Regulations Enhancing the Administration of the Antidumping and Countervailing Duty Trade Remedy Laws

Federal RegisterJul 12, 2024

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DEPARTMENT OF COMMERCE

International Trade Administration

19 CFR Part 351

[Docket No. 240703-0184]

RIN 0625-AB25

Regulations Enhancing the Administration of the Antidumping and Countervailing Duty Trade Remedy Laws

AGENCY:

Enforcement and Compliance, International Trade Administration, Department of Commerce.

ACTION:

Proposed rule; request for comments.

SUMMARY:

Pursuant to Title VII of the Tariff Act of 1930, as amended (the Act), the U.S. Department of Commerce (Commerce) proposes to update its trade remedy regulations to enhance the administration of the antidumping duty (AD) and countervailing duty (CVD) laws. Specifically, Commerce proposes to codify existing procedures and methodologies and create or revise regulatory provisions relating to several matters including the collection of cash deposits, application of antidumping rates in nonmarket economy proceedings, calculation of an all-others' rate, selection of examined respondents, and attribution of subsidies received by cross-owned input producers and utility providers to producers of subject merchandise.

DATES:

To be assured of consideration, written comments must be received no later than September 10, 2024.

ADDRESSES:

Submit electronic comments only through the Federal eRulemaking Portal at

https://www.Regulations.gov,

Docket No. ITA-2023-0003. Comments may also be submitted by mail or hand delivery/courier, addressed to Ryan Majerus, Deputy Assistant Secretary for Policy & Negotiations, Performing the Non-Exclusive Functions and Duties of the Assistant Secretary for Enforcement and Compliance, Room 18022, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230. An appointment must be made in advance with the Administrative Protective Order (APO)/Dockets Unit at (202) 482-4920 to submit comments in person by hand delivery or courier. All comments submitted during the comment period permitted by this document will be a matter of public record and will 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 the material be treated as confidential 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

ECCommunications@trade.gov

or to John Van Dyke, Import Policy Analyst, at

john.vandyke@trade.gov

. Inquiries may also be made of the E&C Communications office during business hours at (202) 482-0063.

FOR FURTHER INFORMATION CONTACT:

Scott D. McBride, Associate Deputy Chief Counsel for Trade Enforcement and Compliance, at (202) 482-6292, or Jesus Saenz, Attorney, at (202) 482-1823.

SUPPLEMENTARY INFORMATION:

General Background

Title VII of the Act vests Commerce with authority to administer the AD/CVD trade remedy laws. 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 U.S. International Trade Commission (ITC).

In addition, 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.

Section 771(5)(B) of the Act defines a countervailable subsidy 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 Act provides numerous disciplines which Commerce must follow in conducting AD and CVD proceedings. For example, sections 703(d)(1)(B), 705(d), 733(d)(1)(B), 735(c), and 751 of the Act direct Commerce to order U.S. Customs and Border Protection (CBP) to collect cash deposits as security pursuant to multiple determinations in its proceedings, until Commerce orders the assessment of AD or CVD duties. Likewise, sections 705(c)(1)(B), 705(c)(5), 735(c)(1)(B)(i), and 735(c)(5) of the Act set forth the means by which Commerce determines the AD margin or countervailable subsidy rate to be applied to imported subject merchandise exported or produced by entities not selected in an investigation for individual examination. In addition, sections 777A(c)(2) and 777A(e)(2)(A) of the Act allow Commerce to limit the number of exporters or producers to be individually examined, while section 782(a) allows Commerce to select voluntary respondents.

In accordance with these and other statutory provisions, this proposed rule codifies and enhances the procedures and practices applied by Commerce in administering and enforcing the AD and CVD laws.

Explanation of the Proposed Rule

Commerce proposes several updates to the AD and CVD regulations found at part 351.

The proposed changes are summarized here and discussed in greater detail below. Commerce invites comments on all proposed regulatory changes and clarifications, including suggestions to improve them.

Commerce's proposed rule seeks to codify several distinct procedures and practices under various sections of the Act. As such, Commerce generally intends the rule's provisions to be severable and to operate independently from each other. Commerce's intent that the rule's provisions be severable is demonstrated by the number of distinct regulatory provisions addressed in this rulemaking and the structure of the preamble in addressing them independently and supporting each, respectively, with Commerce's statutory interpretation, agency practice, and court precedent. Accordingly, Commerce intends each portion of this rule to be severable from each other but has included all of the proposed provisions in one rulemaking for purposes of enhancing Commerce's trade remedy regulations.

• Revise the Subpart A heading of part 351 to reflect the provisions to which it applies.

• Revise § 351.104(a)(7) to reflect that preliminary and final issues and decision memoranda issued in investigations and administrative

reviews before the implementation of Commerce's filing system, Antidumping Duty and Countervailing Duty Centralized Electronic Service System (ACCESS), may be cited in full in submissions before Commerce without placing the memoranda on the record.

• Revise § 351.107 to accurately and more holistically describe Commerce's establishment and application of cash deposit rates, including explaining that some cash deposit rates are calculated on an

ad valorem

basis at importation, while others are calculated on a per-unit basis. The proposed regulation would also describe situations in which Commerce applies cash deposit rates in a producer/exporter combination and the process by which a producer/exporter combination may be excluded from provisional measures and an AD or CVD order as a result of a calculated

de minimis

cash deposit rate following an investigation. Furthermore, the regulation would set forth an AD cash deposit hierarchy for imports from market economies, an AD cash deposit hierarchy for imports from nonmarket economies, and a CVD cash deposit hierarchy. Finally, revised § 351.107 would describe the effective date for cash deposit rates following the correction of ministerial errors in investigations and administrative reviews.

