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

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URL: https://www.frixlaw.com/law-library/documents/fr%3A2024-29245

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** December 16, 2024
- **Citation:** 89 FR 101694

## Text

DEPARTMENT OF COMMERCE
International Trade Administration
19 CFR Part 351
[Docket No. 241206-0317]
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:

Final rule.

SUMMARY:

Pursuant to Title VII of the Tariff Act of 1930, as amended (the Act), the U.S. Department of Commerce (Commerce) is amending its trade remedy regulations to enhance the administration of the antidumping duty (AD) and countervailing duty (CVD) laws. Specifically, Commerce is codifying existing procedures and methodologies and creating or revising regulatory provisions relating to several matters including the collection of cash deposits, indicators used in surrogate country selection, 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:

These amendments are effective January 15, 2025.

FOR FURTHER INFORMATION CONTACT:

Scott D. McBride, Associate Deputy Chief Counsel for Trade Enforcement and Compliance, at (202) 482-6292, Jesus Saenz, Senior Attorney, at (202) 482-1823, Ashlande Gelin, Attorney, at (202) 306-7302, or John Van Dyke, Import Policy Analyst, at
john.vandyke@trade.gov
.

SUPPLEMENTARY INFORMATION:

General Background

On July 12, 2024, Commerce proposed amendments to its existing regulations, 19 CFR part 351, to enhance the administration of the AD and CVD trade remedy laws, in “Regulations Enhancing the Administration of the Antidumping and Countervailing Duty Trade Remedy Laws,” published at 89 FR 57286 (July 12, 2024) (
Proposed Rule
). This final rule concerns the AD/CVD statutory and regulatory provisions in general, as well as those provisions pertaining to filing requirements; the application of cash deposits; the determination of separate rates for nonmarket economy entities; the calculation of rates for unexamined exporters and producers, including the all others rate; the selection of voluntary respondents; the assessment of AD and CVD rates on a per-unit basis; the submission of surrogate value, benchmark, and rebuttal information; the selection of facts otherwise available; the sharing with U.S. Customs and Border Protection (USCBP) of proprietary data for use in negligence and gross negligence investigations, in addition to investigations involving fraud; the collapsing of affiliated producers and non-producers, the application of the special rule for multinational corporations, the calculation of amounts for selling expenses and for profit for constructed value: and a series of CVD-specific provisions, which Commerce summarizes below.

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 USCBP to collect cash deposits as security pursuant to affirmative 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 final rule codifies and enhances the procedures and practices applied by Commerce in administering and enforcing the AD and CVD laws.

As Commerce explained throughout the preamble to the
Proposed Rule,
the purpose of these amendments is to help enhance and facilitate the administration of the AD and CVD regulations found at part 351.
1

The codification of Commerce practice in this final rule, as well as updates to certain regulatory provisions to reflect modifications made by Congress to the Act in 2015, will provide greater clarity and transparency to Commerce's procedures and calculations. In addition, Commerce has revised its methodology in nonmarket economy investigations and reviews to more effectively address situations in which a state-owned entity has less than majority state ownership but the state continues to control an entity through veto power or “golden shares.” It has furthermore updated the means by

which it selects economically comparable countries for purposes of determining normal value in nonmarket economy proceedings. Furthermore, Commerce has updated many of its CVD regulations to provide both clarity and transparency to Commerce's CVD methodology and to codify long-standing CVD policies. Finally, for the first time, Commerce has promulgated CVD regulations to address the government purchase of goods for more than adequate remuneration (MTAR) and the provision of rebates or exemptions of indirect taxes and import charges to exporters that purchase capital goods and equipment.

1
This final rule codifies 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 the proposed provisions in one rulemaking for purposes of enhancing Commerce's trade remedy regulations.

Explanation of Modifications From the Proposed Rule to the Final Rule and Responses to Comments

In the
Proposed Rule,
Commerce invited the public to submit comments.
2

Commerce received 27 submissions from interested parties providing comments, including domestic producers, exporters, importers, foreign governments, and foreign entities. The majority of commenters supported Commerce's proposed regulations and indicated that the new and revised regulations would increase transparency and enhance and improve the administration and enforcement of the AD and CVD laws. Some of the comments provided suggestions to further improve the regulations at issue, and Commerce considered the merits of each submission and analyzed the legal and policy arguments considering both past practice and Commerce's mandate to enhance and improve the administration of our AD and CVD laws. Pursuant to that analysis, Commerce has made certain modifications to the
Proposed Rule
in response to those submissions.

2

See Proposed Rule,
89 FR at 57286.

The preamble to the
Proposed Rule
provided background, analysis, and explanations which are relevant to these regulations. With some modifications, as noted, this final rule would codify regulations proposed on July 12, 2024. Accordingly, to the extent that parties wish to have a greater understanding of these regulations, Commerce encourages not only consideration of the preamble of these final regulations but also a review of the analysis and explanation in the preamble to the
Proposed Rule
.

In drafting this final rule, Commerce carefully considered each of the comments received and the following sections address the comments received. Each section contains a brief discussion of the regulatory provision(s), a summary of the comments Commerce received, and Commerce's response to those comments, including an explanation when Commerce modified its proposed regulations in response to those comments.

1. Commerce Has Made Small Modifications to Proposed § 351.104(a)(7), Which Addresses the Citation of Certain New Factual Information on the Record

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 from other segments and proceedings may be cited without placing such documents on the record and which documents must be placed on the record to be considered by Commerce in its analysis and determinations (
RISE Final Rule
).
3

Those modifications added § 351.104(a)(7), which states that interested parties citing public versions of documents issued by Commerce in other segments or proceedings before the implementation of Commerce's Antidumping Duty and Countervailing Duty Centralized Electronic Service System (ACCESS) (or that otherwise have no assigned ACCESS barcode number) must submit copies of those documents on the record.

3

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) (
RISE Final Rule
).

In the
Proposed Rule,
Commerce stated that it was reconsidering the scope of public documents to which § 351.104(a)(7) applies and proposed that public preliminary and final issues and decision memoranda issued in investigations and administrative reviews pursuant to §§ 351.205, 351.210, and 351.213 with no assigned ACCESS barcode number need not be subject to the requirements of that provision.
4

Commerce explained that citations to these memoranda, like all such citations relied upon by interested parties in submissions to Commerce, would still be required to be cited in full (albeit without an ACCESS barcode number).
5

Commerce also stated that, as set forth in § 351.104(a)(6), if Commerce determined that a citation was not provided in full, Commerce could decline to consider and analyze the cited decision memoranda in its preliminary and final determinations.
6

4

Id.

5

Id.

6

Id.

Commerce received five comments in response to the
Proposed Rule.
No commenter opposed allowing interested parties to cite preliminary and final issues and decision memoranda from other investigations and administrative reviews without ACCESS barcode numbers without also submitting those documents on the record of a segment of the proceeding. Accordingly, this final rule continues to allow parties to cite public documents that meet that description without submitting them on the record.

Two commenters suggested that Commerce modify the proposed regulation language to clarify that the exception being proposed under § 351.104(a)(7) applies to all investigation and administrative review preliminary and final issues and decision memoranda without an associated ACCESS barcode number and not just those which were issued “before the implementation of ACCESS.” Those commenters noted an inconsistency between the first and second sentences of the paragraph as proposed in that regard.

One commenter suggested that all investigation and administrative review preliminary and final determinations from other segments or proceedings are not “new factual information,” and therefore, the Secretary should state in the regulation that such memoranda are not subject to the timing and filing restrictions of the factual information regulation, § 351.301. The commenter stated that just because an ACCESS barcode number is missing does not mean that it should be treated as new factual information under § 351.301.

Other commenters took issue, fundamentally, with both § 351.104(a)(6) and (7), stating that Commerce should expand the list of documents that need not be submitted on the record, or need not include an ACCESS barcode number, to be cited without submitting them on the record. They stated that Commerce's allowance of an exception for just preliminary and final decision memoranda in investigations and administrative reviews and not similar decision memoranda in other segments of a proceeding is arbitrary and that there is no reason for Commerce to treat investigation and administrative review documents differently. Furthermore, they stated that by requiring that certain public Commerce documents, but not others, be submitted onto administrative records, Commerce would be prejudicing interested parties by preventing them from citing relevant Commerce practice and policies, especially once the time for the submission of new factual information on the administrative record has passed. Therefore, they advocated that

Commerce should either allow all public documents originating with Commerce from other segments or other proceedings to be cited without submitting them on the record, or that Commerce at minimum expand the list of documents which may be cited without submitting them on the record in § 351.104(a)(6).

Finally, two commenters stated that if Commerce continues to require that public Commerce documents listed in § 351.104(a)(6) or public Commerce documents without associated ACCESS barcode numbers be submitted on the record, Commerce should take into consideration that interested parties frequently wish to cite certain Commerce public documents from other segments or proceedings in response to Commerce's preliminary determinations, which are issued after the time for the submission of new factual information has passed. They stated that if the time for new factual information closes before Commerce issues its preliminary determination, there is no means by which those interested parties can adequately defend their interests by arguing in a brief or rebuttal brief that Commerce acted inconsistently in the preliminary determination from past cases. They stated that under that scenario, parties may not have been aware that a particular Commerce decision memorandum from another segment or proceeding was relevant until after the preliminary determination was issued. Those commenters, therefore, suggested that Commerce allow parties to submit documents listed in § 351.104(a)(6) or those without associated ACCESS barcode numbers as attachments in an appendix to case briefs and rebuttal briefs.

Response

Commerce has made two revisions to § 351.104(a)(7), as proposed. First, for purposes of § 351.104(a), when Commerce is describing documents issued by all agency employees, Commerce uses the general term “the Department” to describe the overall originator of those documents. This is true for § 351.104(a)(3) through (6) and should equally be used in § 351.104(a)(7). The term “Commerce” appeared in the proposed regulation language, but should say “the Department,” and Commerce has corrected for that error.

The second revision is in response to those commenters who pointed out that Commerce's first and second sentences in the provision were inconsistent. Section 351.104(a)(7) applies to all documents originating with Commerce with no associated ACCESS barcode numbers and not just those issued before the implementation of ACCESS. Accordingly, Commerce has revised the second sentence to make that sentence consistent with the first sentence, as requested by those commenters.

In response to the statements that Commerce's various decision memoranda are not factual information and should not be subject to the requirements of § 351.301, Commerce addressed this claim in the
RISE Final Rule,
7

explaining that collapsing determinations under § 351.401(f), for example, and calculation memoranda, are highly dependent on the case-specific facts that Commerce analyzes.
8

Commerce explained that although it agreed that “each collapsing and calculation memoranda is a legal analysis and decision by the agency, each of these memoranda also reflect conclusions based on the facts unique to the segment of the proceeding in which they were issued.”
9

Accordingly, each such document “contains factual information being introduced on the record of the ongoing segment or proceeding for the first time.”
10

Thus, Commerce disagrees with the statement that Commerce should state that the filing requirements of § 351.301 do not apply to Commerce-authored public decision memoranda from other segments or proceedings because such information is not allegedly new factual information on the record. In fact, such memoranda are unquestionably new factual information in the context of a separate segment or proceeding, and Commerce has not adopted that proposed change.

