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Change in Calculation of Normal Value in AD Proceedings Proposed by ITA

Thursday, August 25, 2016
Sandler, Travis & Rosenberg Trade Report

The International Trade Administration is proposing to modify its regulations on antidumping duty proceedings to specify that when the exporting country does not constitute a viable market (or the ITA declines to calculate normal value on the basis of exporting country sales) normal value will normally be based on constructed value rather than on sales in a viable third country. Comments on this modification, which would invert the current order of preference, are due no later than Sept. 26.

According to the ITA, there are several factors in favor of this change. First, it accords with the Trade Preferences Extension Act, which requires the ITA to request cost information from individually examined respondent companies in AD proceedings. Second, constructed value may normally be preferable because it reflects the costs associated with the production and sale of the goods, whereas third-country sales sometimes involve products that are similar, but not identical, to the products sold in the U.S.

The ITA notes that if this rule is implemented no entities would be required to undertake additional compliance measures or expenditures because the ITA is already required to request cost of production information from each examined respondent in every segment of an AD duty proceeding. As a result, for those individually examined respondents whose exporting country is not viable or where the ITA cannot otherwise use the sales in the exporting country, the ITA will already have required submission of the information necessary to calculate normal value based on constructed value, thus obviating the need to request information on sales in a viable third country.

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