• Codify and update Commerce's methodology for determining if an entity exporting merchandise from a nonmarket economy should receive an antidumping duty rate separate from that of the nonmarket economy entity. New § 351.108 would provide that in a nonmarket economy, one dumping margin may apply to all exporting entities from that economy. It would explain that if an entity located in a nonmarket economy is majority-owned by the government, the government can control its production, management, sales and export activities and it will not receive a separate rate. It would also describe additional scenarios in which an entity in the nonmarket economy will not receive a separate rate if the government owns 50 percent or less of the entity's shares and (1) the government has a disproportionately larger degree of influence or control over the entity's production and commercial decisions than the ownership share would normally entail and the Secretary determines that the degree of influence or control is significant; (2) the government has the authority to veto or control the entity's production and commercial decisions; (3) government officials, employees or representatives have been appointed as officers and have the ability to make or influence production or commercial decisions; or (4) the entity is required by law to maintain or in fact maintains one or more government officials, employees, or representatives in positions of authority who have the ability to make or influence production or commercial decisions. Further, it would also codify Commerce's analysis for determining if an entity is

de jure

and

de facto

separate from the government for purposes of export determinations, including an additional consideration of whether the entity, regardless of government ownership, must maintain government officials, employees or representatives in positions of authority who have the ability to make or influence decisions on export activities. In addition, the proposed rule would allow for consideration of any other information on the record suggesting that the government has direct or indirect influence over the exporter's export activities. Finally, proposed § 351.108 would clarify the requirements for a separate rate application or certification and would suggest a revision to deadlines for separate rate applications of fourteen days following publication of the notice of initiation in the

Federal Register

• Add § 351.109 to address Commerce's methodologies for selecting respondents in investigations and administrative reviews, including the steps Commerce would take to determine the number of exporters or producers that is practicable to investigate or review for calculating the all-others rate in investigations and for calculating a rate for unexamined exporters and producers. This provision would allow for a single country-wide subsidy rate, provide a waiver from examination if both petitioners and the potential respondent agree to non-selection of that potential respondent, and clarify that a nonmarket economy entity rate is not the same thing as an all-others rate. In addition, § 351.109 would move the existing voluntary respondent provisions from § 351.204 to § 351.109 and update and revise the regulatory provisions applicable to the selection of voluntary respondents and deadlines for voluntary respondent submissions.

• Modify § 351.204 to move § 204(d)(1)-(3) to section 109 and move § 204(e)(1)-(3) to section 107. Further, update and simplify § 204(a) and (c), and move § 204(e)(4) to § 204(d), along with a new subheading for that paragraph and a new heading for section 204 itself.

• Modify § 351.212(b) to clarify that entries may be assessed either on an

ad valorem

value or per-unit basis.

• Modify § 351.213(f) to indicate that Commerce may select respondents, including voluntary respondents, in the context of an administrative review.

• Modify the header of § 351.214 to emphasize that the regulations cover both new shipper reviews and CVD expedited reviews, each derived from different statutory authorities.

• Modify § 351.301(b)(2) to require that interested parties submitting new information to rebut, clarify or correct factual information on the record must identify in writing the specific information being rebutted, clarified, or corrected and explain how the new factual information rebuts, clarifies or corrects that existing factual information.

• Modify § 351.301(c)(3) to revise the time in which surrogate value submissions in nonmarket economy country antidumping proceedings and benchmark information in countervailing duty proceedings may be submitted in investigations and administrative, new shipper, and changed circumstances reviews.

• Modify § 351.306(a)(3) to clarify that Commerce may share business proprietary information with CBP officials involved in negligence, gross negligence, or fraud investigations.

• Add paragraphs (g), (h), and (i) to § 351.308 to reflect that pursuant to section 776 of the Act, Commerce may apply partial or total facts available, may use previously calculated dumping margins and countervailable subsidy rates in separate segments of the same proceeding without the need to corroborate those margins or rates, may use the highest dumping margin available as adverse facts available, need not estimate what an antidumping or countervailing duty rate would have been if an entity had acted to the best of its ability, and need not consider the “commercial reality” of an interested party in applying adverse facts available.

• Revise § 351.309(c) and (d) to request that parties include a table of contents, sources such as tribunal decisions and administrative case determinations in the table of authorities, and a public executive summary of no more than 450 words for each discrete issue raised in case briefs and rebuttal briefs. This change would remove the encouraged inclusion of a five-page summary.

• Modify § 351.401(f) to reflect that Commerce may treat both producing and non-producing affiliated parties as a single collapsed entity.

• Add § 351.404(g) to address the filing requirements for those alleging the existence of a multinational corporation and to clarify that the multinational corporation provision will not be applied when the non-exporting country is located in a nonmarket economy.

• Add § 351.405(b)(3) to set forth the criteria Commerce would normally consider in selecting an amount of profit normally realized by exporters or producers in connection with the sale of same or similar merchandise in determining constructed value under the constructed value profit cap.

• Modify § 351.408(b) to update and enhance Commerce's selection of economically comparable countries as part of its nonmarket economy methodology in accordance with sections 773(c)(2)(B) and 773(c)(4)(A) of the Act. In addition to selecting a comparable economy based on

per capita

gross domestic product (GDP) or gross national income (GNI), Commerce could also consider factors including the size and composition of export activity in certain countries and the availability, accessibility, and quality of data from those countries as part of its analysis.

• Remove current § 351.502(d), (e), and (f) which state that integrally linked subsidies, agricultural subsidies and subsidies to small- and medium-sized businesses are not “specific” for purposes of determining the countervailability of a subsidy under the CVD law.

• Move § 351.502(g) covering disaster relief to § 351.502(d) and add that such relief includes pandemic relief.

• Amend § 351.502(e) to explain that subsidies that provide employment assistance to workers grouped in general categories (such as age, gender, and/or the existence of a disability, veterans, or unemployment status) will not be considered specific if those assistance programs are generally available to everyone hired within those categories without restrictions specific to individual industries.

• Remove § 351.502(f) and (g) entirely, as those provisions are no longer required with the other above-listed edits incorporated.

• Add § 351.503(b)(3) to address the general treatment of the balance or value of contingent liabilities/assets not otherwise covered in paragraph 503(a) as an interest-free provision of funds and calculate the benefit using a short-term commercial interest rate.