7

See RISE Final Rule,
89 FR at 20772.

8

Id.

9

Id.

10

Id.

As Commerce also explained in the
RISE Final Rule,
“the conduct of an administrative proceeding is a time-intensive, resource-intensive, and fact-intensive endeavor.”
11

Commerce implemented the ACCESS barcode requirement to make it easier, in part, for Commerce to retrieve the documents and consider them in reaching conclusions for preliminary and final determinations.
12

Therefore, allowing parties to cite documents in their submissions without those ACCESS barcode numbers present defeats the purpose of the requirement.

11

Id.

12

Id.,
89 FR at 20771.

However, Commerce also recognizes that interested parties have cited preliminary and final issues and decision memoranda in investigations and administrative reviews without including ACCESS barcode numbers for many years, and those four types of documents are by far the public Commerce decision documents most frequently cited by interested parties in their case briefs and rebuttal briefs. In addition, those documents are relatively less difficult for Commerce to find in legal resource services than many other types of documents listed in § 351.104(a)(6). Accordingly, Commerce has determined that despite the additional burden on the agency case teams to retrieve the cited documents, it is both fair and reasonable to allow interested parties to cite those four types of public documents from other segments or proceedings in submissions before the agency; especially those submissions issued when no ACCESS barcode was associated with those documents. Commerce has made no such determination with respect to other documents listed under § 351.104(a)(6) and therefore has not codified such a filing exception for those additional Commerce-authored documents.

With respect to the suggestion that Commerce should permit parties to submit documents listed in § 351.104(a)(6) for the first time on the record as appendices to case briefs and rebuttal briefs, for the reasons described below, Commerce does not agree that such a change to the agency's procedures and regulations is warranted or that failing to allow the submission of such documents late in a proceeding after the time for new factual information has passed unduly prejudices interested parties. These types of documents, such as collapsing memoranda and calculation memoranda, typically contain extensive case-specific business proprietary information. In the public versions of such memoranda, the business proprietary information can be redacted such that the detailed basis of Commerce's decision resulting from the underlying business proprietary data may not even be publicly discernable. Furthermore, to the extent that Commerce's analysis is discernable in the public version of the memorandum, that same public analysis should be reflected in a second location—Commerce's preliminary and final issues and decision memoranda. Commerce normally includes a public summary of its collapsing and calculation methodologies, for example, in its preliminary decision memoranda accompanying preliminary determinations or preliminary results published in the
Federal Register
. In

those memoranda, Commerce publicly describes its collapsing determinations and other major calculation issues raised by interested parties in their case and rebuttal briefs in all final decision memoranda accompanying final determinations or final results. It is in these public issues and decision memoranda that Commerce's methodologies can be clearly discerned in a public manner, without relying on case-specific business proprietary information attached to briefs or rebuttal briefs for the first time on the record, long after the time for submitting new factual information on the record has expired.

Under § 351.104(a)(6) and (7) as modified in this final rule, because interested parties can cite these public issues and decision memoranda from other segments or proceedings, including such memoranda without an associated ACCESS barcode number, to support their arguments in their case and rebuttal briefs, Commerce disagrees that the regulations, as amended, unduly prejudice interested parties as claimed by certain commenters. Instead, Commerce finds that § 351.104(a) reflects a reasonable balance that allows parties to defend their interests, while also allowing Commerce officials the ability to analyze and consider information on the record without forcing the officials to also assume the additional burden of (1) independently researching the records of other past segments and proceedings, (2) analyzing as part of that exercise the unique facts that were present in those segments or proceedings that resulted in the application of a particular methodology, analysis or calculation, and then (3) placing additional information derived from those segments or proceedings. on the record of the case before the agency. These regulations allow interested parties to cite many different documents and sources, including over 20 types of Commerce's public decision documents, without placing those documents on the record, but also make clear that interested parties have a responsibility to make certain that the public versions of the factual information which support their arguments from other segments or proceedings and not listed in the relevant provisions of the regulation must be timely submitted on the record to be considered by Commerce in making its determinations. Accordingly, Commerce has determined to make no further modifications to § 351.104(a)(7), other than the changes explained above.

2. Commerce Has Modified Proposed § 351.107 and Proposed § 351.212(b)(1), Which Cover Cash Deposits and Assessment of Duties, To Remove the Examples of Units Upon Which Cash Deposits and Assessment Rates May Be Applied

Commerce significantly revised and updated its cash deposit regulation in proposed § 351.107 to more accurately and holistically reflect Commerce's establishment and application of cash deposit rates.
13

Specifically, the revised regulation: (1) explains that while Commerce normally calculates cash deposit rates on an
ad valorem
basis, Commerce may calculate cash deposit rates on a per-unit basis; (2) describes 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; (3) sets 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; and (4) describes the effective date for cash deposit rates following the correction of ministerial errors in investigations and administrative reviews.

13

See Proposed Rule,
89 FR at 57290-93.

In addition, Commerce also revised its assessment regulation covering AD determinations, § 351.212(b)(1), by dividing it into two sections—one providing for the assessment of entries on an
ad valorem
basis and another providing that if the information normally used to calculate an
ad valorem
assessment rate is not available or the use of an
ad valorem
rate is otherwise not appropriate, Commerce may instruct USCBP to assess duties on a per-unit basis.
14

14

Id.,
89 FR at 57301.

Commerce received several comments supporting the proposed changes to § 351.107. One commenter supported the proposed rule as a welcome clarification to Commerce's cash deposit procedures and recognition of its authority to establish and tailor cash deposit rates to properly effectuate the AD/CVD law. That commenter specifically identified Commerce's proposed regulation as effectively codifying its authority to use combination producer/exporter cash deposit rates to address circumstances such as middleman dumping.

Another commenter specifically expressed support for proposed § 351.107(c)(1), which would codify an exception to Commerce's normal
ad valorem
practice where 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. The commenter further noted that Commerce's practice of using such alternate methodologies to calculate cash deposit rates results in more accurate duty calculations and codifying that practice would provide clear notice of this practice to interested parties.

A third commenter expressed support for the proposed regulation and suggested additional modifications to § 351.107(c)(1) and § 351.107 generally. Regarding § 351.107(c)(1), the commenter proposed that, given the often technical nature of the products subject to review, as well as scope and data issues related to the underlying calculations and entries, Commerce should clarify that draft instructions be accompanied by an explanation of (1) the basis for Commerce's conclusion that the relevant information to calculate an
ad valorem
rate is “not available” or the reason an
ad valorem
rate “is otherwise not appropriate” and (2) a detailed description as to how the per-unit basis is to be calculated, particularly in view of an AD/CVD order's scope. The commenter noted that such an explanation would allow parties to comment on any errors and Commerce to make any appropriate modifications before final instructions are issued.

Regarding the § 351.107 cash deposit regulation generally, the commenter proposed that Commerce explicitly require draft Customs instructions concerning cash deposit and assessment rates be placed on the record for comment at or near the time of the publication of the preliminary results to allow parties an opportunity to comment on the proposed calculations and rates as part of their administrative case briefs or, where Commerce is unable to issue draft instructions sufficiently in advance of the deadline for case briefs, Commerce establish an alternative process for submitting such comments. The commenter emphasized that Commerce should require that draft instructions be placed on the record for comment sufficiently in advance of the final results so parties may comment on those instructions and Commerce may address or respond to such comments as part of the final issues and decision memorandum or notice of final results.

One commenter expressed that while the proposed rule generally codifies Commerce's existing practice, Commerce should clarify its intent behind certain provisions. Regarding the proposed § 351.107(c)(4), which would provide that USCBP may, upon receiving instructions from Commerce, apply a cash deposit requirement that reflects the record information and effectuates the administration and purpose of a certification, the commenter noted that it appeared Commerce intended to codify only its current practice of instructing USCBP to collect cash deposits based on the implementation of a certification requirement pursuant to a circumvention determination and expressed that Commerce should confirm the scope of this provision.

That commenter also requested clarification regarding proposed § 351.107(d) and (e), which identify the hierarchies Commerce utilizes to determine the appropriate cash deposit rate for entries subject to AD/CVD investigations and orders. The commenter pointed out that the regulation states that Commerce may instruct USCBP to use an alternative methodology in applying cash deposit rates if Commerce determines that a cash deposit rate other than that resulting from the CVD cash deposit hierarchy should be applied based on the unique facts in the underlying proceeding. The commenter suggested that, if Commerce adopts the regulation as proposed, it should provide further information and examples of the types of unique circumstances that would warrant a different approach and the alternative approaches that could be used. The commenter further suggested that Commerce confirm that in such a circumstance, interested parties would be provided an opportunity to comment on any such instructions.

Commerce received only one comment on the proposed modifications to § 351.212(b)(1). The same commenter that proposed that Commerce should clarify that draft cash deposit instructions be accompanied by an explanation of: (1) the basis for Commerce's conclusion that the relevant information to calculate an
ad valorem
rate is “not available” or why an
ad valorem
rate “is otherwise not appropriate”; and (2) a detailed description as to how the per-unit basis is to be calculated, particularly in view of an AD/CVD order's scope, made the same request for assessment instructions. The commenter noted that just as such an explanation would allow parties to comment on any errors in Commerce's cash deposit instructions, so too could parties comment on any errors in Commerce's draft assessment instructions and allow Commerce to make any appropriate modifications before the final assessment instructions are issued.

Response

As noted above, all of the commenters on the revised § 351.107 approved of the significant modifications which Commerce made to the provision. Commerce agrees with the commenters that the new version of the regulation will provide substantially more guidance to the public on Commerce's application of cash deposit rates in the normal course of its proceedings.

With respect to additional suggestions, one commenter suggested that Commerce place draft cash deposit instructions to USCBP on the record at or near the time of the publication of the preliminary results on the record to allow interested parties an opportunity to comment on those draft instructions. Commerce has determined not to place this additional requirement in the regulation. However, Commerce agrees that it is Commerce's normal practice to share draft Customs instructions with interested parties and provide an opportunity to comment on them in most cases. In accordance with that practice, when appropriate, Commerce places draft Customs instructions on the record prior to issuance of the final results of a given segment of a proceeding with sufficient time for the parties to have an opportunity to comment on those instructions. However, there is no statutory obligation for Commerce to place draft Customs instructions on the record immediately after a preliminary agency decision has been issued, and sometimes, based on the facts on the record, it is either unnecessary for Commerce to issue draft instructions, or Commerce may be unable to issue draft instructions for a month's time or more after the agency's preliminary decision has been issued. Accordingly, Commerce has determined not to codify the commenter's suggestion into the regulation.

