 62 FR at 27319.
The initiation of new shipper reviews and the issuance of
questionnaires requires an expenditure of administrative resources
by the Department that is not inconsiderable when cumulated across
all AD/CVD proceedings. In our view, the Department should not
expend these resources unless there is a reasonable likelihood that
there ultimately will be a transaction for the Department to review;
namely, as discussed below, an entry and sale to an unaffiliated
purchaser.\16\
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\16\ Id.
Consistent with this earlier discussion, and in light of the
concerns related to circumvention and abuse of new shipper review
procedures expressed by Congress in enacting section 751(a)(2)(B)(iv)
of the Act, Commerce proposes to expend its resources in conducting a
new shipper review only where there is a reasonable likelihood that
there ultimately will be a bona fide sale for Commerce to review. Thus,
proposed revisions to paragraph (b)(1) provide that a producer or
exportermay request a new shipper review if it can demonstrate the
existence of a bona fide sale. Commerce expects that a producer or
exporter could make such a demonstration by complying with the proposed
requirements in proposed paragraph (b)(2)(iv), and proposed revisions
to paragraph (b)(2)(v).
Under proposed paragraph (b)(2)(iv), a request for a new shipper
review must contain (1) a certification from the unaffiliated customer
in the United States that it did not purchase the subject merchandise
from the producer or exporter during the period of investigation, and
(2) a certification from the unaffiliated customer in the United States
that it will provide necessary information requested by Commerce
regarding its purchase of subject merchandise. With respect to (1),
this language was previously discussed in the 1997 Final Rule, among a
number of other suggestions which were aimed at discouraging meritless
requests for new shipper reviews.\17\ At the time, Commerce was
beginning to develop its practice with respect to new shipper reviews,
which was a new procedure adopted in the URAA in 1994.\18\ In light of
this limited experience, Commerce declined to adopt a proposal to
require additional documentation from an exporter claiming to be a new
shipper, or to require certifications from the purchaser, explaining
that ``{w{time} hile the Department has no interest in dealing with
meritless claims for new shipper reviews, by the same token, we do not
want to discourage meritorious claims.'' \19\ However, in light of
Commerce's past 20 years of practice in this area, and the
circumvention and abuse of procedures concerns expressed by Congress in
adopting the 2016 amendments to the new shipper review statute, we
believe that the additional requirements above are needed to discourage
meritless claims, and to preserve Commerce's resources in conducting
new shipper reviews where there is a reasonable likelihood that the
unaffiliated customer will participate in the review.
---------------------------------------------------------------------------
\17\ Id., 62 FR at 27319.
\18\ See 1996 Proposed Rule, 61 FR at 7317.
\19\ See 1997 Final Rule, 62 FR at 27319.
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Consistent with these same considerations, proposed paragraph
(b)(2)(v) (currently paragraph (b)(2)(iv)) requires specific
documentation which would allow Commerce to conduct a bona fides
analysis under section 751(a)(2)(B)(iv) of the Act. This includes
information pertaining to whether shipments were made in commercial
quantities, the date of any subsequent sales, circumstances surrounding
the sale, such as price, expenses, resale for profit, and the arm's-
length basis of the sale. Additionally, documentation establishing the
business activities of the producer or exporter would also be required
under this proposed paragraph (i.e., the producer's or exporter's
offers to sell merchandise in the United States, identification of the
complete circumstances surrounding the exporter's or producers' sales
to the United States, home market or any third country markets (if
applicable), an explanation of any non-producing exporter's
relationship with its
[[Page 49475]]
producer/supplier, and identification of the producer's or exporter's
relationship to the first unrelated U.S. customer).
Proposed revisions to paragraph (c) provide a conforming amendment
to reflect the change in numbering in paragraph (b)(2).
Proposed paragraph (d) would be entitled ``Initiation of new
shipper review.'' Paragraph (d)(1) would clarify that Commerce will
initiate a new shipper review if the requirements for a request for new
shipper review under paragraph (b) are satisfied. Paragraphs (d)(1)-
(3), discussing time limits for the initiation of a new shipper review,
would remain unchanged (with the exception of a minor grammatical edit
in paragraph (d)(2)). These provisions would require Commerce to
initiate a new shipper review in the calendar month immediately
following the anniversary month, or semi-annual anniversary month of
the order, as applicable. This is consistent with the statement in the
SAA that new exporters or producers may request an accelerated new
shipper review at any time.\20\ Paragraph (d)(4) would provide that if
Commerce determines that the requirements for a request for new shipper
review under paragraph (b) have not been satisfied, the Secretary will
reject the request and provide a written explanation of the reasons for
the rejection.
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\20\ See SAA at 816.
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Proposed revisions to paragraph (e) would eliminate language that
requires Commerce to allow, at the option of the importer, the posting
of an AD/CVD-specific bond or security in lieu of an AD/CVD cash
deposit for each entry of the subject merchandise. This proposed
modification implements the same amendment to section 751(a)(2)(B) of
the Act under section 433 of the EAPA as discussed above, which
eliminated the option of posting an AD/CVD bond or security in new
shipper reviews.\21\ Proposed paragraph (e) would also clarify that,
when a new shipper review is initiated, Commerce will direct CBP to
suspend or continue to suspend liquidation of any relevant unliquidated
entry of subject merchandise at the applicable cash deposit rate.
---------------------------------------------------------------------------
\21\ See Sec. 433, 130 Stat. at 171; see also H.R. Rep. No.
114-376 at 192-193.
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Proposed revisions to paragraph (f) would expand on Commerce's
ability to rescind new shipper reviews, in whole or in part, where a
producer or exporter timely withdraws its request for a new shipper
review, or where Commerce determines there is an absence of entry or
sale to an unaffiliated customer. Proposed new paragraph (f)(3) would
provide that Commerce likewise may rescind a new shipper review, in
whole or in part, where (1) information that Commerce considers
necessary to conduct a bona fide sales analysis is not on the record,
or (2) the producer or exporter at issue has failed to demonstrate, to
the satisfaction of Commerce, the existence of a bona fide sale to an
unaffiliated customer. This new provision would be consistent with
Commerce's existing practice in both new shipper reviews and
administrative reviews, that Commerce cannot conduct a review where
there is no bona fide sale.\22\ This would also clarify that Commerce
has the option to rescind where the information required for its
analysis is missing. However, nothing in this provision is intended to
preclude Commerce from completing the new shipper review by applying
the provision governing facts available in section 776 of the Act where
necessary.
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\22\ See, e.g., Haixing Jingmei Chem. Prods. Sales Co. v. United
States, 357 F. Supp. 3d 1337, 1351 (Ct. Int'l Trade 2018).
---------------------------------------------------------------------------
Commerce proposes no changes to paragraphs (g)-(j), and current
paragraphs (k) and (l) would be re-lettered to (l) and (m),
respectively. Further, re-lettered paragraph (l) contains minor
formatting amendments and also removes reference to the posting of an
AD/CVD-specific bond or security in lieu of an AD/CVD cash deposit
pursuant to the changes in paragraph (e) discussed above.
Lastly, proposed paragraph (k) would clarify the factors Commerce
will consider in making a bona fide sale determination. This paragraph
would explain that Commerce shall consider the enumerated factors in
section 751(a)(2)(B)(iv) and identifies, for purposes of section
751(a)(2)(B)(iv)(VII) of the Act, the additional factors that Commerce
shall consider in determining whether the examined sale is typical, or
not, of any future sales by the new shipper. These additional factors
include whether the parties in the transaction were established for
purposes of the sale(s) in question after the imposition of the order,
whether the parties have other lines of business unrelated to the
subject merchandise, whether there is an established history of duty
evasion with respect to new shipper reviews under the order or
circumvention in the same or similar industry, the quantity of sales,
and any other factor which Commerce determines to be relevant with
respect to the future selling behavior of the producer or exporter,
including any other indicia that the sale was not commercially viable.
These additional factors would aid Commerce in developing a consistent
practice of evaluating typical behavior of the new shipper.
Additionally, we believe this proposal reflects Commerce's past twenty
years of practice in this area, and would address the concerns
regarding circumvention, duty evasion, and abuse of procedures
expressed by Congress in adopting the 2016 amendments to the new
shipper review statute.
Scope--Section 351.225
Upon issuance of an AD or CVD order, the Act requires Commerce to
provide a description of the class or kind of merchandise subject to
the order at issue (i.e., subject merchandise).\23\ That description is
known as the scope of the AD/CVD order. Because the statute ``does not
require Commerce to define the class or kind of foreign merchandise in
any particular manner{,{time} Commerce has the authority to fill that
gap and define the scope of an order consistent with the countervailing
duty and antidumping duty laws.'' \24\ Further, ``under the statutory
scheme, Commerce owes deference to the intent of the proposed scope of
an antidumping investigation as expressed in an antidumping petition.''
\25\ Thus, Commerce retains considerable discretion to define the scope
of the order to ensure that all imports causing injury have been
addressed, and, additionally, may take into account potential
circumvention and duty evasion concerns in crafting the scope
language.\26\
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\23\ See section 706(a)(2) of the Act; section 736(a)(2) of the
Act; section 771(25) of the Act.
\24\ See Canadian Solar, Inc. v. United States, 918 F.3d 909,
917 (Fed. Cir. 2019) (internal citations and punctuation omitted)
(Canadian Solar).
\25\ Ad Hoc Shrimp Trade Action Committee v. United States, 637
F. Supp. 2d 1166, 1174 (CIT 2009).
\26\ See Canadian Solar, 918 F.3d at 921-22 (``It is unnecessary
for Commerce to engage in a game of whack-a-mole when it may
reasonably define the class or kind of merchandise in a single set
of orders, and within the context of a single set of investigations,
to include all imports causing injury.'').
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After issuance of an AD/CVD order, Commerce directs CBP to
``suspend liquidation'' and collect cash deposits, or estimated amounts
of duties, on appropriate entries subject to the scope of the order
corresponding to the margins of dumping established under an AD order
and the countervailable duty rates established under a CVD order.\27\
On a yearly basis, interested parties may request that Commerce conduct
an administrative review to determine the appropriate dumping margin or
CVD rate for entries subject to
[[Page 49476]]
the order during the previous review year.\28\ Commerce directs CBP to
``lift suspension of liquidation'' and assess final duties according to
Commerce's administrative review procedures.\29\ Under this dual
statutory framework, Commerce is the agency charged with establishing
and interpreting the scope of AD/CVD orders,\30\ and CBP is the agency
charged with applying and enforcing the AD/CVD orders by--upon
instruction from Commerce--collecting appropriate cash deposits and
assessing final duties on appropriate entries of merchandise into the
United States covered by the scope of an order.\31\ As part of its
statutory responsibility ``to fix the amount of duty owed on imported
goods{,{time} '' CBP ``is both empowered and obligated to determine in
the first instance whether goods are subject to existing {AD/CVD
orders{time} .'' \32\ Pursuant to 19 U.S.C. 1514(b) (section 514 of the
Act), this ``determination is then `final and conclusive' unless an
interested party seeks a scope ruling from Commerce (which ruling would
then be reviewable pursuant to {19 U.S.C. 1516a{time} ).'' \33\
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\27\ See generally section 706 of the Act; section 736 of the
Act. See also 19 CFR 351.211.
\28\ See section 751(a)(1) of the Act.
\29\ See 19 CFR 351.212-213.
\30\ See Xerox Corp. v. United States, 289 F.3d 792, 795 (Fed.
Cir. 2002) (``Commerce should in the first instance decide whether
an antidumping order covers particular products, because the order's
meaning and scope are issues particularly within the expertise of
that agency.'') (internal citations and punctuation omitted).
\31\ See Sunpreme Inc. v. United States, 892 F.3d 1186, 1188
(Fed. Cir. 2018) (Sunpreme I). In Sunpreme I, the CAFC held that a
party cannot invoke the CIT's jurisdiction under 28 U.S.C. 1581(i)
to challenge CBP's decision to apply an AD/CVD order to the party's
merchandise where the party had an available remedy by seeking a
scope ruling from Commerce, which subsequently could have been
challenged under 28 U.S.C. 1581(c). Id. at 1192-94. In Sunpreme Inc.
v. United States, 924 F.3d 1198 (Fed. Cir. 2019) (Sunpreme II), the
CAFC upheld Commerce's affirmative scope ruling, however, a divided
panel found that CBP had exceeded its authority when it suspended
liquidation based on its interpretation of ambiguous scope language
prior to Commerce's scope ruling, and, therefore, Commerce could not
lawfully order the continuation of suspension of liquidation prior
to the initiation of Commerce's scope inquiry. See 924 F.3d at 1212-
15. In Sunpreme Inc. v. United States, 946 F.3d 1300 (Fed. Cir.
2020) (Sunpreme III), the CAFC vacated Sunpreme II in part and held
that ``it is within Customs'{{time} authority to preliminarily
suspend liquidation of goods based on an ambiguous {AD or CVD{time}
order, such that the suspension may be continued following a scope
inquiry by Commerce.'' 946 F.3d at 1303.
\32\ See Sunpreme III, 946 F.3d at 1317 (citing 19 U.S.C.
1500(c); Section 500(c) of the Act).
\33\ See TR International Trading Co. v. United States, Ct. No.
19-00022, Slip Op. 20-34 at *7 (CIT Mar. 16, 2020) (citing Sunpreme
III, 946 F.3d at 1318) (TR International) (appeal pending)
(referencing section 516 of the Act); see also Fujitsu Ten Corp. v.
United States, 957 F. Supp. 245, 248 (CIT 1997) (``The statute
recognizes Customs makes the initial determination that an existing
antidumping order applies to a specific entry of merchandise. The
statute states that such a decision is `final and conclusive' unless
it is appealed by petition to Commerce.'' (citations omitted)).
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Furthermore, each agency has its own authority to ensure the
effectiveness of the trade remedy laws in accordance with its statutory
mandate. Congress, and the courts, have long recognized that Commerce
has the vested authority to administer the trade remedy laws in
accordance with their intent, and has the discretion to take
appropriate enforcement measures to ensure the effectiveness of its AD/
CVD orders by preventing duty evasion and circumvention.\34\ As
discussed below, Commerce has several existing mechanisms to ensure
effective enforcement of its AD/CVD orders, while CBP has its own
authority to conduct civil administrative investigations of duty
evasion of AD/CVD orders, including as provided for in section 517 of
the Act.\35\ In exercising their separate authorities, Commerce and CBP
frequently work together to ensure the effectiveness of the trade
remedy laws. In this proposed rule, Commerce has taken additional steps
to ensure that it continues to exercise its authority to administer the
AD/CVD laws, in cooperation with CBP, and in accordance with its
mandate to prevent duty evasion and circumvention.
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\34\ See generally section 781 of the Act; SAA at 892-95; Tung
Mung Development Co., Ltd. v. United States, 219 F. Supp. 2d 1333,
1343 (CIT 2002) (Tung Mung) (``Commerce has a duty to avoid the
evasion of antidumping duties. {Commerce{time} `has been vested
with authority to administer the antidumping laws in accordance with
the legislative intent. To this end, {Commerce{time} has a certain
amount of discretion {to act{time} . . . with the purpose in mind
of preventing the intentional evasion or circumvention of the
antidumping duty law.' '') (quoting Mitsubishi Elec. Corp. v. United
States, 700 F. Supp. 538, 555 (CIT 1988) (Mitsubishi I), aff'd 898
F.2d 1577, 1583 (Fed. Cir. 1990) (Mitsubishi II)). See also
Torrington Co. v. United States, 745 F. Supp. 718, 721 (CIT 1990),
aff'd 938 F.2d 1276 (Fed. Cir. 1991).
\35\ Additionally, Homeland Security Investigations (HSI), at
the Department of Homeland Security, has the authority to
investigate criminal violations related to illegal evasion of
payment of required duties, including payment of AD/CV duties. See,
e.g., 18 U.S.C. 542.
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Because the scope of an AD/CVD order is written in general terms,
questions may arise as to whether a certain product is within the
scope, and therefore covered by the order. In such cases, Commerce's
existing regulation, section 351.225, describes the applicable
procedures and standards concerning ``scope rulings'' that Commerce
will issue upon application of an interested party, or by initiating a
``scope inquiry.'' Additionally, section 351.225 provides procedures
concerning circumvention proceedings conducted pursuant to section 781
of the Act. Under these provisions, Commerce may determine that certain
products are circumventing existing AD/CVD orders, and thus lawfully
may be considered within the scope of the order(s), even when the
products do not fall within the literal scope language.\36\ Commerce
proposes to revise section 351.225 in its entirety to clarify and
improve Commerce's procedures and standards related to scope matters
which have evolved since Commerce's current scope regulations were
issued in 1997.\37\ As discussed further below, Commerce proposes to
adopt new section 351.226 to address circumvention matters.
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\36\ See Target Corp. v. United States, 609 F.3d 1352, 1355
(Fed. Cir. 2010).
\37\ See 1996 Proposed Rule, 61 FR at 7321-22; 1997 Final Rule,
62 FR at 27327-30. Section 351.225 in its current form adopted many
of the existing procedures from the preceding regulations, sections
353.29 and 355.29, which were issued in 1990. See 1996 Proposed
Rule, 61 FR at 7321 (``With a few exceptions, section 351.225 is
substantively unchanged from existing Sec. Sec. 353.29 and
355.29{.{time} ''); see also Antidumping and Countervailing Duties,
Interim Final Rule, 55 FR 9046 (March 9, 1990) (1990 Interim Final
Rule) (``To implement section 781 of the Act (as added by section
1321 of {the Omnibus Trade and Competitiveness Act of 1988{time} ),
new Sec. Sec. 353.29 and 355.29 establish procedures for the
Secretary to conduct inquiries to determine whether merchandise is
included within the scope of an existing antidumping or
countervailing duty finding or order. The procedures apply to all
scope determinations, including those under section 781 of the Act.
In applying these procedures to scope determinations other than
those under section 781, {Commerce{time} is codifying existing
practice.'').
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We propose revising paragraph (a) to set forth the general purpose
and rules which govern scope proceedings. This is distinguished from
the current paragraph (a), which governs both scope proceedings and
circumvention proceedings. Commerce is now proposing that circumvention
proceedings under section 781 of the Act be covered by a new
regulation, proposed section 351.226. An additional significant change
in this proposed rule, which would be codified in proposed paragraph
(a) and throughout revised section 351.225, eliminates the distinction
between a simpler, or informal, scope ruling procedure (i.e., a ruling
based upon the application) and a formal scope inquiry. This is
discussed in further detail below. Proposed paragraph (a) also explains
that, unless otherwise specified in revised section 351.225, Commerce's
existing procedures contained in subpart C (i.e., relating to factual
information (sections 351.102(b)(21) and 351.301) and the extension of
time limits (section 351.302)) apply to scope inquiries.
Additionally, regarding the term ``clarify'' in current paragraph
(a), the courts have used this term to try to draw
[[Page 49477]]
a distinction between scope language which is ``unambiguous'' and
therefore does not require ``clarification'' under the section 351.225
procedures, and scope language which is ``ambiguous'' and does require
such ``clarification.'' In practice, the procedures under section
351.225 are intended to cover a wide variety of scope questions and are
not intended to be restrictive to only those scenarios in which certain
language in the scope requires ``clarification.'' Therefore, we have
removed the term ``clarify'' from proposed paragraph (a). Additionally,
proposed paragraph (a) explains that a scope ruling that a product is
within the scope of the order is a determination that the product has
always been within the scope of the order. As explained further below
in the discussion of proposed section 351.225(l), the fact that an
importer did not declare merchandise as subject to an AD and/or CVD
order for a period of time before Commerce issued a scope ruling
finding that such merchandise was covered does not justify treating
entries that preceded that scope ruling as non-subject merchandise.
Accordingly, scope rulings will be applied to all unliquidated entries
of subject merchandise, as discussed further below.
Furthermore, the procedures under section 351.225 are not intended
to be the only means by which Commerce may address scope questions that
arise in its proceedings. The language in paragraph (b) in the current
version of section 351.225, which states that Commerce ``will''
initiate a scope inquiry if certain information is available, also has
raised questions about the agency's authority to address scope
questions outside the section 351.225 procedures. For example, Commerce
has the existing authority to address scope issues in the context of
another segment of the proceeding under the AD and/or CVD order, such
as an administrative review or circumvention inquiry. Over time, there
have been questions about Commerce's discretion to self-initiate a
scope inquiry under the current regulation when an interested party
raises the possibility that its product is not covered by an order
during the course of an administrative review under section 751(a) of
the Act. Commerce has always argued that it has such authority under
current laws and regulations. This issue would be addressed by revised
paragraphs (b) and (i). In particular, revised paragraph (b) would
clarify that Commerce ``may'' self-initiate a scope inquiry, if it
believes such initiation is warranted; revised paragraph (i)(1) would
allow Commerce to address scope questions in another segment of the
proceeding, such as an administrative review under section 351.213, a
circumvention inquiry under new section 351.226, or a covered
merchandise referral under new section 351.227, without separately
having to initiate a scope inquiry under section 351.225. To be clear,
Commerce would retain discretion to determine if self-initiation is
warranted under section 351.225(b) or to address scope questions
outside the context of a scope inquiry. Moreover, the onus would remain
on parties who wish to raise scope questions in another segment of a
proceeding, such as an administrative review under section 351.213, to
provide Commerce with the relevant information needed to address such
matters (i.e., by submitting a scope application and supporting
information as provided in paragraph (c)).
Paragraph (c) addresses the information needed for interested
parties \38\ to file a scope ruling application. Domestic industries,
foreign exporters, foreign producers, importers, and those considering
exporting or importing merchandise to the United States all have
different interests in Commerce making scope rulings on particular
merchandise. This paragraph proposes certain amendments to address
specific concerns which Commerce has identified with the current scope
inquiry process. One concern is that scope ruling requests do not
always include the requisite sufficient description and supporting
information necessary for Commerce to complete an analysis. This has
resulted in Commerce issuing numerous requests for further
clarification and supporting evidence, which have further delayed its
proceedings. Commerce has determined that one way to make this less
pervasive is to require parties to fill out and file a standardized
scope ruling application which would be available to parties on
Commerce's website. Revised paragraph (c)(2) would list the information
required which should be contained in the scope ruling application. It
is understood that interested parties requesting a scope ruling may not
have access to all of the information that would be requested. For
example, a domestic interested party seeking a scope ruling on a
product will not be likely to provide the narrative history of the
production of the product at issue, including a history of earlier
versions of the product, if this is not the first model of the product.
For this reason, the regulation would require that the requested
information in the scope ruling application be provided to the extent
reasonably available to the requestor. The applicant would have to
explain the reason it does not have certain requested information when
filling out the scope ruling application, and Commerce would retain the
ability to both ask supplemental questions about those explanations if
necessary, as well as reject a scope ruling application if the
information and explanations provided are insufficient.
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\38\ The term ``interested party'' is defined in section 771(9)
of the Act, and pertains, for example, to ``foreign manufacturers,''
``producers,'' ``exporters,'' or ``United States importers'' ``of
subject merchandise.'' However, the nature of a scope ruling is to
determine whether the merchandise produced, imported by, or exported
by a party is ``subject'' to an AD or CVD order. Thus, in many
cases, the question of whether a party is an ``interested party'' is
tied to the question of whether the merchandise at issue is
determined to be subject merchandise or not. Accordingly, for
purposes of these scope regulations, reference to the term
``interested party'' includes a party that potentially meets the
definition of ``interested party'' under section 771(9) of the Act,
depending upon the outcome of the scope inquiry. This clarification
of the term ``interested party'' for purposes of this regulation is
in no way intended to negate the requirement that the product is, or
has been, in actual production as of the filing of the scope ruling
application, as discussed below.
