[Federal Register Volume 70, Number 154 (Thursday, August 11, 2005)]
[Notices]
[Pages 46816-46817]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4357]


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DEPARTMENT OF COMMERCE

International Trade Administration


Market Economy Inputs Practice in Antidumping Proceedings 
involving Non-Market Economy Countries

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Request for Comments

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SUMMARY: In antidumping proceedings involving non-market economy 
(``NME'') countries, the Department of Commerce (``the Department'') 
calculates normal value by valuing the NME producers' factors of 
production, to the extent possible, using prices from a market economy 
that is at a comparable level of economic development and that is also 
a significant producer of comparable merchandise. The goal of this 
surrogate factor valuation is to use the ``best available 
information.'' See section 773(c)(1) of the Tariff Act of 1930; 
Shangdong Huraong General Corp. v. United States, 159 F. Supp.2d 714, 
719 (CIT 2001). Normally, if a respondent or producer of subject 
merchandise sources an input from a market economy supplier, the 
Department will use the average input price paid by the respondent to 
market economy suppliers (in market economy currency) to value all of 
the given input (both imported and domestically-sourced) used by 
respondents (or the producers of the subject merchandise), provided 
certain conditions are met.
    The Department announced that is was considering options to change 
certain aspects of its policy and practice regarding market economy 
input prices and solicited public comment in a May 26, 2005 notice 
published in the Federal Register (70 FR 30418). In response to this 
first notice, the Department received 21 submissions from interested 
parties. After considering these comments, the Department is requesting 
comments regarding a proposed change to the Department's market economy 
inputs practice, which is detailed below.

DATES: Comments must be submitted by September 6, 2005.

ADDRESSES: Written comments (original and six copies) should be sent to 
Joseph A. Spetrini, Acting Assistant Secretary for Import 
Administration, U.S. Department of Commerce, Central Records Unit, Room 
1870, Pennsylvania Avenue and 14th Street NW, Washington, DC 20230.

FOR FURTHER INFORMATION CONTACT: Lawrence Norton, Economist, or Anthony 
Hill, Senior International Economist, Office of Policy, Import 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington DC, 20230, 202-482-1579 or 202-482-
1843, respectively.

SUPPLEMENTARY INFORMATION:

Background

    In an NME antidumping proceeding, the Department bases its 
calculation of normal value on the NME producers' factors of 
production, valued, to the extent possible, using prices from a market 
economy that is at a comparable level of economic development to the 
NME country and that is also a significant producer of comparable 
merchandise. See section 773(c)(1) of the Tariff Act of 1930. Where an 
NME producer purchases inputs from market economy suppliers and pays in 
a market economy currency, however, the Department normally uses the 
actual price paid for these inputs to value the input in question, 
where possible. See 19 CFR 351.408(c)(1); See also Final Determination 
of Sales at Less Than Fair Value: Oscillating Fans and Ceiling Fans 
from the People's Republic of China, 56 FR 55271 (October 25, 1991). 
Where a portion of the input is purchased from a market economy 
supplier and the remainder from a non-market economy supplier, the 
Department will normally us the average price paid for the inputs 
sourced from market economy suppliers to value all of the input\1\, 
provided four conditions are met. First, the volume of the imported 
input as a share of total purchases from all sources must be

[[Page 46817]]