Nonetheless, Commerce acknowledges the importance of interested parties having the ability in most cases to consider draft Customs instructions and to identify any potential inaccuracies in a submission to Commerce before the final agency decision has been issued. Thus, Commerce recommends and encourages that if interested parties in a proceeding find that draft Customs instructions have not been placed on the record for a significant period of time after Commerce has issued its preliminary decision, those interested parties should request in writing that the agency place draft Customs instructions on the record while there is still sufficient time for parties to comment on them when they submit their case and rebuttal briefs on the record to Commerce in accordance with § 351.309(c) and (d).

Relatedly, with respect to the commenter's suggestion that Commerce provide an explanation and calculation when Commerce applies a cash deposit rate on a per-unit basis under proposed § 351.107(c)(1), as well as that same commenter's suggestion that Commerce provide the same explanation and calculation when Commerce determines an assessment rate on a per-unit basis under proposed § 351.212(b)(1)(ii), it is Commerce's practice to provide interested parties with an opportunity to comment on the calculation of cash deposit and assessment rates in disclosure packages uploaded to the record, and Commerce normally explains its cash deposit requirements in its
Federal Register
notices. However, the Act does not require that Commerce issue such a detailed disclosure in every case, and in fact there may be situations in which the issuance of such a disclosure is simply not necessary. Accordingly, Commerce has determined that it will not modify § 351.107(c)(1) or § 351.212(b)(1)(ii) to codify the issuance of disclosure packages regarding per-unit cash deposits in every case.

Commerce has, however, determined to modify those provisions as set forth in the
Proposed Rule
to remove the examples of units “to which a cash deposit rate may be applied” and “on which duties may be assessed.”
15

Commerce proposed those examples to provide greater clarity to the issue, but has determined that those examples may have instead been the source of some confusion. Accordingly, Commerce will continue to determine the appropriate units on which to apply cash deposits or assessment rates on a case-by-case basis and will forgo listing examples in the regulation.

15

Id.,
89 FR at 57323 and 57328.

In response to the comment that Commerce provide further information and examples of the types of unique circumstances that would warrant a different approach and the alternative approaches that could be used under the AD and CVD cash deposit hierarchies set forth in § 351.107(d) and (e), in the regulation, Commerce must emphasize that these exceptions to the cash deposit hierarchies will be highly dependent on the unique circumstances and facts of a

particular segment of a proceeding. Thus, it would be inappropriate for Commerce to provide examples in the regulation. However, if such a situation arises and Commerce is considering application of an alternative to the cash deposit hierarchy in a segment of the proceeding, consistent with its practice, Commerce anticipates that it would inform the interested parties of that possibility and provide interested parties with an opportunity to provide commentary on such an alternative approach.

Finally, Commerce does not agree with the comment that Commerce intended for proposed § 351.107(c)(4) to apply only to certifications issued pursuant to circumvention determinations under section 781 of the Act. Certifications issued under § 351.228 may be applied pursuant to circumvention determinations, of course, but Commerce may also instruct USCBP to use certifications, for example, in enforcing certain scope rulings, under § 351.225, and there are other situations in which Commerce may instruct USCBP to collect cash deposits in accordance with an importer or interested party certification. Accordingly, the language of proposed § 351.107(c)(4) is appropriately broad enough to cover all situations in which Commerce instructs USCBP to collect cash deposits in accordance with a certification issued under § 351.228 to effectively administer and enforce the AD and CVD laws.

3. Commerce Has Revised Proposed § 351.108, the Separate Rate Regulation, To Clarify Various Provisions and To Address Third Country Exporters of Subject Merchandise From Nonmarket Economies

In the
Proposed Rule,
Commerce proposed to codify its longstanding practice of granting a separate rate to exporters of merchandise from nonmarket economies in new § 351.108.
16

Commerce explained that its practice was in accordance with section 771(18)(A) of the Act, which defines a nonmarket economy country as a 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.”
17

Accordingly, as Commerce explained in the
Proposed Rule,
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). In this regard, current § 351.107(d) explicitly provides that in an “antidumping proceeding involving imports from a nonmarket economy country, `rates' may consist of a single dumping margin applicable to all exporters and producers.”

16

Id.,
89 FR at 57293.

17

Id.

Commerce explained in the
Proposed Rule
that it applies a separate rate test in antidumping proceedings involving a nonmarket economy. Under this test, Commerce considers whether an entity can demonstrate that the foreign nonmarket economy government does not have either legal (
de jure
) control or control in fact (
de facto
) over the entity's export activities.
18

Commerce explained that over the past decade, Commerce has modified its practice to conclude that when a government holds a majority ownership share, either directly or indirectly, in a respondent exporting entity located in a nonmarket economy, the majority holding in and of itself demonstrates that the government exercises, or has the potential to exercise, control over the entity's operations generally.
19

Commerce further explained that it was also proposing to strengthen its separate rate practice to address additional real-world factors through which a foreign government can control or influence production decisions, pricing and sales decisions, and export behavior.
20

Commerce's practice in this regard has been affirmed in multiple cases by the U.S. Court of Appeals for the Federal Circuit (Federal Circuit).
21

18

Id.,
89 FR at 57293.

19

Id.

20

Id.

21

See., e.g., Sigma Corp.
v.
United States,
117 F. 3d 1401, 1405 (Fed. Cir. 1997) (
Sigma
v.
United States
);
Transcom, Inc.
v.
United States,
182 F. 3d 876, 882 (Fed. Cir. 1999) (
Transcom
v.
United States
);
Michaels Stores, Inc.
v.
United States,
776 F.3d 1388, 1390 (Fed. Cir. 2014) (
Michaels
v.
United States
); and
Changzhou Wujin Fine Chem. Factory Co.
v.
United States,
701 F.3d 1367, 1370 (Fed. Cir. 2012) (
Changzhou
v.
United States
).

Commerce received several comments on proposed § 351.108. Numerous commenters indicated their approval for Commerce's separate rate practice and its codification of that practice in its regulations, including its modification of that practice to deny the application of a separate rate when a nonmarket economy government has less than a majority ownership in a company but other indicia exist in conjunction with that (minority) ownership to indicate that the government controls or can control relevant decisions of the company.

Certain commenters identified concerns involving certain aspects of the proposed separate rate regulation. In particular, several commenters expressed concerns that the regulation did not address situations in which a company owned in whole or in part by the nonmarket economy government but located in a market economy other than the United States, exports merchandise from the non-market economy to the United States. One commenter stated that if the final regulations did not address situations in which a company incorporated in a market economy country exports merchandise from a nonmarket economy to the United States, the lack of such guidance could have a negative impact on U.S. import businesses seeking to comply with U.S. trade laws. That commenter stated that by remaining silent on those scenarios, Commerce's proposed regulations discourage the filing of separate rate applications in the first place by third-country exporters of merchandise from nonmarket economies. That commenter also suggested that Commerce should additionally consider addressing Commerce's practice when merchandise is substantially transformed in a third country before exportation to the United States, as well as other situations which might arise in a complex supply chain in the third country with regard to merchandise from the nonmarket economy.

Another commenter recommended that Commerce clarify that the separate rate test applies to all exporters, whether the exporter is located in the nonmarket economy or a market economy other than the United States, because the focus of the statute is on the merchandise produced or exported from the nonmarket economy and not the geographic location of the exporter. That commenter stated that regardless of whether exporters are located in Hong Kong, Toronto, or Shanghai, if the merchandise is exported from a nonmarket economy to the United States, there is no reason to treat any of those exporters differently with regard to the application of the separate rate test, especially if the nonmarket economy government has any ownership interest in those exporters. That commenter stated that under Commerce's proposed regulation there is a significant risk that entities affiliated with the nonmarket economy government exporting merchandise from the nonmarket economy and sold to the United States could be treated differently solely because of whether the entities are physically located within or outside of the nonmarket economy.

Another commenter acknowledged that governments of certain nonmarket economies, including the People's Republic of China (China), have recently established corporate footholds and export platforms in third country market economies, resulting in a significant increase in circumvention and evasion inquiries conducted by Commerce and USCBP. The commenter stated that Commerce's proposed regulation “contains a significant loophole” in not addressing exporters of nonmarket economy merchandise that are located in third countries and stated that Commerce “should not voluntarily limit its ability to remedy control over a firm's export activities exercised by the government of a nonmarket economy solely based on geography.” Citing a separate rates policy bulletin issued by Commerce in 2005, the commenter explained that if a company physically located in a market economy country is owned or otherwise controlled by the nonmarket economy government, then that government could still be in a position to control the export activities of the company, which it asserted is the precise “situation that the separate rate test is intended to address.”
22

22
Citing Policy Bulletin 05.1,
Separate-Rates Practice and Application of Combination Rates in Antidumping Investigations Involving Non-Market Economy Countries
(April 5, 2005), available on Commerce's ACCESS website at
https://access.trade.gov/Resources/policy/bull04-1.html
.

In addition, a few commenters expressed concerns with Commerce's separate rate exception codified in proposed § 351.108(c) for entities wholly owned by market economy entities and incorporated and headquartered in a market economy. One commenter stated that Commerce failed to take into consideration in the proposed regulation that a nonmarket economy government might exercise control through various ownership interests or other means. That commenter advocated removing the exception from the proposed regulations altogether.

Similarly, another commenter identified concerns with the same language in proposed § 351.108(c), suggesting that Commerce should include an “ultimate ownership” analysis in the regulation looking beyond “one level of corporate control” to upstream shareholders and corporate owners to determine if the nonmarket economy government, including through the use of state-owned enterprises, might be situated in such a way as to evade Commerce's separate rate analysis.

A third commenter suggested that Commerce add language to the provision that would allow Commerce to deny the application of the exception if there was evidence on the record suggesting that the company is otherwise controlled by the nonmarket economy government.

A fourth commenter expressed concerns that the exception might allow for “indirect” ownership of an exporter of nonmarket economy merchandise, which “could be exploited by government-controlled” nonmarket economy entities “attempting to obscure their status by routing ownership through one or more foreign holding companies with some operations in a market economy country.” Therefore, that commenter recommended that Commerce add the terms “directly and indirectly” before the descriptor “wholly owned” in § 351.108(c).

Two commenters stated that they disagreed with Commerce's proposed requirement in § 351.108(d)(1), (2), and (3) that separate rate applications and certifications be filed no later than 14 days following publication in the
Federal Register
of a notice of initiation, stating that Commerce's current practice of 30 days was preferrable. In the
Proposed Rule,
Commerce explained that “the thirty-day deadline delays Commerce from selecting respondents in its nonmarket economy proceedings because Commerce cannot select respondents for individual examination in its nonmarket economy proceedings until it first determines the pool of exporters who have satisfied the separate rate analysis.”
23

One commenter stated that it disagreed with Commerce's conclusion, stating that the thirty-day requirement does not affect the selection of mandatory respondents because it claimed that Commerce's practice is to choose the largest exporters based on quantity and value questionnaires and that if a company is selected as a mandatory respondent, Commerce can gather the information it needs for a separate rate analysis from the mandatory respondent's section A questionnaire response. In addition, that commenter stated that gathering necessary information to complete a separate rate application, in particular, is a difficult task, because many exporters may have never participated in an antidumping proceeding before, many companies have intermediate shareholders who may be initially unwilling to report their ownership, and the proposed regulations suggest that new information might be requested of exporters in the future which might take even more time to collect, report, and support with documentation.