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The use of the term ``particular product'' in the current text of
paragraphs (a) and (c) of section 351.225 has also generated questions
over time. In practice, Commerce issues scope rulings, which generally
apply to a particular interested party's product, relying on the
description provided by the interested party. Sometimes the description
of the product does not lend itself to a broader ruling that applies to
all similar products (for instance, the description of the product is
specific to a party's specific description, product number, contract,
packaging, or manufacturing process, etc.). To address these concerns,
proposed revisions to paragraph (c)(2)(ii) would require parties
submitting scope ruling applications to provide a concise public
description of the product at issue. It is Commerce's intent that the
description used throughout the scope inquiry and in the final scope
ruling will reflect the ``particular product'' at issue--thereby
enabling the public and CBP to more easily identify the product at
issue.
Proposed revisions to paragraph (c)(2)(v) would also mandate that,
in requesting a scope ruling on merchandise which has already been
imported into the United States as of the filing of the scope ruling
application, to the extent reasonably available, an applicant must
provide a statement as to whether an entry of the product has been
classified as subject to an AD/CVD order by the filer or reclassified
as
[[Page 49478]]
subject to an AD/CVD order by CBP along with documentation, including
print-outs of the CBP ACE entry summary information, identifying the
product upon importation and other related commercial documents.
Additionally, proposed paragraph (c)(1) provides that the applicant
must demonstrate that the product is or has been in actual production
as of the filing of the scope ruling application.\39\ It is Commerce's
expectation that a party will be able to satisfy this requirement by
providing the requisite information under proposed paragraphs
(c)(2)(iii), concerning a narrative of the production history, and
(c)(2)(iv), concerning the volume of annual production of the product
for the most recently completed fiscal year.
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\39\ See Antidumping and Countervailing Duty Proceedings:
Documents Submission Procedures; APO Procedures, 73 FR 3634, 3639
(January 22, 2008) (``{Commerce's{time} practice is to issue a
scope ruling or conduct a scope inquiry when the party requesting
the ruling can show that the specific product in question is
actually in production. The product need not be imported into the
United States so long as the requestor can show evidence that the
product is in production. {Commerce{time} will not issue a scope
ruling or conduct a scope inquiry on a purely hypothetical
product.'').
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Another procedural matter that has arisen is a party's reference to
prior agency scope rulings and determinations in scope requests without
the placement of those scope rulings, or the full source document, on
the record of the segment of the administrative proceeding. Those
determinations, along with any other relevant source document
supporting the party's position, such as the petition or relevant
documents from the underlying investigation, must be placed on the
record for Commerce to be able to consider them as part of its
analysis. Accordingly, paragraph (c)(2)(viii) would also require that
full copies of relevant prior determinations by the Secretary
(including scope rulings) and relevant excerpts of other documents
identified in paragraph (k)(1) be placed on the administrative record
if cited by an applicant for support of its arguments.
Additional changes under paragraphs (c), (d), and (e) deal with the
distinction between an informal scope ruling procedure and a formal
scope inquiry procedure. In the context of its scope ruling practice,
there is a 45-day deadline for Commerce to either (A) issue a scope
ruling based upon the scope ruling application and descriptions of the
merchandise listed under paragraph (k)(1) pursuant to current
paragraphs (c)(2) and (d), or (B) initiate a formal inquiry pursuant to
current paragraph (e), which Commerce adopted in the 1997
rulemaking.\40\ This was initially intended to streamline the process
and expedite review of certain, less complex scope issues, but in
Commerce's experience this has not been the case. Instead, it has led
to unnecessary delay and questions on the part of outside parties. For
example, in this 45-day window, Commerce often solicits and receives
new factual information and comments from numerous parties, leaving
little time to consider the evidence and argument, and reach a well-
reasoned decision within the time allotted. Frequently, Commerce must
extend this deadline at least once before ultimately determining to
formally initiate a scope inquiry (at which point, a new round of
comments is triggered pursuant to paragraph (f), further delaying
Commerce's decision). This has also led to questions from parties as to
whether a decision to formally initiate a scope inquiry is a reflection
of the difficulty of the issue, thus warranting analysis of the
additional factors under paragraph (k)(2). Instead, a decision to
formally initiate is often the result of the limited window in which
Commerce has to consider the evidence and comments and reach a well-
reasoned decision, even where the issue itself is neither complex nor
controversial.
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\40\ See 1996 Proposed Rule, 61 FR at 7321-22; 1997 Final Rule,
62 FR at 27327-30. These procedures clarified Commerce's existing
practice as codified in sections 353.29 and 355.29, adopted in the
1990 rulemaking. See 1990 Interim Final Rule, 55 FR at 9046.
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Thus, one change in these proposed regulations is that there would
no longer be a distinction between an informal scope ruling procedure
and a formal scope inquiry procedure, as the distinction between those
two procedures sometimes causes confusion and adds unnecessary delay to
the proceedings. Proposed paragraph (d), once a scope ruling
application has been filed and appropriately served on all necessary
parties, would allow Commerce 30 days to determine whether to accept or
reject the scope ruling application. If Commerce determines that the
scope ruling application is deficient or otherwise unacceptable,
Commerce could reject it with an explanation. The applicant may correct
the problems and refile the scope ruling application, restarting the
regulatory deadlines. On the other hand, if Commerce does not reject
the scope ruling application, then after 31 days, a scope inquiry would
be deemed initiated. At that point, Commerce cannot reject the scope
ruling application for deficiencies, but could demand supplemental
information if necessary.
On a related matter, revised section 351.225 would provide that all
scope rulings be issued pursuant to a scope inquiry consistent with
this regulatory provision, with certain exceptions. For example,
Commerce recognizes that there may be instances in which Commerce has
already expressly considered the product at issue, and thus a new scope
inquiry is not necessary to address the issue. In such instances, new
paragraph (m)(1) discussed below would allow for Commerce to notify
parties that it is applying a prior scope ruling to products with the
identical physical description from the same country of origin. It is
Commerce's intent that this notification would serve in place of a
final scope ruling under new paragraph (h), but the requirements of
paragraph (h) would still apply. As another example, as noted above and
discussed further below, under proposed paragraph (i), Commerce would
be able to address scope questions in the context of another segment of
the proceeding, as a means of preserving departmental resources.
Additionally, under revised paragraph (f)(6) discussed below, Commerce
would be able to rescind a scope inquiry under appropriate
circumstances.
Proposed revisions to paragraph (e) would provide new deadlines for
scope inquiries. The current provision indicates that informal scope
rulings based upon the application under the current version of Sec.
351.225(d) would be completed within 45 days of receipt of a scope
ruling application. But years of experience have shown Commerce that
this is a difficult and frequently unworkable deadline, for the reasons
discussed above. Accordingly, the proposed deadlines are timed off the
initiation of the scope inquiry, with most scope inquiries being
completed within 120 days (which is consistent with current paragraph
(f)(5) of Sec. 351.225). If good cause exists, however, such as the
need for further information on the record, or the issuance of a
preliminary scope ruling, Commerce would have the authority under
proposed paragraph (e)(2) to extend the deadline an additional 180
days, up to 300 days--similar to the deadlines allowed for
circumvention inquiries under section 781(f) of the Act.
Proposed revisions to paragraph (f) would clarify certain
procedures for scope inquiries. As an initial matter, as noted above,
proposed paragraph (a) explains that, unless otherwise specified in
proposed section 351.225, Commerce's existing procedures
[[Page 49479]]
contained in subpart C apply to scope inquiries. Proposed paragraph (f)
therefore identifies procedures which otherwise deviate from subpart C,
including the deadlines for parties to comment and submit new factual
information regarding Commerce's self-initiation of a scope inquiry
under paragraph (b) and a scope ruling application. These deadlines
would generally maintain the deadlines of current paragraph (f) (i.e.,
20/10 day comment/rebuttal periods). Additionally, proposed paragraph
(f) would maintain Commerce's ability to issue questionnaires and
conduct verifications, as appropriate, as well as its discretion to
limit the number of respondents in a scope inquiry, if warranted.
However, proposed paragraph (f)(4) would also establish deadlines
regarding comments and rebuttal comments after a preliminary scope
ruling under proposed paragraph (g) if the preliminary scope ruling is
not issued concurrently with the initiation of the scope inquiry. These
deadlines would be reduced from 20 to 10 days and 10 to 5 days,
respectively.
Proposed paragraph (f)(5) would provide Commerce with the ability
to establish alternative procedures if the preliminary scope ruling
issued under proposed paragraph (g) is issued concurrently with the
initiation of the scope inquiry.\41\ Additionally, proposed paragraph
(f)(6) would allow Commerce to maintain the discretion to rescind a
scope inquiry, as appropriate. Commerce intends to exercise this
discretion as a means of preserving departmental resources, for
example, in instances in which a scope matter may be better addressed
in another segment of a proceeding (see revised paragraph (i)(1)) or
instances in which a new scope inquiry or scope ruling is unnecessary
because of a related or prior scope ruling (see revised paragraph (m)).
In addition, Commerce may rescind a scope inquiry, for example, if an
interested party has failed to provide information necessary for
Commerce to issue a scope ruling.\42\ Finally, proposed paragraph
(f)(7) would continue to provide Commerce with the discretion to
consider extension requests and alter the comment deadlines during the
scope inquiry, as appropriate.
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\41\ To be clear, Commerce already has the authority under
existing regulations to issue a preliminary scope ruling
concurrently with initiation.
\42\ Commerce also maintains the discretion to apply facts
available pursuant to section 776 of the Act, as appropriate, rather
than rescind a scope inquiry.
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Proposed revisions to paragraph (g) address the potential issuance
of a preliminary scope ruling and mostly tracks paragraph (f)(3) of the
current regulation, with some exceptions. Under current paragraph
(f)(3), whenever Commerce determines that a scope inquiry presents an
issue of significant difficulty, Commerce will issue a preliminary
scope ruling, based upon the available information at the time, as to
whether there is a reasonable basis to believe or suspect that the
product is covered by the scope. Under proposed paragraph (g), Commerce
would, pursuant to the same ``reasonable basis to believe or suspect''
standard, maintain the discretion to issue a preliminary scope ruling,
but Commerce need not consider whether the inquiry presents an issue of
significant difficulty. Similar to existing paragraph (g), proposed
paragraph (g) would allow Commerce to issue a preliminary scope ruling,
based on available information at the time, as to whether there is a
reasonable basis to believe or suspect that the product is covered by
the scope of the order. Further, proposed paragraph (g) would maintain
Commerce's discretion to issue a preliminary scope ruling at the same
time Commerce initiates a scope inquiry. This could be done, for
example, if the scope question before Commerce previously has been
addressed by Commerce, or Commerce finds the issue to be relatively
straightforward. In determining whether to issue a preliminary scope
ruling, Commerce may consider the complexity of the issues and the
arguments raised by parties.
It is worth noting that, in accordance with proposed paragraph
(n)(4), if Commerce issues a preliminary scope ruling, it would no
longer be required to notify all parties on the scope service list of
that preliminary ruling. Instead, only parties who are on the segment-
specific public service list or the APO service list (see Sec.
351.103(d)), as applicable, would receive notice of the preliminary
scope ruling, as with any other document that is placed on the record
by the agency, through Commerce's Antidumping and Countervailing Duty
Centralized Electronic Service System (ACCESS) system.
Proposed revisions to paragraph (h) largely follow paragraph (f)(4)
of the current regulation concerning the issuance of final scope
rulings, with a few exceptions. Significantly, proposed paragraph (h)
provides that Commerce would ``convey'' the final scope ruling in
accordance with the requirements of section 516A(a)(2)(A)(ii) of the
Act, which states that judicial review of ``class or kind''
determinations under section 516A(a)(2)(B)(vi) of the Act, such as
scope rulings, are based off of the date of mailing of such
determination. Section 516A(a)(2)(A)(ii) of the Act further provides
that only ``an interested party who is a party to the proceeding'' may
commence judicial review procedures. Therefore, Commerce proposes to
convey the final scope ruling in the manner prescribed by section
516A(a)(2)(A)(ii) of the Act to interested parties who are parties to
the proceeding (see Sec. 351.102(b)(36)), because these are the only
parties that have legal standing to appeal the final scope ruling under
section 516A(a)(2)(A)(ii) of the Act. However, as noted above, as with
any other document that is placed on the record by the agency, all
parties on the segment-specific service lists will be notified of the
final scope ruling through Commerce's electronic ACCESS system.
Additionally, paragraph (h) states that Commerce will ``promptly''
convey the scope ruling to all parties to the proceeding. The use of
this term is consistent with the use of the same term in new Sec. Sec.
351.226 and 227. It is Commerce's expectation that prompt conveyance of
the scope ruling normally would occur no more than 5 business days from
the issuance of the final scope ruling. Consistent with sections
516A(a)(2)(A)(ii) and (B)(vi) of the Act, judicial review procedures
would be commenced based on the date of conveyance, as opposed to the
date of receipt, of a scope ruling.
As noted above, proposed paragraph (i) would clarify the
interaction between scope inquiries and other segments of the
proceeding and would replace paragraphs (f)(6) and (l)(4). These
revisions acknowledge Commerce's discretion to determine after
reviewing all of the information on the record, on a case-by-case
basis, the most efficient means of addressing a scope question in an
effort to preserve departmental resources. For example, Commerce would
be able to address scope questions in another segment of a proceeding,
such as an administrative review under Sec. 351.213, a circumvention
inquiry under new Sec. 351.226, or a covered merchandise inquiry under
new Sec. 351.227, without invoking the Sec. 351.225 procedures;
conduct a scope inquiry under Sec. 351.225 in addition to another
segment of the proceeding; or align the deadlines, maintaining them as
separate segments of the proceeding. Further, under revised paragraph
(i)(3), during the pendency of a scope inquiry or upon issuance of a
final scope ruling, Commerce could consider the products
[[Page 49480]]
subject to the scope inquiry in an ongoing administrative review, as
appropriate (i.e., if sufficient time remains in the administrative
review to collect and analyze such information), although it would not
be required to do so.
Proposed revisions to paragraphs (j) and (k) address the substance
of Commerce's scope ruling determinations. Aside from the description
of the merchandise subject to the scope of an order, an essential
element in determining whether a product is covered by an order is the
country of origin of the product at issue. Therefore, proposed
paragraph (j) would codify Commerce's longstanding ``substantial
transformation'' test or analysis, which is used to determine the
country of origin of a product or products.\43\ In particular, Commerce
generally uses a substantial transformation analysis to determine
whether a product's country of origin has changed as a result of
processing that occurs in third countries before a product is imported
into the United States. The courts have upheld Commerce's substantial
transformation analysis,\44\ which has, in different iterations, looked
at factors such as whether the processed downstream product is a
different class or kind of merchandise than the upstream product; the
technical, physical, and chemical characteristics of the product and
its parts; the intended end-use of the product; the cost of production
and value added to the product as a result of further processing in
third countries; the nature and sophistication of processing in third
countries; the level of investment in third countries; and where the
essential component of the product is produced or where the essential
characteristics of the product are imparted. In addition, Commerce has
considered other relevant case-specific factors in applying its
substantial transformation analysis when necessary.
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\43\ See Bell Supply Company, LLC v. United States, 888 F.3d
1222, 1228-29 (Fed. Cir. 2018) (``A substantial transformation
occurs where, `as a result of manufacturing or processing steps . .
. {,{time} the {product{time} loses its identity and is
transformed into a new product having a new name, character and
use.' '') (internal citations omitted).
\44\ See E.I. DuPont de Nemours & Co. v. United States, 8 F.
Supp. 2d 854, 858 (CIT 1998) (``The `substantial transformation'
rule provides a yardstick for determining whether the processes
performed on merchandise in a country are of such significance as to
require the resulting merchandise to be considered the product of
the country in which the transformation occurred.'').
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Additionally, Commerce continues to recognize that, in addressing
country of origin issues in the context of Commerce proceedings,
Commerce is not bound by the country of origin determinations of other
agencies, such as CBP.\45\ While such determinations may be
informative, when determining the scope of AD/CVD orders, Commerce's
country of origin analysis is ultimately made independently and is
based upon the information on the record of the proceeding.
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\45\ While the ``Department may consider the decisions of
Customs, it is not obligated to follow, nor is it bound by, the
classification determinations of Customs. . . .'' Wirth Ltd. v.
United States, 5 F. Supp. 2d 968, 973 (CIT 1998) (``Commerce, not
Customs, has authority to clarify the scope of AD/CVD orders and
findings.'').
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Furthermore, if for some reason the substantial transformation test
is not appropriate for purposes of determining the country of origin of
a particular product, Commerce would continue to retain the ability to
apply another reasonable test to determine the country of origin of a
specific product. This would particularly be the case where ```rote
application' of the substantial transformation test would be inadequate
to remedy the unfair pricing decisions and/or unfair subsidization
because it would exclude the very imports found to injure the domestic
industry.'' \46\
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\46\ See Canadian Solar, 918 F.3d at 919.
---------------------------------------------------------------------------
Paragraph (k) of current Sec. 351.225 describes the substantive
basis for Commerce's scope rulings, and, as a result, has been the
source of much litigation over the life of the regulation. Although the
U.S. Court of International Trade (CIT) and the U.S. Court of Appeals
for the Federal Circuit (CAFC) have generally recognized that Commerce
has ``substantial freedom to interpret and clarify'' the scope of AD/
CVD orders through scope rulings,\47\ the Courts have held that
Commerce's scope rulings must still be issued in accordance with the
requirements of its scope ruling regulations, and in particular, the
sequence of factors to consider set forth in paragraph (k). In light of
Commerce's years of experience drafting scope rulings, and numerous
holdings of the CIT and CAFC addressing Commerce's scope
determinations, Commerce is proposing that certain modifications be
made to paragraph (k). As an initial matter, current paragraph (k)
makes no specific reference to the scope language as the starting point
for any scope analysis. However, the CAFC has added this initial step,
sometimes referred to as a ``k(0)'' analysis.\48\ Recently, the CAFC
clarified the legal framework required of a scope ruling determination:
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\47\ Duferco Steel, Inc. v. United States, 296 F.3d 1087, 1096
(Fed. Cir. 2002) (quotation marks and citations omitted).
\48\ See Meridian Prods., LLC v. United States, 851 F.3d 1375,
1381 (Fed. Cir. 2017) (``No specific statutory provision governs the
interpretation of the scope of antidumping or countervailing orders.
Commerce has filled the statutory gap with a regulation that sets
forth a two-step test for answering scope questions, 19 CFR
351.225(k), and our case law has added another layer to the
inquiry.'') (internal citations and punctuation omitted).
First, the plain language of an antidumping order is paramount
in determining whether particular products are included within its
scope. If the scope is unambiguous, it governs. In reviewing the
plain language of a duty order, Commerce must consider the
descriptions of the merchandise contained in the petition, the
initial investigation, and the determinations of the Secretary
(including prior scope determinations) and the Commission. Second,
if the above sources do not dispositively answer the question,
Commerce may consider the (k)(2) factors.\49\
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\49\ Meridian Prods., LLC v. United States, 890 F.3d 1272, 1277-
78 (Fed. Cir. 2018) (Meridian) (internal citations and punctuation
omitted).
Accordingly, proposed paragraph (k) would codify this judicially
created and affirmed framework, explaining that the primary analysis in
any scope inquiry is the language of the scope itself. Revised
paragraph (k) also explains that Commerce may issue its scope ruling on
this basis alone if the language of the scope, including the
descriptions of merchandise expressly excluded from the scope, and the
language of the scope as a whole, is dispositive. Furthermore, in light
of our experience and prior court holdings, proposed paragraph (k)(1)
indicates that, in considering the plain language of the scope,
Commerce, at its discretion, could also consider the underlying
petition, Commerce's investigation, prior Commerce determinations
(including but not limited to prior scope rulings,\50\ memoranda, or
clarifications),\51\ and
[[Page 49481]]
determinations of the ITC. In addition to the (k)(1) sources, Commerce
could also consider traditional interpretive tools, such as a
dictionary and industry usage of a particular word or phrase, or other
record evidence, to provide context and understanding in considering
the plain language of the scope. However, in the event of a conflict
between these interpretive tools or other record evidence and the
sources identified in paragraph (k)(1), Commerce would adopt the
interpretation supported by the (k)(1) sources.\52\
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\50\ This is not limited to Commerce's scope rulings within the
same order, and Commerce may consider its analysis of the same or
similar scope language used in other orders.
\51\ Scope clarifications are not defined in the statute or
regulation. Scope clarifications are sometimes issued during an
ongoing investigation if arguments or information pertaining to the
scope of an investigation comes to Commerce's attention following
the issuance of a scope memorandum and Commerce determines that it
is necessary to place a clarification on the administrative record
to address those scope claims. Scope clarifications also may be
issued after an AD/CVD order has been in place for a period of time
and Commerce has found that multiple parties have requested scope
rulings over and over covering the same or similar scope language.
In that situation, Commerce may issue a scope clarification
addressing that particular scope language, and then further
memorialize that clarification in the form of an interpretive
footnote to the scope of the order. Following the issuance of a
scope clarification in that context, the interpretive footnote will
normally accompany the text of the scope itself when it is published
in Commerce's administrative determinations and instructions to CBP.
The procedures and timetables set forth in these regulations
covering scope inquiries and scope rulings do not apply to scope
clarifications, nor do they inhibit Commerce's ability or discretion
to issue such scope clarifications.
\52\ See Meridian, 890 F.3d at 1280-81 (overruling a CIT
decision that adopted the common and commercial meaning and
dictionary definition of a scope term over Commerce's interpretation
in prior scope rulings).
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Proposed revisions to paragraph (k)(2) would maintain that if,
based on the scope language and the factors enumerated above, Commerce
is unable to determine whether a product is covered by a scope, then
Commerce would consider the listed five additional factors.\53\ These
factors are largely consistent with current paragraph (k)(2), with some
minor clarifications. It is Commerce's intent that the first factor--
the characteristics of the product, including the technical, physical,
or chemical characteristics of the product--may be given greater weight
than the other individual factors. Nonetheless, Commerce should
consider each of the factors in making its determination under
paragraph (k)(2).
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\53\ Those factors are sometimes referred to as the Diversified
Products factors because they were first articulated in Diversified
Prods. Corp. v. United States, 572 F. Supp. 883 (CIT 1983). See
Walgreen Co. of Deerfield, IL v. United States, 620 F.3d 1350, 1355
& n.2 (Fed. Cir. 2010) (Walgreen).
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Finally, proposed paragraph (k)(3) would codify and clarify
Commerce's analysis for certain products, colloquially referred to as
``mixed media'' products (i.e., subject merchandise assembled or
packaged with non-subject merchandise), which has been recognized by
the courts.\54\ In some instances, the scope language of an order may
clearly address these types of products.\55\ In such cases, a ``mixed-
media'' analysis may not be necessary. However, because scope language
is written in general terms, the language itself may not contemplate
assembled or packaged items that contain subject merchandise as a
component. Therefore, in conducting a scope inquiry, Commerce may need
to conduct a ``mixed-media'' analysis to determine whether a
combination of products or a component thereof constitutes subject
merchandise. Under such situations, in accordance with Commerce's
practice and proposed paragraph (k)(3), Commerce could first determine
whether the component product, if separated from the other component
products, would be considered covered by the scope. If the
determination is that the product would be covered by the scope, then
Commerce would conduct a further analysis and determine if the product
is nonetheless excluded from the scope through its inclusion in the
combined product. To determine if the product is covered or excluded
from the scope of the order, Commerce would consider the practicability
of separating the in-scope component for repackaging or resale, the
measurable value of the in-scope component as compared to the
measurable value of the merchandise as a whole, and the ultimate use or
function of the in-scope component relative to the ultimate use or
function of the merchandise as a whole. If Commerce determines that the
component product at issue is covered by the scope of an order, but the
other components of the larger merchandise are not covered by the scope
of an order, the value of the in-scope subject component should be
reported to CBP for AD/CVD purposes in accordance with CBP's reporting
requirements.
