Background

The International Trade Administration is considering issuing a new regulation that would identify information it should and should not consider in antidumping and countervailing duty proceedings in determining whether a particular market situation exists that distorts the cost of production. Comments on this issue are due no later than Dec. 18.

Under current law the ITA is to consider sales to be outside the ordinary course of trade when there are situations in which it determines that the particular market situation prevents a proper comparison with the export price or constructed export price. Further, in determining the costs of material and fabrication or other processing employed in producing the goods, during a period that would ordinarily permit the production of the goods in the ordinary course of trade, for determining constructed value, if a particular market situation exists such that those costs do not accurately reflect the cost of production in the ordinary course of trade, the ITA may use another calculation methodology.

However, the law does not currently define “particular market situation,” identify the information the ITA should consider in determining the existence of a PMS that does not accurately reflect the costs of production in the ordinary course of trade, or provide the ITA with guidance as to the information it should consider in determining if a market situation is, or is not, particular.

In addition, the ITA notes that in a decision earlier this year the Court of Appeals for the Federal Circuit appeared to reach at least four conclusions on this issue: (1) a PMS that distorts costs must cause costs to deviate from what they would have otherwise been in the ordinary course of trade, (2) a PMS must be particular to certain producers or exporters, inputs, or the market where the inputs are manufactured, (3) if there is a claim of a subsidy or government interference, there should be evidence that the producer or seller of the input at issue received, or should have received, that subsidy or government assistance and that there is some form of impact on the price of the input as a result, and (4) the ITA is not required to quantify a distortion in costs by the PMS to find the existence of a PMS, but if it is able to quantify the distortion that may help support a finding of the existence of a PMS.

Considering that a regulation may help clarify these issues, the ITA is now soliciting public comments on the following issues.

- information the ITA should consider in determining if a PMS exists that distorts the costs of production if that information is reasonably available and relevant to the PMS allegation

- information the ITA should not be required to consider when determining if a PMS exists, regardless of the PMS allegation

- adjustments the ITA may make to its calculations when it determines the existence of a PMS but the record before it does not allow for the quantification of cost distortions

For more information on this issue and how it may affect your business, please contact attorney Kristen Smith at (202) 730-4965 or via email

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