23

See Proposed Rule,
89 FR at 57296.

A second commenter that disagreed with the fourteen-day deadline focused on the hardship which that truncated deadline would have on United States small businesses and, in particular, importers. The commenter explained that many United States importers are caught by surprise in antidumping investigations and have less-sophisticated operations than larger importers, and it may take a lengthy amount of time after a petition in an investigation has been filed to identify smaller importers as interested parties. In addition, the commenter explained that once those smaller importers realize that they are interested parties, it can take some time for them to retain legal counsel, fully understand the impact of antidumping and countervailing duties on their business, identify relevant products covered by an investigation being imported, and identify their upstream producers and exporters that are ultimately responsible for completing the separate rate application. Even after they identify those producers and exporters, the commenter explained that communicating with those parties and inducing them to file a timely separate rate application also takes time. That commenter stated that this “significant change” would be “likely to disproportionately and negatively impact small U.S. businesses.” Therefore, considering the financial impact of such a change on U.S. importers and numerous steps which U.S. importers would have to take under the proposed fourteen-day deadline, that commenter stated that Commerce should retain the thirty-day deadline.

One commenter indicated its support for the fourteen-day deadline, stating that it should not create any hardship for companies wishing to submit a separate rate application or certification. That commenter stated that the applications and certifications are available on Commerce's website, and all importers, producers, and exporters should be aware after the petition is filed in investigations, (before initiation of the investigation), or after a review request is filed in reviews, that they are subject to an antidumping proceeding. That commenter agreed with Commerce that the new deadline would help prevent delays in nonmarket economy investigations or reviews because it allows Commerce to select respondents for individual examination earlier in the proceeding.

In addition, Commerce received several suggestions from commenters for smaller modifications to proposed

§ 351.108 to improve the regulations. One commenter recommended that Commerce make the following modifications: Remove the term “the lack of” in the header language for proposed § 351.108(b)(3) because the criteria listed in that section actually indicate
de facto
control; remove the word “no” in proposed § 351.108(b)(3)(vi) because, again, that provision speaks to evidence of
de facto
control or influence; remove the word “must” in § 351.108(b)(3)(i) and add the term “or must maintain” because the described situation covers both existing and required maintenance of certain government representatives in positions of control; include the term “or managers” following the term “officers” throughout the regulation because both officers and managers can influence corporate decisions; and when addressing situations in which representative of the governments may, in fact, be placed in positions of leadership or power in a company, Commerce should include the term “or their family members,” because Commerce has a long-standing practice of recognizing that family members and family groupings may share a common business interest and authority.
24

24
That commenter cited
Jinko Solar Co.
v.
United States,
279 F. Supp. 3d 1253, 1260 (CIT 2017), and
Echjay Forgings Priv. Ltd.
v.
United States
, 475 F. Supp.3d 1350, 1366 (CIT 2020), for cases affirming Commerce's determinations that family members can share a common interest with a business.

Another commenter suggested that Commerce revise the regulation to better clarify that the agency, and not the separate rate applicants or certifiers, must be satisfied that the applications or certifiers have shown that the degree of government control or influence is not significant and to emphasize that the applicants or certifiers have the sole responsibility to provide proof of lack of government control or influence. That commenter also suggested that Commerce include “government-appointed or controlled labor unions” in the regulation as types of governing authorities through which the nonmarket economy government may exert control or influence, because Commerce has indicated in the past that such unions are under the “control and direction of the All-China Federation of Trade Unions (ACFTU),” which is affiliated with the Chinese government and an organ of the Communist Party of China.
25

25
That commenter cited a memorandum drafted by Commerce,
“Memorandum on China's Status as a Non-Market Economy,”
dated October. 26, 2017, available at
https://enforcement.trade.gov/download/prc-nme-status/prc-nme-review-final-103017.pdf
.

Finally, one commenter expressed concerns with proposed § 351.108(e), which states that entities that submit separate rate applications or certifications and are subsequently selected to be an examined respondent in an investigation or review must fully respond to Commerce's questionnaires to be eligible for separate rate status. That commenter stated that Commerce should not adopt the proposed provision and not “automatically deem companies that failed to respond to all questionnaires as part” of the nonmarket economy entity. The commenter stated that a failure to respond to all questionnaires would justify the application of adverse facts available, pursuant to section 776(a) and (b) of the Act, but would not necessarily justify the refusal of a grant of separate rate eligibility. That commenter stated that treating individually examined respondents differently from non-selected exporters in this manner would create an “arbitrary distinction” and would result in Commerce not considering “the rate assigned” to an examined respondent in “calculating the separate rate” if the examined respondent was “deemed to be part” of the nonmarket economy entity. The commenter stated that such a practice would create a “significant incentive for manipulation by exporters and permit separate rate companies to potentially benefit from lower rates, notwithstanding the selected respondent's deemed representativeness of the non-individually examined companies.” The commenter explained that under this situation, parties with no intent to fully participate or that anticipate substantial dumping margins would be incentivized to submit a separate rate application or certification and, once selected as an examined respondent, could withdraw from participation as a means of manipulating the rate applied to the non-selected separate rate companies.

Response

Commerce has made certain modifications to proposed § 351.108 in light of the comments it received on the proposed regulation. With respect to the concerns expressed by multiple commenters as to third country exporters, Commerce respectfully disagrees with the commenters who stated that there is no difference for purposes of Commerce's separate rate practice between exporters of subject merchandise owned, in whole or in part, by a nonmarket economy government located in the nonmarket economy and those exporters located in a third country.

When an entity is physically located in a nonmarket economy, there are multiple means by which the nonmarket economy government may, directly or indirectly, influence and control the entity. In the Act, Congress instructed Commerce to take into account at least six factors in determining if a country is a nonmarket economy: (i) the extent to which the currency of the foreign country is convertible into the currency of other countries; (ii) the extent to which wage rates in the foreign country are determined by free bargaining between labor and management; (iii) the extent to which joint ventures or other investments by firms of other foreign countries are permitted in the foreign country; (iv) the extent of government ownership or control of the means of production; (v) the extent of government control over the allocation of resources and over the price and output decisions; and (vi) such other factors as the administering authority considers appropriate.
26

Some of those factors are specific to the nonmarket economy government's ownership and control of the producers and exporters of the subject merchandise, but other factors reflect the nature of the nonmarket economy itself.
27

As Commerce has explained, its practice is focused on “the government's use of a variety of legal and administrative levers to exert influence and control (both direct and indirect) over the assembly of economic factors across the economy.”
28

26

See
section 771(18)(B) of the Act.

27
In 1997, the Federal Circuit in
Sigma
v.
United States
recognized that the Act “recognizes a close correlation between a nonmarket economy and government control of prices, output decisions, and the allocation of resources.”
Sigma
v.
United States,
117 F.3d at 1405-1406.

28

See Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, From the People's Republic of China: Final Results of Antidumping Duty Administrative Review and Final Determination of No Shipments;
2012-2013, 80 FR 40998 (July 14, 2015), and accompanying Issues and Decision Memorandum at Comment 42.

As noted above, Commerce has recognized in multiple cases the ability of the nonmarket economy government to influence or control production decisions, commercial decisions, or export activities within the nonmarket economy, even when such influence or control is applied through multiple entities and organizational relationships, and the Federal Circuit has affirmed such findings.
29

The nonmarket economy government might control one producer directly, through a government agency or a state-owned

enterprise, while indirectly influencing another producer through privately-owned companies over which the nonmarket economy has ownership interests or governing authority.

29

See., e.g., Sigma
v.
United States
117 F.3d at 1405;
Transcom
v.
United States,
182 F. 3d 876, 882;
Michaels Stores
v.
United States,
776 F.3d 1388, 1390; and
Changzhou
v.
United States,
701 F.3d 1367, 1370.

However, when an exporting entity is physically located outside of the nonmarket economy at issue, some of those conclusions may not equally apply. In other words, the nonmarket economy government's “legal and administrative levers” in the nonmarket economy that impact certain activities may differ from that government's “legal and administrative levers” in a third country where that government is not the legal authority. At the same time, Commerce recognizes that a nonmarket economy government can, depending on the specific circumstances, continue to exert substantial influence over the export activities of state-owned firms incorporated in third countries. For example, direct ownership of an exporter by a nonmarket economy government or state-owned enterprise could imply control over the selection of management of the exporter under the governing corporate agreements or inform the extent to which that exporter retains the proceeds of its export sales or repatriates them to the nonmarket economy parent.

Accordingly, whether the exporting entity is located in a market economy or a different nonmarket economy is a factor that can be relevant to the analysis of whether a third country exporter is owned or potentially controlled by the nonmarket economy government.

The focus of the separate rate test is “if a respondent can demonstrate the absence of both
de jure
and
de facto
government control over its export activities.”
30

The ultimate question under the separate rate test is whether the nonmarket economy government has influence or control over important decisions of the entity, like the “selection of management,” which would be “key” in “determining whether a company has sufficient independence in its export activities to merit a separate rate.”
31

30

See Polyester Textured Yarn 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,
84 FR 31297 (July 1, 2019), and accompanying Preliminary Decision Memorandum at “Separate Rates.”

31

Id.

In the case of an entity located in a third country that exports merchandise subject to an investigation or AD/CVD order and originating from the nonmarket economy, the subject merchandise might be exported directly to the United States from the nonmarket economy. Alternatively, the subject merchandise might be exported to a third country, either the one where the entity is located or another third country, where it is held in a warehouse, stored in inventory or otherwise retained for a period of time, before it is eventually exported to the United States at a later date. A third option might be that the subject merchandise undergoes some minor processing in a third country, like the painting or marking of a product, without changing the country of origin of the merchandise. In all of these potential situations, unless record evidence demonstrates that the company is wholly owned by a foreign entity and is incorporated and headquartered in a market economy, in accordance with § 351.108(c), Commerce requires a separate rate application or certification from that entity.
32

This is because it is Commerce's experience that entities in third countries that export merchandise from the nonmarket economy to the United States commonly are owned, in part or in whole, by the nonmarket economy government through the government's agencies or state-owned enterprises.
33

Additionally, based on experience, there is a strong possibility that through that ownership relationship the nonmarket economy government might control or influence the entity's export activities and decisions with respect to the merchandise being exported from the nonmarket economy. Such control might arise, for example, through the appointment of officers, managers, and the board of directors, but could also manifest through veto power or the use of “golden shares” and outsized voting rights within the company. Every company is unique, so a state-owned enterprise or other government-controlled entity might equally be able to direct or influence export-related decisions of a third country company based on the unique nature of its ownership share.