• Add § 351.505(a)(6)(iii) to provide an initiation standard for government-owned policy banks that would find the threshold for specificity met if a party can sufficiently allege that a policy bank provides loans pursuant to government policies or directives.

• Modify§ 351.505(b) to remove the term “otherwise” from the regulation to bring the language into conformity with other regulations addressing the treatment of long-term loans.

• Modify § 351.505(c) to remove paragraphs (c)(3) and (c)(4) and update paragraph (c)(2) to be the only provision addressing long-term loans. The benefit for long-term loans would be calculated by determining the difference between what a party would have paid on a comparable commercial loan and the actual amount the party paid on a government loan during a period of investigation (POI) or review (POR), and then allocating the benefit amount to the relevant sales during the POI or POR. Consistent with the language of section 771(5)(E) of the Act, remove sentences in current § 351.505(c)(1) and (c)(2) that state that the present value in the year of receipt of the loan should never be permitted to exceed the principal of the loan in our calculations.

• Consistent with section 771(5)(E) of the Act, modify § 351.505(e) to remove the sentence “[i]n no event may the present value (in the year of receipt of the contingent liability loan) of the amounts calculated under this paragraph exceed the principal of the loan.”

• Modify § 351.509, the regulation addressing direct taxes, to add a clause stating that the calculation of a benefit under § 351.509(a)(1) applies to firms located in an area designated by the government as being outside the customs territory of the government.

• Modify § 351.511(a)(2)(i) to provide for the comparison of a government price to either an actual transaction in the country in question or to “actual sales from competitively run government auctions” in determining a benchmark price under the definition of “adequate remuneration.” In addition to defining actual transaction prices, modified § 351.511(a)(2)(i) would also define “competitively run government auctions.”

• Complete § 351.512, applicable to the purchase of goods, which is currently reserved. New § 351.512(a)(1) would provide that in general, where goods are purchased by the government from a firm, a benefit will exist if the goods are purchased for more than adequate remuneration. Proposed § 512(a)(2) would define adequate remuneration for this provision, including an explanation that Commerce will use ex-factory or ex-works comparison prices and the price paid to the firm for the good by the government in order to measure the benefit conferred to the recipient. Proposed § 512(a)(3) would explain that when the government is both a provider and purchaser of a good, Commerce will normally measure the benefit by comparing the price the government sold the good to a firm with the price the government paid when purchasing the good from the same firm. Proposed § 512(b) would state that date of receipt of the benefit will be at the time of receipt of payment for the purchased good, and § 351.512(c) would address the time period in which Commerce would allocate the benefit for the purchase of a good.

• Remove reserved § 351.521 titled “Import substitution subsidy,” because no such regulation is necessary in light of the definition of an import substitution subsidy found in section 771(5A)(C) of the Act.

• Replace § 351.521 with a new regulation addressing export subsidies which exempt, remit, or defer indirect taxes and import charges on capital goods and equipment. Proposed § 521(a)(1) would address the benefits received through an export subsidy that provides for the full or partial exemption or remission of an indirect tax or an import charge on the purchase or import of capital goods and equipment. Proposed § 521(a)(2) would address the benefits received through a deferral of indirect taxes or import charges. Proposed § 521(b) would explain the time of receipt of the benefit in the case of full or partial exemptions or remissions of indirect taxes or import charges, as well as the time of receipt of deferral of indirect taxes or import charges. Finally, proposed § 351.521(c) would explain that Commerce will allocate the benefit of a full or partial exemption, remission, or deferral to the year in which the benefit is considered to have been received.

• Delete and reserve § 351.522, as it addresses green light and green box subsidies that lapsed pursuant to section 771(5B)(G) of the Act.

• Revise § 351.525(b)(6)(iii), which addresses the attribution of subsidies to holding companies and their subsidiaries. Specifically, this proposed rule would remove the second sentence of the provision in § 351.525(b)(6)(iii), which states that if a holding company merely served as a conduit for the transfer of the subsidy from the government to a subsidiary of the holding company, Commerce will attribute the subsidy to products sold by the subsidiary. The agency would remove this language because it is proposing to modify the language in the regulation addressing the transfer of subsidies from cross-owned companies

in new proposed § 351.525(b)(6)(vi) to state that a transferred subsidy will be solely attributed to the products produced by the recipient of the transferred subsidy. This modification would apply to all cross-owned companies, including holding or parent companies.

• Revise § 351.525(b)(6)(iv), which currently addresses the attribution of subsidies to input suppliers. The proposed rule would revise the subheading to apply to input producers and divide the paragraph into § 351.525(b)(6)(iv)(A) and § 351.525(b)(6)(iv)(B). Proposed § 525(b)(6)(iv)(A) would use language similar to the current provision, addressing input producers that supply a downstream producer. Proposed § 525(b)(6)(iv)(B) would list several factors that Commerce may consider in determining if an input product is primarily dedicated to the production of the downstream product.

• Move current § 351.525(b)(6)(vi), the definition of cross-ownership, to a new § 351.525(b)(6)(vii).

• Move current § 351.525(b)(6)(v), covering the transfer of subsidies between corporations with cross-ownership producing different products, to § 351.525(b)(6)(vi) and modify it to address the transfer of subsidies from any cross-owned corporation. Under this modification, a transferred subsidy from a cross-owned corporation would be attributed solely to products produced by the recipient of the transferred subsidy.

• Modify § 351.525(b)(6)(v) to cover the attribution of subsidies to cross-owned corporations providing electricity, natural gas or other similar utility products. The regulation would provide that Commerce will attribute subsidies received by a provider of utility products to the combined sales of the cross-owned producer and the sales of products sold by the producer of subject merchandise if at least one of two identified conditions are met.

• Add a new § 351.525(b)(8) to propose that Commerce would not tie or attribute subsidies on a plant- or factory-specific basis.