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\54\ See Mid Continent Nail Corporation v. United States, 725
F.3d 1295, 1302-04 (Fed. Cir. 2013) (Mid Continent Nail)
(referencing the ``mixed-media'' analysis); Walgreen, 620 F.3d at
1355-57 (same).
\55\ See, e.g., Aluminum Extrusions from the People's Republic
of China: Antidumping Duty Order, 76 FR 30650, 30651 (May 26, 2011)
(``The scope includes the aluminum extrusion components that are
attached (e.g., by welding or fasteners) to form subassemblies,
i.e., partially assembled merchandise unless imported as part of the
finished goods `kit' defined further below. The scope does not
include the non-aluminum extrusion components of subassemblies or
subject kits.''); Narrow Woven Ribbons With Woven Selvedge From
Taiwan and the People's Republic of China: Amended Antidumping Duty
Orders, 75 FR 56982, 56983 (September 17, 2010) (``Narrow woven
ribbons subject to the orders may. . . be included within a kit or
set such as when packaged with other products, including but not
limited to gift bags, gift boxes and/or other types of ribbon.'').
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Paragraph (l) of the current regulation, governing the suspension
of liquidation and requirement of cash deposits for entries affected by
Commerce's scope rulings, also has been the source of varying
interpretations and litigation and requires revision.
As an initial matter, as discussed above, AD and CVD orders provide
the legal basis for the suspension of liquidation of importations of
subject merchandise that enter for consumption on or after the date of
publication of that order, throughout the life of the order, and until
the order is revoked.\56\ Further, the publication in the Federal
Register of Commerce's preliminary and final investigation
determinations, as well as the publication of the resulting orders,
serve as notice to producers, exporters, and importers that their
merchandise might be covered by those investigations and/or orders,
and, therefore, it is incumbent upon the importing parties to (1)
declare the status of their merchandise truthfully to CBP upon entry,
or (2) seek a scope ruling from Commerce if there is a question as to
whether the merchandise is covered by an AD and/or CVD order. As
discussed above for proposed paragraph (a), a scope ruling that a
product is within the scope of the order is a determination that the
product has always been within the scope of the order, and Commerce's
scope regulations must reflect that determination. Put another way, if
a party has imported merchandise and declared that merchandise as not
covered by the scope of an order, and then Commerce issues a scope
ruling finding that such merchandise is subject to an order, under
these proposed regulations Commerce's scope ruling would apply to all
unliquidated entries of the merchandise, as discussed below. Importing
parties are already notified through the publication in the Federal
Register of Commerce's determinations and/or order, and, therefore,
cannot claim ignorance or reliance on another agency's determinations
or actions to avoid the application of Commerce's scope ruling to their
merchandise. Commerce proposes to amend paragraph (l) as necessary in
light of these considerations.
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\56\ See Ugine & ALZ Belgium v. United States, 551 F.3d 1339,
1340-43 (Fed. Cir. 2009); Am. Power Pull Corp. v. United States, 121
F. Supp. 3d 1296, 1300-02 (CIT 2015).
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Additionally, current paragraph (l) reflects the distinction
between a formal scope inquiry as provided under current paragraphs
(b), (e), and (f) and a final scope ruling based on the application
under current paragraph (d) (also referred to as an informal scope
inquiry). Although current paragraph (l) expressly addresses suspension
of liquidation and requirement of cash deposits under the first
procedure, it is largely silent with respect to scope rulings based on
the application--and this silence has been the source of some confusion
and litigation. As discussed above, we are proposing to eliminate the
distinction between these two procedures, and, with these proposed
changes, we are proposing to adapt the current structure of paragraph
(l)
[[Page 49482]]
accordingly to reflect a single scope inquiry procedure. That is, all
scope rulings would be subject to the same procedures under revised
paragraph (l), and there will no longer be any distinction between
formal and informal scope inquiries (as discussed above).
Revised paragraph (l)(1) provides that when Commerce initiates a
scope inquiry under proposed paragraphs (b) or (d), it will notify CBP
of the initiation and direct CBP to continue the suspension of
liquidation of all unliquidated entries of products subject to the
scope inquiry that are already subject to the suspension of
liquidation,\57\ until appropriate liquidation instructions are
issued.\58\ Further, Commerce will direct CBP to apply the cash deposit
rate that would be applicable if the product were determined to be
covered by the scope of the order. These revisions are consistent with
current paragraph (l)(1) to the extent that both call for the
suspension of liquidation and application of cash deposits for already-
suspended entries to continue after initiation of a formal scope
inquiry.
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\57\ Entries may be already subject to the suspension of
liquidation under a variety of scenarios. As recently affirmed by
the CAFC and as discussed in more detail above, CBP has independent
authority to suspend liquidation of entries that CBP determines are
within the scope of an AD or CVD order; such determinations are
``final and conclusive'' unless appealed to Commerce through a
request for a scope ruling. See Sunpreme III, 946 F.3d at 1317-18.
Additionally, section 517 of the Act (concerning CBP's civil
administrative investigations of duty evasion of AD/CVD orders)
authorizes CBP to suspend liquidation of entries for which it has
reasonable suspicion, or, in the case of final determination,
substantial evidence, that covered merchandise is entered into the
United States through evasion under section 517(e) and (d) of the
Act.
\58\ At the time Commerce initiates a scope inquiry, there may
be entries of products subject to the scope inquiry that CBP has
liquidated but for which liquidation is not yet final (e.g., entries
under protest pursuant to 19 U.S.C. 1514). Consistent with current
practice and in accordance with CBP's statutory and regulatory
authorities, Commerce expects that CBP may stay its action on these
entries pending the outcome of the scope inquiry. This is consistent
with the CAFC's decision in Thyssenkrupp Steel North America, Inc.
v. United States, 886 F.3d 1215 (Fed. Cir. 2018). In Thyssenkrupp,
the CAFC recognized that instructions revoking an antidumping duty
order superseded previously issued liquidation instructions, as of
the effective date of the revocation, and applied to entries under
protest that entered the United States after the effective date of
the revocation. Id. at 1223-27. The CAFC explained that this
``serves the purpose of the protest mechanism--to allow agency
consideration of issues after an initial liquidation determination--
and respects the longstanding principle . . . that newly governing
law, if retroactive to particular events, is to be applied to those
events in ordinary, timely initiated direct-review proceedings.''
Id. at 1224. A similar point was recognized in TR International,
Slip Op. 20-34 at *11, currently on appeal, concerning CBP's
potential application of a Commerce scope ruling to entries under
protest.
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However, this also deviates from current paragraphs (l)(1) and (2),
which provide that when Commerce issues a preliminary scope ruling
finding the product is not covered by the scope of the AD and/or CVD
order (i.e., a ``negative'' scope ruling), it will instruct CBP to
terminate suspension of liquidation and refund all cash deposits for
already-suspended entries.
Notably, revised paragraph (l)(2) (pertaining to preliminary scope
rulings) does not require Commerce to notify CBP of a negative
preliminary scope ruling. In such instances, suspension of liquidation
and application of cash deposits for already suspended entries (if any)
under revised paragraph (l)(1) will remain in effect pending Commerce's
subsequent issuance of a final scope ruling and appropriate
instructions as described in revised paragraphs (l)(3) or (4). Thus,
any suspension of liquidation prior to the negative preliminary scope
ruling will remain in effect until the conclusion of the scope inquiry
to ensure appropriate application of AD/CVD duties in the event of a
final scope ruling finding the product is covered by the scope of the
AD and/or CVD order (i.e., an ``affirmative'' scope ruling). Further,
under revised paragraph (l)(4), if Commerce issues a negative final
scope ruling that the product is not covered by an order, and the
product is not otherwise subject to suspension as a result of another
segment of a proceeding, such as a circumvention inquiry under Sec.
351.226 or a covered merchandise inquiry under Sec. 351.227, for
merchandise that was suspended and for which cash deposit rates were
paid, Commerce would instruct CBP to terminate suspension of
liquidation and refund cash deposits (if any) on entries of this non-
subject merchandise.
Paragraphs (l)(2) and (3) also have been revised to address the
considerations highlighted above, specifically, to ensure that the
results of affirmative scope rulings are appropriately applied to all
entries of subject merchandise, which should be covered by those
rulings. Therefore, under revised paragraphs (l)(2) and (3), at the
time of the first affirmative scope ruling (preliminary or final),
Commerce will direct CBP to suspend liquidation of all unliquidated
entries of products subject to the scope inquiry that are not already
subject to the suspension of liquidation (and continue suspension of
liquidation for any entries already suspended as provided under revised
paragraph (l)(1)). This action would apply to all such entries dating
back to the earliest suspension date under the order, which is normally
the preliminary determination in the underlying investigation. Further,
Commerce will direct CBP to apply the applicable cash deposit rate to
all such entries. As provided under revised paragraphs (l)(2) and (3),
these instructions will remain in place until appropriate liquidation
instructions are issued pursuant to Sec. Sec. 351.212 and 351.213.\59\
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\59\ As discussed above, consistent with current practice and in
accordance with CBP's statutory and regulatory authorities, CBP may
stay its action on entries of products that CBP has liquidated but
for which liquidation is not yet final pending the outcome of a
scope inquiry. Additionally, any instructions issued by Commerce
directing CBP to ``lift suspension of liquidation'' and assess
duties at the applicable AD/CVD rate would not limit CBP's ability
to (1) suspend liquidation/assess duties/take any other measures
pursuant to CBP's EAPA investigation authority under section 517 of
the Act specifically, or (2) take any other action within CBP's or
HSI's authority with respect to AD/CVD entries.
---------------------------------------------------------------------------
This deviates from current paragraph (l) in certain respects. As
stated above, current paragraph (l) expressly addresses suspension of
liquidation and requirement of cash deposits for entries in a formal
scope inquiry, but is less clear when Commerce issues a final scope
ruling based upon the application in an informal scope inquiry. For
instance, current paragraphs (l)(2) and (3) provide that if Commerce
issues an affirmative preliminary or final scope ruling pursuant to a
formal scope inquiry, then ``any suspension of liquidation'' will
continue. Where there has been no previous suspension of liquidation,
Commerce will direct CBP (in the event of an affirmative preliminary or
final scope ruling) to suspend liquidation of unliquidated entries
dating back to the date of initiation of the scope inquiry.
Current paragraph (l)(3) also provides that if Commerce issues an
affirmative final scope ruling based on the application, then ``any
suspension of liquidation'' will continue. However, paragraph (l) does
not expressly address instances in which Commerce issues an affirmative
final scope ruling based upon the application (and thus, there has been
no initiation of the scope inquiry) and entries have not already been
suspended. Therefore, in such instances Commerce may direct CBP to
suspend liquidation of all unliquidated entries subject to the scope
inquiry not already subject to the suspension of liquidation (and
continue suspension of liquidation for any entries already suspended),
and apply the applicable cash deposit rates to such entries. This
action applies to all such entries dating back to the earliest
suspension date
[[Page 49483]]
under the order, which is normally the preliminary determination in the
underlying investigation.
In short, under the current regulatory framework, Commerce has
employed two distinct approaches for suspension of liquidation and
application of cash deposits reflecting the different procedures for
informal and formal scope inquiries. As Commerce proposes to eliminate
the distinction between these different procedures, and, in light of
the considerations highlighted above, revised paragraph (l) largely
mirrors the approach for informal scope inquiries discussed above.
Specifically, as stated above, the proposed action under paragraphs
(l)(2) and (3) would apply to all unliquidated entries dating back to
the earliest suspension date under the order, which is normally the
preliminary determination in the underlying investigation, as opposed
to the date of initiation of the scope inquiry (i.e., the approach
currently taken in formal scope inquiries).
The reason that Commerce is proposing to take this approach to
suspension of liquidation and application of cash deposits is to
prevent a situation which, in the terms of the CAFC, ``would encourage
gamesmanship by importers'' and ``permit importers to potentially avoid
paying duties. . . .'' \60\ Under the proposed approach, importers have
an incentive to seek a determination as soon as possible whether a
particular product is subject to the scope of an existing AD/CVD order.
If they fail to do so, then they may be liable for AD/CVD duties if
Commerce eventually determines that the products are covered by the
scope of an existing AD/CVD order. By contrast, the alternative
approach (i.e., the approach currently taken in rulings based on a
formal scope inquiry) would encourage gamesmanship, delay, and indeed,
duty evasion. Foreign producers and exporters, as well as U.S.
importers, would understand that all entries not already suspended
prior to the date on which Commerce initiates a scope inquiry are
essentially excused from AD/CVD duties, even if Commerce finds through
the scope inquiry that such duties should have applied. In turn, this
would lead parties to import as much as possible before any request for
a scope inquiry is filed, and then eliminate AD/CVD duty liability for
such imports by requesting a scope inquiry. Such manipulation of AD/CVD
duty liability would undermine the effectiveness and remedial purpose
of the AD/CVD laws. Accordingly, Commerce proposes to adopt the
procedures discussed above.
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\60\ Sunpreme III, 946 F.3d at 1317 and 1321. In United Steel
and Fasteners, Inc. v. United States, 947 F.3d 794 (Fed. Cir. 2020)
(Fasteners), discussed further below, the CAFC did not disagree with
Commerce's concerns of potential ``gamesmanship and delay'' if
importers did not report their merchandise to CBP as subject
merchandise. See Fasteners, 947 F.3d at 803 (finding narrowly that
``we do not find that such gamesmanship occurred in this case.'')
---------------------------------------------------------------------------
We recognize that the CAFC recently held that Commerce's current
regulations did not allow for ``retroactively suspending liquidation to
the issuance date'' of the antidumping order in that litigation, where
Commerce issued a final scope ruling based on the application in an
informal scope inquiry.\61\ However, the CAFC relied on the existing
regulatory framework that delineates between an informal and formal
scope inquiry described above, and that Commerce is now proposing to
change in this proposed rule.\62\ Therefore, notwithstanding the CAFC's
holding in Fasteners, Commerce is not precluded from amending its
regulations through notice and comment procedures to adopt the
procedures discussed herein.
---------------------------------------------------------------------------
\61\ See Fasteners, 947 F.3d at 800-03.
\62\ Id.
---------------------------------------------------------------------------
Additionally, to the extent the CAFC relied on concerns in the 1997
Final Rule regarding potential retroactive suspension of
liquidation,\63\ those concerns pertained to the inconvenience to
importers and exporters if domestic industries filed a scope request
based ``on nothing more'' than a mere ``allegation'' and Commerce began
suspension of liquidation on entries not already subject to suspension
of liquidation.\64\ This was in response to a suggestion that, at the
time Commerce initiates a formal scope inquiry based on a scope
request, Commerce should instruct CBP to suspend liquidation of any
unliquidated entries.\65\ However, Commerce's proposed regulation does
not adopt such a position. Rather, Commerce proposes that only upon
issuance of an affirmative preliminary or final scope ruling will
Commerce direct that any unliquidated entries under the order (dating
back to the earliest suspension date under the order) be suspended.
This proposal is consistent with the 1997 Final Rule statement that
``the Department will not order the suspension of liquidation until it
makes either a preliminary or final affirmative scope ruling, whichever
occurs first.'' \66\ The difference is that the 1997 Final Rule as
promulgated in the current regulation imposes a ``cut-off'' of the
initiation date of the scope inquiry--the proposed regulation removes
this limitation so that any unliquidated entries found within the scope
of the order appropriately will be subject to duties, not just those
that entered after the initiation date.\67\
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\63\ Id. at 802 (citing 1997 Final Rule, 62 FR at 27327-38).
\64\ See 1997 Final Rule, 62 FR at 27328.
\65\ Id., 62 FR at 27327-28.
\66\ Id., 62 FR at 27328.
\67\ As discussed above, consistent with current practice and in
accordance with CBP's statutory and regulatory authorities, CBP may
stay its action on entries of products that CBP has liquidated but
for which liquidation is not yet final pending the outcome of a
scope inquiry.
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This exercise of Commerce's discretion is reasonable and balanced.
As explained above, Congress, and the courts, have long recognized that
Commerce has the vested authority to administer the trade remedy laws
in accordance with their intent, and has the discretion to take
appropriate enforcement measures to ensure the effectiveness of its AD/
CVD orders by preventing duty evasion and circumvention.\68\ Further,
over the last twenty years, the United States has faced various
complications in fully collecting AD and CVD duties from the obligated
parties.\69\ Although Commerce is cognizant of the concerns raised in
the 1997 Final Rule regarding the risk of potential unfairness to
certain importers who genuinely may not be aware that their products
are within the scope of an order until Commerce issues a ruling,
Commerce cannot distinguish between importers with a genuine
misunderstanding from those who (1) have failed to do their due
diligence by reviewing Commerce scope descriptions or past scope
rulings, or (2) are aware of their potential (or actual) AD/CVD
liability and have opted not to seek a scope ruling or enter their
merchandise as subject to an AD/CVD order, so as to avoid the likely
application of AD/CVD duties. On balance, Commerce has determined that
the very real risk and concerns of duty evasion, circumvention, and
duty collection should guide its updated regulations.
---------------------------------------------------------------------------
\68\ See generally section 781 of the Act; SAA at 892-95; Tung
Mung, 219 F. Supp. 2d at 1343.
\69\ See, e.g., U.S. Gov't Accountability Office, Report to the
Chairman, Committee on Finance, U.S. Senate, GAO 16-542, Antidumping
and Countervailing Duties: CBP Action Needed to Reduce Duty
Processing Errors and Mitigate Nonpayment Risk, at 13 (July 2016).
---------------------------------------------------------------------------
Commerce also has considered the practical effect this change in
policy may have on importers' liability. Significantly, the statute
generally directs CBP to liquidate entries which have not been declared
as subject to an AD/CVD order within one year of entry.\70\ Therefore,
practically speaking, it is unlikely that once Commerce issues
[[Page 49484]]
a preliminary or final scope ruling finding a product covered by an AD/
CVD order that there will be any unliquidated entries, other than those
already suspended, more than a year old. In light of this, Commerce
believes that it has settled on a policy which will effectuate its
authority under the AD/CVD laws, while mitigating the harm to importers
who may be acting in good faith by importing without paying duties.
Moreover, should this change in policy be adopted in any final rule,
the effective date of the policy change would be 30 days after
publication of the final rule. Therefore, scope inquiries initiated
prior to this effective date would maintain the initiation date of the
inquiry as the furthest potential ``retroactive'' date for unliquidated
entries not already suspended. That said, given that this proposal
involves complex and technical issues, and given that important trade
enforcement objectives are implicated, Commerce invites public comment
on revised Sec. 351.225(l). We will carefully consider all public
comments before issuing a final rule that revises the existing
regulation.
---------------------------------------------------------------------------
\70\ 19 U.S.C. 1504(a); Section 504 of the Act.
---------------------------------------------------------------------------
Proposed revisions to paragraph (m) address the application of
scope rulings under two different scenarios. Paragraph (m)(1) would
clarify that if a scope ruling application requests a scope ruling on a
product, which is physically identical to that of another product for
which a scope ruling has already been issued under the same order,
Commerce could apply the previous scope ruling directly to the
requested product without conducting a new scope inquiry. In that
situation, for example, Commerce may issue a letter to the applicant
and attach the scope ruling upon which it has relied, making its
determination without the need of a larger, more detailed scope ruling.
In such instances, the requirements for issuing a final scope ruling
under paragraph (h) would apply.
Proposed paragraphs (m) and (n) together address a problem that
arises when a scope ruling would apply equally to companion AD and CVD
orders, which cover the same merchandise from the same country. In that
scenario, an interested party submitting a scope ruling application
pertaining to both orders pursuant to paragraph (c) must file its scope
ruling application on the record of the AD proceeding only, and serve
its scope ruling application to all parties on the annual inquiry
service list for both the AD and CVD orders. The annual inquiry service
list and related procedures are discussed in paragraph (n). Once
Commerce initiates the scope inquiry, Commerce would initiate and
conduct that inquiry pertaining to both orders only on the record of
the AD proceeding.\71\ This is because Commerce has noticed over the
years that, in certain inquiries, interested parties have inadvertently
placed relevant information, for example, on the AD proceeding record,
but not on the CVD proceeding record, or vice-versa. Once Commerce
issues a final scope ruling on the record of the AD proceeding,
Commerce would include a copy of that scope ruling on the record of the
CVD proceeding. By limiting the scope inquiry only to the record of one
proceeding, the chances of incomplete records, or confusing records
being filed with courts on appeal, should be lessened.
---------------------------------------------------------------------------
\71\ Commerce will follow the procedures of paragraph (l) for
both orders.
---------------------------------------------------------------------------
Proposed revisions to paragraph (n) addresses service requirements.
The current regulations require that any party that has ever
participated in proceedings under an order must be served with a scope
request based on the scope service list maintained on Commerce's
website. However, because some orders are decades old and the scope
service list contains dozens of parties who have participated over the
years, the proposed regulations would require that parties (other than
the petitioner) who wish to be served with new scope ruling
applications, under paragraph (c), or be notified of Commerce's self-
initiation of a scope inquiry, under paragraph (b), would have to take
the affirmative step of filing a request for inclusion on the annual
inquiry service list. Requests for inclusion on the annual inquiry
service list must be filed with Commerce during the anniversary month
of the AD or CVD order at issue, and Commerce would update the list on
an annual basis at that time.
In addition, under proposed paragraph (n), once a scope ruling
application is accepted by Commerce in accordance with paragraph (d),
and after Commerce has notified parties on the annual inquiry service
list of its self-initiation of a scope inquiry under paragraph (b), a
segment-specific service list would be established, under Sec.
351.103(d)(1), and the requirements of Sec. 351.303(f) would apply. To
be clear, once the segment-specific service list is established,
parties on the annual inquiry service list for all orders that may be
affected by the scope ruling would no longer be served with filings
made pursuant to the scope inquiry, unless they had followed the
procedures of Sec. 351.103(d)(1) by filing an entry of appearance in
the relevant scope segment. However, as discussed further below,
Commerce proposes to amend Sec. 351.103(d)(1) to reflect that an
interested party that submits a scope ruling application need not file
an entry of appearance under Sec. 351.103(d)(1), as that interested
party would be placed on the segment-specific service list by Commerce.
Finally, proposed revisions to paragraphs (o) and (p) provide that
Commerce would publish in the Federal Register on a quarterly basis a
list of all of the final scope rulings issued within the previous three
months and that scope rulings may, as appropriate, apply to suspension
agreements as well, in accordance with Sec. 351.208.
Circumvention--Section 351.226
When the current scope regulations were drafted, there was a belief
that there were similarities between scope inquiries and circumvention
inquiries sufficient to place them both in the same general regulatory
provision. Circumvention inquiries (sometimes called anti-circumvention
inquiries) are conducted pursuant to section 781 of the Act, while
scope inquiries are referenced only in sections 516a(a)(2)(A)(ii) and
516a(a)(2)(B)(vi) of the Act. As the two latter provisions pertain to
determinations by Commerce as to ``whether a particular type of
merchandise is within the class or kind of merchandise described in an
existing finding of dumping or antidumping or countervailing duty
order,'' it is clear that Commerce derives its authority to conduct a
scope ruling from multiple sources, including, for example, sections
771(25) (defining subject merchandise as a ``class or kind of
merchandise that is within the scope of an investigation, a review, a
suspension agreement, (or) an order''), 701(a) (directing Commerce to
impose duties on a class or kind of merchandise being subsidized), and
731(a) of the Act (directing Commerce to impose duties on a class or
kind of merchandise being dumped).