32

See
Commerce's Separate Rate Application at 3, available at
https://access.trade.gov/Resources/nme/sep-rate-files/app-20190221/prc-sr-app-022119.pdf.

33

See, e.g., Chinese Firms are expanding in South-Asia,
The Economist, dated April 24, 2024, available at
https://economist.com/asia/2024/04/25/chinese-firms-are-expanding-in-south-east-asia.

On the other hand, because the nonmarket economy government may not have the same legal and administrative levers in the third country which it has in the subject country, the exercise of ownership and control of the entity in the third country by the nonmarket economy government may differ. Accordingly, after consideration of the comments, Commerce has modified paragraph (a) of § 351.108 to add a paragraph (a)(3) which states that if a nonmarket economy government has direct ownership or control, in whole or in part, of an entity located in a third country market and that entity exports subject merchandise from the nonmarket economy to the United States, Commerce may determine on the basis of record information that such an entity is part of the government-controlled entity and assign that entity the nonmarket economy entity rate.

Furthermore, Commerce has modified § 351.108(b) and divided it into two provisions. Pursuant to paragraph (b)(1), Commerce will apply an updated separate rate test and analysis to entities located in nonmarket economies, as set forth in the
Proposed Rule,
and pursuant to paragraph (b)(2), Commerce may analyze an entity directly owned or controlled by a nonmarket economy government and located in a third country and determine based on record information if that third country exporter should be treated as part of the nonmarket economy entity and receive the nonmarket economy entity rate or if it should be granted a separate antidumping duty rate. This language is consistent with Commerce's historical analysis and treatment of entities located in nonmarket economies and allows for Commerce to consider the legal and administrative levers present in third countries that might allow for the control of an entity that exports subject merchandise to the United States and is owned, in part or in whole, by the nonmarket economy government.
34

34

See, De Facto Criteria for Establishing a Separate Rate in Antidumping Proceedings Involving Nonmarket Economy Countries,
78 FR 40430, 40432 (July 5, 2013) (“We agree that there is a legitimate concern that NME producers under government control selling through affiliated third-country resellers may, in fact, control that reseller and, in such cases, the reseller's exporting activities would also be under government control”) and (“In circumstances when the record indicates there may be government control through the NME producer, we may require both the NME producer and the ME exporter to provide” separate rate
de jure
and
de facto
information).

In response to the comments on proposed § 351.108(c), Commerce has clarified the language of the provision to explain that, in accordance with our current practice, if an entity claims that it is wholly owned by a foreign entity and headquartered and incorporated in a market economy, it must complete and submit relevant, designated sections of the separate rate application or

certification explaining as much and provide accompanying information on the record that supports such a claim.
35

Furthermore, Commerce has modified the language of § 351.108(d) to explain that all exporters of subject merchandise to the United States, even those claiming the “wholly owned” exception applies, must submit a separate rate application or certification, with the only difference being those claiming that the “wholly owned” exception need only complete a section of the application or certification explicitly designated for that purpose by Commerce.

35

See
Commerce's Separate Rate Application at 3, available at
https://access.trade.gov/Resources/nme/nme-separate.html.

On the other hand, Commerce will not modify the regulations to require further analysis or investigation under the “wholly owned” exception into possible “ultimate owners” of the foreign owners themselves in every proceeding in which the issue arises, as suggested by certain commenters. The facts of each antidumping proceeding are unique, and the application of any such requirement to Commerce in every case in which this arises, whether the foreign-owned entity is located in the nonmarket economy or in a third country, would be unreasonable and fail to take into consideration the time, record constraints and overall difficulty which Commerce could be faced with in pursuing such lines of inquiry in a proceeding involving multiple parties or complicated facts. Commerce has an extensive history of applying the foreign-owned exception in its separate rate practice,
36

and Commerce will continue to apply that exception and consider the evidence on the record in determining on a case-by-case basis whether the exception should apply to a given exporter. Furthermore, for the same reason, Commerce will not expand its normal analysis to mandate inquiry in the regulation into “indirect” means of ownership or control of foreign-owned entities by a nonmarket economy government through potential holding companies or shareholder deception in every case, as suggested by some commenters.

36
Commerce has allowed an exception for wholly-foreign-owned exporters from the application of the separate rate analysis for three decades.
See Notice of Final Determination of Sales at Less Than Fair Value: Bicycles From the People's Republic of China,
61 FR 19026 (April 30, 1996) (explaining that “Four of the responding exporters in this investigation are located outside the PRC . . . Further, there is no PRC ownership of any of these companies. Therefore, we determine that no separate rates analysis is required for these exporters because they are beyond the jurisdiction of the PRC government”);
Certain Steel Threaded Rod from the People's Republic of China: Preliminary Results and Partial Rescission of the Antidumping Duty Administrative Review; 2014-2015,
81 FR 29843 (May 13, 2016), and accompanying Issues and Decision Memorandum at 5,
citing Final Results of Antidumping Administrative Review: Petroleum Wax Candles from the People's Republic of China,
72 FR 52355 (September 13, 2011) (stating “In its Section A response, the RMB/IFI Group, reported that it is wholly-owned by individuals or companies located in a market economy (“ME”) country. Therefore, because it is wholly foreign-owned, and we have no evidence indicating that it is under the control of the PRC government, a separate rate analysis is not necessary to determine whether this company is independent from government control. Accordingly, we preliminarily grant a separate rate to the RMB/IFI Group”); and
Wooden Bedroom Furniture From the People's Republic of China: Amended Final Results Pursuant to a Final Court Decision,
75 FR 72788 (November 26, 2010) (stating “Wanvog provided evidence that during the POR it was a wholly foreign-owned company. Therefore, consistent with the Department's practice, further analysis is not necessary to determine whether Wanvog's export activities are independent from government control, and we have preliminarily granted a separate rate to Wanvog”).

With regard to the comments on proposed deadlines for the filing of separate rate applications and certifications under § 351.108(d)(1) and (2), Commerce has reconsidered its proposed deadline of 14 days from publication of initiation in antidumping investigations in agreement with the commenters who noted that many importers or exporters who find themselves subject to an investigation might be unfamiliar with the antidumping laws and procedures and may need more than fourteen days after initiation to communicate with the appropriate lawyers, company representatives or government officials and gather information to submit necessary documentation with Commerce. Although one commenter is correct that Commerce normally determines the potential pool of respondents using Quantity and Value questionnaires in nonmarket economy procedures, Commerce disagrees that the receipt of those questionnaires, followed by the receipt of separate rate applications, does not delay the selection of respondents. As Commerce explained in the
Proposed Rule,
the longer Commerce must wait for questionnaires, applications, and certifications, the longer it takes for Commerce to select respondents and issue full questionnaires to respondents selected for examination.
37

Investigations, administrative reviews and new shipper reviews are all conducted under statutory deadlines, and the Act does not provide for extensions of those deadlines due to response times of Quantity and Value questionnaires and separate rate applications and certifications.

37

See Proposed Rule,
89 FR at 57296.

Commerce, therefore, continues to find that 30 days from initiation of an investigation is still too lengthy of a period in which to wait for separate rate applications in an investigation, but also agrees with some of the commenters that in an investigation 14 days may be too short of a time for importers and exporters to communicate and gather the necessary data. Accordingly, Commerce has modified § 351.108(d)(1) to allow for a separate rate application to be filed an additional seven days from that proposed in the
Proposed Rule.
Specifically, in antidumping investigations, interested parties will be allowed to file separate rate applications no later than 21 days following publication of initiation of the investigation in the
Federal Register
. This means that from the time a petition is filed in an investigation, interested parties will have notice that an investigation might be conducted and start gathering necessary information, and from the time the investigation notice is published in the
Federal Register
, they will have 21 days to answer the questions in Commerce's separate rate application, located on Commerce's website, and file the application electronically with the agency. Commerce has determined that this modification to the proposed regulation appropriately takes into consideration the concerns raised by some of the commenters, while also helping Commerce to prevent delays of its procedures by a few days when conducting an AD investigation.

However, with respect to administrative reviews and new shipper reviews, Commerce does not agree that the same issues exist as were raised by the commenters with respect to investigations. After an investigation is completed, an AD order is issued and published in the
Federal Register
.
38

Administrative reviews and new shipper reviews are conducted pursuant to an existing AD order. U.S. importers and foreign exporters alike are on notice that when merchandise subject to an AD order is imported into the United States, cash deposits will be collected on that merchandise, and duties will be assessed on that merchandise at some point.
39

Importers and exporters have an obligation to be aware of potential duties on the merchandise which they are importing or exporting, and ignorance of the existence of the AD order or of their fiduciary duties to pay the applicable trade remedies is not a

reasonable excuse. On the other hand, the fourteen-day deadline will allow Commerce the opportunity to avoid certain existing delays in its proceedings to the benefit of the participants who must answer questionnaires and to Commerce officials in analyzing and considering those parties' questionnaire responses and information. Accordingly, Commerce has not modified the fourteen-day deadline from the publication of initiation of an administrative review or new shipper review set forth in § 351.108(d)(2).

38

See
section 736(a) of the Act.

39

Id.

Commerce agrees with other suggestions and has adopted them as follows: (1) Commerce has removed the term “the lack of” in the header language for proposed § 351.108(b)(1)(iii) because the criteria listed in that section actually indicate
de facto
control; (2) Commerce has removed the word “no” in proposed § 351.108(b)(1)(iii) because, again, that provision speaks to evidence of
de facto
control or influence and the inclusion of the word “no” spoke to the opposite meaning; (3) Commerce has revised § 351.108(b)(1)(iii)(A) to read “maintains or must maintain” because the described situation covers both existing and required maintenance of certain government representatives in positions of control; (4) Commerce has included the term “or managers” following the term “officers” throughout the regulation because both officers and managers can influence corporate decisions; (5) Commerce has included the term “or their family members” when addressing situations in which representatives of the governments may, in fact, be placed in positions of leadership or power in a company, in accordance with Commerce's practice of recognizing that family members and family groupings may share a common business interest and authority; and (6) Commerce has included “government-appointed or controlled labor unions” in the regulation as types of government authorities through which a nonmarket economy may exert control or influence. In addition to those modifications, Commerce has emphasized in § 351.108(a)(2), that its analysis is based on record information, clarified language throughout the regulation when it was referring to a “government” that the government at issue is the “nonmarket economy government,” and removed the term “or control” from § 351.108(b)(1)(i)(B)(
2
) because that language is superfluous, as that particular provision pertains to the veto power of the nonmarket economy government giving it control over the decisions of the entity. Furthermore, Commerce has also modified “production and commercial” decisions throughout the regulation to be “production, commercial and export” decisions because export decisions are always under consideration in Commerce's separate rate analysis.