• Add a new § 351.525(b)(9) to propose that a subsidy normally would be determined to be “tied” to a product or market when the authority providing the subsidy was made aware of, or had knowledge of, the intended use of the subsidy and so acknowledged the intended use of the subsidy prior to, or concurrent with, the approval or bestowal of the subsidy.

• Revise language in § 351.525(b)(1) to reflect that the attribution regulations now extend to § 351.525(b)(9) and add a sentence that states that Commerce may limit the number of cross-owned companies examined under this provision if the facts on the record and available resources warrant such a limitation.

• Revise § 351.525(c), which addresses the attribution of subsidies to trading companies, to address the formula for cumulating subsidies, both when the trading company exports the individually examined respondent's merchandise and when the trading company is the individually examined respondent itself.

• Add § 351.525(d) to explain Commerce's adjustment of the

ad valorem

subsidy rate when a country is experiencing high inflation, which is defined for this provision as an inflation rate greater than 25 percent per annum during the relevant period.

• Replace current § 351.526, which is no longer relevant, with language codifying Commerce's practice with respect to subsidy extinguishment from changes in ownership. Proposed § 526(a) would explain that, in general, Commerce will presume that non-recurring subsidies continue to benefit a recipient in full over a particular allocation period notwithstanding an intervening change in ownership. Proposed § 526(b) would set forth the criteria by which an interested party may rebut the presumption of the continuation of a benefit in full over the relevant allocation period. Furthermore, proposed § 526(c) would explain that if the presumption is rebutted, the full amount of the benefits from subsidies preceding the change in ownership would be found to be extinguished, including the benefits of concurrent subsidies meeting the criteria set forth in § 351.526(c)(2).

• Update § 351.104(a)(2)(iii), § 351.214(1)(1), § 351.214(l)(3)(iii), § 351.301(c)(1), and § 351.302(d)(1)(ii) to correct for cross-citations modified as a result of this Proposed Rule.

1. Revising Subpart A Heading to Part 351 To Include the Record of Proceedings, Cash Deposits, Nonmarket Economy Antidumping Rates, All-Others Rate, and Respondent Selection

Currently, Subpart A to part 351, which covers §§ 101-107, is titled “Scope and Definitions,” although it also covers administrative record requirements and proceedings, as well as cash deposits. In this Proposed Rule, Commerce proposes the revision of the cash deposit regulation, as well as the creation of two new regulations which codify the agency's separate rates and respondent selection practice and procedures. Accordingly, Commerce proposes changing the name of Subheading A to “Scope, Definitions, the Record of Proceedings, Cash Deposits, Nonmarket Economy Antidumping Rates, All-Others Rate, and Respondent Selection.”

2. Revising Commerce's Filing Requirements To Allow Citation of Preliminary and Final Issues and Decision Memoranda Issued Before the Implementation of Commerce's ACCESS Filing System Without Placing Them on the Record—§ 351.104(a)(7)

On March 25, 2024, Commerce issued a final rule which provided clarity and procedures for interested parties submitting documentation to the agency, explaining which documents may be cited without placing documents from other segments and proceedings on the record and which documents must be placed on the record to be considered by Commerce in its analysis and determinations.

Those modifications added § 351.104(a)(7), which currently states that interested parties citing to public versions of documents which were issued by Commerce in other segments or proceedings before the implementation of ACCESS must place copies of those documents on the record because such documents have no assigned ACCESS barcode number.

See Regulations Improving and Strengthening the Enforcement of Trade Remedies Through the Administration of the Antidumping and Countervailing Duty Laws, Final Rule,

89 FR 20766, 20768-20773 (March 25, 2024).

Commerce has reconsidered the scope of public documents to which § 351.104(a)(7) applies and has determined that public preliminary and final issues and decision memoranda issued in investigations and administrative reviews pursuant to §§ 351.205, 210 and 213 before ACCESS was implemented need not be subject the requirements of that provision. Accordingly, this proposed rule would remove the requirement that such memoranda be placed on the record to be considered. Citations to these memoranda, like all such citations relied upon by interested parties in submissions to Commerce, must be cited in full (albeit without an ACCESS barcode number) and, as set forth in § 351.104(a)(6), if Commerce determines that a citation is not cited in full, it may decline to consider and analyze the cited preliminary or final issues and decision memoranda in its preliminary and final determinations.

3. Explaining Commerce's Cash Deposit Procedures and Calculations Including Producer/Exporter Combination Rates, AD/CVD Hierarchies, and Effective Dates for Ministerial Errors—§ 351.107

Sections 703(d)(1)(B), 705(d), 733(d)(1)(B), 735(c), and 751 of the Act provide Commerce with the statutory authority to determine cash deposit rates and order the suspension of liquidation and collection of cash deposits in antidumping and countervailing duty investigations and reviews. Specifically, sections 703(d)(1)(B) and 705(d) of the Act direct Commerce to determine cash deposit rates and issue instructions to CBP pursuant to preliminary and final determinations in CVD investigations, and sections 733(d)(1)(B) and 735(c) of the Act direct Commerce to determine cash deposit rates and issue instructions to CBP pursuant to preliminary and final determinations in AD investigations. With respect to section 751 of the Act, various provisions, such as sections 751(a)(1), 751(a)(2)(C), and 751(d), describe procedures by which Commerce instructs CBP to suspend liquidation of entries of merchandise, collect cash deposits, and revoke or terminate the collection of cash deposits pursuant to the results of different types of reviews. Commerce proposes a revision to § 351.107(a) that addresses Commerce's authority to take such actions under the Act.

Proposed § 351.107(b) would establish the general rule that Commerce will instruct CBP to suspend liquidation of merchandise subject to an AD or CVD proceeding and apply cash deposit rates determined in that proceeding to all applicable imported merchandise. Proposed § 351.107(b) would also establish that, in general, cash deposits should be calculated in proportion to the estimated value of the merchandise, as reported to CBP, on an

ad valorem

basis. This provision would be similar to the description of the final assessment of merchandise pursuant to AD and CVD proceedings on an

ad valorem

basis as already set forth in § 351.212(b).

