[Federal Register Volume 78, Number 149 (Friday, August 2, 2013)]
[Rules and Regulations]
[Pages 46799-46804]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-18547]


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DEPARTMENT OF COMMERCE

International Trade Administration

19 CFR Part 351

[Docket No. 120424022-3616-02]
RIN 0625-XC001


Use of Market Economy Input Prices in Nonmarket Economy 
Proceedings

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

ACTION: Final rule.

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SUMMARY: The Department of Commerce (``Department'') is modifying its 
regulation which states that the Department normally will use the price 
that a nonmarket economy (``NME'') producer pays to a market economy 
supplier when a factor of production is purchased from a market economy 
supplier and paid for in market economy currency, in the calculation of 
normal value (``NV'') in antidumping proceedings involving NME 
countries. The rule establishes a requirement that the input at issue 
be produced in one or more market economy countries, and a revised 
threshold requiring that ``substantially all'' (i.e., 85 percent) of an 
input be purchased from one or more market economy suppliers before the 
Department uses the purchase price paid to value the entire factor of 
production. The Department is making this change because it finds that 
a market economy input price is not the best available information for 
valuing all purchases of that input when market economy purchases of an 
input do not account for substantially all purchases of the input.

DATES: This final rule is effective September 3, 2013. It is applicable 
for all proceedings or segments of proceedings (e.g., investigations 
and administrative reviews) initiated on or after September 3, 2013.

FOR FURTHER INFORMATION CONTACT: Wendy Frankel at (202) 482-5849, 
Albert Hsu at (202) 482-4491, or Scott McBride at (202) 482-6292.

SUPPLEMENTARY INFORMATION:

Background

    On June 28, 2012, the Department published a proposed modification 
to its regulations regarding use of market economy input prices in NME

[[Page 46800]]

proceedings.\1\ The Proposed Rule explained the Department's proposal 
to modify its regulations to establish (1) a requirement that the input 
at issue be produced in one or more market economy countries, and (2) a 
revised threshold requiring that ``substantially all'' (i.e., 85 
percent) of an input be purchased from one or more market economy 
suppliers before the Department uses the purchase price paid to value 
the entire factor of production. The Department received numerous 
comments on the Proposed Rule and has addressed these comments below. 
The Proposed Rule, comments received, and this Final Rule can be 
accessed using the Federal eRulemaking Portal at http://www.Regulations.gov under Docket Number ITA-2012-0002. After analyzing 
and carefully considering all of the comments that the Department 
received in response to the Proposed Rule, the Department has adopted 
the modification and amended its regulations.
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    \1\ See Proposed Modification to Regulation Concerning the Use 
of Market Economy Input Prices in Nonmarket Economy Proceedings, 77 
FR 38553 (June 28, 2012) (``Proposed Rule'').
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Explanation of Modification to 19 CFR 351.408

    The second sentence of 19 CFR 351.408(c)(1) states that 
``{w{time} here a factor is purchased from a market economy supplier 
and paid for in a market economy currency, the Secretary normally will 
use the price paid to the market economy supplier.'' To implement this 
rule, the Department is modifying the existing sentence as follows:

    ``{w{time} here a factor is produced in one or more market 
economy countries, purchased from one or more market economy 
suppliers and paid for in market economy currency, the Secretary 
normally will use the price(s) paid to the market economy 
supplier(s) if substantially all of the total volume of the factor 
is purchased from the market economy supplier(s). For purposes of 
this provision, the Secretary defines the term ``substantially all'' 
to be 85 percent or more of the total volume purchased of the factor 
used in the production of subject merchandise.''

