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ITA Modifies Selection of Respondents in Certain AD Proceedings

Monday, November 04, 2013
Sandler, Travis & Rosenberg Trade Report

Effective Dec. 4, the International Trade Administration will modify its practice with respect to the methodology for selecting respondents in certain antidumping duty proceedings. The ITA will select respondents by sampling where certain criteria are met in administrative reviews of AD duty orders and discontinue conditional administrative reviews of non-market economy entities.

Sampling.When the number of producers and exporters involved in an AD duty investigation or review is so large that it is impractical to examine each one individually, the ITA may limit its examination to (a) a sample of exporters, producers or types of products that is statistically valid based on the information available to the administering authority at the time of selection, or (b) exporters and producers accounting for the largest volume of subject merchandise from the exporting country that can be reasonably examined.

To date, the ITA has used the second option in proceedings in which limited examination has been necessary, meaning that companies with relatively small export volumes have typically not been selected for individual examination. This creates a potential enforcement concern in AD administrative reviews over time, the ITA states, because it contributes to the perception among such exporters that they are effectively excluded from individual examination and that their pricing behavior will therefore not affect their AD duty rates.

To remedy this situation, the ITA will select respondents on the basis of a sampling technique that (a) is random, to ensure that every company has a chance of being selected as a respondent and to capture potential variability across the population, (b) is stratified, to ensure the participation of companies of different import volumes given the small samples that would be used, and (c) uses probability-proportional-to-size samples, to ensure that the probability of each company being chosen as a respondent is proportional to its share of imports in its respective stratum.

The ITA will generally use this technique to select respondents when the following conditions are met: (a) there is a request by an interested party for the use of sampling to select respondents, (b) the ITA has the resources to examine individually at least three companies for the segment, (c) the largest three companies (or more if the ITA intends to select more than three respondents) by import volume of the subject merchandise under review account for normally no more than 50% of total volume, and (4) information obtained by or provided to the ITA 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. Information that may be submitted with respect to the last point may include company margins from previous segments of the proceedings, market and company pricing information, the nature and structure of the foreign industry in question, and the CBP import entry database.

After an examination of respondents selected by the sampling method, the ITA will need to assign an AD duty rate to all non-selected companies. To do so, the ITA will calculate a sample rate based on an average of all selected respondent rates, weighted by the import share of their corresponding strata. The respondents selected for individual examination through the sampling process will receive their own rates, while all companies in the sample population that were not selected for individual examination will receive the sample rate.

The ITA expects to implement this sampling methodology in the context of its administrative reviews by providing interested parties with notice of the schedule for submissions related to sampling on a case-by-case basis. The ITA is therefore publishing a separate proposed rule that would amend its regulations to implement procedural changes, as needed, with respect to submissions related to sampling in AD administrative reviews. In sum, this rule proposes to require interested parties to submit requests for the ITA to conduct sampling in AD administrative reviews together with their comments on CBP data within seven days following the release of the CBP data, unless otherwise specified. Such requests would have to include factual information and comments on whether this information 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. Interested parties would have a ten-day comment period and a five-day rebuttal period to comment on any sampling request.

NME Entity Reviews. The ITA states that one of the issues that may affect the use of sampling in future segments is its review of the NME entity in administrative reviews. Under current practice, even if there is no request for an administrative review of an NME entity, it will become subject to review if an exporter that is subject to the review does not demonstrate that it is separate from the entity. This conditional review practice has resulted in the delayed liquidation (often over a year after the date a review is initiated) of NME entity entries, despite the fact that in most cases the ultimate duty assessment rate is no different from the cash deposit rate.

Having concluded that there is no ongoing benefit to be achieved in maintaining such conditional reviews, the ITA will no longer consider the NME entity as an exporter conditionally subject to administrative reviews. Accordingly, the NME entity will not be under review unless the ITA specifically receives a request for, or self-initiates, a review of that entity.

In administrative reviews where a review of the NME entity has not been initiated but an individual exporter for which a review was initiated does not qualify for a separate rate, the ITA will issue a final decision indicating that the company in question is part of the NME entity. This may result in a change in the rate for that exporter but will not affect the rate for the NME entity.

Following the initiation of an administrative review when there is no review requested of the NME entity, the ITA will instruct CBP to liquidate entries for all exporters not named in the initiation notice, including those that were suspended at the NME entity rate. This change in practice will eliminate the unnecessary delay in liquidation of entries from the NME entity.

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