Because there is unique authority for these different inquiries and
corresponding determinations, and we conduct the two proceedings
differently, we have determined that it is appropriate to establish
separate regulations for each type of proceeding. With respect to
circumvention inquiries in particular, paragraphs (h), (i), (j), and
(k) of proposed new Sec. 351.226 are derived directly from section 781
of the Act and current regulation Sec. Sec. 351.225(g), (h), (i), and
(j).
Proposed paragraph (a) introduces new Sec. 351.226 and briefly
addresses
[[Page 49485]]
section 781 of the Act. Congress enacted section 781 of the Act to
combat certain forms of circumvention of AD and CVD orders. When
Congress passed the Omnibus Trade and Competitiveness Act in 1988, it
explained that ``{a{time} n order on an article presumptively includes
articles altered in minor respects in form or appearance . . . .'' The
legislative history explains that the purpose of the circumvention
statute ``is to authorize the Commerce Department to apply AD and
{CVD{time} orders in such a way as to prevent circumvention and
diversion of U.S. law.'' \72\ Further, it indicates that Congress was
concerned with the existence of ``loopholes,'' i.e., foreign companies
evading orders by making slight changes in their method of production,
because such scenarios ``seriously undermine the effectiveness of the
remedies provided by the antidumping and countervailing duty
proceedings, and frustrated the purposes for which these laws were
enacted.'' \73\ Congress also recognized that ``aggressive
implementation of {the circumvention statute{time} by the Commerce
Department can foreclose these practices.'' \74\ When implementing the
Uruguay Round Agreements Act of 1994, the Administration expressed
similar concerns about scenarios limiting the effectiveness of the AD
duty law (i.e., completion or assembly in a country other than the
subject country).\75\ Accordingly, Commerce ``has been vested with
authority to administer the antidumping laws in accordance with the
legislative intent'' and, thus, ``has a certain amount of discretion
{to act{time} . . . with the purpose in mind of preventing the
intentional evasion or circumvention of the antidumping duty law.''
\76\ Proposed paragraph (a), as well as additional paragraphs discussed
below, would codify these principles. Additionally, proposed Sec.
351.226(a) tracks proposed Sec. 351.225(a), and explains that, unless
otherwise specified in proposed new Sec. 351.226, Commerce's existing
procedures contained in subpart C (i.e., relating to factual
information (Sec. Sec. 351.102(b)(21) and 351.301) and the extension
of time limits (Sec. 351.302)) apply to circumvention inquiries.
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\72\ Omnibus Trade Act of 1987, Report of the Senate Finance
Committee, S. Rep. No. 100-71, at 101 (1987).
\73\ Id.
\74\ Id.
\75\ See SAA at 892-95.
\76\ Tung Mung, 219 F. Supp. 2d at 1343 (quoting Mitsubishi I,
700 F. Supp. at 555, aff'd 898 F.2d at 1583).
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Under proposed paragraph (b), Commerce could self-initiate a
circumvention inquiry based on information available to it, while under
proposed paragraph (c), Commerce could initiate a circumvention inquiry
based on the filing of an inquiry request by an interested party.\77\
If Commerce self-initiates, it would publish a notice of initiation in
the Federal Register. If a circumvention inquiry request is filed with
Commerce, the filing party would have to notify all parties on the
annual inquiry service list, set forth in proposed Sec. Sec.
351.225(n) and 351.226(n). Proposed paragraph (c)(2) would also set
forth the information to be included in a circumvention inquiry
request. Commerce expects that such a request would include not only a
detailed description of the merchandise allegedly circumventing the
order, but also public identification of any producers, exporters, or
importers of the merchandise.\78\ As with respect to the revised scope
ruling application described in proposed Sec. 351.225(c), it is
understood that not all of the information listed will be available to
all interested parties requesting a circumvention inquiry. For example,
the domestic industry may know certain details about a company's
``further manufacturing'' of a product, but it may not be able to
supply ``a description of parts, materials, and the production process
employed in the production of the product.'' For this reason, proposed
paragraph (c)(2) would require that the described information in the
circumvention inquiry request be provided to the extent reasonably
available to the requestor.
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\77\ To be clear, Commerce already has the authority to self-
initiate anti-circumvention inquiries under the current regulations.
See 19 CFR 351.225(b). As noted above with respect to the proposed
changes to the scope regulations, the term ``interested party'' is
defined in section 771(9) of the Act, and pertains, for example, to
``foreign manufacturers,'' ``producers,'' ``exporters,'' or ``United
States importers'' ``of subject merchandise.'' However, the nature
of a circumvention proceeding is to determine whether the
merchandise produced, imported by, or exported by a party is
circumventing an AD or CVD order. Thus, in many cases, the question
of whether a party is an ``interested party'' is tied to the
question of whether the merchandise at issue is determined to be
subject merchandise, or not. Accordingly, for purposes of these
circumvention regulations, the term ``interested party'' includes a
party that potentially meets the definition of ``interested party''
under section 771(9) of the Act, depending upon the outcome of the
circumvention inquiry.
\78\ Commerce recognizes that the identity of the producers,
exporters and or importers alleged to be participants to
circumvention may not be public, but that such information can be
very important to the conduct of a circumvention inquiry.
Accordingly, although the regulation requests public names be
provided, if available, it also stresses that this provision is not
intended to restrict the inclusion of the business proprietary names
of those entities in the application if the requester has access to
that data.
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Proposed paragraph (d) would provide the deadlines for initiation
of a circumvention inquiry. The deadline for initiation would be
shortened from the current 45 days to 20 days, with a possible
extension of up to a total of 35 days. However, initiation would only
occur if Commerce concludes that the request properly alleges that the
elements necessary for a circumvention determination under section 781
of the Act exist and is accompanied by information reasonably available
to the interested party supporting these allegations. If the
circumvention request is incomplete or otherwise unacceptable, the
Secretary may reject the request and will reconsider it if it is
resubmitted with sufficient documentation. Additionally, Commerce could
defer its initiation of a circumvention inquiry if it determines that a
scope question should first be addressed in a new or ongoing segment of
a proceeding, such as a scope inquiry under the proposed revisions to
Sec. 351.225.
Paragraph (d)(2) refers to proposed Sec. 351.225(i)(1), which
expressly allows Commerce to address scope issues in the context of a
circumvention inquiry, rather than conduct a separate scope inquiry
under Sec. 351.225. In certain circumstances, a party may submit a
request for a circumvention inquiry, which requires Commerce to
consider, in the first instance, whether the product at issue is
already covered by the scope of the order at issue in its scope ruling
procedures under Sec. 351.225. If a product is already subject to the
scope of the order, a circumvention inquiry may not be necessary. To
consolidate its resources and avoid unnecessary duplication of effort,
proposed Sec. Sec. 351.226(d)(2) and 351.225(i)(1) would allow
Commerce to address scope and circumvention issues more efficiently, by
allowing scope issues to be addressed within the context of a
circumvention inquiry.
Proposed paragraph (e) would provide the deadlines for Commerce to
conduct circumvention inquiries, consistent with section 781(f) of the
Act, which sets a deadline for circumvention determinations within 300
days from the date of publication of the initiation notice, to the
maximum extent practicable. Proposed paragraph (e)(1) would establish a
new deadline for preliminary determinations of 150 days from the date
of publication of the initiation notice. Proposed paragraph (e)(2)
restates the statutory deadline, and also sets forth that Commerce
would only be able to extend the 300-
[[Page 49486]]
day statutory deadline by no more than 65 days if it determined that an
inquiry was extraordinarily complicated. It is Commerce's understanding
that for an inquiry to be extraordinarily complicated there would
exist, for example, novel facts or issues (such as facilities being
ravaged by natural disasters or unusual or complicated government or
business practices), or a large number of firms involved in the
inquiry.
Proposed paragraph (f) would provide the procedures for
circumvention inquiries, and largely tracks the proposed new scope
inquiry procedures provided under proposed Sec. 351.225(f), as well as
the requirements provided under current Sec. 351.225(f)(7) concerning
notification to the ITC. This provision also explains that Commerce
could limit the issuance of questionnaires to a reasonable number of
respondents. In practice, Commerce could do this through a respondent
selection process.
Proposed paragraph (f)(4) would also establish deadlines regarding
comments and rebuttal comments after a preliminary circumvention
determination under proposed paragraph (g) if the preliminary
circumvention determination is not issued concurrently with the
initiation of the circumvention inquiry. Proposed paragraph (f)(5)
would provide Commerce with the ability to establish alternative
procedures if the preliminary circumvention determination issued under
proposed paragraph (g) is issued concurrently with the initiation of
the circumvention inquiry.\79\ Additionally, proposed paragraph (f)(6)
would allow Commerce to forego or rescind a circumvention inquiry, in
whole or in part, if a circumvention request is withdrawn or if
Commerce issues a final determination in another segment of the
proceeding under an AD and/or CVD order that the merchandise at issue
in the circumvention inquiry is covered by that order (or orders).
Commerce could also rescind if the basis for the initiation of the
circumvention inquiry included multiple provisions under section 781 of
the Act, and Commerce need only reach a final determination with
respect to one of those provisions. This most frequently happens if a
circumvention inquiry examines whether merchandise is altered in minor
respects or later-developed merchandise, and Commerce need only address
one of those provisions to reach an affirmative determination. Proposed
paragraph (f)(7) would allow Commerce to alter deadlines under this
paragraph, as appropriate, including to align the deadlines of the
circumvention inquiry with another segment of the proceeding, such as a
scope inquiry, under proposed new Sec. 351.225.
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\79\ To be clear, Commerce already has the authority under
existing regulations to issue a preliminary circumvention
determination concurrently with initiation.
---------------------------------------------------------------------------
Finally, proposed paragraph (f)(8) would also maintain provisions
regarding notification to the ITC under current Sec. 351.225(f)(7).
Unless otherwise specified, Commerce's current procedural regulations
concerning factual information (19 CFR 351.102(b)(21) and 19 CFR
351.301), including the extension of time limits (19 CFR 351.302),
apply to circumvention procedures and would continue to apply under the
proposed revisions.
Proposed paragraph (g) follows proposed Sec. Sec. 351.225(g) and
(h) with respect to preliminary and final circumvention determinations.
However, unlike preliminary and final scope rulings, preliminary and
final circumvention determinations will both be published in the
Federal Register. Similar to proposed Sec. 351.225(g), proposed
paragraph (g)(1) would allow Commerce to issue a preliminary
circumvention determination, based on available information at the
time, as to whether there is a reasonable basis to believe or suspect
that the elements necessary for a circumvention determination under
section 781 of the Act exist. Proposed paragraph (g)(2) largely tracks
the similar provision under proposed Sec. 351.225(h) concerning the
issuance of final scope rulings. Thus, proposed paragraph (g)(2)
provides that Commerce would ``convey'' the final circumvention
determination in accordance with the requirements of section
516A(a)(2)(A)(ii) of the Act, which states that judicial review of
``class or kind'' determinations under section 516A(a)(2)(B)(vi) of the
Act, such as scope rulings and circumvention determinations, are based
off of the date of mailing of such determination. Section
516A(a)(2)(A)(ii) of the Act further provides that only ``an interested
party who is a party to the proceeding'' may commence judicial review
procedures. Therefore, aside from its obligation to publish notice of
the final circumvention determination in the Federal Register, Commerce
proposes to convey a copy of the final circumvention determination in
the manner prescribed by section 516A(a)(2)(A)(ii) of the Act (i.e.,
mailing) to interested parties who are parties to the proceeding (see
Sec. 351.102(b)(36)), because these are the only parties that have
legal standing to appeal the final circumvention determination under
section 516A(a)(2)(A)(ii) of the Act.
Furthermore, paragraph (g)(2) states that Commerce will
``promptly'' convey a copy of the final circumvention determination
after publication in the Federal Register. The use of the term
``promptly'' is consistent with the use of the same term in revised
section 225 and new section 227. It is Commerce's expectation that
prompt conveyance of a copy of the final circumvention determination
normally would occur no more than 5 business days from the publication
of the determination in the Federal Register. Consistent with sections
516A(a)(2)(A)(ii) and (B)(vi) of the Act, judicial review procedures
would be commenced based on the date of conveyance, as opposed to the
date of receipt, of a final circumvention determination. Additionally,
as with any other document that is placed on the record by the agency,
all interested parties on the segment-specific service lists will be
notified of the final circumvention determination through Commerce's
electronic ACCESS system.
Proposed paragraphs (h) and (i) relate to the current regulatory
provisions for products completed or assembled in the United States or
other foreign countries found in current Sec. Sec. 351.225(g) and (h),
respectively, with two important proposed revisions. First, we have
removed statements that no one single factor under sections 781(a)(2)
and 781(b)(2) of the Act will be controlling. We recognize that this
language adopts similar language from the SAA.\80\ However, this
statement alone, without additional context, has raised questions. In
particular, the SAA states: ``Commerce will evaluate each of {the
factors under sections 781(a)(2) and 781(b)(2) of the Act{time} as
they exist either in the United States or a third country, depending on
the particular circumvention scenario. No single factor will be
controlling.'' The SAA also provides that these provisions ``do not
establish rigid numerical standards for determining the significance of
the assembly (or completion) activities in the United States or for
determining the significance of the value of the imported parts or
components.'' \81\ Therefore, although no one single factor should
control Commerce's analysis, this statement in the SAA should be
considered in light of the evidence before Commerce in a given case and
is not intended to limit Commerce's discretion to evaluate the
particularities of the circumvention scenario.
[[Page 49487]]
Accordingly, we are proposing to remove the statement from paragraphs
(h) and (i).
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\80\ See SAA at 893.
\81\ Id. at 894.
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Second, we propose removing specific reference to the major input
rule under section 773(f)(3) of the Act in paragraphs (h) and (i).
Under current Sec. Sec. 351.225(g) and (h), in determining the value
of parts or components purchased from an affiliated person under
sections 781(a)(1)(D) and 781(b)(1)(D) of the Act, or of processing
performed by an affiliated person under sections 781(a)(2)(E) and
781(b)(2)(E) of the Act, the value of the part or component may be
based on the cost of producing the part or component under section
773(f)(3) of the Act. The 1996 Proposed Rule added this reference to
the ``transactions disregarded'' and ``major input'' rules applicable
to affiliated transactions set forth in 773(f)(3) of the Act in
response to comments raised before Commerce at the time.\82\
Additionally, the 1997 Final Rule further explained that the SAA
clearly contemplates the use of the major input rule in appropriate
circumstances, and, in response to comments, also explained that cost
of production may be used as the basis of the value for inputs from
affiliated persons.\83\ Based on our more recent experience, we believe
it would be beneficial to codify that determinations of the value of
parts or components on the basis of the cost of producing the part or
component may be conducted under the various applicable provisions of
section 773--in this case, section 773(e) (constructed value) and
773(c) (factors of production under the nonmarket economy methodology)
of the Act. The major input rule under section 773(f)(3) will still
apply, as appropriate, in accordance with this applicable statutory
framework.
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\82\ See 1996 Proposed Rule, 61 FR at 7322. Clarifying edits to
this language were made in the 1997 Final Rule. See 1997 Final Rule,
62 FR at 27328 (clarifying that application of the major input rule
is discretionary for purposes of both U.S. and third country
assembly).
\83\ See 1997 Final Rule, 62 FR at 27328 (citing SAA at 894).
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Proposed paragraph (j) would incorporate the current regulatory
provision, Sec. 351.225(i), pertaining to minor alteration of
merchandise under section 781(c) of the Act, with some additions.
Although the statute is silent regarding what factors to consider in
determining whether alterations are properly considered ``minor,'' the
legislative history of this provision indicates there are certain
criteria that should be considered before reaching a circumvention
determination.\84\ Previous circumvention cases conducted by Commerce
have relied on those enumerated criteria.\85\ These would now be
incorporated into paragraph (j). Additionally, in conducting a minor
alteration circumvention inquiry, under section 781(c) of the Act, we
have analyzed other factors, as appropriate on a case-by-case basis,
including the circumstances under which the products enter the United
States, the timing of the entries during the circumvention review
period, and the quantity of merchandise entered during the
circumvention review period.\86\ We would incorporate these additional
factors, which is a non-exhaustive list, in paragraph (j).
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\84\ See Omnibus Trade Act of 1987, Report of the Senate Finance
Committee, S. Rep. No. 100-71, at 100 (1987) (stating that Commerce
``should apply practical measurements regarding minor alterations,
so that circumvention can be dealt with effectively, even where such
alterations to an article technically transform it into a
differently designated article{,{time} '' and providing a list of
criteria to be considered).
\85\ See, e.g., Final Results of Anti-Circumvention Review of
Antidumping Order: Corrosion-Resistant Carbon Steel Flat Products
From Japan, 68 FR 33676, 33677 (June 5, 2003).
\86\ See Preliminary Determination of Circumvention of
Antidumping Order; Cut to Length Carbon Steel Plate from Canada, 65
FR 64926, 64929-31 (October 31, 2000), unchanged in Final
Determination of Circumvention of Antidumping Order; Cut to Length
Carbon Steel Plate from Canada, 66 FR 7617 (January 24, 2001).
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Proposed paragraph (k) would incorporate the current regulatory
provision, Sec. 351.225(j), pertaining to later-developed merchandise,
under section 781(d) of the Act, with some additions. In conducting a
later-developed merchandise circumvention inquiry, under section
78l(d)(l) of the Act, and in determining whether the merchandise is
``later-developed,'' Commerce first examines whether the merchandise at
issue was commercially available at the time of the initiation of the
AD and CVD investigation.\87\ We would incorporate the commercial
availability standard into paragraph (k), as this is judicially-
affirmed and well-established in our practice. Commerce intends to
consider whether a product is ``commercially available'' on a case-by-
case basis in light of the record of the proceeding. If Commerce
determines that such merchandise was not commercially available at the
time of the investigation, and is, thus, later-developed, Commerce
would consider whether the later-developed merchandise is covered by
the orders pursuant to the statutory factors identified in section
781(d)(1) of the Act.
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\87\ See Later-Developed Merchandise Anticircumvention Inquiry
of the Antidumping Duty Order on Petroleum Wax Candles from the
People's Republic of China: Affirmative Preliminary Determination of
Circumvention of the Antidumping Duty Order, 71 FR 32033, 32037-40
(June 2, 2006), unchanged in Later-Developed Merchandise
Anticircumvention Inquiry of the Antidumping Duty Order on Petroleum
Wax Candles from the People's Republic of China: Affirmative Final
Determination of Circumvention of the Antidumping Duty Order, 71 FR
59075 (October 6, 2006); Candles Anticircumvention Final, 71 FR at
59077 and accompanying Issues and Decision Memorandum at Comment 4,
amended by Redetermination Pursuant to Court Remand Order in Target
Corporation v. United States, 578 F. Supp. 2d 1369 (CIT 2008)
(November 7, 2008), affirmed by Target Corp. v. United States, 626
F. Supp. 2d 1285 (CIT 2009), and Target Corp., 609 F.3d at 1358-60
(holding that Commerce's interpretation of later-developed, as
turning on whether the merchandise was commercially available at the
time of the investigation, is reasonable). See also Erasable
Programmable Read Only Memories from Japan; Final Scope Ruling, 57
FR 11599 (April 6, 1992); Electrolytic Manganese Dioxide from Japan;
Final Scope Ruling, 57 FR 395 (January 6, 1992); Portable Electronic
Typewriters from Japan, 55 FR 47358 (November 13, 1990).
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Proposed paragraph (l) of Sec. 351.226 would alter the suspension
of liquidation requirements found in current Sec. 351.225(l) (which
apply to circumvention inquiries) and mirror the proposals to Sec.
351.225(l) pertaining to scope, which have already been described
above.
Thus, proposed paragraph (l)(1) of Sec. 351.226 provides that when
Commerce initiates a circumvention inquiry under proposed paragraphs
(b) or (d), it will notify CBP of the initiation and direct CBP to
continue the suspension of liquidation of all unliquidated entries of
products subject to the circumvention inquiry that are currently
suspended by CBP \88\ at the applicable cash deposit rate that would
apply if the product were determined to be circumventing the order.
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\88\ As discussed above, entries may be ``currently suspended by
CBP'' under a variety of scenarios. See Sunpreme III, 946 F.3d at
1317-18 (discussing CBP's authority to suspend liquidation of
entries that CBP determines are within the scope of an AD/CVD order
unless appealed to Commerce); section 517 of the Act (authorizing
CBP to suspend liquidation of entries for which it has reasonable
suspicion, or, in the case of final determination, substantial
evidence, that covered merchandise is entered into the United States
through evasion under section 517(e) and (d) of the Act).
Additionally, as discussed above, consistent with current practice
and in accordance with CBP's statutory and regulatory authorities,
CBP may stay its action on entries of products that CBP has
liquidated but for which liquidation is not yet final pending the
outcome of a circumvention inquiry.
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Further, proposed paragraph (l)(2) of Sec. 351.226 provides that
if Commerce issues a preliminary circumvention determination under
proposed paragraph (g)(1) that the product at issue is circumventing an
AD and/or CVD order, Commerce will direct CBP to: (1) Continue
suspension of liquidation of already suspended entries; (2) suspend
[[Page 49488]]
liquidation of all other products at issue that are unliquidated; and
(3) apply the applicable cash deposit rate under the order to
unliquidated entries.
Proposed paragraph (l)(4) provides that if Commerce issues a
negative final determination under paragraph (g)(2), and the product is
not otherwise subject to suspension as a result of another segment of a
proceeding, such as a covered merchandise inquiry under Sec. 351.227,
for merchandise that was suspended and for which cash deposit rates
were paid, Commerce would instruct CBP to terminate suspension of
liquidation and refund cash deposits (if any) on entries of this non-
subject merchandise.
On the other hand, if Commerce concludes in a final determination
under proposed paragraph (g)(2) that circumvention has occurred, then
under proposed paragraph (l)(3) Commerce would direct CBP to: (1)
Continue suspension of liquidation of already suspended entries,
including those entries subject to suspension of liquidation as a
result of another segment of a proceeding, such as an administrative
review under Sec. 351.213; (2) suspend liquidation of all products at
issue which are unliquidated; and (3) apply the applicable cash deposit
rate under the order to unliquidated entries, until appropriate
liquidation instructions are issued pursuant to Sec. Sec. 351.212 and
351.213.\89\
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\89\ As discussed above, consistent with current practice and in
accordance with CBP's statutory and regulatory authorities, CBP may
stay its action on entries of products that CBP has liquidated but
for which liquidation is not yet final pending the outcome of a
circumvention inquiry. Additionally, any instructions issued by
Commerce directing CBP to ``lift suspension of liquidation'' and
assess duties at the applicable AD/CVD rate are not intended to
impugn CBP's ability to (1) suspend liquidation/assess duties/take
any other measures pursuant to CBP's EAPA investigation authority
under section 517 of the Act specifically, or (2) take any other
action within CBP's or HSI's authority with respect to AD/CVD
entries.
---------------------------------------------------------------------------
As described in further detail above in the discussion of proposed
paragraph (l) of Sec. 351.225, these procedures deviate from the
current Sec. 351.225 framework in two key respects. First, upon an
affirmative preliminary or final circumvention determination, Commerce
will instruct CBP to suspend liquidation of any unliquidated entries,
not only those that entered on or after the date of initiation of the
circumvention inquiry. Second, the proposed regulation does not require
Commerce to notify CBP of a negative preliminary circumvention
determination, and, therefore, suspension of liquidation for already
suspended entries (if any) will remain in effect pending Commerce's
issuance of a final circumvention determination.