    We view these additions as necessary to specify which inputs 
qualify under this change to our regulations.
    The current third sentence of 19 CFR 351.408(c)(1) states ``In 
those instances where a portion of the factor is purchased from a 
market economy supplier and the remainder from a nonmarket economy 
supplier, the Secretary normally will value the factor using the price 
paid to the market economy supplier.'' The Department is modifying this 
sentence to read as follows:
    ``In those instances where less than substantially all of the total 
volume of the factor is produced in one or more market economy 
countries and purchased from one or more market economy suppliers, the 
Secretary normally will weight-average the actual price(s) paid for the 
market economy portion and the surrogate value for the nonmarket 
economy portion by their respective quantities.''
    We view these changes as necessary to explain the methodology the 
Department will apply when a respondent purchases less than 
substantially all of the input from market economy suppliers, or when 
only part of the input is produced in one or more market economy 
countries.

Response to Comments on the Proposed Rule

    The Department received nine sets of comments on the Proposed Rule 
from numerous parties including domestic producers, foreign exporters, 
foreign governments, and members of the International Trade Bar. As 
indicated in the ``Background'' section, these comments can be accessed 
using the Federal eRulemaking Portal at http://www.regulations.gov 
under Docket Number ITA-2012-0002. The Department analyzed and 
carefully considered all of the comments received. Below is a summary 
of the comments, grouped by issue category and followed by the 
Department's response.

Comment 1: Whether the Department Provided an Adequate Explanation for 
the Proposed Change

    One commenter asserted that the Department did not adequately 
justify the need for the ``substantially all'' (i.e., 85 percent) 
requirement in the Proposed Rule. The commenter stated that the 
Department has been using market economy input prices to value the 
entire input when the total quantity purchased from market economy 
suppliers is ``meaningful'' (i.e., 33 percent or more of total 
purchases) for years, and there does not appear to be a reason to stray 
from that practice.\2\ Another commenter argued that the Department in 
its Proposed Rule did not sufficiently explain why it now has concerns 
regarding the reliability of market economy prices when the quantity 
purchased is less than 85 percent and questioned why the Department has 
these concerns, since the Department stated in a recent case that 
market forces are at play with respect to many prices in China.\3\ A 
third commenter also asserted that the Proposed Rule only partially 
disclosed the reasons for the Department's proposed change.
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    \2\ See Antidumping Methodologies: Market Economy Inputs, 
Expected Non-Market Economy Wages, Duty Drawback; and Request for 
Comments, 71 FR 61716 (October 19, 2006).
    \3\ See Countervailing Duty Investigation of Coated Free Sheet 
Paper from the People's Republic--Whether the Analytical Elements of 
the Georgetown Steel Opinion are Applicable to China's Present-Day 
Economy (March 29, 2007).
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    Response to Comments: The Department has determined to amend its 
regulations to only allow the application of market economy purchase 
prices to value the entire input when substantially all of the firm's 
purchases of that input have been made from a market economy. Upon 
review of our past practice, we have determined that when a company's 
purchases from market economy suppliers represent only 33 percent of 
its total purchases, this amount does not constitute a sufficient 
quantity to be representative of the input prices that the company 
would pay to source all of its purchases from market economy suppliers. 
This is because, when a company purchases an input from multiple 
sources in multiple economies at different prices, some type of 
constraint is usually at work. Otherwise, the company would likely meet 
all of its needs more efficiently by sourcing from the single, lowest-
price input supplier. For example, if certain imports represent the 
lowest prices available, but are limited in quantity, then the company 
has no option but to purchase the remainder of its input needs from 
higher-priced domestic sources. On the other hand, if domestic sources 
represent the lowest prices, but the domestic sources are limited in 
quantity, then the company might have no choice but to complete its 
purchases using higher-priced imports. In both cases, because of the 
supply constraint at work, valuing all of the input at the market price 
paid for less than the vast majority of total purchases of that input 
would either overstate or understate the company's input costs. 
Further, the meaning of ``supply constraint'' can be broadened to cover 
logistics problems and movement costs, and the outcome would be the 
same--an overstatement or understatement of the company's costs.
    For these reasons, the Department has determined that unless the 
vast majority of an input need is met with imports from one or more 
market-based economies, using the market-based purchase prices to value 
all of a company's inputs (from all sources, foreign and domestic) 
would be an inappropriate means of valuing factors of production. 
Accordingly, consistent

[[Page 46801]]

with Section 773(c)(1) of the Tariff Act of 1930 (``the Act''), we have 
concluded that the best available information to value a factor of 
production using market economy prices is when the market economy input 
purchases represent substantially all of the total purchases of that 
input.