In 1997, Commerce promulgated § 351.107 to provide guidance on the rules for calculating the cash deposit rate.

Since that rulemaking, Commerce has encountered several scenarios where the current § 351.107 did not provide guidance in applying a cash deposit rate or rates. For example, although the 1997 regulations provide for the assessment of entries on an

ad valorem

basis, the cash deposit regulations do not address the similar calculation of cash deposits. Over the years, relying on statutory and court guidance, Commerce developed various practices that are reflected in the proposed § 351.107 revision. Although Commerce normally instructs CBP to calculate cash deposits on an

ad valorem

basis, it has also at times instructed CBP to calculate cash deposit rates on a per-unit basis. Proposed § 351.107(c)(1) describes the exception to Commerce's normal

ad valorem

practice, stating that the calculation of cash deposits on a per-unit basis might be appropriate if the information normally used to calculate an

ad valorem

cash deposit rate is not available or the use of an

ad valorem

cash deposit rate is otherwise not appropriate. For example, it is Commerce's practice to calculate cash deposits on a per-unit basis when an

ad valorem

basis will result in an under-collection of duties.

See Antidumping Duties; Countervailing Duties, Final Rule,

62 FR 27296, 27318-19 (May 19, 1997) (

1997 Final Rule

) (discussing the finalized cash deposits regulation).

See Certain Activated Carbon from the People's Republic of China Final Results of Antidumping Duty Administrative Review; 2010-2011,

77 FR 67337, (November 9, 2012) and accompanying IDM (

Certain Activated Carbon from the People's Republic of China

IDM) at 34 (stating “the regulation, however, does not proscribe {Commerce} from resorting to other methods of calculating and assigning assessment and cash deposit rates, and the agency does so in certain circumstances . . . {Commerce} changed the cash deposit and assessment methodology from an ad valorem to a per-unit basis because the application of an ad valorem rate based on net U.S. price would yield an under-collection of duties due to Jacobi's undervaluing of its United States sales.”).

Accordingly, to ensure the proper calculation of the cash deposit rate, Commerce is codifying its practice of relying on reported unit measurements when relying on reported sales values would result in an inaccurate cash deposit rate because entered sales values are unknown, undervalued, or systematically understated.

The regulation explains that units to which a cash deposit rate may be applied include, but are not limited to, weight, length, volume, packaging (such as the type or size of packaging), and individual units of the product itself. Notably, the U.S. Court of International Trade (CIT) has affirmed Commerce's use of a per-unit methodology.

See id.; see also 1-Hydroxyethylidene-1, 1-Diphosphonic Acid from the People's Republic of China: Final Results of Antidumping Duty Administrative Review; 2016-2018,

84 FR 67925, (December 12, 2019) and accompanying IDM (

1-Hydroxyethylidene-1, 1-Diphosphonic Acid from the People's Republic of China

IDM) at Comment 5;

Wooden Bedroom Furniture from the People's Republic of China: Final Results and Final Rescission in Part,

75 FR 50992 (August 18, 2010), and accompanying IDM (

Wooden Bedroom Furniture from the People's Republic of China

IDM) at Comment 17; and

Honey from the People's Republic of China: Final Results and Final Rescission, In Part, of Antidumping Duty Administrative Review,

70 FR 38872 (July 6, 2005) and accompanying IDM (

Honey from the People's Republic of China

IDM) at Comment 7.

See Wuhan Bee Healthy Co.

United States,

Slip Op. 2008-61 at 12 (CIT May 8, 2008) (

Wuhan Bee

Commerce normally calculates a cash deposit rate applicable to all imported subject merchandise exported by an examined exporter or produced by an examined producer. Proposed § 351.107(c)(2) would provide an exception whereby Commerce may apply a cash deposit rate determined in the current or a preceding examination only to imported merchandise both produced by an identified producer and exported by an identified exporter in a producer/exporter combination rather than all the subject merchandise exported by an examined exporter or produced by an examined producer. Commerce's regulations already provide for the application of cash deposit rates to certain producer/exporter combinations in current § 351.107(b); however, unlike the newly proposed paragraph, the current regulation addresses only merchandise where the producer and exporter are not the same entity. The CIT has held that Commerce has “broad discretion to determine when and how to administer combination rates” in order to prevent the evasion of the calculated cash deposit rates.

Accordingly, Commerce proposes to revise and clarify the producer/exporter combination provisions in the regulation, including the example set forth in proposed § 351.107(c)(2)(i).

See Tianjin Magnesium Int'l Co.

United States,

772 F.Supp.2d 1322,1341 (CIT 2010) (stating, “Commerce has broad discretion to determine when and how to administer combination rates.”);

Lifestyle Enter., Inc.

United States,

768 F. Supp.2d. 1314 (CIT 2011) (stating “Commerce has a duty to prevent circumvention of AD law and may do so by imposing combination rates.”).

To provide even greater clarity on the application of producer/exporter combinations, § 351.107(c)(2)(ii)(A) through (D) sets forth four examples in which Commerce would instruct CBP to apply a determined cash deposit rate to a producer/exporter combination. Specifically, Commerce would instruct CBP to collect cash deposits for producer/exporter combinations in (1) new shipper reviews;

(2) AD

investigations of exporters or producers from a nonmarket economy;

(3) scope, circumvention, and covered merchandise inquiries when Commerce has made a determination on a producer/exporter combination basis;

and (4) any additional segments Commerce deems appropriate based on the facts of the record.

See, e.g.,

Certain Cut-to-Length Carbon-Quality Steel Plate Products From the Republic of Korea: Final Results of Antidumping Duty Administrative Review and New Shipper Review; 2014-2015,

81 FR 62712 (September 12, 2016), (“With respect to Hyundai Steel Company, the respondent in the new shipper review, the Department established a combination cash deposit rate for this company consistent with its practice, as follows . . .”).