These suspension of liquidation procedures and cash deposit
requirements will result in a more effective application of
circumvention determinations. As discussed above, Congress enacted
section 781 of the Act to combat certain forms of circumvention of AD
and CVD orders, however, neither section 781 of the Act nor any other
provision of the Act contains specific guidance regarding when
merchandise found to be circumventing an AD and/or CVD order should be
subject to suspension of liquidation and cash deposit requirements.
When Congress passed the Omnibus and Trade Competitiveness Act of 1988,
it explained that the purpose of the circumvention statute ``is to
authorize the Commerce Department to apply antidumping and
countervailing duty orders in such a way as to prevent circumvention
and diversion of U.S. law.'' \90\ Congress also recognized that
``aggressive implementation of {the circumvention statute{time} by the
Commerce Department can foreclose these practices.'' \91\ Consistent
with Congress's intent when enacting the circumvention statute, these
proposals for paragraph (l) of Sec. 351.226 will help prevent
companies from eluding the payment of duties if Commerce ultimately
concludes that the merchandise is circumventing an AD and/or CVD order.
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\90\ Omnibus Trade Act of 1987, Report of the Senate Finance
Committee, S. Rep. No. 100-71, at 101 (1987).
\91\ Id.
---------------------------------------------------------------------------
Proposed paragraph (m) would address the effect and application of
circumvention determinations. In its experience, Commerce has witnessed
scenarios in which the circumvention determined to exist was unique to
the interested party under review. In that situation, a company-
specific circumvention determination is warranted. However, Commerce
has also found circumvention to exist in other cases in which the
circumvention warranted a country-wide determination. Accordingly, the
regulation would recognize that section 781 of the Act provides
Commerce with the discretion to apply a circumvention decision on a
country-wide basis, and therefore allows for Commerce to consider
whether a country-wide application is warranted on a case-by-case basis
in circumvention inquiries. One of the factors Commerce may consider in
making such a determination is the possibility of subsequent
circumvention by other producers, exporters, or importers following the
issuance of an affirmative company-specific circumvention
determination.
Proposed paragraph (m) would also address the potential overlap
between a circumvention inquiry and other segments of the proceeding
and would allow Commerce to take appropriate action in such other
proceedings. For example, Commerce could request information concerning
the product that is the subject of the circumvention inquiry for
purpose of an administrative review under Sec. 351.213.
Proposed paragraphs (m) and (n) would together address a problem
that arises when a circumvention determination would apply equally to
companion AD and CVD orders, which cover the same merchandise from the
same country, and largely mirror the same paragraphs under the proposed
revisions to Sec. 351.225. In that scenario, an interested party
requesting a circumvention inquiry pertaining to both orders pursuant
to paragraph (c) must file its request on the record of the AD duty
proceeding only, and serve its circumvention inquiry request to all
parties on the annual inquiry service list for both the AD and CVD
orders. The annual inquiry service list and related procedures are
discussed in proposed Sec. 351.225(n). Once Commerce initiates the
circumvention inquiry, Commerce would initiate and conduct that inquiry
pertaining to both orders only on the record of the AD duty
proceeding.\92\ Once Commerce issues a final circumvention
determination on the record of the AD proceeding, Commerce would
include a copy of that determination on the record of the CVD
proceeding and notify CBP in accordance with paragraph (l). As noted
above, by limiting the circumvention inquiry only to the record of one
proceeding, the chances of incomplete records, or confusing records
being filed with courts on appeal, should be lessened.
---------------------------------------------------------------------------
\92\ Under that scenario, Commerce would follow the procedures
of paragraph (l) for both orders.
---------------------------------------------------------------------------
Proposed paragraph (n) would address service requirements and
largely tracks the same provision under proposed Sec. 351.225(n),
i.e., interested parties filing a circumvention inquiry request must
serve all parties on the annual inquiry service list for that order and
any companion order. Under proposed paragraph (n), once a circumvention
inquiry is initiated under paragraph (b) or (d), a segment-specific
service list would be established, under Sec. 351.103(d)(1), and the
requirements of
[[Page 49489]]
Sec. 351.303(f) would apply. Once the segment-specific service list is
established, parties on the annual inquiry service list would no longer
be served with filings made pursuant to the circumvention inquiry,
unless they follow the procedures of Sec. 351.103(d)(1) by filing an
entry of appearance in the relevant circumvention segment. However, as
discussed further below, Commerce proposes to amend Sec. 351.103(d)(1)
to reflect that an interested party that submits a request for
circumvention inquiry need not file an entry of appearance under Sec.
351.103(d)(1), as that party will be placed on the segment-specific
service list by Commerce. Additionally, as discussed further below,
Commerce proposes to amend Sec. 351.305(d) to adopt special filing
requirements for importers seeking access to business proprietary
information in circumvention inquiries.
Finally, proposed paragraph (o) would allow for the circumvention
inquiry procedures of Sec. 351.226, discussed above, to apply to
suspended investigations and suspension agreements.
Covered Merchandise Referrals--Section 351.227
As discussed above, Commerce and CBP work together to ensure the
effectiveness of AD/CVD orders, and both agencies have their own
independent authority to examine potential circumvention and duty
evasion of existing orders.\93\ Pursuant to section 421 of the Enforce
and Protect Act of 2015,\94\ effective August 22, 2016, section 517 was
added to the Act, which establishes a formal process for CBP to conduct
civil administrative investigations of potential duty evasion of AD and
CVD orders on the basis of an allegation by an interested party or upon
referral by another Federal agency (referred to herein as an ``EAPA
investigation'').\95\ Pursuant to section 517(b)(4)(A) of the Act, if
CBP is conducting an EAPA investigation based on an allegation from an
interested party, and is unable to determine whether the merchandise at
issue is ``covered merchandise'' within the meaning of section
517(a)(3) of the Act, it shall refer the matter to Commerce to make a
covered merchandise determination (referred to herein as a ``covered
merchandise referral'').\96\
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\93\ Additionally, HSI has the authority to investigate criminal
violations related to illegal evasion of payment of required duties,
including payment of AD/CV duties. See, e.g., 18 U.S.C. 542.
\94\ Public Law 114-125, 130 Stat. 122, 155 (2016).
\95\ Id., sections 421(a)-(d), 130 Stat. at 161-169.
\96\ See H.R. Rep. No. 114-376, at 190 (2015) (EAPA Conf. Rep.)
(``If the Commissioner is unable to determine whether the
merchandise at issue is covered merchandise, the Commissioner shall
refer the matter to the Department of Commerce to determine whether
the merchandise is covered merchandise. The Department of Commerce
is to make this determination pursuant to its applicable statutory
and regulatory authority, and the determination shall be subject to
judicial review under 19 U.S.C. 1516a(a)(2). The Conferees intend
that such determinations include whether the merchandise at issue is
subject merchandise under 19 U.S.C. 1677j.'') (referencing sections
516 and 781 of the Act).
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Section 421 of the EAPA requires that the Secretary of the Treasury
prescribe regulations as necessary to implement the amendments.\97\
Although the EAPA does not mandate that Commerce promulgate
regulations, in order to provide clarity and consistency to the public,
Commerce proposes to adopt Sec. 351.227, a new regulation to address
procedures and standards specific to Commerce's consideration of
covered merchandise referrals. In particular, this new regulation would
govern Commerce's receipt of a covered merchandise referral, Commerce's
initiation and conduct of a covered merchandise inquiry, and Commerce's
covered merchandise determination, pursuant to section 517(b)(4) of the
Act. The proposed rulemaking is intended to provide for efficient
notice and service requirements, expedited deadlines, and streamlined
opportunities to solicit information and comment from interested
parties. These proposed changes are procedural in nature and pertain to
the agency's internal process in conducting its covered merchandise
inquiry. In addition, these changes would not alter the current
statutory or regulatory framework under which Commerce may already
request participation of interested parties and issue a substantive
determination that certain merchandise is within the scope of an AD/CVD
order, as detailed above.
---------------------------------------------------------------------------
\97\ See also Investigation of Claims of Evasion of Antidumping
and Countervailing Duties, Interim Regulations, 81 FR 56477 (August
22, 2016) (setting forth CBP's interim regulations under section 517
of the Act).
---------------------------------------------------------------------------
In promulgating the proposed procedures, Commerce is mindful of
three aspects of the EAPA. First, as discussed above, section 517(b)(4)
of the Act requires CBP to make a covered merchandise referral to
Commerce if it is unable to determine whether the merchandise at issue
is covered merchandise within the meaning of section 517(a)(3) of the
Act. To date, Commerce has received only a few covered merchandise
referrals,\98\ and, thus, we are still familiarizing ourselves with the
facts and circumstances that would lead CBP to choose to make such a
referral, as well as the facts and circumstances that would be
appropriate for Commerce to consider in reaching its covered
merchandise determination. For instance, there may be a need for
Commerce to seek further information to establish a more detailed
description of the merchandise at issue, or engage in a complex
analysis, before determining whether the merchandise is covered
merchandise. Commerce, therefore, needs to maintain flexibility in both
its opportunities to request information and the issues that it
considers in its analysis, before reaching a covered merchandise
determination.
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\98\ See Wooden Bedroom Furniture From the People's Republic of
China: Notice of Covered Merchandise Referral, 83 FR 9272 (March 5,
2018); Hydrofluorocarbon Blends From the People's Republic of China:
Notice of Covered Merchandise Referral, 83 FR 9277 (March 5, 2018);
and Diamond Sawblades and Parts Thereof From the People's Republic
of China: Notice of Covered Merchandise Referral, 83 FR 9280 (March
5, 2018).
---------------------------------------------------------------------------
Second, the EAPA does not prescribe timing requirements for
Commerce to reach its covered merchandise determination. Nevertheless,
section 517(b)(4)(B) of the Act instructs Commerce to promptly transmit
its determination to CBP. In addition, the EAPA (section 517(b)(4)(C)
of the Act) provides that CBP's own deadlines to complete its EAPA
investigation will be stayed pending completion of Commerce's covered
merchandise determination. In drafting the proposed regulations,
Commerce is taking timeliness into account, which we believe is
consistent with the intent of Congress in drafting the EAPA.
Third, section 517(b)(4)(D) of the Act provides that the statutory
scheme for judicial review under section 516A(a)(2) of the Act applies
to Commerce's covered merchandise determinations.\99\ Under the
applicable standard of review, Commerce's determinations must be
supported by substantial evidence and in accordance with law (see
section 516A(b)(1)(B) of the Act). Thus, to ensure that its covered
merchandise determinations meet this standard, Commerce intends to
ensure that parties are afforded opportunities to submit evidence and
argument for Commerce's consideration in reaching its determination.
Further, Commerce intends to allow sufficient time for it to consider
such evidence and arguments for purposes of drafting a well-reasoned
determination that may be subject to judicial review.
---------------------------------------------------------------------------
\99\ See EAPA Conf. Rep. at 190.
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In short, in proposing new Sec. 351.227, we have taken into
account considerations relating to: (1) Flexibility
[[Page 49490]]
in Commerce's ability to request information necessary for its analysis
in reaching a covered merchandise determination; (2) timeliness; and
(3) scheduling that allows Commerce sufficient time to analyze the
issues and the record evidence and issue a determination that may be
subject to judicial review. However, although we are setting forth
these proposed regulations, as noted above, covered merchandise
inquiries constitute a new type of segment of a proceeding at Commerce
and, therefore, Commerce will continue to develop its practice and
procedures in this area. Further, as detailed below, Commerce
recognizes the potential significant overlap between a covered
merchandise inquiry, scope inquiry and circumvention inquiry procedures
discussed above under Sec. Sec. 351.225 and 351.226, and possibly any
other segment of a proceeding that may address scope issues.\100\
Therefore, in crafting these regulations, Commerce has allowed for the
flexibility to address CBP's covered merchandise referrals in the
context of another segment of the proceeding, or to otherwise rely on
the standards under section 351.225 and 226, in issuing a covered
merchandise determination.
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\100\ Id. (``The Department of Commerce is to make this
determination pursuant to its applicable statutory and regulatory
authority, and the determination shall be subject to judicial review
under 19 U.S.C. 1516a(a)(2). The Conferees intend that such
determinations include whether the merchandise at issue is subject
merchandise under 19 U.S.C. 1677j.'').
---------------------------------------------------------------------------
Proposed section 351.227(a) would introduce the new section and
briefly describes the framework of CBP's EAPA investigations and
covered merchandise referrals under section 517 of the Act.
Additionally, paragraph (a) tracks the similar provision in proposed
sections 351.225 (scope inquiries) and 351.226 (circumvention
inquiries), explaining that, unless otherwise specified in new section
351.227, Commerce's existing procedures contained in subpart C (i.e.,
relating to factual information (sections 351.102(b)(21) and 351.301)
and the extension of time limits (section 351.302)), apply to covered
merchandise inquiries.
Proposed paragraph (b) would provide that, within 15 days after
receiving a covered merchandise referral that Commerce determines to be
sufficient, Commerce will take one of three actions. First, under
paragraph (b)(1), Commerce may initiate a covered merchandise inquiry
and will publish notice of its initiation in the Federal Register.
Second, under paragraph (b)(2), Commerce may self-initiate a
circumvention inquiry in accordance with proposed section 351.226(b)
and publish notice of its initiation in the Federal Register. Third,
under paragraph (b)(3), if Commerce determines that the covered
merchandise referral can be addressed in an ongoing segment of a
proceeding, such as a scope inquiry, under the proposed revisions to
section 351.225, or circumvention inquiry, under proposed section
351.226, Commerce will publish a notice in the Federal Register that it
intends to address the referral in the context of such other segment.
In determining whether a covered merchandise referral is
sufficient, Commerce may consider, among other things, whether the
referral has provided the name and contact information of the parties
to CBP's EAPA investigation, including the name and contact information
of any known representative acting on behalf of such parties; an
adequate description of the alleged covered merchandise; identification
of the applicable AD or CVD orders; and any necessary information
reasonably available to CBP regarding whether the merchandise at issue
is covered merchandise. Additionally, Commerce will review the covered
merchandise referral and any accompanying documentation to ensure any
business proprietary information is properly redacted in accordance
with Commerce's statutory and regulatory requirements. Regardless of
which of the three actions Commerce takes with respect to the covered
merchandise referral, Commerce will place the documents on the record
of the segment of the proceeding under which Commerce intends to
address the referral.
Proposed paragraph (c) would provide the deadline for Commerce to
conduct covered merchandise inquiries and would also set forth that
Commerce could only extend the deadline if it determines that the
inquiry is extraordinarily complicated. This tracks similar language
under new section 351.226 (circumvention inquiries).
Proposed paragraph (d) would provide the procedures for covered
merchandise inquiries, and largely tracks the new procedures provided
under proposed sections 351.225(f) (scope inquiries) and 351.226(f)
(circumvention inquiries), with some exceptions. For example, paragraph
(d)(5) would allow Commerce to forego or rescind a covered merchandise
inquiry, in whole or in part, for one of three reasons: First, if CBP
withdraws its covered merchandise referral; second, if the Secretary
issues a final determination in another segment of a proceeding, which
can provide the basis for the Secretary's covered merchandise
determination, thus negating the need for a separate covered
merchandise inquiry; and, third, where Commerce otherwise determines
that it is not necessary to initiate or conduct a covered merchandise
inquiry in response to a covered merchandise referral because the
matter at issue may be addressed by other means. With respect to this
third category, this could happen where Commerce believes a prior scope
ruling or circumvention determination can provide the basis for
Commerce's covered merchandise determination. In such instances,
Commerce will issue a final covered merchandise determination in
accordance with the requirements of paragraph (e)(2) of this section.
Proposed paragraph (e) would incorporate preliminary and final
covered merchandise determinations, which will both be published in the
Federal Register, and largely tracks the requirements under proposed
section 351.226 pertaining to circumvention inquiries. Similar to
proposed section 351.226(g)(1), proposed paragraph (e)(1) would allow
Commerce to issue a preliminary covered merchandise determination,
based on available information at the time, as to whether there is a
reasonable basis to believe or suspect that the product that is the
subject of the covered merchandise inquiry is covered by the scope of
the order. Proposed paragraph (e)(2), which tracks proposed section
351.226(g)(2), would provide that, promptly after publication of the
final covered merchandise determination, Commerce would convey a copy
of the final determination, in the manner prescribed by section
516A(a)(2)(A)(ii) of the Act, to all parties to the proceeding, and
transmit a copy of the final determination to CBP, thus fulfilling its
obligation under section 517(b)(4)(B) of the Act. The use of the term
``promptly'' is not defined in section 517(b)(4)(B) of the Act.
Consistent with the use of the same term in revised section 351.225 and
new section 351.226, it is Commerce's expectation that prompt
conveyance and transmittal of a copy of the final covered merchandise
determination normally would occur no more than 5 business days from
the publication of the determination in the Federal Register.
Consistent with sections 516A(a)(2)(A)(ii) and (B)(vi) of the Act,
judicial review procedures would be commenced based on the date of
conveyance, as opposed to the date of receipt, of a final covered
merchandise determination.
[[Page 49491]]
Paragraph (e)(3) would also clarify that if Commerce addresses the
covered merchandise referral in the context of another segment of the
proceeding, or issues a scope ruling, under section 351.225, or a
circumvention determination, under section 351.226, which provides the
basis for the covered merchandise determination, Commerce would
promptly transmit a copy of the final action in that segment to CBP in
accordance with section 517(b)(4)(B) of the Act.
Proposed paragraph (f) would explain that, if Commerce issues a
covered merchandise determination after conducting a covered
merchandise inquiry, Commerce may rely on the standards provided under
proposed sections 351.225(j) (country of origin) or (k) (scope
rulings). Commerce also could rely on the provisions of section 781 of
the Act regarding the four forms of circumvention (proposed sections
351.226(h), (i), (j), or (k)). We believe this is consistent with the
legislative history, which specifically identifies that Commerce may
follow its existing statutory and regulatory authority in issuing a
covered merchandise determination.\101\
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\101\ See id. at 190.
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To maintain consistency with proposed sections 351.225 and 351.226,
proposed paragraphs (g)-(k) would be reserved. Additionally, the
following paragraphs would largely mirror the same provisions in
proposed sections 351.225 and 351.226, which have been discussed in
detail above: Paragraph (l) concerning suspension of liquidation;
paragraph (m) concerning applicability of covered merchandise
determinations; other segments of the proceeding, and companion AD and
CVD orders; paragraph (n) concerning service; and paragraph (o)
concerning suspended investigations and suspension agreements.
Additionally, with respect to proposed paragraph (l), as discussed
above, any instructions issued by Commerce directing CBP to ``lift
suspension of liquidation'' and assess duties at the applicable AD/CVD
rate are not intended to impugn CBP's ability to (1) suspend
liquidation/assess duties/take any other measures pursuant to CBP's
EAPA investigation authority under section 517 of the Act specifically,
or (2) take any other action within CBP's or HSI's authority with
respect to AD/CVD entries.
Certifications--Section 351.228
At various points throughout its history of administering the AD
and CVD laws, Commerce has determined that the establishment of a
certification scheme is necessary to ensure the enforcement of the AD/
CVD orders or suspension agreements. For example, to carry out the
terms of certain suspension agreements, Commerce has required
importers, producers, and exporters to certify to certain requirements
with respect to the entries and sales of merchandise subject to the
agreement.\102\ Commerce has also required certifications for various
AD and CVD orders.\103\ Additionally, Commerce has established a
certification scheme in the context of its circumvention inquiries to
ensure that parties claiming merchandise is not subject to an AD/CVD
order, as a result of a circumvention determination, must certify and
maintain documentation to that effect.\104\
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\102\ See, e.g., Sugar From Mexico: Suspension of Countervailing
Duty Investigation, 79 FR 78044 (December 29, 2014).
\103\ See, e.g., Notice of Amended Final Determination of Sales
at Less Than Fair Value and Antidumping Duty Order: Low Enriched
Uranium From France, 67 FR 6680 (February 13, 2002) (requiring
certifications of the importer and end user).
\104\ See, e.g., Glycine From the People's Republic of China:
Final Partial Affirmative Determination of Circumvention of the
Antidumping Duty Order, 77 FR 73426 (December 10, 2012).
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Proposed section 351.228 would codify and enhance Commerce's
existing authority and practice to require certifications by importers
and other interested parties as to whether merchandise is subject to an
AD/CVD order. Under proposed section 351.228(b), where that party fails
to comply with the certification requirements by failing to provide the
certification upon request, or providing a certification that contains
materially false, fictitious, or fraudulent statements or
representations, or material omissions, to Commerce or CBP, as
appropriate, Commerce would have the authority to instruct CBP to
collect from the importer cash deposits for the AD or CVD at the
applicable rate. Commerce recognizes that CBP has its own independent
authority to address import documentation related to negligence, gross
negligence, or fraud.\105\ This provision is not intended to supplant
CBP's authority, nor is a formal finding by CBP required for Commerce
to determine, within its own authority, that the certification is
deficient and unreliable for the reasons discussed above. Whether a
certification contains ``material'' or ``fraudulent'' information is a
determination that would be made by Commerce pursuant to its own
authority and consideration of the normal meaning of those terms.\106\
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\105\ Additionally, HSI has the authority to investigate
criminal violations related to illegal evasion of payment of
required duties, including payment of AD/CV duties. See, e.g., 18
U.S.C. 542.
\106\ Commerce does not intend to be restricted by the
interpretations or policies set forth by other agencies in
interpreting those terms in applying other areas of law.
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Importer Reimbursement Certification--Section 351.402(f)(2)
Section 351.402(f)(1)(i) of Commerce's regulations provide that in
calculating the export price, or constructed export price in
determining an AD margin, Commerce will deduct any AD or CVD duties
that the exporter or producer paid on behalf of the importer or
reimbursed to the importer. Section 351.402(f)(1)(ii) provides an
exception that in calculating export price or constructed export price,
Commerce will not deduct AD or CVD duties if an exporter or producer
granted to the importer before initiation of the AD investigation in
question a warranty of nonapplicability of AD/CVD duties with respect
to subject merchandise (1) sold before the date of publication of the
notice of first suspension of liquidation, and (2) exported before the
date of publication of the final AD determination.
Section 351.402(f)(2) currently requires importers of AD entries to
file prior to liquidation a certificate with CBP that identifies
whether the importer has or has not entered into an agreement for the
payment or reimbursement of AD or CVD duties. This certificate is
required for each entry (or a group of entries) subject to AD duties,
and must identify the relevant merchandise to which it relates.
Consistent with section 351.402(f)(1)(i), if an importer certifies that
it has entered into an agreement for the payment or reimbursement of AD
or CVD duties, Commerce will deduct any AD or CVD duties that the
exporter or producer paid on behalf of the importer or reimbursed to
the importer. However, consistent with section 351.402(f)(2)(ii),
Commerce will not deduct AD or CVD duties paid or reimbursed with
respect to subject merchandise (1) sold before the date of publication
of the notice of first suspension of liquidation, and (2) exported
before the date of publication of the final AD determination where,
before the initiation of the AD investigation in question, the exporter
or producer granted a warranty of nonapplicability of AD or CVD duties
with respect to the merchandise. Additionally, under section
351.402(f)(3), if the importer does not provide the certificate prior
to liquidation, Commerce presumes that the exporter or producer paid or
reimbursed such duties and will deduct
[[Page 49492]]
the applicable AD or CVD duties that the exporter or producer is
presumed to have paid on behalf of the importer or reimbursed to the
importer. The current regulation, which is largely unchanged as it
existed 40 years ago,\107\ is otherwise silent regarding the specific
filing requirements for the certificate.