Comment 2: Whether the Proposal Meets the ``Best Available 
Information'' Standard and the United States' World Trade Organization 
(``WTO'') Obligations

    Some commenters asserted that the Department must undertake an 
analysis to determine the best available information for use in an NME 
case on a case-by-case basis, whether it is actual market economy 
purchase prices or surrogate values. They argued that the Proposed Rule 
would preclude the Department from doing this statutorily mandated 
analysis to determine the best available information when the purchase 
quantity from market economy producers is less than 85 percent of total 
purchases of that input. One commenter asserted that the Proposed Rule 
would result in market economy purchase prices being excluded in favor 
of surrogate values when the 85 percent threshold is not met, which is 
contrary to the best available information requirement. It also claimed 
that market economy prices are more reliable than surrogate values.
    One commenter also contended that U.S. WTO obligations with respect 
to the People's Republic of China (``PRC'') demonstrate a preference 
for using primary information (where market economy prices exist) and 
require that secondary information (e.g., surrogate values) must be 
shown to be more reliable and accurate than primary information (e.g., 
market economy purchase prices) in order to be used. Another commenter 
also asserted that market economy purchase prices are inherently the 
best available information, and there is nothing in the statute or the 
WTO agreements that precludes the use of one producer's market economy 
purchase prices to value another producer's factors of production.
    Response to Comments: The Department finds that this amendment to 
the Department's regulations comports with U.S. law, and by extension 
with U.S. WTO obligations, because this modification is designed to 
ensure that the Department is using the best available information to 
value the factors of production. As stated in our response to Comment 1 
and in the Proposed Rule, when market economy purchases of an input do 
not account for substantially all purchases of the input, the 
Department finds that a market economy input price is not the best 
available information for valuing all purchases of that input, 
particularly since it would not be possible to determine objectively 
whether the price for the input would have been the same had the firm 
purchased solely from market economy suppliers. Moreover, the 
Department will continue to use valid market economy purchase prices 
\4\ if the quantity purchased from market economy suppliers is less 
than 85 percent of total purchases by weight averaging those values 
with a surrogate value, using as weights the relative quantities of the 
input imported and purchased from domestic sources.
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    \4\ See Comment 5: Criteria for when the Department will accept 
a Respondent's Market Economy Purchases.
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    We agree with the argument that nothing precludes the Department 
from using market-based transactions of any number in our calculations, 
including the statute and WTO agreements. However, just because we are 
not precluded from using a particular value in our analysis does not 
mean that the value at issue is the best available or most appropriate 
on the record. For the reasons stated above, we believe the amended 
regulation is fully consistent with section 773(c)(1) of the Act.

Comment 3: Whether the Quantity Purchased Affects the Purchase Price

    Some commenters asserted that the Department typically examines a 
single company, whose purchases of an input are unlikely to affect the 
global price of that input. They assert that only the price of certain 
commodities might change depending on the quantity of that input that 
is purchased, whether that may be due to inelastic supply, or if the 
input is thinly traded. Thus, these parties contended that the 
Department has provided no justification to now find that the quantity 
of an input that a firm can purchase will somehow be able to affect the 
price of that input. These commenters proposed that, if such 
circumstances exist, the Department could consider limiting the use of 
market economy purchase prices in those instances, but that does not 
justify modifying the regulation to use market economy purchase prices 
only when the quantity purchased is greater than 85 percent.
    Response to Comments: As we explained in our response to Comment 1, 
if a company purchases only a limited quantity of an input from a 
market economy supplier, it is possible that some supply constraint 
exists (e.g., the import quantity is limited). Therefore, the 
Department continues to be concerned that in those cases, the purchased 
amount does not constitute a sufficient quantity to be representative 
of the input prices that the company would pay to source all of its 
purchases from market economy suppliers. On the other hand, if the 
company is able to purchase the vast majority of the input (i.e., 85 
percent or more) from market economy suppliers, the Department does not 
have such concerns. The Department has therefore concluded that using 
the market economy purchase price to value all of a company's inputs 
when those purchases represent only 33 percent of a company's overall 
purchases of that input would not be the best available information to 
value the factor of production under examination.