See, e.g.,

Carbon and Certain Alloy Steel Wire Rod From the People's Republic of China: Final Determination of Sales at Less Than Fair Value and Final Affirmative Determination of Critical Circumstances, in Part,

79 FR 68860, 68861 (November 19, 2014) (“{Commerce} will instruct CBP to require a cash deposit equal to the weighted-average amount by which the normal value exceeds U.S. price, with the above-noted adjustments, as follows: (1) The rate for the exporter/producer combinations listed in the chart above will be the rate we have determined in this final determination.”).

See, e.g.,

Glycine from the People's Republic of China: Preliminary Partial Affirmative Determination of Circumvention of the Antidumping Duty Order and Initiation of Scope Inquiry,

77 FR 21532, 21535 (April 10, 2012).

For an example of an additional appropriate usage of combination rates, in

Tung Mung Development Co.

United States,

354 F. 3d 1371, 1380 (Fed. Cir. 2004),

affirming Tung Mung Development Co.

United States,

219 F. Supp. 2d 1333 (CIT 2002), the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) affirmed Commerce's use of a combination rate in addressing middleman dumping—a situation in which a foreign producer sold merchandise for less than normal value to a foreign exporter, and the foreign exporter subsequently sold the merchandise for even less than normal value to the United States.

In addition, under another exception to Commerce's normal application of cash deposit rates to all imported subject merchandise exported by an examined exporter or produced by an examined producer, when Commerce determines in an AD or CVD investigation that a respondent should be excluded from an AD or CVD order, it is Commerce's long-standing practice to instruct CBP to apply that exclusion on a producer/exporter combination basis. Sections 703(b)(4)(A) and 733(b)(3) of the Act provide that Commerce shall disregard any countervailable subsidy rate and any dumping margin, respectively, that is zero or

de minimis

in the preliminary determination. Moreover, sections 705(c)(2) and 735(c)(2) of the Act provide that Commerce shall “terminate” the investigation, suspension of liquidation, and collection of cash deposits for the investigated exporter or producer when Commerce makes a negative determination based on a zero or

de minimis

countervailable subsidy rate or dumping margin for that exporter or producer. In other words, when a zero or

de minimis

countervailable subsidy rate or dumping margin is calculated for an exporter or producer based on particular investigated producer/exporter transactions, Commerce's long-standing enforcement of the Act has been to exclude future imports of merchandise from the disciplines of the AD or CVD order using those same investigated producer/exporter combinations. Proposed § 351.107(c)(3) would codify Commerce's practice of excluding the producer/exporter combination or combinations examined in the investigation that satisfy those statutory requirements and identifying that combination or combinations publicly in the

Federal Register

See Common Alloy Aluminum Sheet from Italy: Final Affirmative Determination of Sales at Less Than Fair Value (LTFV),

86 FR 13309 (March 8, 2021) (stating that “because the estimated weighted-average dumping margin for Laminazione is zero, entries of shipments of subject merchandise produced and exported by this company will not be subject to suspension of liquidation or cash deposit requirements.”);

see also Common Alloy Aluminum Sheet from Bahrain, Brazil, Croatia, Egypt, Germany, India, Indonesia, Italy, Oman, Romania, Serbia, Slovenia, South Africa, Spain, Taiwan and the Republic of Turkey: Antidumping Duty Orders,

86 FR 22139, 22141 (April 27, 2021) (finding that “because the estimated weighted average dumping margin is zero for subject merchandise produced and exported by Laminazione Sottile S.p.A., entries of shipments of subject merchandise from this producer/exporter combination are excluded from the antidumping duty order on subject merchandise from Italy.”).

Commerce's current regulations address the exclusion of producers, exporters, and combinations of nonproducing exporters and producers in current § 351.204(e)(1)-(3). For purposes of clarity, Commerce proposes to move the paragraphs found in current § 351.204(e)(1) through (3) to proposed § 351.107(c)(3)(i) through (iii) and update the language and examples to better reflect Commerce's practices and procedures in applying a producer/exporter combination in exclusions from AD and CVD investigations and orders. Commerce proposes recognizing that in a preliminary determination, with respect to entries of subject merchandise for which a producer/exporter combination has been preliminarily determined to have an individual weighted-average dumping margin or individual net countervailable subsidy rate of zero or

de minimis,

as long as that producer/exporter combination is identified in the

Federal Register

, Commerce would not instruct CBP to suspend liquidation of entries of subject merchandise or collect cash deposits. Similarly, with respect to final determinations, proposed § 315.107(c)(3)(ii) states that (1) Commerce would instruct CBP to exclude a producer/exporter combination identified in the

Federal Register

from an AD or CVD order and (2) resellers of subject merchandise cannot benefit from an exclusion applicable to a producer/exporter combination determined in an investigation.

Commerce is also proposing the addition of a fourth paragraph to § 351.107(c) to address cash deposit instructions that require the use of a certification. Commerce added § 351.228 to the regulations in 2021 to require certifications by importers and other interested parties regarding whether merchandise is subject to an AD or CVD order.

In accordance with that provision, in certain instances certifications are required to accompany the payment of cash deposits. Proposed § 351.107(c)(4) would add a paragraph that states that the agency may instruct CBP to apply a cash deposit requirement that reflects the record information and effectuates the administration and purpose of the certification.

See Regulations to Improve Administration and Enforcement of Antidumping and Countervailing Duty Laws,

86 FR 52300, 52383 (Sept. 20, 2021).

See,

e.g.,

Certain Uncoated Paper From Brazil, the People's Republic of China, and Indonesia: Affirmative Final Determinations of Circumvention of the Antidumping Duty Orders and Countervailing Duty Orders for Certain Uncoated Paper Rolls, 86 FR 71025, 71027 (December 14, 2021) (“Commerce is continuing to impose a certification requirement . . . , in order to not be subject to cash deposit requirements, the importer is required to meet the certification and documentation requirements described in Appendix IV for merchandise from Brazil, Appendix VI for merchandise from China, and VII for merchandise from Indonesia.”).

