[Federal Register Volume 72, Number 206 (Thursday, October 25, 2007)]
[Notices]
[Pages 60649-60651]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-21053]


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DEPARTMENT OF COMMERCE

International Trade Administration


Antidumping Methodologies in Proceedings Involving Certain Non-
Market Economies: Market-Oriented Enterprise; Request for Comment

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

SUMMARY: The Department of Commerce (``the Department'') requests 
public comment on whether it should consider granting market-economy 
treatment to individual respondents in antidumping proceedings 
involving the People's Republic of China (``China''), the conditions 
under which individual firms should be granted market-economy 
treatment, and how such treatment might affect our antidumping 
calculation for such qualifying respondents.

DATES: Comments must be submitted by November 26, 2007.

ADDRESSES: Written comments (original and six copies) should be sent to 
David Spooner, Assistant Secretary for Import Administration, U.S. 
Department of Commerce, Central Records Unit, Room 1870, 14th Street 
and Constitution Ave., NW., Washington, DC, 20230.

FOR FURTHER INFORMATION CONTACT: Lawrence Norton, Senior International 
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; telephone 202-482-
1579 or 202-482-1843, respectively.

SUPPLEMENTARY INFORMATION:

Background

    In antidumping proceedings involving non-market economy (``NME'') 
countries, it is the Department's usual practice to calculate the 
normal value for allegedly dumped merchandise being imported into the 
United States by valuing the NME producer's factors of production 
using, to the extent possible, prices from a market economy that is at 
a comparable level of economic development and that is also a 
significant producer of comparable merchandise. See section 773(c)(4) 
of the Tariff Act of 1930, as amended (``the Act''). Specifically, 
section 773(c)(1) of the Act provides for the use of factors of 
production to determine normal value if two conditions are met:
(A) the subject merchandise is exported from an NME country; and
(B) the administering authority finds that available information does 
not permit the normal value of the subject merchandise to be determined 
as is done for respondents in market economy countries.
    In all past NME proceedings involving China, the Department has 
found that both conditions of section 773(c)(1) are met and has 
calculated the normal value based on prices and costs from a surrogate 
country, in accordance with sections 773(c)(3) and (4) of the Act.
    The Department recently affirmed China's NME status. See Memorandum 
for David M. Spooner, Assistant Secretary for Import Administration, 
Antidumping Duty Investigation of Certain Lined Paper Products from the 
People's Republic of China's Status as a Non-Market Economy (August 30, 
2006) (``August 30th Memorandum'') (on file in the Central Records Unit 
{``CRU''{time} , Room-B-099, on the record of case number A-570-901). 
In conducting this review of China's NME status in accordance with 
section 771(18)(B) of the Act, the Department concluded that, while 
China has enacted significant and sustained economic reforms, the 
Chinese government has preserved a significant role for the state in 
the economy. The Department concluded that the limits the Chinese 
government has placed on the role of market forces are sufficient to 
preclude China's designation as a market economy under the U.S. 
antidumping law.
    Notwithstanding China's continued designation as an NME, the August 
30th Memorandum noted that China has undertaken numerous positive 
reforms. These are discussed more fully in the Department's March 29, 
2007 memorandum, Countervailing Duty Investigation of Coated Free Sheet 
(``CFS'') Paper from the People's Republic of China - Whether the 
Analytical Elements of the Georgetown Steel Opinion are Applicable to 
China's Present-day Economy, (March 29, 2007) (``Georgetown Steel 
Memorandum'') (on file in the CRU on the record of case number C-570-
907). The Georgetown Steel Memorandum notes that China's economy has 
evolved significantly over time and its present-day economy ``features 
both a certain degree of private initiative as well as significant 
government intervention, combining market processes with continued 
state guidance.'' Id. at 7. Further, the Department found that while 
private industry now dominates many sectors of the Chinese economy and 
entrepreneurship is flourishing, China's economy is best characterized 
as one in which constrained market mechanisms