``meaningful,'' a term used in the Preamble to the Regulations but 
which is interpreted by the Department on a case-by-case basis. See 
Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 
27366 (May 19, 1997) (Preamble). See, also, Shakeproof v. United 
States, 268 F.3d 1376, 1382 (Fed. Cir. 2001) (Shakeproof). Second, this 
average import price must reflect arms-length, bona fide sales. See 
Shakeproof at 14. Third, the Department has disregarded all input 
values it has reason to believe or suspect might be dumped or 
subsidized. See China National Machinery Import & Export Corporation v, 
United States, 293 F. Supp 2d 1334 (CIT 2003), as affirmed by Federal 
Circuit, 104 Fed. Appx. 183 (Fed. Cir. 2004). Fourth, the Department 
has disregarded the prices of inputs that could not possibly have been 
used in the production of subject merchandise during the period of 
investigation or review. See, e.g., Final Determination of Sales at 
Less Than Fair Value: Certain Frozen and Canned Warmwater Shrimp from 
the Socialist Republic of Vietnam, 69 FR 71005 (December 8, 2004).
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    \1\ See 19 CFR 351.408(c)(1)
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    In comments submitted in response to the Department's May 26 
Federal Register notice requesting comment on our current practice, 
seventeen interested parties argued that the prices paid for that 
portion of an input that was purchased from market economy countries 
often constitutes the ``best information available'' required by the 
statute for valuing domestically sourced inputs. In particular, these 
parties contended that using surrogate values in place of actual market 
economy purchase prices to value an entire input would result in less 
accurate calculation of normal value. These parties also stressed that 
the Department already requires that the quantity purchased from market 
economy suppliers be significant and that the transactions be bona fide 
and conducted in market economy currency. According to these parties, 
the aforementioned requirements already ensure that the market economy 
purchase prices the Department accepts constitute the ``best available 
information''.
    Other interested parties responding to the request for comment, 
however, submitted arguments that the Department's current case-by-case 
assessment of what constitutes a ``meaningful'' quantity does not 
ensure that the prices paid by respondents for the portion of the input 
sourced from market economy countries are an accurate valuation of the 
entire input. In particular, these parties have alleged that it may be 
possible, under the Department's current practice, for respondents to 
source a small amount of an input on favorable terms with the goal of 
manipulating the Department's margin calculations. Alternatively, these 
parties claim, market economy suppliers may sometimes offer limited 
quantities of an input at prices that are much lower than the price at 
which respondents could acquire the total amount of the input in 
question. Where situations such as these occur, these parties claim 
that it would be distortive to use the prices paid for a portion of an 
input sourced from market economy suppliers to value the entire input.
    Upon consideration of these comments, the Department proposes to 
continue to value respondents' entire input with the prices paid by 
them to market economy suppliers of the input, as long as the purchases 
reflect bona fide sales, were made in market economy currency, 
constitute a ``meaningful'' quantity, and could have been used in the 
production of the subject merchandise. However, the Department's goal 
is to better ensure that the market economy input purchase prices it 
accepts are as free as possible from distortions and constitute the 
best available information. Accordingly, we are now proposing a change 
in the Department's practice that is intended to reduce potential 
distortions in the Department's current market economy inputs practice 
while continuing to use the average price paid for the inputs sourced 
from market economy suppliers to value an entire input.
    The Department is now proposing to use respondents' market economy 
purchase prices to value all of the input (provided the Department's 
four other requirements described above are met) when the majority of 
each input by volume is sourced from market economy countries. Where 
respondents source less than a majority of the total volume of an input 
from market economy countries in transactions meeting the Department's 
other requirements, the Department will weight-average the portion that 
was purchased from market economy countries, using the actual price 
paid, with the portion sourced domestically, using a surrogate value. 
The Department welcomes comments on whether this proposal would 
appropriately address distortions that have been identified in the 
Department's market economy inputs practice and whether this proposal 
would be consistent with the Department's regulations.

Comments

    Persons wishing to comment should file a signed original and six 
copies of each set of comments by the date specified above. The 
Department will consider all comments received before the close of the 
comment period. Comments received after the end of the comment period 
will be considered, if possible, but their consideration cannot be 
assured. The Department will not accept comments accompanied by a 
request that a part or all of the material be treated confidentially 
because of its business proprietary nature or for any other reason. The 
Department will return such comments and materials to the persons 
submitting the comments and will not consider them in the development 
of any changes to its practice. The Department requires that comments 
be submitted in written form. The Department recommends submission of 
comments in electronic form to accompany the required paper copies. 
Comments filed in electronic form should be submitted either by e-mail 
to the webmaster below, or on CD-ROM, as comments submitted on 
diskettes are likely to be damaged by postal radiation treatment.
    Comments received in electronic form will be made available to the 
public in Portable Document Format (PDF) on the Internet at the Import 
Administration website at the following address: http://ia.ita.doc.gov/
.
    Any questions concerning file formatting, document conversion, 
access on the Internet, or other electronic filing issues should be 
addressed to Andrew Lee Beller, Import Administration Webmaster, at 
(202) 482-0866, email address: [email protected].

    Dated: August 5, 2005.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. E5-4357 Filed 8-10-05; 8:45 am]
BILLING CODE 3510-DS-S