Current § 351.107(c)(1) provides guidance for applying cash deposit rates where entry documents do not identify the producer of subject merchandise. That paragraph is no longer necessary under this proposed rule because proposed § 351.107(d) and (e) would set forth cash deposit hierarchies that provide more detailed guidance regarding the application of cash deposit rates. Specifically, the hierarchies set forth in proposed § 351.107(d) and (e) would address the situation in which a producer and exporter each have different AD or CVD cash deposit rates and CBP must determine the rate to apply in collecting cash deposits regarding a given entry of subject merchandise. When the entry documents do not identify a specific party (

i.e.,

a producer or exporter) in a step of the proposed cash deposit hierarchy, the subsequent step of the proposed cash deposit hierarchy would apply. When the entry documents do not identify any party for which the Secretary has established a current cash deposit rate, CBP would be instructed to apply the all-others rate or nonmarket economy entity rate to entries of the subject merchandise, pursuant to sections 705(c)(5) and 735(c) of the Act

and proposed § 351.108(b) and § 351.109(f) of Commerce's regulations. These provisions apply only when Commerce has not previously established a combination cash deposit rate for the producer and exporter in question under § 351.107(c)(2).

Commerce routinely articulates a cash deposit hierarchy for market and nonmarket antidumping proceedings in its determinations based on the factors listed in proposed § 351.107(d)

and proposes to codify the antidumping market and nonmarket cash deposit hierarchies under paragraphs (d)(1)(i) and (ii), respectively.

See, e.g.,

Methionine From Spain: Final Affirmative Determination of Sales at Less Than Fair Value and Final Affirmative Determination of Critical Circumstances,

86 FR 38985, 38986 (July 23, 2021) (“we will instruct CBP to require a cash deposit equal to the estimated weighted-average dumping margin or the estimated all-others rate, as follows: (1) The cash deposit rate for the respondent listed above will be equal to the company-specific estimated weighted-average dumping margin determined in this final determination; (2) if the exporter is not a respondent identified above, but the producer is, then the cash deposit rate will be equal to the company-specific estimated weighted-average dumping margin established for that producer of the subject merchandise; and (3) the cash deposit rate for all other producers and exporters will be equal to the all-others estimated weighted-average dumping margin.”) and

Glass Containers From the People's Republic of China: Final Affirmative Determination of Sales at Less Than Fair Value,

85 FR 58333, 58337 (September 18, 2020) (“Commerce will instruct CBP to require a cash deposit equal to the weighted-average amount by which the normal value exceeds U.S. price as follows: (1) The cash deposit rate for the exporter/producer combinations listed in the table above will be the rate identified in the table; (2) for all combinations of Chinese exporters/producers of subject merchandise that have not received their own separate rate, the cash deposit rate will be the cash deposit rate established for the China-wide entity; and (3) for all non-Chinese exporters of subject merchandise which have not received their own separate rate, the cash deposit rate will be the cash deposit rate applicable to the Chinese exporter/producer combination that supplied that non-Chinese exporter.”).

The antidumping duty order cash deposit hierarchy for a market economy proceeding proposed in § 351.107(d)(1)(i) includes three steps for determining the applicable cash deposit rate for a given entry of subject merchandise. Commerce would first determine if it has already determined a cash deposit rate for the exporter and, if so, instruct CBP to apply that cash deposit rate to the exporter's entries of subject merchandise. When such an exporter-specific cash deposit rate does not exist, proposed § 351.107(d)(1)(i)(B) would provide that if a cash deposit rate exists for the producer in question, Commerce would instruct CBP to apply that rate to the entries of subject merchandise at issue. If the first and second steps do not yield a result (

i.e.,

Commerce has not previously established a cash deposit rate for either the exporter or the producer of subject merchandise), under proposed § 351.107(d)(1)(i)(C) Commerce would instruct CBP to apply the all-others rate determined in the investigation of the underlying proceeding, pursuant to section 735(c) of the Act and proposed § 351.109(f), as the cash deposit rate for the entries of subject merchandise in question.

For proceedings involving a nonmarket economy country, proposed § 351.107(d)(1)(ii) would apply. First, under proposed § 351.107(d)(1)(ii)(A), if Commerce has already established a cash deposit rate for the exporter, such as in an investigation, the agency would instruct CBP to apply it to the entries of subject merchandise in question. If Commerce has not established a cash deposit rate for the exporter, pursuant to proposed § 351.107(d)(1)(ii)(B) Commerce would instruct CBP to apply the cash deposit established for the nonmarket economy entity pursuant to proposed § 351.108(a) to the entries at issue.

Next, proposed § 351.107(d)(1)(ii)(C) would addresses entries of subject merchandise resold in the United States through a third-country reseller under proceedings involving a nonmarket economy country. In that situation, Commerce would normally instruct CBP to apply the cash deposit rate applicable to either the nonmarket economy country exporter that supplied the subject merchandise to the reseller or to an applicable producer/exporter combination, as warranted.

Finally, proposed § 351.107(d)(2) would provide an exception to the two AD cash deposit hierarchies pursuant to which based on unique facts in an underlying proceeding. Commerce might determine that an alternative cash deposit rate (

i.e.,

a cash deposit rate not identified under proposed paragraph § 351.107(d)(1)) is the most appropriate cash deposit rate to apply to the entries in question, and accordingly instruct CBP to apply that alternative cash deposit rate.

In addition to the AD cash deposit hierarchies set forth in proposed § 351.107(d), proposed § 351.107(e) would establish a new CVD cash deposit hierarchy that applies when the producer and exporter in question have differing cash deposit rates. Under proposed § 351.107(e)(1)(i), when a cash deposit rate is established for both the producer and exporter of subject merchandise, Commerce would instruct CBP to apply the higher of the two rates for the entry of subject merchandise in question. If that step does not apply and a cash deposit rate exists for the producer but not the exporter of subject merchandise, Commerce would instruct CBP to apply the producer's cash deposit rate to the entries in question under proposed § 351.107(e)(1)(ii). If that step does not apply and a cash deposit rate exists for the exporter but not the producer of subject merchandise, Commerce would instruct CBP to apply the exporter's cash deposit rate to the entries of subject merchandise at issue under proposed § 351.107(e)(1)(iii). Finally, if none of those rates exist, Commerce would instruct CBP to apply the all-others rate determined in the investigation to the entries of subject merchandise at issue under proposed § 351.107(e)(1)(iv).