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\107\ See 19 CFR 153.49 (``Reimbursement of dumping duties'')
(1979).
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Section 405 of the Security and Accountability for Every (SAFE)
Port Act of 2006, Public Law 109-347, established the International
Data Trade System (ITDS), the purpose of which ``is to eliminate
redundant information requirements, to efficiently regulate the flow of
commerce, and to effectively enforce laws and regulations relating to
international trade, by establishing a single portal system, operated
by CBP, for the collection and distribution of standard electronic
import and export data required by all participating Federal
agencies.'' Flowing from this, one goal of the ITDS is to encourage and
facilitate the transition of paper filing requirements for certain
import documentation to electronic format.
Accordingly, Commerce proposes to modify section 351.402(f)(2) to
clarify that for all entries subject to AD duties, the importer must
file a reimbursement certification in either electronic or paper form
in accordance with CBP's requirements, as applicable. Additionally,
Commerce proposes to remove the requirement for specific certification
language, and instead allow importers to certify to the substance of
the certification. Moreover, for ease of administration, Commerce
proposes to clarify that a certification is required for each entry of
merchandise subject to AD duties imported on or after the date of the
first suspension of liquidation.\108\ Furthermore, although such
certification is required prior to liquidation, Commerce proposes to
clarify that CBP may also accept the reimbursement certification in
accordance with its protest procedures under 19 U.S.C. 1514. Commerce
is also proposing non-substantive restructuring of the regulation.
---------------------------------------------------------------------------
\108\ Sections 351.402(f)(1(i) and (ii) are unchanged in this
proposed rule. Therefore, Commerce will not deduct AD or CVD duties
paid or reimbursed with respect to subject merchandise (1) sold
before the date of publication of the notice of first suspension of
liquidation, and (2) exported before the date of publication of the
final AD determination where, before the initiation of the AD
investigation in question, the exporter or producer granted a
warranty of nonapplicability of AD or CVD duties with respect to the
merchandise.
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Other Procedural Amendments--Sections 351.103(d)(1) and 305(d)
Consistent with the substantive proposed rules discussed above,
Commerce proposes to adopt necessary changes to two procedural
regulations, section 351.103(d)(1) pertaining to letters of appearance
and public service lists, and section 351.305(d) pertaining to importer
filing requirements for access to business proprietary information in
Commerce's proceedings. As discussed above, under revised section
351.225, pertaining to scope inquiries, Commerce proposes to amend
section 351.103(d)(1) to reflect that an interested party that submits
a scope ruling application need not file an entry of appearance, under
section 351.103(d)(1), as that interested party will be placed on the
segment-specific service list for that scope inquiry by Commerce.
Similarly, as discussed above, under revised section 351.226,
pertaining to circumvention inquiries, Commerce proposes to amend
section 351.103(d)(1) to reflect that an interested party that submits
a request for a circumvention inquiry need not file an entry of
appearance under section 351.103(d)(1) to be placed on the segment-
specific service list for that circumvention inquiry. We have also made
minor amendments to section 351.103(d)(1) to reflect the filing of an
``entry of appearance,'' rather than a ``letter of appearance,'' to
more accurately describe Commerce's electronic filing process.
Further, current section 351.305(d) would provide special filing
requirements for importers seeking access to business proprietary
information in Commerce's proceedings, and would mandate that for scope
segments of a proceeding, under existing section 351.225, an applicant
seeking access to business proprietary information on behalf of an
importer must demonstrate that the party is an importer, or has taken
steps to import, the merchandise subject to the scope inquiry. This
language would be unchanged with respect to importers in scope
inquiries, but we have added similar language for importers in
circumvention inquiries, under proposed section 351.226.
Lastly, with respect to covered merchandise inquiries under
proposed section 351.227, we propose changes to both sections
351.103(d)(1) and 305(d). Specifically, under revised section
351.103(d)(1), any publicly identified parties in a covered merchandise
referral from CBP, under section 517 of the Act, need not file an entry
of appearance in the covered merchandise inquiry to be added to the
segment-specific service list for that segment of the proceeding.
Additionally, under revised section 351.305(d), an applicant for access
to business proprietary information on behalf of a party that has been
publicly identified by CBP as the importer in a covered merchandise
referral is exempt from the requirements of demonstrating that the
party is an importer for purposes of a covered merchandise inquiry.
Classifications
Executive Order 12866
OMB has determined that this proposed rule is significant for
purposes of Executive Order 12866.
Executive Order 13771
This rule is not subject to the requirements of E.O. 13771 because
this rule results in no more than de minimis costs.
Paperwork Reduction Act
This proposed rule contains no collection of information subject to
the Paperwork Reduction Act, 44 U.S.C. chapter 35.
Executive Order 13132
This proposed rule does not contain policies with federalism
implications as that term is defined in section 1(a) of Executive Order
13132, dated August 4, 1999 (64 FR 43255 (August 10, 1999)).
Regulatory Flexibility Act
The Chief Counsel for Regulation has certified to the Chief Counsel
for Advocacy of the Small Business Administration under the provisions
of the Regulatory Flexibility Act, 5 U.S.C. 605(b), that the proposed
rule would not have a significant economic impact on a substantial
number of small business entities. A summary of the need for,
objectives of, and legal basis for this rule is provided in the
preamble, and is not repeated here.
The entities upon which this rulemaking could have an impact
include foreign governments, foreign exporters and producers, some of
whom are affiliated with U.S. companies, and U.S. importers.
Enforcement & Compliance currently does not have information on the
number of entities that would be considered small under the Small
Business Administration's size standards for small businesses in the
relevant industries. However, some of these entities may be considered
small entities under the appropriate industry size standards. Although
this proposed rule may indirectly impact small entities that are
parties to individual AD and CVD proceedings, it
[[Page 49493]]
will not have a significant economic impact on any such entities
because the proposed rule applies to administrative enforcement
actions, only clarifying and establishing streamlined procedures; it
does not impose any significant costs on regulated entities. Therefore,
the proposed rule would not have a significant economic impact on a
substantial number of small business entities. For this reason, an
Initial Regulatory Flexibility Analysis is not required and one has not
been prepared.
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: July 7, 2020.
Jeffrey I. Kessler,
Assistant Secretary for Enforcement and Compliance.
For the reasons stated in the preamble, the Department of Commerce
proposes to amend 19 CFR part 351 as follows:
PART 351--ANTIDUMPING AND COUNTERVAILING DUTIES
0
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.
0
2. Revise paragraph (d)(1) of Sec. 351.103 to read as follows:
Sec. 351.103 Central Records Unit and Administrative Protective Order
and Dockets Unit.
* * * * *
(d) * * *
(1) With the exception of a petitioner filing a petition in an
investigation pursuant to Sec. 351.202, an interested party filing a
scope ruling application pursuant to Sec. 351.225(c), an interested
party filing a request for a circumvention inquiry pursuant to Sec.
351.226(c), and those relevant parties identified by the Customs
Service in a covered merchandise referral pursuant to Sec. 351.226,
all persons wishing to participate in a segment of a proceeding must
file an entry of appearance. The entry of appearance must identify the
name of the interested party, how that party qualifies as an interested
party under Sec. 351.102(b)(29) and section 771(9) of the Act, and the
name of the firm, if any, representing the interested party in that
particular segment of the proceeding. All persons who file an entry of
appearance and qualify as an interested party will be included in the
public service list for the segment of the proceeding in which the
entry of appearance is submitted. The entry of appearance may be filed
as a cover letter to an application for APO access. If the
representative of the interested party is not requesting access to
business proprietary information under APO, the entry of appearance
must be filed separately from any other document filed with the
Department. If the interested party is a coalition or association as
defined in subparagraph (A), (E), (F) or (G) of section 771(9) of the
Act, the entry of appearance must identify all of the members of the
coalition or association.
* * * * *
0
3. Add paragraph (g) to Sec. 351.203 to read as follows:
Sec. 351.203 Determination of sufficiency of petition.
* * * * *
(g) Time limits for filing interested party comments on industry
support. For purposes of sections 702(c)(4)(E) and 732(c)(4)(E) of the
Act, the Secretary will consider comments or information on the issue
of industry support submitted no later than 5 business days before the
date referenced in paragraph (b)(1) of this section by any interested
party under section 771(9) of the Act. The Secretary will consider
rebuttal comments or information to rebut, clarify, or correct such
information on industry support submitted by any interested party no
later than two calendar days from the time limit for filing comments.
0
4. Revise Sec. 351.214 to read as follows:
Sec. 351.214 New shipper reviews under section 751(a)(2)(B) of the
Act.
(a) Introduction. Section 751(a)(2)(B) of the Act provides a
procedure by which so-called ``new shippers'' can obtain their own
individual dumping margin or countervailable subsidy rate on an
expedited basis. In general, a new shipper is an exporter or producer
that did not export, and is not affiliated with an exporter or producer
that did export, to the United States during the period of
investigation. Furthermore, section 751(a)(2)(B)(iv) requires that the
Secretary make a determination of whether the sales under review are
bona fide. This section contains rules regarding requests for new
shipper reviews and procedures for conducting such reviews, as well as
requirements for determining whether sales are bona fide under section
751(a)(2)(B)(iv) of the Act. In addition, this section contains rules
regarding requests for expedited reviews by non-investigated exporters
in certain countervailing duty proceedings and procedures for
conducting such reviews.
(b) Request for new shipper review--(1) Requirement of sale or
export. Subject to the requirements of section 751(a)(2)(B) of the Act
and this section, an exporter or producer may request a new shipper
review if it has exported, or sold for export, subject merchandise to
the United States and can demonstrate the existence of a bona fide
sale.
(2) Contents of request. A request for a new shipper review must
contain the following:
(i) If the person requesting the review is both the exporter and
producer of the merchandise, a certification that the person requesting
the review did not export subject merchandise to the United States (or,
in the case of a regional industry, did not export the subject
merchandise for sale in the region concerned) during the period of
investigation;
(ii) If the person requesting the review is the exporter, but not
the producer, of the subject merchandise:
(A) The certification described in paragraph (b)(2)(i) of this
section; and
(B) A certification from the person that produced or supplied the
subject merchandise to the person requesting the review that that
producer or supplier did not export the subject merchandise to the
United States (or, in the case of a regional industry, did not export
the subject merchandise for sale in the region concerned) during the
period of investigation;
(iii)(A) A certification that, since the investigation was
initiated, such exporter or producer has never been affiliated with any
exporter or producer who exported the subject merchandise to the United
States (or in the case of a regional industry, who exported the subject
merchandise for sale in the region concerned) during the period of
investigation, including those not individually examined during the
investigation; and
(B) In an antidumping proceeding involving imports from a nonmarket
economy country, a certification that the export activities of such
exporter or producer are not controlled by the central government;
(iv)(A) A certification from the unaffiliated customer in the
United States that it did not purchase the subject merchandise from the
producer or exporter during the period of investigation; and
(B) A certification from the unaffiliated customer in the United
States that it will provide necessary
[[Page 49494]]
information requested by the Secretary regarding its purchase of
subject merchandise.
(v) Documentation establishing:
(A) The date on which subject merchandise of the exporter or
producer making the request was first entered, or withdrawn from
warehouse, for consumption, or, if the exporter or producer cannot
establish the date of first entry, the date on which the exporter or
producer first shipped the subject merchandise for export to the United
States;
(B) The volume of that and subsequent shipments, including whether
such shipments were made in commercial quantities;
(C) The date of the first sale, and any subsequent sales, to an
unaffiliated customer in the United States; and
(D) The circumstances surrounding such sale(s), including but not
limited to:
(1) The price of such sales;
(2) Any expenses arising from such sales;
(3) Whether the subject merchandise involved in such sales was
resold in the United States at a profit;
(4) Whether such sales were made on an arms-length basis;
(E) Additional documentation regarding the business activities of
the producer or exporter, including but not limited to:
(1) The producer or exporter's offers to sell merchandise in the
United States;
(2) An identification of the complete circumstance surrounding the
producer or exporter's sales to the United States, as well as any home
market or third country sales;
(3) In the case of a non-producing exporter, an explanation of the
exporter's relationship with its producer/supplier; and
(4) An identification of the producer's or exporter's relationship
to the first unrelated U.S. purchaser;
(vi) In the case of a review of a countervailing duty order, a
certification that the exporter or producer has informed the government
of the exporting country that the government will be required to
provide a full response to the Department's questionnaire.
(c) Deadline for requesting review. An exporter or producer may
request a new shipper review within one year of the date referred to in
paragraph (b)(2)(v)(A) of this section.
(d) Initiation of new shipper review--(1) In general. If the
requirements for a request for new shipper review under paragraph (b)
of this section are satisfied, the Secretary will initiate a new
shipper review under this section in the calendar month immediately
following the anniversary month or the semiannual anniversary month if
the request for the review is made during the 6-month period ending
with the end of the anniversary month or the semiannual anniversary
month (whichever is applicable).
(2) Semiannual anniversary month. The semiannual anniversary month
is the calendar month that is 6 months after the anniversary month.
(3) Example. An order is published in January. The anniversary
month would be January, and the semiannual anniversary month would be
July. If the Secretary received a request for a new shipper review at
any time during the period February-July, the Secretary would initiate
a new shipper review in August. If the Secretary received a request for
a new shipper review at any time during the period August-January, the
Secretary would initiate a new shipper review in February.
(4) Exception. If the Secretary determines that the requirements
for a request for new shipper review under paragraph (b) of this
section have not been satisfied, the Secretary will reject the request
and provide a written explanation of the reasons for the rejection.
(e) Suspension of liquidation. When the Secretary initiates a new
shipper review under this section, the Secretary will direct the
Customs Service to suspend or continue to suspend liquidation of any
unliquidated entries of the subject merchandise from the relevant
exporter or producer at the applicable cash deposit rate.
(f) Rescission of new shipper review--(1) Withdrawal of request for
review. The Secretary may rescind a new shipper review under this
section, in whole or in part, if a producer or exporter that requested
a review withdraws its request not later than 60 days after the date of
publication of notice of initiation of the requested review.
(2) Absence of entry and sale to an unaffiliated customer. The
Secretary may rescind a new shipper review, in whole or in part, if the
Secretary concludes that:
(i) As of the end of the normal period of review referred to in
paragraph (g) of this section, there has not been an entry and sale to
an unaffiliated customer in the United States of subject merchandise;
and
(ii) An expansion of the normal period of review to include an
entry and sale to an unaffiliated customer in the United States of
subject merchandise would be likely to prevent the completion of the
review within the time limits set forth in paragraph (i) of this
section;
(3) Absence of bona fide sale to an unaffiliated customer. The
Secretary may rescind a new shipper review, in whole or in part, if the
Secretary concludes that:
(i) Information that the Secretary considers necessary to conduct a
bona fide sale analysis is not on the record; or
(ii) The producer or exporterseeking a new shipper review has
failed to demonstrate to the satisfaction of the Secretary the
existence of a bona fide sale to an unaffiliated customer.
(4) Notice of Rescission. If the Secretary rescinds a new shipper
review (in whole or in part), the Secretary will publish in the Federal
Register notice of ``Rescission of Antidumping (Countervailing Duty)
New Shipper Review'' or, if appropriate, ``Partial Rescission of
Antidumping (Countervailing Duty) New Shipper Review.''
(g) Period of review--(1) Antidumping proceeding--(i) In general.
Except as provided in paragraph (g)(1)(ii) of this section, in an
antidumping proceeding, a new shipper review under this section
normally will cover, as appropriate, entries, exports, or sales during
the following time periods:
(A) If the new shipper review was initiated in the month
immediately following the anniversary month, the twelve-month period
immediately preceding the anniversary month; or
(B) If the new shipper review was initiated in the month
immediately following the semiannual anniversary month, the period of
review will be the six-month period immediately preceding the
semiannual anniversary month.
(ii) Exceptions. (A) If the Secretary initiates a new shipper
review under this section in the month immediately following the first
anniversary month, the review normally will cover, as appropriate,
entries, exports, or sales during the period from the date of
suspension of liquidation under this part to the end of the month
immediately preceding the first anniversary month.
(B) If the Secretary initiates a new shipper review under this
section in the month immediately following the first semiannual
anniversary month, the review normally will cover, as appropriate,
entries, exports, or sales during the period from the date of
suspension of liquidation under this part to the end of the month
immediately preceding the first semiannual anniversary month.
[[Page 49495]]
(2) Countervailing duty proceeding. In a countervailing duty
proceeding, the period of review for a new shipper review under this
section will be the same period as that specified in Sec.
351.213(e)(2) for an administrative review.
(h) Procedures. The Secretary will conduct a new shipper review
under this section in accordance with Sec. 351.221.
(i) Time limits--(1) In general. Unless the time limit is waived
under paragraph (j)(3) of this section, the Secretary will issue
preliminary results of review (see Sec. 351.221(b)(4)) within 180 days
after the date on which the new shipper review was initiated, and final
results of review (see Sec. 351.221(b)(5)) within 90 days after the
date on which the preliminary results were issued.
(2) Exception. If the Secretary concludes that a new shipper review
is extraordinarily complicated, the Secretary may extend the 180-day
period to 300 days, and may extend the 90-day period to 150 days.
(j) Multiple reviews. Notwithstanding any other provision of this
subpart, if a review (or a request for a review) under Sec. 351.213
(administrative review), Sec. 351.214 (new shipper review), Sec.
351.215 (expedited antidumping review), or Sec. 351.216 (changed
circumstances review) covers merchandise of an exporter or producer
subject to a review (or to a request for a review) under this section,
the Secretary may, after consulting with the exporter or producer:
(1) Rescind, in whole or in part, a review in progress under this
subpart;
(2) Decline to initiate, in whole or in part, a review under this
subpart; or
(3) Where the requesting producer or exporter agrees in writing to
waive the time limits of paragraph (i) of this section, conduct
concurrent reviews, in which case all other provisions of this section
will continue to apply with respect to the exporter or producer.
(k) Determinations based on bona fide sales. In determining whether
the U.S. sales of an exporter or producer made during the period
covered by the review are bona fide, the Secretary shall consider the
factors identified at section 752(a)(2)(B)(iv) of the Act. In
accordance with section 751(a)(2)(B)(iv)(VII) of the Act, the Secretary
shall consider the following factors:
(1) Whether the producer, exporter, or customer was established for
purposes of the sale(s) in question after the imposition of the
relevant antidumping or countervailing duty order;
(2) Whether the producer, exporter, or customer has lines of
business unrelated to the subject merchandise;
(3) Whether there is an established history of duty evasion with
respect to new shipper reviews or circumvention under the relevant
antidumping or countervailing duty order;
(4) Whether there is an established history of duty evasion with
respect to new shipper reviews or circumvention under any antidumping
or countervailing duty orders in the same or similar industry;
(5) The quantity of sales; and
(6) Any other factor that the Secretary determines to be relevant
with respect to the future selling behavior of the producer or
exporter, including any other indicia that the sale was not
commercially viable.
(l) Expedited reviews in countervailing duty proceedings for
noninvestigated exporters--(1) Request for review. If, in a
countervailing duty investigation, the Secretary limited the number of
exporters or producers to be individually examined under section
777A(e)(2)(A) of the Act, an exporter that the Secretary did not select
for individual examination or that the Secretary did not accept as a
voluntary respondent (see Sec. 351.204(d)) may request a review under
this paragraph (l). An exporter must submit a request for review within
30 days of the date of publication in the Federal Register of the
countervailing duty order. A request must be accompanied by a
certification that:
(i) The requester exported the subject merchandise to the United
States during the period of investigation;
(ii) The requester is not affiliated with an exporter or producer
that the Secretary individually examined in the investigation; and
(iii) The requester has informed the government of the exporting
country that the government will be required to provide a full response
to the Department's questionnaire.
(2) Initiation of review--(i) In general. The Secretary will
initiate a review in the month following the month in which a request
for review is due under paragraph (l)(1) of this section.
(ii) Example. The Secretary publishes a countervailing duty order
on January 15. An exporter would have to submit a request for a review
by February 14. The Secretary would initiate a review in March.
(3) Conduct of review. The Secretary will conduct a review under
this paragraph (l) in accordance with the provisions of this section
applicable to new shipper reviews, subject to the following exceptions:
(i) The period of review will be the period of investigation used
by the Secretary in the investigation that resulted in the publication
of the countervailing duty order (see Sec. 351.204(b)(2));
(ii) The final results of a review under this paragraph (l) will
not be the basis for the assessment of countervailing duties; and
(iii) The Secretary may exclude from the countervailing duty order
in question any exporter for which the Secretary determines an
individual net countervailable subsidy rate of zero or de minimis (see
Sec. 351.204(e)(1)), provided that the Secretary has verified the
information on which the exclusion is based.
(m) Exception from assessment in regional industry cases. For
procedures relating to a request for the exception from the assessment
of antidumping or countervailing duties in a regional industry case,
see Sec. 351.212(f).
0
5. Revise Sec. 351.225 to read as follows:
Sec. 351.225 Scope rulings.
(a) Introduction. Questions sometimes arise as to whether a
particular product is covered by the scope of an antidumping or
countervailing duty order. Such questions may arise for a variety of
reasons given that the description of the merchandise subject to the
scope is written in general terms. The Secretary will initiate and
conduct a scope inquiry and issue a scope ruling to determine whether
or not a product is covered by the scope of an order at the request of
an interested party or on the Secretary's initiative. A scope ruling
that a product is within the scope of the order is a determination that
the product has always been within the scope of the order. This section
contains rules and procedures regarding scope rulings, including scope
ruling applications, scope inquiries, and standards used in determining
whether a product is covered by the scope of an order. Unless otherwise
specified, the procedures as described in subpart C of this part
(Sec. Sec. 351.301 through 351.308 and Sec. Sec. 351.312 through
351.313) apply to this section.
(b) Self-initiation of a scope inquiry. If the Secretary determines
from available information that an inquiry is warranted to determine
whether a product is covered by the scope of an order, the Secretary
may initiate a scope inquiry and notify, electronically or otherwise,
all parties on the annual inquiry service list (see paragraph (n) of
this section).
(c) Scope ruling application--(1) Contents. An interested party may
submit a scope ruling application
[[Page 49496]]
requesting that the Secretary conduct a scope inquiry to determine
whether a product, which is or has been in actual production by the
time of the filing of the application, is covered by the scope of an
order. The Secretary will make available a scope ruling application,
which the applicant must fully complete and serve in accordance with
the requirements of paragraph (n) of this section. To the extent
reasonably available to the applicant, the scope ruling application
must include the requested information under paragraph (c)(2) of this
section and relevant supporting documentation.
(2) Requested information. (i) A detailed physical description of
the product, including:
(A) The characteristics (including technical, physical, chemical or
otherwise) of the product;
(B) The uses of the product;
(C) The product's tariff classification under the Harmonized Tariff
Schedule of the United States;
(D) Clear and legible photographs, schematic drawings,
specifications, standards, marketing materials, and any other exemplars
providing a visual depiction of the product; and
(E) A description of parts, materials, and the production process
employed in the production of the product.
(ii) A concise public description of the product and public
identification of the name and address of the producer, exporter, and
importer of the product, if reasonably available to the applicant.
(iii) A narrative history of the production of the product at
issue, including a history of earlier versions of the product if this
is not the first model of the product.
(iv) The volume of annual production of the product for the most
recently completed fiscal year.
(v) If the product has been imported into the United States as of
the date of the filing of the scope ruling application:
(A) An explanation as to whether an entry of the product has been
classified as subject to an order; and
(B) Relevant documentation, including dated copies of the Customs
and Border Protection entry summary forms (or electronic entry
processing system documentation) identifying the product upon
importation and other related commercial documents, including, but not
limited to, invoices and contracts, which reflect the details
surrounding the sale and purchase of that imported product.