In addition, in response to a commenter's suggestion that Commerce revise the regulation to clarify that Commerce, not the separate rate applicants or certifiers, must be satisfied that the applications or certifiers have shown that the degree of government control or influence is not significant and that applicants or certifiers must provide proof of lack of government control or influence, Commerce has modified the text of § 351.108(b) to indicate that Commerce must determine “that the exporter has demonstrated that it operates certain activities sufficiently independent from nonmarket economy government control.” Commerce has also provided further language in § 351.108(d) to explain that if no separate rate application or certification is timely submitted by an exporter of merchandise subject to an investigation or AD/CVD order, Commerce may apply the nonmarket economy rate to that exporter's merchandise. Also, Commerce modified the title language to the overall regulation to emphasize that Commerce's separate rate analysis applies to entities, whether in the nonmarket economy or in a third country, that export merchandise from the nonmarket economy to the United States.

In response to the comment on proposed § 351.108(e) that entities that submit separate rate applications or certifications and are subsequently selected to be an examined respondent in an investigation or review by Commerce must fully respond to Commerce's questionnaires in order to be eligible for separate rate status, Commerce has expanded that proposed paragraph to not only require full responses to questionnaires but also full participation in the proceeding, as explained below.

With respect to Commerce's questionnaires, the full “section A” questionnaire asks more detailed questions specifically about corporate structure than the separate rate application or certification. It asks for an organizational chart on affiliation and has more comprehensive questions about manufacturing facilities, locations, legal structure, third parties, narrative history, capital verification reports, and other information in addition to ownership and affiliation. Further, the “section C” questionnaire requests information that supports claims that a respondent retained the proceeds of their export sales and made independent decisions regarding the disposition of profits or financing of losses. In addition to requesting more data about the company's corporate structure in the initial questionnaire, Commerce frequently will issue supplemental questionnaires to learn even more details about the affiliations and structure of the respondent being examined. Much of the “section A” questionnaire is akin to a more detailed request for information to supplement the separate rate application or certification and allows Commerce to confirm or clarify claims made in a separate rate certification or application.

In addition, full participation in the proceeding overall is necessary to allow Commerce to be able to verify any information relevant to determining separate rate eligibility, and it is not unusual for Commerce to discover at verification that information believed to be complete on the record before conducting verification was, in fact, incomplete after consideration of an entity's complete books and record. Accordingly, if a respondent selected for individual examination fails to fully respond to Commerce's questionnaires or, where applicable, fails to allow Commerce to verify information submitted in response to Commerce's questionnaires, absent extenuating circumstances, Commerce shall determine that it also has failed to demonstrate its eligibility for a separate rate.

The commenter on § 351.108(e) did not seem to take issue with the provision itself, but instead indicated concerns with what Commerce does after it has made a determination that the exporter is part of the nonmarket economy entity. The commenter expressed concerns that non-selected entities and examined respondents would collude in such a way that if an examined respondent realized that review of its entries could lead to a high dumping margin, which would in turn be used to help calculate the rate applied to the non-selected exporters, the examined respondent might choose not to answer questionnaires, thereby pulling it into the nonmarket economy entity and pulling it out of the non-selected exporters calculation, under Commerce's current practice for determining that non-selected exporter rate.

Although Commerce appreciates the concerns expressed by the commenter on this issue, Commerce disagrees that treating an examined respondent differently for purposes of its separate

rate analysis from those exporters who only submit separate rate applications and certifications is “arbitrary.” The distinction is in no way arbitrary because examined respondents must provide a much greater amount of information to Commerce to analyze and determine an antidumping margin covering their merchandise. In addition, without full participation by the examined respondent, including a response to questionnaires, Commerce is unable to confirm, clarify, or verify claims made in a separate rate certification or application. Furthermore, although Commerce has codified its methodology for determining a rate to be applied to non-selected exporters in an antidumping proceeding covering a nonmarket economy in general at § 351.109(g), neither that provision nor § 351.108(e) addresses the use, or nonuse, of the nonmarket economy entity rate in determining a rate to be applied to the non-selected exporters in an antidumping investigation or administrative review. The commenters' concerns seem to speak to that element of Commerce's calculation of a rate to apply to non-selected exporters, but because Commerce is not codifying that practice in this provision, Commerce has determined that this concern should be addressed on a case-specific basis. Accordingly, other than requiring full participation in the proceeding, Commerce has made no further modifications to § 351.108(e).

Finally, Commerce is not addressing in the new regulation or in the preamble to the final rule situations in which an entity located in a third country substantially transforms subject merchandise into a different product in the third country, completes or assembles the subject merchandise into a different product in the third country, or alters the subject merchandise in form or appearance in minor respects in the third country, as suggested by one of the commenters. All of those scenarios are already addressed in scope and circumvention proceedings by sections 781(b) and (c) of the Act and §§ 351.225(j) and 351.226(i) and (j) of Commerce's regulations.

4. Commerce Has Made a Small Modification to Proposed § 351.109(c)(2)(v), Which Applies to the Selection of Additional Respondents

Proposed new § 351.109 addresses Commerce's procedures for selecting respondents, calculating the all-others rate in investigations, calculating a rate for unexamined respondents in various proceedings, and the selection of voluntary respondents.
40

40

See Proposed Rule,
89 FR at 57296.

Commerce received several generally supportive comments on the proposed new § 351.109. With respect to the selection of additional respondents, one commenter stated that the language “soon after filing questionnaire response” and “early in the segment of a proceeding” in proposed § 351.109(c)(2)(v)
41

is open-ended and would likely lead to debate over what counts as “soon” or “early.” That commenter recommended that Commerce instead define the cutoff for adding new respondents by stating Commerce would select a respondent only after determining that there is sufficient time left before deadlines in the proceedings to complete all of its procedures without additional administrative burden. That commenter suggested that by adding language that addressed timing and other such considerations, Commerce would set realistic parameters for parties to understand when Commerce may select additional respondents.

41

Id.,
89 FR at 57296-57300.

That commenter stated that this revised language would also establish a standard that is consistent with Commerce's approach elsewhere in its regulations. For example, § 351.311(b) provides that Commerce “will examine the practice, subsidy, or subsidy program {discovered in the course of an investigation or review} if the Secretary concludes that sufficient time remains before the scheduled date for the final determination or final results of review.” Similarly, § 351.214(f)(2) states that Commerce may rescind a new shipper review where “{a}n 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.”

The second commenter stated that it generally concurred with Commerce's proposed rule but recommended that the regulation define the parameters on the timing for the selection of additional respondents under § 351.109(c)(2)(v). For example, the proposed language does not define how soon after the filing of questionnaire responses a respondent could withdraw from participation and Commerce would consider reviewing another exporter or producer for examination, how early in the segment Commerce could determine that a selected exporter or producer is no longer participating in the investigation or administrative review and that there is sufficient time to pick another respondent, or when in the segment Commerce could determine that the exporter's or producer's sales of merchandise subject to an investigation or AD/CVD order are not
bona fide
but that there remains time to examine another respondent. Without a clear definition of what “early in the segment” means, the commenter explained the uncertainty could result in the selection of additional respondents and the filing of new questionnaire responses very late in a proceeding, thereby providing insufficient time for domestic producers to provide meaningful comment or for Commerce to issue supplemental questionnaires prior to a preliminary determination or preliminary results. Therefore, the second commenter recommended that Commerce add language to state that Commerce will select additional respondents only if it is within 90 days of initiation, consistent with the 90-day deadline for parties to withdraw requests for administrative reviews under § 351.213(d).

Two other commenters suggested that Commerce codify that a “reasonable number of respondents” in an investigation or administrative review where individual examination of all known exporters or producers is not practicable must be more than one respondent, consistent with recent holdings of the Court of International Trade (CIT) and Federal Circuit.
42

42

See YC Rubber Co. (North America) LLC
v.
United States,
No. 2021-1489, 2022 WL 3711377 at 3 (Fed. Cir. 2022);
see also Schaeffler Italia S.R.L.
v.
United States,
781 F. Supp. 2d 1358, 1363 (CIT 2011).

Those two commenters also recommended that Commerce modify its practice to enable more frequent use of sampling as a respondent selection methodology. They stated that in many cases, selection of the two largest producers or exporters results in selection of the same respondents in proceeding after proceeding and allows those respondents to tailor their operations or reporting in a manner that avoids antidumping or countervailing duties without being representative of the foreign industry.

The commenters also expressed concern with Commerce's rejection of the use of sampling in most cases. In a 2013 notice, the agency stated that it would not rely on sampling unless it “has the resources to examine individually at least three companies for the segment.”
43

One commenter stated

that Commerce rarely selects more than two respondents, particularly in administrative reviews, and claims that Commerce has not conducted a single proceeding since the issuance of the 2013 policy announcement in which it used sampling to select respondents. One commenter also stated that a system in which most foreign exporters will be excluded from individual examination and thus able to “free ride” off the largest respondents' margins creates a significant barrier to leveling the playing field in the U.S. market.

43

See Antidumping Proceedings,
78 FR 65963, 65965 (November 4, 2013) (announcement of

change in Commerce practice for respondent selection in AD proceedings and conditional review of the nonmarket economy entity in AD proceedings).

Another concern raised by one commenter was Commerce's normal reliance on USCBP data to select respondents. That commenter stated that while USCBP data is generally an appropriate starting point for respondent selection, these data can also be highly problematic for the purpose of respondent selection. For example, it is possible for quantities to be reported in different units that are not easily converted into a uniform unit of measurement. That commenter also suggested that USCBP data may also contain errors or appear to be incomplete, which can be evident on the face of the data or revealed only in light of information submitted by interested parties. Therefore, one commenter recommended that Commerce clarify in its regulations that, when such problems with USCBP data are evident or revealed by information placed on the record, Commerce will rely on additional information for the purpose of respondent selection. That commenter suggested that Commerce consider requiring all exporters requesting an administrative review to provide with their request the quantity and value of their shipments of subject merchandise during the period of review in order to have a second set of reliable data on the record from which to select respondents.

Lastly, one commenter expressed concerns regarding Commerce's proposed regulation for calculating the all-others and non-selected rates. That commenter referenced several past cases where Commerce used either quantity or value in calculating the dumping margin assigned to exporters and producers who were not individually reviewed and stated that Commerce's calculations had been inconsistent. That commenter stated that Commerce should clarify in the regulations the circumstances in which it will rely on a weighted average of publicly ranged U.S. sales values or the circumstances in which Commerce would rely on a weighted average of sales quantities for calculating the all-others rate and the non-selected respondents' rate.

Response

Commerce agrees with the commenter that suggested Commerce should focus on the time remaining and actions which need to be taken in a segment of a proceeding before selecting a new respondent. Accordingly, in the last sentence of § 351.109(c)(2)(v) Commerce has added language to say that the Secretary may select the next respondent based on the next largest volume or value “if the Secretary determines that such a selection will not inhibit or impede the timely completion of that segment of the proceeding.”