Comment 4: Whether the Proposal Creates Different Standards for NME and 
Market Economy Producers

    Some commenters suggested that the proposal would allow the 
Department to apply different standards in NME and market economy cases 
with respect to the use of input prices produced in an NME. They 
asserted that under the proposal, in NME proceedings the Department 
will no longer accept the price paid by a firm to a market economy 
supplier if that input was produced in an NME country. However, these 
commenters maintained that in market economy proceedings the Department 
will use a market economy firm's costs of an input that was produced in 
an NME, unless some exceptions apply. One commenter suggested that if 
an input was originally produced in an NME that is different from the 
NME subject to the proceeding, then the Department should accept the 
purchase price of that input if the firm purchased it from a market 
economy. Another commenter recommended that the Department accept the 
market economy purchase price of an input originally produced in an NME 
unless evidence is presented that shows the NME input producer's 
records are not kept in accordance with the local GAAP or shows that 
the price is otherwise distorted.
    Response to Comments: The Department agrees that there is a 
difference between market economy and NME practice with respect to the 
use of inputs produced in an NME; however, this does not reflect a 
change from current practice, and this difference in methodology is 
inherent in the statute. In calculating the cost of production or 
constructed value in market economy antidumping cases, the statute 
requires that the Department use the actual costs

[[Page 46802]]

of purchases and makes no mention of limiting those costs by the 
country from which an input is purchased.\5\ Conversely, section 
773(c)(1) of the Act provides that in NME cases the Department shall 
determine the normal value using a factors of production methodology if 
the merchandise is exported from an NME and the information does not 
permit the calculation of normal value using home-market prices, third-
country prices, or constructed value under section 773(a) of the Act. 
The Department bases normal value on the factors of production because 
the government's extensive role in the economy renders price 
comparisons and the calculation of production costs invalid under the 
Department's normal methodologies. Accordingly, this argument is not 
directed at the proposed amendment to the Department's regulations but 
at the statutory NME provision itself. We therefore find that these 
comments are outside the scope of the request and to implement such 
changes would require amendment of the statute. Thus, we have not 
adopted these suggested changes.
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    \5\ See section 773(b)(3) and 773(e) of the Act.
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Comment 5: Criteria for When the Department Will Accept a Respondent's 
Market Economy Purchases