Just as with the AD cash deposit hierarchies' exception found in proposed § 351.107(d)(2), if Commerce determines that a cash deposit rate other than that resulting from the CVD cash deposit hierarchy should apply based on the unique facts in the underlying proceeding, then under proposed § 351.107(e)(2) Commerce might instruct CBP to use an alternative methodology in applying cash deposit rates to entries of subject merchandise.

Proposed § 351.107(f) would address effective dates for amended preliminary and final determinations and results of review upon the correction of a ministerial error, in accordance with sections 703, 705(e), 733, and 735(e) of the Act and § 351.224(e) through (g) of Commerce's regulations. When Commerce amends a preliminary or final determination in an investigation and the amendment increases the dumping margin or the countervailable subsidy rate, proposed § 351.107(f)(1) would provide that the new cash deposit rate would be applied to entries made on or after publication of the amended determination.

See Urea Ammonium Nitrate Solutions from the Republic of Trinidad and Tobago: Amended Preliminary Determination of Sales at Less Than Fair Value,

87 FR 12935, 12936 (March 8, 2022) (“Because these amended rates result in increased cash deposit rates, they will be effective on the date of publication of this notice in the

Federal Register

.”).

On the other hand, under proposed § 351.107(f)(2), when Commerce's amends a preliminary or final determination in an investigation and that amendment results in a decrease of the dumping margin or the countervailable subsidy rate, then the new cash deposit rate would be retroactive to the date of publication of the original preliminary or final determination, respectively.

See Raw Honey from Brazil: Amended Preliminary Determination of Sales at Less Than Fair Value,

86 FR 71614, 71615 (December 17, 2021) (“Because these amended rates result in

reduced cash deposit rates, they will be effective retroactively to . . . the date of publication of the Preliminary Determination.”).

Furthermore, under proposed § 351.107(f)(3), when Commerce amends the final results of an administrative review, the effective date of the amended cash deposit rate would be retroactive to entries following the date of publication of the original final results of review, regardless of whether the dumping margin or countervailable subsidy rate increases or decreases.

See Certain Carbon and Alloy Steel Cut-to Length Plate from Belgium; Amended Final Results of Antidumping Duty Administrative Review,

2018-2019, 86 FR 21274 (April 22, 2021) (“The following cash deposit requirements will be effective retroactively for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after March 24, 2021, the publication date of the

Final Results

of this administrative review.”).

In addition to amended cash deposit rates made pursuant to ministerial error corrections under paragraphs § 351.107(f)(1) through (3), Commerce may also make such amendments as a result of litigation when alleged or disputed ministerial errors are at issue. In those circumstances, as reflected in proposed § 351.107(f)(4), the effective date of the amended cash deposit rates may differ from those resulting from the application of § 351.107(f)(1) through (3). Furthermore, proposed § 351.107(f)(4) explains that the applicable effective date following litigation will normally be identified in a

Federal Register

notice. In most cases, in accordance with the statute, such amendments pursuant to litigation will be prospective in application.

4. Describing and Modifying Commerce's Separate Rates Practice and Procedures for Nonmarket Economy Country Antidumping Proceedings—§ 351.108

Section 771(18)(A) of the Act defines a nonmarket economy country as any foreign country which Commerce determines “does not operate on market principles of cost or pricing structures, so that sales of merchandise in such country do not reflect the fair value of the merchandise.” Further, section 771(18)(C)(i) of the Act states that “{a}ny determination that a foreign country is a nonmarket economy country shall remain in effect until revoked” by Commerce.

For over three decades, in antidumping proceedings involving nonmarket economy countries, Commerce has repeatedly determined that legally distinct entities are in a sufficiently close relationship to the government to be considered part of a single entity (

i.e.,

the government-controlled entity).

Reflecting that dynamic, current § 351.107(d) states that “{i}n an antidumping proceeding involving imports from a nonmarket economy country, `rates' may consist of a single dumping margin applicable to all exporters and producers.”

See Fine Denier Polyester Staple Fiber from the People's Republic of China: Preliminary Affirmative Determination of Sales at Less Than Fair Value, Postponement of Final Determination, and Extension of Provisional Measures,

83 FR 6335 (Jan 5, 2018), and accompanying Preliminary Decision Memorandum, dated December 18, 2017, at “Separate Rates” (

Polyester Staple Fiber from the PRC PDM

). For an example of a Commerce determination finding a country is a non-market economy,

see Antidumping Duty Investigation of Certain Aluminum Foil From the People's Republic of China: Affirmative Preliminary Determination of Sales at Less-Than-Fair Value and Postponement of Final Determination,

82 FR 50858, 50861 (November 2, 2017).

In the 1991

Sparklers from China

investigation,

Commerce established a separate rate test, which it further developed in a subsequent 1994 investigation on

Silicon Carbide from China.

Under the separate rate test, if an entity can demonstrate that the foreign government does not have either legal (

de jure

) control or control in fact (

de facto

) over the entity's export activities, it may receive a separate rate. Commerce's separate rate test has been affirmed as in accordance with law and otherwise acknowledged multiple times by the Federal Circuit.

See Final Determination of Sales at Less Than Fair Value: Sparklers from the People's Republic of China,

56 FR 20588, 20589 (May 6, 1991) (

Sparklers from China

See Notice of Final Determination of Sales at Less Than Fair Value: Silicon Carbide from the People's Republic of China,

59 FR 22585, 22586-22587 (May 2, 1994) (

Silicon Carbide from China

See Diamond Sawblades Mfrs. Coal.

United States,

866 F.3d 1304, 1310-11 (Fed. Cir. 2017);