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Separate AD Duty Rates for NME Exporters Could be More Difficult to Obtain

Friday, July 05, 2013
Sandler, Travis & Rosenberg Trade Report

Effective July 5, the International Trade Administration is implementing policy revisions that could make it more difficult for individual exporters in non-market economy countries to obtain separate rates in antidumping proceedings. NMEs currently include Armenia, Azerbaijan, Belarus, China, Georgia, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Uzbekistan and Vietnam.

In AD proceedings involving NME countries the ITA has a rebuttable presumption that the export activities of all companies within the country are subject to government control and should therefore be assessed a single AD duty rate. It is the ITA’s policy to assign this single rate to all exporters of merchandise subject to investigation in an NME country unless an exporter can demonstrate that it is sufficiently free of both de jure and de facto governmental control over its export activities. When conducting its de factoseparate rate analysis the ITA has asked exporters questions regarding their ownership and whether any individual owners hold office at any level of the NME government; export sales negotiations and prices; the composition of company management, the process through which they were selected and whether any managers held government positions; the disposition of profits; and affiliations with any companies involved in the production or sale in the home market, third-country markets or the U.S. of merchandise that would fall under the description of goods covered by the scope of the proceeding.

The ITA has now determined to add the following elements to its de facto analysis.

- The ITA will consider, on a case-by-case basis, issuing supplemental questionnaires to identify and review additional documentation and information that would directly or indirectly relate to the issue of de factogovernment control by any level of government in cases where the respondent’s initial questionnaire responses do not provide sufficient information to support its claim. Depending on the record evidence, the supplemental questions might address the selection and removal of directors and managers at the producing/exporting company; identification of parties that have the authority to approve contracts, bank transactions, etc., on behalf of the company; ownership, including individual and corporate (direct and indirect shareholdings or equity holdings); whether any corporate owners are state-owned, state-controlled or otherwise affiliated with the state at the national or sub-national government levels; and whether any managers hold government positions at the national or sub-national government levels.

- Where budget and resources allow, the ITA will continue to consider conducting verifications of entities claiming eligibility for a separate rate on a case-by-case basis. However, the ITA made no comment on suggestions that such verifications include increased issue-focused verifications of exporters and their producing suppliers, more focus on companies that have previously failed verification, or enhanced verification of companies that previously received partial or total adverse facts available determinations based on their failure to cooperate to the best of their ability.

- In cases where a respondent has a producing entity in an NME and an affiliated reseller in a market economy country, the ITA will endeavor to examine, on a case-by-case basis, whether any supplemental information is required to determine if the affiliated reseller is under government control through the NME producer. When the record indicates there may be such control, the ITA may require both the NME producer and the ME exporter to provide information similar to that requested in the NME Separate Rate Application.

The ITA declined requests to make its de facto analysis even more stringent, for example by (1) including a threshold determination of state ownership that would be dispositive of whether the NME government is exercising control over an entity’s export activities, (2) finding government control where any level of the NME government ownership is 5% or more, (3) examining whether any shareholder owning more than 10% of company stock has a leadership role in the Communist Party, (4) requiring all respondents to disclose the extent to which they export subject merchandise manufactured or supplied by another party, and (5) requiring separate rate applications from NME exporters and their NME suppliers in combination.

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