(vi) A statement as to whether the product undergoes any additional
processing in the United States after importation, or in a third
country before importation, and a statement as to the relevance of this
processing to the scope of the order.
(vii) The applicant's statement as to whether the product is
covered by the scope of the order, including:
(A) An explanation with specific reference to paragraph (j) and (k)
of this section, as appropriate;
(B) Citations to any applicable legal authority; and
(C) Whether there are companion orders as described in paragraph
(m)(2) of this section.
(viii) Factual information supporting the applicant's position,
including full copies of prior scope determinations and relevant
excerpts of other documents identified in paragraph (k)(1) of this
section.
(d) Initiation of a scope inquiry based on a scope ruling
application. (1) Within 30 days after the filing of a scope ruling
application, the Secretary will determine whether to accept or reject
the scope ruling application. If the Secretary determines that a scope
ruling application is incomplete or otherwise unacceptable, the
Secretary may reject the scope ruling application and will provide a
written explanation of the reasons for the rejection. If the scope
ruling application is rejected, the applicant may resubmit the full
application at any time, with all identified deficiencies corrected.
(2) If the Secretary does not reject the scope ruling application,
it will be deemed accepted 31 days after filing and the scope inquiry
will be deemed initiated.
(e) Time limits--(1) In general. The Secretary shall issue a final
scope ruling within 120 days after the date on which the scope inquiry
was initiated under paragraph (b) or (d) of this section. (2)
Extension. The Secretary may extend the deadline in paragraph (e)(1) of
this section by no more than 180 days if the Secretary determines that
good cause exists to warrant an extension. Situations in which good
cause has been demonstrated may include, but are not limited to, the
following:
(i) If the Secretary has issued questionnaires to the applicant or
other interested parties; received responses to those questionnaires;
and determined that an extension is warranted to request further
information or consider and address the parties' responses on the
record adequately; or
(ii) The Secretary has issued a preliminary scope ruling (see
paragraph (g) of this section).
(f) Scope inquiry procedures. (1) Within 20 days of the Secretary's
self-initiation of a scope inquiry under paragraph (b) of this section,
interested parties are permitted one opportunity to submit comment and
factual information addressing the self-initiation. Within 10 days of
the filing of such comments, any interested party is permitted one
opportunity to submit comment and factual information to rebut,
clarify, or correct factual information submitted by the other
interested parties.
(2) Within 20 days of the initiation of a scope inquiry under
paragraph (d)(2) of this section, an interested party other than the
applicant is permitted one opportunity to submit comment and factual
information to rebut, clarify, or correct factual information contained
in the scope ruling application. Within 10 days of the filing of such
rebuttal, clarification, or correction, the applicant is permitted one
opportunity to submit comment and factual information to rebut,
clarify, or correct factual information submitted in the interested
party's rebuttal, clarification or correction.
(3) Following initiation of a scope inquiry under paragraph (b) or
(d) of this section, the Secretary may issue questionnaires and verify
submissions received, where appropriate. The Secretary may limit
issuance of questionnaires to a reasonable number of respondents.
Questionnaire responses are due on the date specified by the Secretary.
Within 10 days after a questionnaire response has been filed with the
Secretary, an interested party other than the original submitter is
permitted one opportunity to submit comment and factual information to
rebut, clarify, or correct factual information contained in the
questionnaire response. Within five days of the filing of such
rebuttal, clarification, or correction, the original submitter is
permitted one opportunity to submit comment and factual information to
rebut, clarify, or correct factual information submitted in the
interested party's rebuttal, clarification or correction.
(4) If the Secretary issues a preliminary scope ruling under
paragraph (g) of this section, which is not issued concurrently with
the initiation of the scope inquiry, the Secretary will establish a
schedule for the filing of scope comments and rebuttal comments. Unless
otherwise specified, any interested party may submit scope comments
within 10 days after the issuance of the preliminary scope ruling, and
any interested party may submit rebuttal comments within 5 days
thereafter. Unless otherwise specified, no factual information will be
accepted in the scope or rebuttal comments.
[[Page 49497]]
(5) If the Secretary issues a preliminary scope ruling concurrently
with the initiation of a scope inquiry under paragraph (g) of this
section, paragraphs (f)(1) through (4) of this section will not apply.
In such a situation, the Secretary will establish appropriate
procedures on a case-specific basis.
(6) If the Secretary determines it is appropriate to do so, the
Secretary may rescind a scope inquiry under this section.
(7) The Secretary may alter any deadlines under this paragraph or
establish a separate schedule for the filing of comments and/or factual
information during the scope inquiry, as appropriate.
(g) Preliminary scope ruling. The Secretary may issue a preliminary
scope ruling, based upon the available information at the time, as to
whether there is a reasonable basis to believe or suspect that the
product subject to a scope inquiry is covered by the scope of the
order. In determining whether to issue a preliminary scope ruling, the
Secretary may consider the complexity of the issues and arguments
raised in the scope inquiry. The Secretary may issue a preliminary
scope ruling concurrently with the initiation of a scope inquiry under
paragraph (b) or (d) of this section.
(h) Final scope ruling. The Secretary will issue a final scope
ruling as to whether the product that is the subject of the scope
inquiry is covered by the scope of the order, including an explanation
of the factual and legal conclusions on which the final scope ruling is
based. The Secretary will promptly convey a copy of the final scope
ruling in the manner prescribed by section 516A(a)(2)(A)(ii) of the Act
to all parties to the proceeding (see Sec. 351.102(b)(36)).
(i) Other segments of the proceeding. (1) Notwithstanding any other
provision of this section, the Secretary may, but is not required to,
address scope issues in another segment of the proceeding, such as an
administrative review under Sec. 351.213, a circumvention inquiry
under Sec. 351.226, or a covered merchandise inquiry under Sec.
351.227, without initiating or conducting a scope inquiry under this
section. For example, the Secretary may forego or rescind a scope
inquiry under this section and determine whether the product at issue
is covered by the scope of the order in another segment of the
proceeding (including another scope inquiry, see paragraph (m)(1) of
this section).
(2) Notwithstanding any other provision of this section, the
Secretary may modify the deadlines of the scope inquiry to align with
the deadlines of another segment of the proceeding or make no changes
to its scope inquiry deadlines.
(3) During the pendency of a scope inquiry or upon issuance of a
final scope ruling under paragraph (h) of this section, the Secretary
may take any further action, as appropriate, with respect to another
segment of the proceeding. For example, if the Secretary considers it
appropriate, the Secretary may request information concerning the
product that is the subject of the scope inquiry for purpose of an
administrative review under Sec. 351.213.
(j) Country of origin determinations. In considering whether a
product is covered by the scope of the order at issue, the Secretary
may need to determine the country of origin of the product. To make
such a determination, the Secretary may use any reasonable method and
is not bound by the determinations of any other agency, including
tariff classification and country of origin marking rulings issued by
the Customs Service. In determining the country of origin, the
Secretary may conduct a substantial transformation analysis that
considers relevant factors that arise on a case-by-case basis,
including:
(1) Whether the processed downstream product is a different class
or kind of merchandise than the upstream product;
(2) The characteristics (including technical, physical, chemical or
otherwise) and intended end-use of the product;
(3) The cost of production/value added of further processing in the
third country or countries;
(4) The nature and sophistication of processing in the third
country or countries; and
(5) The level of investment in the third country or countries.
In conducting a country of origin determination, the Secretary also
may consider where the essential component of the product is produced
or where the essential characteristics of the product are imparted.
(k) Scope rulings. In determining whether a product is covered by
the scope of the order at issue, the Secretary will consider the
language of the scope and may make its determination on this basis
alone if the language of the scope, including the descriptions of
merchandise expressly excluded from the scope, is dispositive.
(1) In considering the language of the scope, at the Secretary's
discretion, the following may also be considered:
(i) The descriptions of the merchandise contained in the petition;
(ii) The descriptions of the merchandise contained in the initial
investigation;
(iii) Determinations of the Secretary, including, but not limited
to, prior scope rulings, memoranda, or clarifications; and
(iv) Determinations of the Commission, including reports issued
pursuant to the Commission's initial investigation.
(2) If the Secretary determines that the above sources are not
dispositive, the Secretary will then further consider:
(i) The characteristics (including technical, physical, chemical or
otherwise) of the product;
(ii) The expectations of the ultimate purchasers;
(iii) The ultimate use of the product;
(iv) The channels of trade in which the product is sold; and
(v) The manner in which the product is advertised and displayed.
(3) If merchandise contains two or more components and the product
at issue in the scope inquiry is a component of that merchandise, the
Secretary will first analyze the scope language and the criteria above
to determine if the product, standing alone, would be covered by an
order. If the Secretary determines that a component product would
otherwise be covered by the scope of an order, the Secretary next will
examine the same criteria to determine if the component product's
inclusion in the larger merchandise is directly addressed by the scope
of the order for purposes of inclusion or exclusion from the coverage
of the scope. Finally, if the scope language and the criteria above do
not address that situation, then the Secretary will consider, as
appropriate, relevant factors that may arise on a product-specific
basis to determine whether the component product's inclusion in the
larger merchandise results in its exclusion from the scope of the
order, or leaves it within the coverage of the scope. Such relevant
factors include:
(i) The practicability of separating the in-scope component for
repackaging or resale;
(ii) The measurable value of the in-scope component as compared to
the measurable value of the merchandise as a whole; and
(iii) The ultimate use or function of the in-scope component
relative to the ultimate use or function of the merchandise as a whole.
(l) Suspension of liquidation. (1) When the Secretary initiates a
scope inquiry under paragraph (b) or (d) of
[[Page 49498]]
this section, the Secretary will notify the Customs Service of the
initiation and direct the Customs Service to continue the suspension of
liquidation of entries of products subject to the scope inquiry that
were already subject to the suspension of liquidation, and to apply the
cash deposit rate that would be applicable if the product were
determined to be covered by the scope of the order, until appropriate
liquidation instructions are issued.
(2) If the Secretary issues a preliminary scope ruling under
paragraph (g) of this section that the product at issue is covered by
the scope of the order, the Secretary will direct the Customs Service
as follows:
(i) To continue the suspension of liquidation of previously
suspended entries of the product at issue as directed under paragraph
(l)(1) of this section; and
(ii) To suspend liquidation of all other unliquidated entries of
the product at issue, and apply the applicable cash deposit rate under
the order to those entries.
(3) If the Secretary issues a final scope ruling under paragraph
(h) of this section that the product at issue is covered by the scope
of the order, the Secretary will direct the Customs Service as follows:
(i) To continue the suspension of liquidation of entries suspended
as directed under paragraph (l)(1) and/or (l)(2) of this section
(including entries of the product at issue that are subject to
suspension of liquidation as a result of another segment of a
proceeding, such as an administrative review under Sec. 351.213 or a
circumvention inquiry under Sec. 351.226) and apply the applicable
cash deposit rate under the order until appropriate liquidation
instructions are issued pursuant to Sec. Sec. 351.212 and 351.213; and
(ii) To suspend liquidation of all other unliquidated entries of
the product at issue that are not otherwise subject to suspension of
liquidation, and apply the applicable cash deposit rate under the order
until appropriate liquidation instructions are issued pursuant to
Sec. Sec. 351.212 and 351.213.
(4) If the Secretary issues a final scope ruling under paragraph
(h) of this section that the product is not covered by the scope of the
order, and entries of the product at issue are not otherwise subject to
suspension of liquidation as a result of another segment of a
proceeding, such as a circumvention inquiry under Sec. 351.226 or a
covered merchandise inquiry under Sec. 351.227, the Secretary will
direct the Customs Service to terminate the suspension of liquidation
and refund any cash deposits for such entries.
(m) Applicability of scope rulings; companion orders--(1) In
general. To the extent practicable, the Secretary normally will
initiate and conduct a single scope inquiry and issue a single scope
ruling for an order under this section with respect to all products
with the identical physical description from the same country of origin
as the particular product at issue, regardless of producer, exporter,
or importer. If the Secretary has previously issued a scope ruling for
an order with respect to a particular product, the Secretary may apply
that scope ruling to all products with the identical physical
description from the same country of origin as the particular product
at issue, regardless of producer, exporter, or importer, without
initiating or conducting a new scope inquiry under this section. In
such instances, the requirements of paragraph (h) of this section will
apply.
(2) Companion antidumping and countervailing duty orders. If there
are companion antidumping and countervailing duty orders covering the
same merchandise from the same country of origin, the requesting
interested party under paragraph (c) of this section must file the
scope ruling application pertaining to both orders only on the record
of the antidumping duty proceeding. Should the Secretary determine to
initiate a scope inquiry under paragraph (b) or (d) of this section,
the Secretary will initiate and conduct a single inquiry with respect
to the merchandise at issue for both orders only on the record of the
antidumping proceeding. Once the Secretary issues a final scope ruling
on the record of the antidumping duty proceeding, the Secretary will
include a copy of that scope ruling on the record of the countervailing
duty proceeding.
(n) Service of scope ruling application; annual inquiry service
list; entry of appearance. (1) The requirements of Sec. 351.303(f)
apply to this section, except that an interested party that submits a
scope ruling application under paragraph (c) of this section must serve
a copy of the application on all persons on the annual inquiry service
list for that order, as well as the companion order, if any, as
described in paragraph (m)(2) of this section. If a scope ruling
application is rejected and resubmitted pursuant to paragraph (d)(1) of
this section, service of the resubmitted application is not required
under this paragraph, unless otherwise specified.
(2) For purposes of this section, the ``annual inquiry service
list'' will include the petitioner(s) and those parties that file a
request for inclusion on the annual inquiry service list for a
proceeding, in accordance with the Secretary's established procedures.
(3) A new ``annual inquiry service list'' will be established on a
yearly basis. Parties filing a request for inclusion on that list must
file a request during the anniversary month of the publication of the
antidumping or countervailing duty order. Only the petitioner will be
automatically placed on the new annual inquiry service list once the
previous year's list has been replaced.
(4) Once a scope ruling application is accepted by the Secretary, a
segment-specific service list will be established and the requirements
of Sec. 351.303(f) will apply. Parties other than the scope ruling
applicant that wish to participate in the scope inquiry must file an
entry of appearance in accordance with Sec. 351.103(d)(1).
(o) Publication of list of final scope rulings. On a quarterly
basis, the Secretary will publish in the Federal Register a list of
final scope rulings issued within the previous three months. This list
will include the case name, and a brief description of the ruling. The
Secretary also may include complete public versions of its scope
rulings on its website, should the Secretary determine such placement
is warranted.
(p) Suspended investigations; suspension agreements. The Secretary
may, as appropriate, apply the procedures set forth in this section in
determining the scope of a suspended investigation or a suspension
agreement (see Sec. 351.208).
0
6. Add Sec. 351.226 as follows:
Sec. 351.226 Circumvention inquiries.
(a) Introduction. Section 781 of the Act addresses the
circumvention of antidumping and countervailing duty orders. This
provision recognizes that circumvention seriously undermines the
effectiveness of the remedies provided by the antidumping and
countervailing duty proceedings, and frustrates the purposes for which
these laws were enacted. Section 781 of the Act allows the Secretary to
apply antidumping and countervailing duty orders in such a way as to
prevent circumvention by including within the scope of the order four
distinct categories of merchandise. The Secretary will initiate and
conduct a circumvention inquiry at the request of an interested party
or on the Secretary's initiative, and issue a circumvention
determination as provided for under section 781 of the Act and the
rules and procedures in this section. Unless otherwise specified, the
procedures as described in subpart C of
[[Page 49499]]
this part (Sec. Sec. 351.301 through 351.308 and Sec. Sec. 351.312
through 351.313) apply to this section.
(b) Self-initiation of circumvention inquiry. If the Secretary
determines from available information that an inquiry is warranted into
the question of whether the elements necessary for a circumvention
determination under section 781 of the Act exist, the Secretary may
initiate a circumvention inquiry and publish a notice of initiation in
the Federal Register.
(c) Circumvention inquiry request--(1) In general. An interested
party may submit a request for a circumvention inquiry that alleges
that the elements necessary for a circumvention determination under
section 781 of the Act exist and that is accompanied by information
reasonably available to the interested party supporting these
allegations. The circumvention inquiry request must be served in
accordance with the requirements of paragraph (n) of this section.
(2) Contents of request. To the extent reasonably available to the
requestor, a circumvention inquiry request must include the requested
information under paragraph (c)(1) of this section and the following:
(i) A detailed physical description of the merchandise allegedly
circumventing the antidumping or countervailing duty order, including:
(A) The characteristics (including technical, physical, chemical or
otherwise) of the product;
(B) The uses of the product;
(C) The product's tariff classification under the Harmonized Tariff
Schedule of the United States;
(D) Clear and legible photographs, schematic drawings,
specifications, standards, marketing materials, and any other exemplars
providing a visual depiction of the product; and
(E) A description of parts, materials, and the production process
employed in the production of the product.
(ii) A concise public description of the product and public
identification of the name and address of any producer, exporter, and
importer of the product allegedly circumventing the antidumping or
countervailing duty order if reasonably available to the requesting
interested party. If the full universe of parties allegedly
circumventing the order(s) is unknown, then examples are sufficient.
Furthermore, this provision is not intended to restrict the inclusion
of business proprietary information in the request where appropriate.
(iii) A statement of the requestor's position as to the nature of
the alleged circumvention under section 781 of the Act, such as a
description of the procedures, channels of trade, and foreign countries
involved (including a description of the processes occurring in each
country), as appropriate.
(iv) A statement of the requestor's position as to whether the
circumvention inquiry, if initiated, should be conducted on a country-
wide basis.
(iv) Factual information supporting this position, including import
and export data relevant to the merchandise allegedly circumventing the
antidumping or countervailing duty order.
(d) Initiation of a circumvention inquiry based on a request.
Within 20 days after the filing of a request for a circumvention
inquiry, the Secretary will determine whether to accept or reject the
request. If it is not practicable to determine whether to accept or
reject a request within 20 days, the Secretary may extend that deadline
by an additional 15 days.
(1) If the Secretary determines that the request is incomplete or
otherwise unacceptable, the Secretary may reject the request, and will
provide a written explanation of the reasons for the rejection. If the
request is rejected, the requestor may resubmit the full request at any
time, with all identified deficiencies corrected.
(2) If the Secretary determines upon review of a request for a
circumvention inquiry that a scope ruling is warranted before the
Secretary can conduct a circumvention analysis, the Secretary may
either, in accord with Sec. 351.225(i)(1), initiate the circumvention
inquiry and address scope issues in the context of the circumvention
inquiry, or defer initiation of the circumvention inquiry pending the
completion of any ongoing or new segment of the proceeding addressing
the scope issue. When initiation is deferred pending another segment of
the proceeding, if the result of that other segment is that the product
at issue is not covered by the scope of the antidumping and/or
countervailing duty order(s) at issue, the Secretary may immediately
initiate the circumvention inquiry upon the issuance of the final
decision in that other segment.
(3) If the Secretary determines that a request for a circumvention
inquiry satisfies the requirements of paragraph (c) of this section,
the Secretary will accept the request and initiate a circumvention
inquiry. The Secretary will publish a notice of initiation in the
Federal Register.
(e) Time limits--(1) Preliminary Determination. The Secretary will
issue a preliminary determination under paragraph (g)(1) of this
section no later than 150 days from the date of publication of the
notice of initiation of a circumvention inquiry under paragraph (b) or
(d) of this section.
(2) Final Determination. In accordance with section 781(f) of the
Act, the Secretary shall, to the maximum extent practicable, issue a
final determination under paragraph (g)(2) of this section no later
than 300 days from the date of publication of the notice of initiation
of a circumvention inquiry under paragraph (b) or (d) of this section.
If the Secretary concludes that the inquiry is extraordinarily
complicated and additional time is necessary to issue a final
circumvention determination, then the Secretary may extend the 300-day
deadline by no more than 65 days.
(f) Circumvention inquiry procedures. (1) Within 20 days of the
publication of the Secretary's self-initiation of a circumvention
inquiry under paragraph (b) of this section, interested parties are
permitted one opportunity to submit comment and factual information
addressing the self-initiation. Within 10 days of the filing of such
comments, any interested party is permitted one opportunity to submit
comment and factual information to rebut, clarify, or correct factual
information submitted by the other interested parties.
(2) Within 20 days of the publication of the initiation of a
circumvention inquiry under paragraph (d) of this section, an
interested party other than the requestor is permitted one opportunity
to submit comment and factual information to rebut, clarify, or correct
factual information contained in the request. Within 10 days of the
filing of such rebuttal, clarification, or correction, the requestor is
permitted one opportunity to submit comment and factual information to
rebut, clarify, or correct factual information contained in the
interested party's rebuttal, clarification or correction.
(3) Following initiation of a circumvention inquiry under paragraph
(b) or (d) of this section, the Secretary may issue questionnaires and
verify submissions received, where appropriate. The Secretary may limit
issuance of questionnaires to a reasonable number of respondents.
Questionnaire responses are due on the date specified by the Secretary.
Within 10 days after a questionnaire response has been filed with the
Secretary, an interested party other than the original submitter is
permitted one opportunity to submit comment and factual information to
rebut, clarify, or correct factual information contained in the
questionnaire response. Within 5 days
[[Page 49500]]
of the filing of such rebuttal, clarification, or correction, the
original submitter is permitted one opportunity to submit comment and
factual information to rebut, clarify, or correct factual information
contained in the interested party's rebuttal, clarification or
correction.
(4) If the Secretary issues a preliminary circumvention
determination under paragraph (g)(1) of this section, which is not
issued concurrently with the initiation of the circumvention inquiry,
the Secretary will establish a schedule for the filing of comments and
rebuttal comments. Unless otherwise specified, any interested party may
submit comments within 10 days after the issuance of the preliminary
circumvention determination, and any interested party may submit
rebuttal comments within 5 days thereafter. Unless otherwise specified,
no factual information will be accepted in the comments or rebuttal
comments.
(5) If the Secretary issues a preliminary circumvention
determination concurrently with the initiation of the circumvention
inquiry under paragraph (g)(1) of this section, paragraphs (g)(1)
through (4) will not apply. In such a situation, the Secretary will
establish appropriate procedures on a case-specific basis.
(6) Notwithstanding any other provision of this section, the
Secretary may forego or rescind a circumvention inquiry, in whole or in
part, under this section for the following reasons:
(i) The requestor timely withdraws its request for a circumvention
inquiry under paragraph (c) of this section;
(ii) The Secretary issues a final determination in another segment
of a proceeding, and has determined that the merchandise at issue in
the circumvention inquiry is covered by the scope of the antidumping or
countervailing duty order;
(iii) Where the Secretary has initiated a circumvention inquiry
under paragraph (b) or (d) of this section to examine circumvention
under two or more provisions under paragraphs (h), (i), (j), or (k) of
this section, and determines that it is not necessary to issue a final
circumvention determination with respect to one of those paragraphs.
For example, if the Secretary initiates a circumvention inquiry to
examine whether merchandise is altered in minor respects under
paragraph (j) of this section or later-developed merchandise under
paragraph (k) of this section, the Secretary may rescind the inquiry in
part to address only one of those provisions.
(7) The Secretary may alter any deadlines under this paragraph or
establish a separate schedule for the filing of comments and/or factual
information during the circumvention inquiry, as appropriate.
Notwithstanding any other provision of this section, the Secretary may
modify the deadlines of the circumvention inquiry to align with the
deadlines of another segment of the proceeding or make no changes to
its inquiry deadlines.
