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Lower AD Duties for Chinese Goods a Possibility as U.S. Considers Market Economy Status

Friday, March 31, 2017

Importers could see a decrease in typically high antidumping duties on goods from China after the Department of Commerce signaled its willingness to consider market economy status for that country. Interested parties have just 30 days, until May 3, to submit comments and information on this issue.

China’s protocol of accession to the World Trade Organization allowed WTO members to use calculations in AD proceedings that are not based on the actual costs of Chinese producers if the producers cannot demonstrate that market economy conditions prevail in their industry. The U.S. has used this provision to automatically assign non-market economy status to goods imported from China, which typically results in higher AD duties than would otherwise be the case.

When this provision expired Dec. 11, 2016, China asserted that WTO members would have to stop using NME-type methodologies altogether with respect to Chinese goods as of that date. The U.S. and others, however, believe they may continue to use such methodologies as long as the petitioners clearly show that market economy conditions do not prevail in the industry at issue.

As a next step, the DOC has launched an inquiry into whether it should continue to treat China as an NME. This inquiry is being conducted as part of a new AD duty investigation of aluminum foil from China and the DOC plans to announce its final NME determination before its preliminary dumping determination.

Comments and information are being specifically requested on the following factors the DOC is statutorily required to consider in making a market/non-market economy determination.

- the degree of convertibility of the Chinese yuan
- the degree to which wage rates in China are determined by free bargaining between labor and management
- the extent to which China permits joint ventures or other investments by foreign firms
- the extent of government ownership or control over the means of production
- the extent of government control over the allocation of resources as well as price and output decisions of producers
- any other factors the DOC considers appropriate

For more information, or for assistance preparing submissions to the DOC, please contact Mark Ludwikowski at (202) 730-4967, Kristen Smith at (202) 730-4965, or David Craven at (312) 279-2844.

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