[[Page 60650]]

operate alongside (and sometimes, in spite of) government plans. Id. at 
9-10. Although the limits the Chinese Government has placed on the role 
of market forces are not consistent with recognition of China as a 
market economy under the U.S. antidumping law, the evolution in China's 
economy nevertheless has led the Department to conclude that it is 
possible to determine whether the state has bestowed a benefit upon a 
Chinese producer (i.e., a subsidy can be identified and measured) and 
whether any such benefit is specific. Id. at 9. See also Coated Free 
Sheet Paper from the People's Republic of China: Amended Preliminary 
Affirmative Countervailing Duty Determination, 72 FR 17484 (April 9, 
2007). The Department also stated in the Georgetown Steel Memorandum 
that the evolution of China's economy, together with the features and 
characteristics of China's present-day economy, including a growing 
private sector, suggest that modification of some aspects of the 
Department's current NME antidumping policy and practice with regard to 
China might be warranted, such as the conditions under which the 
Department would grant an individual respondent in China market-economy 
treatment in some or all respects.
    Following the conclusion in the Georgetown Steel Memorandum that 
the evolution in China's economy might warrant changes to the 
Department's NME practice, the Department invited public comment on a 
possible market-oriented enterprise (``MOE'') test that could be 
introduced in future NME AD proceedings in a Federal Register notice 
published on May 25, 2007 (72 FR 29302). Given the Department's 
analysis in the Georgetown Steel Memorandum regarding China's present-
day economy, the May, 25, 2007 notice requested public comment on the 
conditions under which the Department might grant market-economy 
treatment to individual Chinese respondents (as well as possibly other 
NME respondents), and, if so, how this might affect our antidumping 
duty calculations for such enterprises. The Department received 39 
comments in response to this notice, which are available (along with 
the May 25, 2007 request for comment) on the Import Administration Web 
site at http://ia.ita.doc.gov/download/nme-moe/nme-moe-cmt-20070625-index.html).

Request for Comment

    The Department has carefully considered all of the comments it 
received in response to its first request for comment. The comments 
identify two broad competing concerns which the Department now seeks to 
clarify in this second request for comment. The first is that various 
parties have argued that there may be prices within China that are 
sufficiently market-based that they can be used in the calculation of 
normal value, notwithstanding China's overall status as an NME. The 
Department has the legal authority to introduce an MOE test, these 
parties argue, and introducing such a test would recognize the reform 
efforts that China has undertaken since the Department adopted its 
current NME methodology. The Department agrees that to the extent that 
market-based prices exist in China that might be useable in the AD 
calculation, it would be appropriate to find a way to identify them 
through an MOE test.
    However, other parties argue that the Department has no legal 
authority to introduce a MOE test. These parties also point out that 
any MOE test that attempted to identify market-based prices within an 
NME would be very difficult to administer, particularly since prices 
within an economy are interconnected. That is, these parties argue, 
even if the Department could identify which companies manage their 
operations on a market basis, these firms would still operate in a 
broader NME environment. In particular, firms' input prices could be 
affected by non-market considerations. Such a distortion of an 
otherwise ``market-oriented'' firm's acquisition prices could happen 
either directly, if these firms purchase inputs from non-profit 
maximizing SOEs, or indirectly, if macroeconomic NME distortions 
relating to land or capital affect the relevant input market. It would 
be impossible, these parties argue, to parse out the numerous 
distortions that could affect each input price, unless perhaps the 
Department and parties conducted a laborious analysis of each input 
price. However, anything less than a full analysis, these parties 
argue, would rapidly undermine China's overall NME status.
    Because there are complex legal and administrative arguments on 
each side of this issue, the Department is requesting further comment 
on any potential MOE test. As noted above and described more fully in 
the August 30th Memorandum, market forces are not yet sufficiently 
developed in China to warrant market economy status. However, as noted 
in the Georgetown Steel Memorandum, China's economy has evolved to the 
point where domestic prices of certain market-oriented firms might be 
useable in the dumping calculation. In submitting comments, we ask 
parties to further consider whether there is a legal basis for a MOE 
test. We also ask parties to consider administrative feasability in 
proposing how the Department could identify an MOE operating within a 
broader NME environment. We ask parties also to consider to what 
extent, and under what conditions, the Department should rely on an 
MOE's prices and costs, particularly for those inputs that are 
inextricably linked to the broader operating economic environment, 
i.e., labor, land and capital. While an enterprise may be market-
oriented, the cost of certain inputs obtained in the broader economy 
may necessarily be determined on a non-market basis. Given such a 
situation in China, we request parties to consider administrative 
feasability in proposing the extent and conditions under which a 
finding of an MOE might be limited. For example, how appropriate and 
feasible would it be to consider using a respondent's own prices and 
costs within China in conjunction with certain surrogate prices and 
costs in our antidumping duty calculations?

Submission of 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 Web site 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

[[Page 60651]]

Administration Webmaster, at (202) 482-0866, e-mail address: [email protected].

    Dated: October 17, 2007.
David Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E7-21053 Filed 10-24-07; 8:45 am]
BILLING CODE 3510-DS-S