(8)(i) The Secretary will notify the Commission in writing of the
proposed inclusion of products in an order prior to issuing a final
determination under paragraph (g)(2) of this section based on a
determination under:
(A) Section 781(a) of the Act (paragraph (h) of this section) with
respect to merchandise completed or assembled in the United States
(other than minor completion or assembly);
(B) Section 781(b) of the Act (paragraph (i) of this section) with
respect to merchandise completed or assembled in other foreign
countries; or
(C) Section 781(d) of the Act (paragraph (k) of this section) with
respect to later-developed products that incorporate a significant
technological advance or significant alteration of an earlier product.
(ii) If the Secretary notifies the Commission under paragraph
(f)(7)(i) of this section, upon the written request of the Commission,
the Secretary will consult with the Commission regarding the proposed
inclusion, and any such consultation will be completed within 15 days
after the date of such request. If, after consultation, the Commission
believes that a significant injury issue is presented by the proposed
inclusion of a product within an order, the Commission may provide
written advice to the Secretary as to whether the inclusion would be
inconsistent with the affirmative injury determination of the
Commission on which the order is based.
(g) Circumvention determinations--(1) Preliminary determination.
The Secretary will issue a preliminary determination, based upon the
available information at the time, as to whether there is a reasonable
basis to believe or suspect that the elements necessary for a
circumvention determination under section 781 of the Act exist. The
preliminary determination will be published in the Federal Register.
The Secretary may publish notice of a preliminary determination
concurrently with the notice of initiation of a circumvention inquiry
under paragraph (b) or (d) of this section.
(2) Final determination. The Secretary will issue a final
determination as to whether the elements necessary for a circumvention
determination under section 781 of the Act exist, in which case the
merchandise at issue will be included within the scope of the order. As
part of its determination, the Secretary will include an explanation of
the factual and legal conclusions on which the final determination is
based. The final determination will be published in the Federal
Register. Promptly after publication, the Secretary will convey a copy
of the final determination in the manner prescribed by section
516A(a)(2)(A)(ii) of the Act to all parties to the proceeding (see
Sec. 351.102(b)(36)).
(h) Products completed or assembled in the United States. Under
section 781(a) of the Act, the Secretary may include within the scope
of an antidumping or countervailing duty order imported parts or
components referred to in section 781(a)(1)(B) of the Act that are used
in the completion or assembly of the merchandise in the United States
at any time such order is in effect. In determining the value of parts
or components (including such purchases from another person) under
section 781(a)(1)(D) of the Act, or of processing performed (including
by another person) under section 781(a)(2)(E) of the Act, the Secretary
may determine the value of the part or component on the basis of the
cost of producing the part or component under section 773(e) of the
Act--or, in the case of nonmarket economies, on the basis of section
773(c) of the Act.
(i) Products completed or assembled in other foreign countries.
Under section 781(b) of the Act, the Secretary may include within the
scope of an antidumping or countervailing duty order, at any time such
order is in effect, imported merchandise completed or assembled in a
foreign country other than the country to which the order applies. In
determining the value of parts or components (including such purchases
from another person) under section 781(b)(1)(D) of the Act, or of
processing performed (including by another person) under section
781(b)(2)(E) of the Act, the Secretary may determine the value of the
part or component on the basis of the cost of producing the part or
component under section 773(e) of the Act--or, in the case of nonmarket
economies, on the basis of section 773(c) of the Act.
(j) Minor alterations of merchandise. Under section 781(c) of the
Act, the Secretary may include within the scope of an antidumping or
countervailing duty order articles altered in form or
[[Page 49501]]
appearance in minor respects. The Secretary may consider such criteria
including, but not limited to, the overall physical characteristics of
the merchandise, the expectations of the ultimate users, the use of the
merchandise, the channels of marketing and the cost of any modification
relative to the total value of the imported products. The Secretary
also may consider the circumstances under which the products enter the
United States, including but not limited to the timing of the entries
and the quantity of merchandise entered during the circumvention review
period.
(k) Later-developed merchandise. In determining whether later-
developed merchandise is within the scope of an antidumping or
countervailing duty order, the Secretary will apply section 781(d) of
the Act. In determining whether merchandise is ``later-developed'' the
Secretary will examine whether the merchandise at issue was
commercially available at the time of the initiation of the underlying
antidumping or countervailing duty investigation.
(l) Suspension of liquidation. (1) When the Secretary publishes a
notice of initiation of a circumvention inquiry under paragraph (b) or
(d) of this section, the Secretary will notify the Customs Service of
the initiation and direct the Customs Service to continue the
suspension of liquidation of entries of products subject to the
circumvention inquiry that were already subject to the suspension of
liquidation, and to apply the cash deposit rate that would be
applicable if the product were determined to be covered by the scope of
the order, until appropriate liquidation instructions are issued.
(2) If the Secretary issues an affirmative preliminary
determination under paragraph (g)(1) of this section, the Secretary
will direct the Customs Service as follows:
(i) To continue the suspension of liquidation of previously
suspended entries of the product at issue as directed under paragraph
(l)(1) of this section; and
(ii) To suspend liquidation of all other unliquidated entries of
the product at issue, and apply the applicable cash deposit rate under
the order to those entries.
(3) If the Secretary issues an affirmative final determination
under paragraph (g)(2) of this section, the Secretary will direct the
Customs Service as follows:
(i) To continue the suspension of liquidation of entries suspended
as directed under paragraph (l)(1) and/or (l)(2) of this section
(including entries of the product at issue that are subject to
suspension of liquidation as a result of another segment of a
proceeding, such as an administrative review under Sec. 351.213) and
apply the applicable cash deposit rate under the order until
appropriate liquidation instructions are issued pursuant to Sec. Sec.
351.212 and 351.213; and
(ii) To suspend liquidation of all other unliquidated entries of
the product at issue that are not otherwise subject to suspension of
liquidation, and apply the applicable cash deposit rate under the order
until appropriate liquidation instructions are issued pursuant to
Sec. Sec. 351.212 and 351.213.
(4) If the Secretary issues a negative final determination under
paragraph (g)(2) of this section, and entries of the product are not
otherwise subject to suspension of liquidation as a result of another
segment of a proceeding, such as a covered merchandise inquiry under
Sec. 351.227, the Secretary will order the Customs Service to
terminate the suspension of liquidation and refund any cash deposits
for such entries.
(m) Applicability of circumvention determination; other segments of
the proceeding; companion orders--(1) Applicability of circumvention
determination. In conducting a circumvention inquiry under this
section, the Secretary shall consider, based on the available record
evidence, whether the circumvention determination should be applied on
a country-wide basis.
(2) Other segments of the proceeding. During the pendency of a
circumvention inquiry or upon issuance of a final circumvention
determination under paragraph (g)(2) of this section, the Secretary may
take any further action, as appropriate, with respect to another
segment of the proceeding. For example, if the Secretary considers it
appropriate, the Secretary may request information concerning the
product that is the subject of the circumvention inquiry for purpose of
an administrative review under Sec. 351.213.
(3) Companion antidumping and countervailing duty orders. If there
are companion antidumping and countervailing duty orders covering the
same merchandise from the same country of origin, the requesting
interested party under paragraph (c) of this section must file the
request pertaining to both orders only on the record of the antidumping
duty proceeding. Should the Secretary determine to initiate a
circumvention inquiry under paragraph (b) or (d) of this section, the
Secretary will initiate and conduct a single inquiry with respect to
the merchandise at issue for both orders only on the record of the
antidumping proceeding. Once the Secretary issues a final circumvention
determination on the record of the antidumping duty proceeding, the
Secretary will include a copy of that determination on the record of
the countervailing duty proceeding.
(n) Service of circumvention inquiry request; annual inquiry
service list; entry of appearance. (1) The requirements of Sec.
351.303(f) apply to this section, except that an interested party that
submits a circumvention inquiry request under paragraph (c) of this
section must serve a copy of that inquiry request on all persons on the
annual inquiry service list for that order, as well as the companion
order, if any, as described in paragraph (m)(3) of this section. The
procedures and description pertaining to the ``annual inquiry service
list'' are set forth in Sec. 351.225(n)(1)-(3).
(2) Once a circumvention inquiry request is accepted by the
Secretary, a segment-specific service list will be established and the
requirements of Sec. 351.303(f) will apply. Parties other than the
interested party requesting a circumvention inquiry that wish to
participate in the circumvention inquiry must file an entry of
appearance in accordance with Sec. 351.103(d)(1).
(o) Suspended investigations; suspension agreements. The Secretary
may, in accordance with section 781 of the Act, apply the procedures
set forth in this section in determining whether the elements necessary
for a circumvention determination under section 781 of the Act exist
with respect to a suspended investigation or a suspension agreement
(see Sec. 351.208).
0
7. Add Sec. 351.227 to read as follows:
Sec. 351.227 Covered merchandise referrals.
(a) Introduction. The Trade Facilitation and Trade Enforcement Act
of 2015 contains Title IV-Prevention of Evasion of Antidumping and
Countervailing Duty Orders (short title ``Enforce and Protect Act of
2015'' or ``EAPA'') (Pub. L. 114-125, sections 401, 421, 130 Stat. 122,
155, 161 (2016)). The Enforce and Protect Act of 2015 added section 517
to the Act, which established a new framework by which the Customs
Service can conduct civil administrative investigations of potential
duty evasion of an antidumping and/or countervailing duty order
(referred to herein as an ``EAPA investigation''). Section
517(b)(4)(A)(i) of the Act provides a procedure whereby if, during the
course of an EAPA investigation, the Customs Service is unable to
determine whether the merchandise at issue is covered
[[Page 49502]]
merchandise within the meaning of section 517(a)(3) of the Act, it
shall refer the matter to the Secretary to make such a determination
(referred to herein as a ``covered merchandise referral''). Section
517(b)(4)(B) of the Act directs the Secretary to determine whether the
merchandise is covered merchandise and promptly transmit the
determination to the Customs Service. The Secretary shall consider a
covered merchandise referral and issue a covered merchandise
determination in accordance with the rules and procedures in this
section. Unless otherwise specified, the procedures as described in
subpart C of this part (Sec. Sec. 351.301 through 351.308 and
Sec. Sec. 351.312 through 351.313) apply to this section.
(b) Actions with respect to covered merchandise referral. Within 15
days after receiving a covered merchandise referral from the Customs
Service pursuant to section 517(b)(4)(A)(i) of the Act that the
Secretary determines to be sufficient, the Secretary will take the
following action.
(1) Initiate a covered merchandise inquiry (the Secretary will
publish a notice of initiation in the Federal Register);
(2) Self-initiate a circumvention inquiry pursuant to Sec.
351.226(b) to address the covered merchandise referral; or
(3) If the Secretary determines upon review of the covered
merchandise referral that the question before the Secretary can be
addressed in an ongoing segment of the proceeding, such as a scope
inquiry under Sec. 351.225 or a circumvention inquiry under Sec.
351.226, the Secretary will publish a notice of its intent to address
the covered merchandise referral in the context of such other segment
in the Federal Register.
(c) Time limits--(1) In general. When the Secretary initiates a
covered merchandise inquiry under paragraph (b)(1) of this section, the
Secretary shall issue a final covered merchandise determination within
120 days from the date of publication of the notice of initiation.
(2) Extension. If the Secretary concludes that the inquiry is
extraordinarily complicated and additional time is necessary to issue a
final covered merchandise determination, then the Secretary may extend
the deadline in paragraph (c)(1) by no more than 60 days.
(d) Covered merchandise inquiry procedures. (1) Within 20 days of
the date of publication of the notice of a covered merchandise inquiry
under paragraph (b)(1) of this section, interested parties are
permitted one opportunity to submit comment and factual information
addressing the initiation. Within 10 days of the filing of such
comments, any interested party is permitted one opportunity to submit
comment and factual information to rebut, clarify, or correct factual
information submitted by the other interested parties.
(2) Following initiation of a covered merchandise inquiry under
paragraph (b)(1) of this section, the Secretary may issue
questionnaires and verify submissions received, where appropriate. The
Secretary may limit issuance of questionnaires to a reasonable number
of respondents. Questionnaire responses are due on the date specified
by the Secretary. Within 10 days after a questionnaire response has
been filed with the Secretary, an interested party other than the
original submitter is permitted one opportunity to submit comment and
factual information to rebut, clarify, or correct factual information
contained in the questionnaire response. Within five days of the filing
of such rebuttal, clarification, or correction, the original submitter
is permitted one opportunity to submit comment and factual information
to rebut, clarify, or correct factual information submitted in the
interested party's rebuttal, clarification or correction.
(3) If the Secretary issues a preliminary covered merchandise
determination under paragraph (e)(1) of this section, which is not
issued concurrently with a covered merchandise inquiry, the Secretary
will establish a schedule for the filing of comments and rebuttal
comments. Unless otherwise specified, any interested party may submit
comments within 10 days after the issuance of the preliminary covered
merchandise determination, and any interested party may submit rebuttal
comments within five days thereafter. Unless otherwise specified, no
factual information will be accepted in the comments or rebuttal
comments.
(4) If the Secretary issues a preliminary covered merchandise
determination concurrently with the initiation of the covered
merchandise inquiry under paragraph (e)(1) of this section, paragraphs
(e)(1) through (3) will not apply. In such a situation, the Secretary
will establish appropriate procedures on a case-specific basis.
(5) Notwithstanding any other provision of this section, the
Secretary may forego or rescind a covered merchandise inquiry, in whole
or in part, under this section for the following reasons:
(i) The Customs Service withdraws its request for a covered
merchandise inquiry under paragraph (b) of this section;
(ii) The Secretary issues a final determination in another segment
of a proceeding that can provide the basis for the Secretary's covered
merchandise determination.
(iii) Where the Secretary otherwise determines that it is not
necessary to initiate or conduct a covered merchandise inquiry to
address the covered merchandise referral, in which case the
requirements of paragraph (e)(2) of this section will apply.
(6) The Secretary may alter any deadlines under this paragraph or
establish a separate schedule for the filing of comments and/or factual
information during the covered merchandise inquiry, as appropriate.
Notwithstanding any other provision of this section, the Secretary may
modify the deadlines of the covered merchandise inquiry to align with
the deadlines of another segment of the proceeding or make no changes
to its inquiry deadlines.
(e) Covered merchandise determinations--(1) Preliminary
determination. The Secretary may issue a preliminary determination,
based upon the available information at the time, as to whether there
is a reasonable basis to believe or suspect that the product that is
the subject of the covered merchandise inquiry is covered by the scope
of the order. In determining whether to issue a preliminary
determination, the Secretary may consider the complexity of the issues
and arguments raised in the context of the covered merchandise inquiry.
The preliminary determination will be published in the Federal
Register. The Secretary may publish notice of a preliminary
determination concurrently with the notice of initiation of a covered
merchandise inquiry under paragraph (b)(1) of this section.
(2) Final determination. The Secretary will issue a final
determination as to whether the product that is the subject of the
covered merchandise inquiry is covered by the scope of the order. As
part of its determination, the Secretary will include an explanation of
the factual and legal conclusions on which the final determination is
based. The final determination will be published in the Federal
Register. Promptly after publication, the Secretary will:
(i) Convey a copy of the final determination in the manner
prescribed by section 516A(a)(2)(A)(ii) of the Act to all parties to
the proceeding (see Sec. 351.102(b)(36)); and
[[Page 49503]]
(ii) Transmit a copy of the final covered merchandise determination
to the Customs Service in accordance with section 517(b)(4)(B) of the
Act.
(3) Covered merchandise determinations in other segments of the
proceeding. If the Secretary addresses the covered merchandise referral
in the context of another segment of the proceeding as provided for
under this section, or issues a scope ruling under Sec. 351.225 or a
circumvention determination under Sec. 351.226 that can provide the
basis for the Secretary's covered merchandise determination, the
Secretary will promptly transmit a copy of the final action in that
segment to the Customs Service in accordance with section 517(b)(4)(B)
of the Act.
(f) Basis for covered merchandise determination. In issuing a
determination under paragraph (e)(1) or (2) of this section, the
Secretary may base its determination on paragraphs (j) and (k) of Sec.
351.225 or any provision under section 781 of the Act (paragraphs (h),
(i), (j), or (k) of Sec. 351.226).
(g)-(k) [Reserved]
(l) Suspension of liquidation. (1) When the Secretary publishes a
notice of initiation of a covered merchandise inquiry under paragraph
(b)(1) of this section, the Secretary will notify the Customs Service
of the initiation and direct the Customs Service to continue the
suspension of liquidation of entries of products subject to the covered
merchandise inquiry that were already subject to the suspension of
liquidation, and to apply the cash deposit rate that would be
applicable if the product were determined to be covered by the scope of
the order until appropriate liquidation instructions are issued.
(2) If the Secretary issues an affirmative preliminary
determination under paragraph (e)(1) of this section that the product
at issue is covered by the scope of the Order, the Secretary will
direct the Customs Service as follows:
(i) To continue the suspension of liquidation of previously
suspended entries of the product at issue as described under paragraph
(l)(1) of this section; and
(ii) To suspend liquidation of all other unliquidated entries of
the product at issue, and apply the applicable cash deposit rate under
the order to those entries.
(3) If the Secretary issues an affirmative final determination
under paragraph (e)(2) of this section that the product at issue is
covered by the scope of the order, the Secretary will direct the
Customs Service as follows:
(i) To continue the suspension of liquidation of entries suspended
as directed under paragraph (l)(1) and/or (l)(2) of this section
(including entries of the product at issue that are subject to
suspension of liquidation as a result of another segment of a
proceeding, such as an administrative review under Sec. 351.213) and
apply the applicable cash deposit rate under the order until
appropriate liquidation instructions are issued pursuant to Sec. Sec.
351.212 and 351.213; and
(ii) To suspend liquidation of all other unliquidated entries of
the product at issue that are not otherwise subject to suspension of
liquidation, and apply the applicable cash deposit rate under the order
until appropriate liquidation instructions are issued pursuant to
Sec. Sec. 351.212 and 351.213.
(4) If the Secretary issues a negative final determination under
paragraph (e)(2) of this section, and entries of the product are not
otherwise subject to suspension of liquidation as a result of another
segment of a proceeding, such as a circumvention inquiry under Sec.
351.226, the Secretary will direct the Customs Service to terminate the
suspension of liquidation and refund any cash deposits for such
entries.
(m) Applicability of covered merchandise determination; other
segments of the proceeding; companion orders--(1) Applicability of
covered merchandise determination. In conducting a covered merchandise
inquiry under this section, the Secretary shall consider, based on the
available record evidence, whether the covered merchandise
determination should be applied on a country-wide basis.
(2) Other segments of the proceeding. During the pendency of a
covered merchandise inquiry or upon issuance of a final covered
merchandise determination under paragraph (e)(2) of this section, the
Secretary may take any further action, as appropriate, with respect to
another segment of the proceeding. For example, if the Secretary
considers it appropriate, the Secretary may request information
concerning the product that is the subject of the covered merchandise
inquiry for purpose of an administrative review under Sec. 351.213.
(3) Companion antidumping and countervailing duty orders. If there
are companion antidumping and countervailing duty orders covering the
same merchandise from the same country of origin, and should the
Secretary determine to initiate a covered merchandise inquiry under
paragraph (b)(1) of this section, the Secretary will initiate and
conduct a single inquiry with respect to the merchandise at issue only
on the record of the antidumping duty proceeding. Once the Secretary
issues a final covered merchandise determination on the record of the
antidumping duty proceeding, the Secretary will include a copy of that
determination on the record of the countervailing duty proceeding, and
notify the Customs Service in accordance with paragraph (l) of this
section.
(n) Service list. Once the Secretary initiates a covered
merchandise inquiry under paragraph (b)(1) of this section, a segment-
specific service list will be established and the requirements of Sec.
351.303(f) will apply. Parties other than those relevant parties
identified by the Customs Service in the covered merchandise referral
that wish to participate in the covered merchandise inquiry must file
an entry of appearance in accordance with Sec. 351.103(d)(1).
(o) Suspended investigations; suspension agreements. The Secretary
may apply the procedures set forth in this section in determining
whether the elements necessary for a circumvention determination under
section 781 of the Act exist with respect to a suspended investigation
or a suspension agreement (see Sec. 351.208).
0
8. Add Sec. 351.228 to read as follows:
Sec. 351.228 Certification by importer or other interested party.
(a) Certification Requirements. The Secretary may determine in the
context of an antidumping or countervailing duty proceeding that an
importer or other interested party shall:
(1) Maintain a certification for entries of merchandise into the
customs territory of the United States; or
(2) Provide a certification by electronic means at the time of
entry or entry summary; or
(3) Otherwise demonstrate compliance with a certification
requirement as determined by the Secretary, in consultation with the
Customs Service. Where the certification is required to be maintained
by the importer or other interested party, the Secretary and/or the
Customs Service may require the importer or other interested party to
provide such a certification to the requesting agency upon request.
(b) Consequences For No Provision of a Certificate; Provision of a
False Certificate. The Secretary may instruct the Customs Service to
suspend liquidation of an importer's or other interested party's
entries and require the importer to post a cash deposit for the
antidumping duty or countervailing duty at the applicable rate if:
(1) The importer or other interested party has not provided to the
Secretary or the Customs Service, as appropriate,
[[Page 49504]]
the certification required under paragraph (a) of this section upon
request; or
(2) The importer or other interested party provided a certification
in accordance with paragraph (a) of this section, but the certification
contained materially false, fictitious or fraudulent statements or
representations, or contained material omissions. Under either of these
scenarios, the Secretary may also instruct the Customs Service to
assess an antidumping duty or countervailing duty at the applicable
rate at the time of liquidation or reliquidation of the entry.
0
9. Revise paragraph (d) of Sec. 351.305 to read as follows:
Sec. 351.305 Access to business proprietary information.
* * * * *
(d) Additional filing requirements for importers. If an applicant
represents a party claiming to be an interested party by virtue of
being an importer, then the applicant shall submit, along with the Form
ITA-367, documentary evidence demonstrating that during the applicable
period of investigation or period of review the interested party
imported subject merchandise. For a scope segment of a proceeding
pursuant to Sec. 351.225 or a circumvention segment of a proceeding
pursuant to Sec. 351.226, the applicant must present documentary
evidence that the interested party imported subject merchandise, or
that it has taken steps towards importing the merchandise subject to
the scope or circumvention inquiry. For a covered merchandise referral
segment of a proceeding pursuant to Sec. 351.227, an applicant
representing an interested party that has been identified by the
Customs Service as the importer in a covered merchandise referral is
exempt from the requirements of providing documentary evidence to
demonstrate that it is an importer for purposes of that segment of a
proceeding.
0
10. Revise paragraph (f)(2) of Sec. 351.402 to read as follows:
Sec. 351.402 Calculation of export price and constructed export
price; reimbursement of antidumping and countervailing duties.
* * * * *
(f) * * *
(2) Reimbursement Certification. (i) The importer must certify with
the Customs Service prior to liquidation whether the importer has or
has not been reimbursed or entered into any agreement or understanding
for the payment or for the refunding to the importer by the
manufacturer, producer, seller, or exporter for all or any part of the
antidumping and countervailing duties, as appropriate. Such
certifications should identify the commodity, the country, and the
relevant entry number(s).
(ii) The reimbursement certification may be filed either
electronically or in paper in accordance with the Customs Service's
requirements, as applicable.
(iii) If an importer does not provide its reimbursement
certification prior to liquidation, the Customs Service may accept the
reimbursement certification in accordance with its protest procedures
under 19 U.S.C. 1514.
(iv) Reimbursement certifications are applicable to entries for the
relevant commodity that has been imported on or after the date of
publication of the antidumping notice in the Federal Register that
first suspended liquidation in that proceeding.
* * * * *
[FR Doc. 2020-15283 Filed 8-12-20; 8:45 am]
BILLING CODE 3510-DS-P