The International Trade Administration has modified the applicability date of a final rule that amended its regulations in an effort to prevent the manipulation of dumping margins through post-sale price adjustments. The ITA now states that this rule will apply to all segments of antidumping duty proceedings initiated on or after Sept. 1.
An AD duty analysis involves a comparison of the company’s sales price in the U.S. (export price or constructed export price) with the price or cost in the foreign market (normal value). The prices used to calculate export price, constructed export price and normal value involve certain adjustments.
In a May 1997 rule that defined “price adjustment” the ITA said this term is intended to describe a category of changes to a price, such as discounts, rebates and post-sale price adjustments, that affect the net outlay of funds by the purchaser. Since that time the ITA has consistently applied its practice of not granting price adjustments where the terms and conditions were not established and known to the customer at the time of sale (sometimes referred to as determining the “legitimacy” of a price adjustment) because of the potential for manipulation of dumping margins through so-called “after-the-fact” adjustments. In a March 2014 decision, however, the Court of International Trade disagreed and stated that as currently written the regulations do not give the ITA such discretion.
As a result, the ITA revised its regulations to (a) clarify that it does not intend to accept a price adjustment made after the time of sale unless the interested party demonstrates its entitlement to such an adjustment to the ITA’s satisfaction and (b) provide a non-exhaustive list of factors it may consider in determining whether to accept price adjustments made after the time of sale. The final rule clarified that a price adjustment is not limited to discounts or rebates but encompasses other adjustments as well.
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