On the other hand, Commerce does not agree with a commenter's suggestion that Commerce should codify a hard deadline before which it can select additional respondents. There is nothing in the Act which would suggest such a restriction, and imposing such a deadline in the regulation may curtail Commerce's ability to select respondents when issues arise during a proceeding. As mentioned in the
Proposed Rule,
considerable time and resources are necessary for issuing questionnaires and analyzing data for purposes of respondent selection.
44

If Commerce were to codify a deadline as suggested and then a respondent decided not to participate or to withdraw its request for administrative review, or Commerce determined that the U.S. sales reported by a selected respondent were not
bona fide
sales of subject merchandise after that deadline, yet Commerce also determined that there remained sufficient enough time for Commerce to select another respondent, then such a deadline would be a hindrance to the agency. Commerce should be able to select another respondent for examination in any of those scenarios. Accordingly, Commerce does not believe the codification of a hard deadline is advisable.

44

See Proposed Rule,
89 FR at 57297.

Section 777A(c)(1) and (e)(1) of the Act direct Commerce to determine an individual weighted-average dumping margin or countervailable subsidy rate for each known exporter and producer of the subject merchandise. If Commerce codified a hard deadline and for whatever reason one or more respondents dropped out after that deadline, Commerce might find itself with no ability to select additional exporters or producers, despite the statutory preference to review more exporters and producers and the fact that Commerce has determined that it has the time and resources to examine another exporter or producer. Such a restriction is illogical and would only provide Commerce with fewer opportunities to exercise its statutory authority to examine a reasonable number of respondents.
45

Accordingly, Commerce has not adopted that recommendation in the final rule.

45

See Viet I-Mei Frozen Foods Co.
v.
United States,
83 F. Supp. 3d 1345, 1362 (CIT 2015),
aff'd,
839 F.3d 1099 (Fed. Cir. 2016) (“{T}o the prevention of abuse where Commerce expends resources to initiate an individual examination—and the respondent seeks to withdraw its participation when it changes its mind about the benefit of such examination and prefers the `all others' rate instead—is a reasonable basis on which Commerce may decline to abort its examination.”).

As mentioned in the
Proposed Rule,
the primary focus of respondent selection is whether Commerce can effectively examine a reasonable number of producers and exporters, as Congress intended, to calculate an accurate dumping margin or countervailable subsidy rate.
46

Certain commenters requested that Commerce codify that when limiting individual examination to the largest producers/exporters, Commerce will select more than one respondent in every case. However, Commerce saw no need to codify any such requirement in its
Proposed Rule
and continues to see no benefit in codifying such a requirement into the regulation. Accordingly, Commerce has not placed such a restriction in the regulation.

46

See Proposed Rule,
89 FR at 57297.

With respect to the comments on sampling, section 777A(c) of the Act states that if it is “not practicable to make individual weighted average dumping margin determinations” because of “the large number of exporters or producers involved” in an investigation or review, Commerce may “determine the weighted average dumping margins for a reasonable number of exporters or producers by limiting its examination to (A) a sample of exporters, producers or types of products that is statistically valid based on the information available” to Commerce at the time of selection or (B) the exporters and producers accounting for the “largest volume of the subject merchandise from the exporting country that can be reasonably examined.” The Statement of Administrative Action (SAA) states that “the authority to select samples rests exclusively with Commerce, but, to the greatest extent possible, Commerce will consult with

exporters and producers regarding the method to be used.”
47

47
See Statement of Administrative Action Accompanying the Uruguay Rounds Agreement Act, H. Doc. 316, Vol. 1, 103d Cong. (1994) (SAA) at 872.

In its
2013 Change in Practice Notice,
Commerce explained that it will normally rely on sampling for respondent selection purposes in AD administrative reviews when (1) there is a request by an interested party for the use of sampling to select respondents, (2) Commerce has the resources to examine individually at least three companies for the segment, (3) the “largest” three companies (or more if Commerce intends to select more than three respondents) by import volume of the subject merchandise under review account for normally no more than 50 percent of total volume, and (4) information obtained by or provided to Commerce provides a reasonable basis to believe or suspect that the average export prices and/or dumping margins for the largest exporters differ from such information that would be associated with the remaining exporters.
48

In the rare cases where Commerce relies on sampling to select respondents, it is typically when there are multiple, and often numerous, prior reviews to draw upon for evidence of margin differentials attributable to size.

48

See Antidumping Proceedings: Announcement of Change in Department Practice for Respondent Selection in Antidumping Duty Proceedings and Conditional Review of the Nonmarket Economy Entity in NME Antidumping Duty Proceedings,
78 FR 65963, 65964 (November 4, 2013) (
2013 Change in Practice Notice
).

An important part of any methodology using sampling to select respondents is that the sampling must be “statistically valid” under section 777A(c)(A) of the Act. The commenters who expressed concerns with Commerce's respondent selection sampling methodology did not explain why that methodology is not statistically valid, or, in the alternative, provide an alternative methodology that would meet this statutory requirement.
49

Therefore, Commerce will continue to rely on the criterion specified in the
2013 Change in Practice Notice
and consider sampling when Commerce can select a minimum of three respondents to examine individually in light of resource constraints. Despite statements by the commenters to the contrary, Commerce has in fact completed a statistically valid sampling request since the issuance of the
2013 Change in Practice Notice,
50

and statistically valid sampling for purposes of respondent selection remains a viable option for parties to request and consider.

49

See
SAA at 873 (“Commerce will employ a sampling methodology designed to give representative results based on the facts known at the time the sampling method is designed”).

50

See, e.g.,
Commerce's Memorandum, “Antidumping Duty Administrative Review of Steel Nails from the People's Republic of China: Sampling Pool for Selection of Respondents and Selection Methodology,” dated April 1, 2019 (“In light of the particularly large number of exporters that are under review in this segment, as well as the history of margins in the prior segments of this proceeding, discussed above, we find that using a sampling methodology in this review addresses this enforcement concern”).

In the
Proposed Rule,
Commerce stated that it would normally base respondent selection on information derived from USCBP.
51

While one commenter expressed concerns regarding Commerce's preference for USCBP data, suggesting that USCBP data are susceptible to errors, no database is perfect. Although the Act does not limit Commerce to relying only on USCBP data in its reviews, Commerce weighs USCBP data more heavily because they contain the actual entry documentation for the shipments, including the CBP 7501 entry summary form (or its electronic equivalent), invoice, and bill of lading.
52

USCBP data are based on information required by, and provided to, the U.S. government authority responsible for permitting goods to enter into the United States.
53

Moreover, significant penalties can be imposed on parties that report entry information inaccurately.
54

Furthermore, Commerce prefers USCBP data because they are “a primary source, as opposed to a secondary source, which may be prone to errors in the data collection and aggregation process.”
55

Given the aforementioned reasons, Commerce's treatment of USCBP data will remain unchanged when selecting that as a data source to determine the largest exporters or producers of subject merchandise.

51

See Proposed Rule,
89 FR at 57297.

52

See, e.g., Certain Frozen Fish Fillets From the Socialist Republic of Vietnam: Final Results of Antidumping Duty Administrative Review; Final Determination of No Shipments; 2020-2021,
87 FR 55996 (September 13, 2022) (
Fish Fillets from Vietnam
), and accompanying Issues and Decision Memorandum (“Although the petitioners assert that ship manifest data it placed on the record `raises questions' regarding the CBP data, it is well-established that mere speculation does not constitute substantial evidence, which is the standard for Commerce to make a finding.”).

53

See, e.g., Certain Frozen Warmwater Shrimp from India: Final Results and Partial Rescission of Antidumping Duty Administrative Review,
74 FR 33409 (July 13, 2009), and accompanying Issues and Decision Memorandum, at Comment 2.

54

See Fish Fillets from Vietnam
Issues and Decision Memorandum at Comment: Commerce Should Ensure that All Subject Merchandise Is Subject to the Appropriate Duties.

55

See, e.g., Certain Cut-to-Length Carbon Steel Plate from the People's Republic of China: Preliminary Results of Antidumping Administrative Review and Preliminary Determination of No Shipments,
77 FR 47593 (August 9, 2012).

In addition, Commerce will not include in the regulation a requirement that respondents that request an administrative review file a quantity and value questionnaire response when making a review request, as suggested by a domestic industry commenter. Such further information submissions from foreign exporters would be unnecessary and create an additional burden on Commerce to consider and analyze such submissions, regardless of whether such additional information on the record actually adds value to the case at hand.

Commerce agrees that for some imported products, problems arise in relying on certain USCBP volume data because different importers will report their entries in quantities that are denominated in different units of measure (UOMs). For example, in the 2023 CVD administrative review of softwood lumber from Canada, Commerce acknowledged that certain importers reported their imports based on cubic meters, others on square meters, others on kilograms, and still others based on number of pieces.
56

Commerce also explained that “in addition to missing volumes, the various UOMs are problematic because, for example, measurements of weight (
e.g.,
kilograms) cannot be converted to measurements of volume (
e.g.,
cubic meters) without making certain assumptions, and `number of pieces' simply cannot be converted to a measurement of volume.”
57

On the other hand, the USCBP data in that review did contain “value amounts for all entries of subject merchandise in the same unit of currency.”
58

Therefore, as it had in prior review periods, Commerce determined to rely “on the value data as a proxy for quantity and selecting respondents accounting for the largest value.”
59

Commerce explained that using value as a proxy for quantity when there are issues with reported UOMs for entry quantities “is transparent and consistent with Commerce's approach in other proceedings as well as the prior administrative reviews of this order.”
60

For this reason, § 351.109(c)(2)(ii) specifically provides that if Commerce determines that “volume data are

unreliable or inconsistent, depending on the product at issue,” Commerce “may instead select the largest exporter of subject merchandise based on the value of the imported products instead of the volume of the imported products.” The value data, however, will still normally originate from the USCBP. Thus, on this basis as well, Commerce sees no reason to second-guess its normal preference of using data derived from USCBP if possible.

56

See
Memorandum, “Administrative Review of the Countervailing Duty Order on Certain Softwood Lumber Products from Canada; 2023: Respondent Selection,” dated April 19, 2024 (ACCESS Barcode: 4546196-01).

57

Id.

58

Id.

59

Id.

60

Id.

Lastly, one commenter claimed that Commerce has been inconsistent on whether it relies on a weighted-average using publicly ranged U.S. sales values or on a weighted-average using U.S. sales quantities in calculating all-others and non-selected rates. That commenter requested that Commerce set a clear test in the regulation as to the circumstances in which Commerce will base its calculations on sales values and when it will base its calculations on sales quantities.