    Some commenters support the Department's proposed modification but 
requested that the Department clarify and/or tighten its current 
practice with respect to when it will accept a firm's market economy 
purchase prices. Specifically, some commenters requested that the 
Department require firms to provide evidence that their inputs were 
actually produced in a market economy country. These commenters also 
requested that in finalizing this modification, the Department 
reiterate that it will not accept market economy purchases: (1) That 
are dumped; (2) from a country that maintains general export subsidies; 
(3) that are not ``bona fide;'' or (4) that are purchased from an 
affiliate. Additionally, one commenter requested that the Department 
revise its questionnaire to ask firms for detailed information 
concerning their market economy purchases to aid in the Department's 
analysis. This commenter advocated that the Department question whether 
the input purchased reflects the same type, grade, and quality of the 
input used in the production of the subject merchandise, and whether 
respondent can demonstrate that the input was actually used in the 
production of subject merchandise.
    Response to Comments: With this modification, the Department will 
continue its practice of disregarding market economy purchase prices 
that: (1) May have been dumped (e.g., the country covered by our 
proceeding has an antidumping measure on the input from the source 
country); (2) are from a country that the Department has a ``reason to 
believe or suspect'' maintains general export subsidies; (3) are not 
reflective of bona fide sales based on record evidence; or (4) are 
otherwise not acceptable for use in a dumping calculation (i.e. record 
evidence demonstrates that the purchases are from an affiliate and are 
not made at arm's length). The Department has therefore determined that 
there is no further need to clarify or modify the Department's practice 
in this regard.
    With respect to the comment that firms should be required to 
provide evidence that their inputs were produced in a market economy 
country, in the standard NME questionnaire the Department currently 
requests that respondents provide evidence identifying the country of 
origin for where each input was produced. Therefore, since the 
Department already requests such information from respondents, we do 
not find that such a requirement needs to be included in the 
modification of the regulation.
    Finally, the Department is not revising its questionnaire to 
require respondents to demonstrate that certain inputs were the actual 
inputs used in the production of merchandise exported to the United 
States, and therefore subject to an antidumping duty order. The 
Department calculates a company's costs of production (in market 
economy cases) and factors of production (in NME cases) based on the 
merchandise the company has produced, and not on the market in which 
such merchandise is sold. The inputs used in the production of subject 
merchandise are often fungible and thus may be used in the production 
of merchandise destined for the home market, the United States or other 
export markets. Indeed, it is the Department's experience that while 
companies may, in some cases, have the ability to distinguish between 
otherwise fungible inputs based solely on the source and/or price of 
the input and the destination of the subject merchandise, the 
calculation of normal value may also be subject to distortion on this 
basis.\6\ Specifically, a determination of normal value should not 
depend upon a respondent's ability to demonstrate that it selected 
particular inputs for use in the production of merchandise destined for 
the United States versus the production of merchandise sold in other 
markets, particularly when such a selection might have been based 
solely on the price of inputs that were otherwise fungible.
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    \6\ See Sulfanilic Acid from the People's Republic of China; 
Final Results of Antidumping Duty Administrative Review, 63 FR 
63834, 63838 (Nov. 17, 1998) (finding that ``aniline is a generic, 
fungible input'' and that it did not matter whether it was imported 
or sourced in China--``the factor to be valued in this case is not 
`domestic aniline' but simply `aniline.' '').
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    For this reason, the Department's NME questionnaire, at Section D, 
specifically requires that respondents report factors of production 
information for all models or product types used to produce one unit of 
the ``merchandise under consideration,'' \7\ which the Department 
defines as merchandise that meets the physical description of the scope 
of the antidumping duty order, ``regardless of whether or not destined 
for the U.S. market.'' \8\ Accordingly, we are not making the requested 
change to our questionnaire.
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    \7\ The Department's Section D Questionnaire, at D-1. See also 
D-4 and D-6, which require that respondents provide not only the 
factors used to produce all models and product types sold to the 
United States, but also ``the portion of production of those models 
or product types not destined for the United States.''
    \8\ The Department's Section D Questionnaire at I-6.
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Comment 6: Economic Comparability of Input/Supplier Country

    One commenter asserted that the Department should modify the 
Proposed Rule such that in order for the Department to use a market 
economy purchase price, the market economy input must be purchased from 
an economically comparable country that is also a significant producer 
of comparable merchandise, consistent with section 773(c)(4) of the 
Act.
    Response to Comment: The Act contains no requirement that the 
Department use only market economy purchase prices from a country that 
is economically comparable to the NME country and also a significant 
producer of comparable merchandise. Rather, these are requirements 
imposed when applying surrogate values from a third country. Therefore, 
we have not adopted this suggested change.

Comment 7: Effective Date

    Two commenters requested that the Proposed Rule be applied 
prospectively in order to give parties a chance to change their 
purchasing behavior. Specifically, they asserted that any such change 
in practice should only be applied in investigations and/or reviews 
that cover entries of subject

[[Page 46803]]

merchandise that entered the United States after the effective date of 
the change in practice.
    Response to Comments: If the Department were to delay 
implementation as suggested by those commenters, the effect would be a 
year or more of entries, investigations and reviews not affected by 
this modification to our regulations. The Department will make this 
modification effective for proceedings or segments of proceedings that 
are initiated on or after 30 days following the publication of this 
Final Rule. This change is intended and designed to ensure that the 
Department is relying on the best available information to value a 
firm's factors of production; thus, the Department does not believe 
that it should delay the effective date of this modification.