Upon consideration of this comment, Commerce has determined not to adopt this proposed addition to its regulations but clarifies here that the agency's practice is to calculate the all-others and non-selected rates using a weighted-average based on publicly ranged U.S. sales values. To the extent that Commerce chooses to use, instead, a weighted average using U.S. sales quantities in determining the all-others rate or a rate to apply to respondents who are not individually examined, such an application is an exception to Commerce's practice and would be case-specific and based on the unique facts to the record before the agency. If Commerce determines to calculate the all-others rate or rate for respondents who are not individually examined based on U.S. quantities instead of U.S. sales-values, Commerce will provide an explanation in its determination.

5. Commerce Has Made No Modifications to the Proposed Change to § 351.214, Which Covers Expedited CVD Reviews

In the
Proposed Rule,
Commerce proposed modifying the heading of § 351.214, which currently reads “New shipper reviews under section 751(a)(2)(B) of the Act,” by adding the phrase “and expedited reviews in countervailing duty proceedings.”
61

Commerce proposed such a change because section 751(a)(2)(B) of the Act provides Commerce the authority to determine dumping margins and CVD rates for exporters and producers that did not export subject merchandise to the United States during the period of investigation, referred to as “new shipper reviews.” However, paragraph (l) of § 351.214 does not relate to new shipper reviews but instead provides procedures for conducting expedited reviews of exporters not selected for individual examination in CVD investigations. Instead, the Federal Circuit in
Comm. Overseeing Action for Lumber Int'l Trade Investigations
v.
United States,
66 F.4th 968, 977 (Fed. Cir. 2023) (
COALITION
v.
U.S.
) held that the “individualized-determination provisions” of section 777A(e) of the Act, along with the “regulatory-implementation authority” of section 103(a) of the URAA,
62

explicitly provide Commerce with the authority to promulgate § 351.214(l).
63

Therefore, Commerce proposed modifying the heading to § 351.214 to make it consistent with the holding in
COALITION
v.
U.S.

61

See Proposed Rule,
89 FR at 57302.

62

See
Uruguay Round Agreements Act, Public Law 103-465, 108 Stat. 4809 (1994) (URAA).

63

See COALITION
v.
U.S.,
66 F.4th at 977.

One party commented on this change, stating that the Federal Circuit in
COALITION
v.
U.S.
held that expedited CVD administrative reviews are not prescribed by the Act. Accordingly, that commenter stated that Commerce should remove § 351.214(l) entirely from the regulation to conserve agency resources, instead of modifying the heading to § 351.214 as proposed.

Response

Commerce proposed to only revise the heading to § 351.214 and not to remove an entire provision pursuant to which Commerce has conducted expedited CVD administrative reviews. As the Federal Circuit held in
COALITION
v.
U.S.,
that provision was added consistent with language in the WTO Agreement on Subsidies and Countervailing Measures (the SCM Agreement),
64

and Commerce does not believe it would be reasonable to remove that language in this final rule. Accordingly, Commerce will not modify the regulation as suggested by the commenter and will modify the heading of § 351.214 as set forth in the
Proposed Rule.

64

See
Agreement on Subsidies and Countervailing Measures (SCM Agreement); 19 U.S.C. 3511 (Approval and entry into force of Uruguay Round Agreements”) (December 9, 1994).

6. Commerce Has Made Certain Small Modifications to Proposed § 351.301(b)(2), Covering the Submission of Rebuttal Information

Commerce proposed a modification to one of its reporting regulations, § 351.301(b)(2), to require greater detail from interested parties filing factual information to rebut, clarify, or correct factual information on the record.
65

The existing regulatory language does not require the submitter of such information to explain what information on the record the alleged rebuttal/clarification/correction information actually rebuts, clarifies, or corrects, and the lack of such an explanation has created a burden on both Commerce and interested parties to understand why the information being provided under this paragraph is being submitted and how it is particularly responsive to the information already on the record.
66

Accordingly, Commerce proposed adding a sentence to the regulation that stated that the submitter “must also provide a narrative summary explaining how the factual information provided under this paragraph rebuts, clarifies, or corrects the factual information already on the record.”
67

65

See Proposed Rule,
89 FR at 57302.

66

Id.

67

Id.

Two commenters expressed concerns with this proposed modification to the regulation, stating that the proposed additional requirement would hinder the submission of relevant information and delay proceedings because frequently parties that initially submit factual information in response to Commerce's questionnaires do not provide the detailed explanation required by the proposed language. They stated that the difference between what is required of those submitting initial factual information on the record and what would be required of those submitting rebuttal factual information would be inherently unfair. Furthermore, the commenters stated that to require submitters rebutting that information to prepare a detailed narrative before the record is complete would require parties to also prematurely disclose arguments in an ongoing segment of the proceeding, basically emboldening parties to “litigate their arguments” early in a segment of the proceeding in the guise of objections to the scope of rebuttal factual information. They stated that those submitting factual information on the record for the first time often may not provide a specific explanation for how the submitted factual information supports their questionnaire responses. Thus, those filing rebuttal information are often forced to submit information that they think might be responsive, but they may not learn until the time for filing new factual information has passed the specific capacity for which the initial facts on the record were actually submitted in the first place.

The commenters also stated that such a requirement would push those submitting rebuttal information to request extensions from Commerce to prepare a detailed narrative. The commenters stated that placing such a requirement in the regulation would create a burden for Commerce with no real benefit, and, as such, they requested that Commerce reject the proposed modification to its regulations, or at minimum, have the required explanation only address how the information is “relevant” to the factual information already on the record.

Response

Commerce retains the view that the failure to identify the information being rebutted creates a burden on Commerce or other interested parties. Under the current regulatory language parties may submit information with no explanation as to what it rebuts, clarifies or corrects, thereby permitting the submission of information that does not meet those requirements despite the restrictions of the regulation. Having information on the record without an explanation of how it ties to the initial facts on record complicates Commerce's ability to analyze and enforce the limitations of submitting factual information under § 351.301. Accordingly, Commerce will continue to include language addressing this concern in the regulation.

With respect to the perceived unfairness of the reporting requirements of those submitting information in the first instance on the record in response to questionnaires, Commerce emphasizes two points. First, normally, when a respondent submits information on the record in response to a specific Commerce question, the reason that the information was submitted on the record in the first place is evident. That may not be the case, however, with rebuttal information submitted on the record with no explanation. Therefore, by their nature these two types of factual information submissions are different, and Commerce requires specific explanation from those submitting rebuttal information to identify the information already on the record that is being rebutted (or clarified or corrected).

Second, if an interested party reviewing the record does not believe that factual information submitted on the record in the first instance by another interested party supports or is relevant to the question asked by Commerce, the interested party has the ability to bring that concern to Commerce's attention in a timely fashion. Commerce may reject new factual information submitted on the record in the first instance if Commerce determines that it is not relevant to the questions or information request made of the respondent. In short, the record should be clear as to the reasons new factual information is being submitted, either through a response to an agency questionnaire, or in a rebuttal, clarification, or correction explanation. Commerce has determined, therefore, that the regulation should reflect that understanding of new factual information and the administrative record.

Commerce has made certain small changes, however, to the language set forth in the
Proposed Rule.
The opening paragraph of § 351.301(b) requires those submitting factual information in the first instance to provide a “written explanation identifying the subsection of 351.102(b)(21) under which the information is being submitted.” Commerce has revised the new language in § 351.301(b)(2) to state that the submitter of rebuttal, clarifying or correction factual information must “provide a written explanation describing how the factual information” rebuts, clarifies, or corrects the factual information already on the record. This language provides greater symmetry in the parties' obligations in the regulation while emphasizing the type of information Commerce is seeking from those submitting rebuttal factual information—not a long narrative submission, but rather a concise and complete explanation describing specifically what factual information on the record the new factual information rebuts, clarifies or corrects.

7. Commerce Has Made No Changes to the New Deadlines in Proposed § 351.301(c)(3), Covering the Submission of Benchmark and Surrogate Value Data, But Has Added Language Permitting Commerce To Issue a Schedule With New Deadlines in Unique Circumstances

Commerce proposed a revision to § 351.301(c)(3) to update deadlines for filing certain information on the record.
68

Current § 351.301(c)(3)(i) and (ii) establish a thirty-day time limit before the scheduled dates of preliminary determinations and results of review for interested parties to submit factual information to value factors of production under § 351.408(c) or to measure the adequacy of remuneration under § 351.511(a)(2) in AD and CVD investigations, administrative reviews, new shipper reviews, and changed circumstances reviews.

68

See Proposed Rule,
89 FR at 57302-57303.

The
Proposed Rule
explained that those submissions sometimes contain hundreds, if not thousands, of pages of information that Commerce must analyze in a short amount of time prior to issuing a preliminary determination or preliminary results.
69

Because the volume of information often contained in these submissions can be so large, it makes it difficult for Commerce to meet its statutory deadlines to determine the appropriate surrogate values or benchmarks in the preliminary determination or preliminary results.
70

Commerce also explained that since the 30-day deadlines were codified, Commerce has experienced a large increase in AD and CVD proceedings and orders which it must administer.
71

Accordingly, to effectively administer and enforce the AD and CVD laws, Commerce proposed modifying these time limits to allow Commerce additional time to more fully analyze these voluminous submissions for purposes of its preliminary decisions.
72

Specifically, Commerce proposed revising § 351.301(c)(3)(i) to create both a paragraph (c)(3)(i)(A) and (B) covering investigations. Under the proposal, the time limit for parties to submit factual information to value factors of production under § 351.408(c) in AD investigations under § 351.301(c)(3)(i)(A) would be no later than 60 days before the scheduled date of the preliminary determination, and the time limit for parties to submit factual information to measure the adequacy of remuneration under § 351.511(a)(2) in CVD investigations would be no later than 45 days before the scheduled date of the preliminary determination in proposed § 351.301(c)(3)(i)(B).
73

69

Id.

70

Id.

71

Id.

72

Id.

73

Id.

Furthermore, for administrative reviews, new shipper reviews, and changed circumstances reviews, proposed § 351.301(c)(3)(ii) would require parties to submit factual information to value factors of production under § 351.408(c) or to measure the adequacy of remuneration under § 351.511(a)(2) no later than 60 days before the scheduled date of the preliminary results of review.
74

74

Id.

Commerce received several comments on the proposed change in deadlines. One party supported the change, stating that the modifications would enhance Commerce's ability to enforce trade laws in a timely and efficient manner and

would provide interested parties with a more complete preliminary determination, as the agency would have more time to consider and analyze its benchmark and surrogate value determinations for purposes of the preliminary agency decision. That commenter agreed with Commerce that the agency does not currently have sufficient time to review the benchmark and surrogate value data provided in either submissions or rebuttal submissions, and therefore, Commerce frequently cannot address those submissions in part or in whole in the preliminary determination or results, to the disservice of the interested parties. That commenter stated that it disagrees with the claim that the revisions will unduly affect the ability of interested parties to gather and su

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2024-29245. Public record. Not legal advice.