Comment 8: Allegation of Clerical Errors

    One commenter asserted that the Department made clerical errors in 
the Proposed Rule that need to be fixed. Specifically, this commenter 
recommended that the Department (1) add the word ``and'' before 
``purchased,'' and (2) use a lowercase ``i'' for the word ``if'' in the 
second sentence of its proposed modification of the regulation.
    Response to Comments: The Department notes that these clerical 
errors appeared in the section of the Proposed Rule entitled, 
``Explanation of Proposed Modification to 19 CFR 351.408,'' as printed. 
However, the proposed revised regulatory text at the end of the 
Proposed Rule did not contain these errors. Therefore, the Department 
has not made any changes to the final modification of this regulation, 
but it has made the explanation of the final modification clearer based 
on the typographical errors in the Proposed Rule.

Classification

Executive Order 12866

    This rule has been determined to be not significant for purposes of 
Executive Order 12866.

Final Regulatory Flexibility Analysis

    Pursuant to the requirements of 5 U.S.C. 604, the Department has 
prepared the following Final Regulatory Flexibility Analysis.
1. A Statement of the Need for, and Objectives of, the Rule
    The final rule is intended to revise 19 CFR 351.408(c)(1) to 
establish that in valuing factors of production in antidumping 
proceedings involving NMEs, if substantially all of an input is 
purchased from market economy suppliers as a share of total purchases 
of that input from all sources during the investigation or review 
period, the Department will use the weighted-average purchase price 
paid to market economy suppliers to value all of the input. Further, 
the final rule is also intended to add a requirement to 19 CFR 
351.408(c)(1) that the market economy input at issue actually be 
produced in one or more market economy countries, and not just be sold 
through market economy countries.
    The legal basis for this final rule is 5 U.S.C. 301; 19 U.S.C. 1202 
note; 19 U.S.C. 1303 note; and 19 U.S.C. 1671 et seq. No other Federal 
rules duplicate, overlap or conflict with this final rule.
2. A Statement of Significant Issues Raised by the Public Comments in 
Response to the Initial Regulatory Flexibility Analysis, a Statement of 
the Assessment of the Agency of Such Issues, and a Statement of Any 
Changes in the Proposed Rule as a Result of Such Comments
    The Department received no comments concerning the Initial 
Regulatory Flexibility Analysis or the economic impacts of the rule 
more generally.
3. The Response of the Agency to Any Comments Filed by the Chief 
Counsel for Advocacy of the Small Business Administration in Response 
to the Proposed Rule, and a Detailed Statement of Any Change Made to 
the Proposed Rule in the Final Rule as a Result of the Comments
    The Department received no comments from the Chief Counsel for 
Advocacy of the Small Business Administration.
4. A Description of and an Estimate of the Number of Small Entities to 
Which the Rule Will Apply or an Explanation of Why No Such Estimate Is 
Available
    The final rule regulates entities that are: (1) Producing 
merchandise in an NME that is exported to the United States and is 
subject to an antidumping duty order; (2) being individually examined 
in an antidumping proceeding; and (3) claiming that market economy 
purchase prices should be used to value a factor of production in the 
calculation of the exporter's weighted-average dumping margin and 
antidumping duty assessment rate. The resulting antidumping duty 
assessment rate determines the amount of antidumping duties to be paid 
by importers of record of the subject merchandise imported into the 
United States.
    Entities which produce and export merchandise subject to U.S. 
antidumping duty orders are rarely U.S. companies. Some producers and 
exporters of subject merchandise do have U.S. affiliates, some of which 
may be considered small entities under the appropriate Small Business 
Administration (SBA) small business size standard. The Department is 
not able to estimate the number of exporters and producer domestic 
affiliates which may be considered small entities, but anticipates, 
based on its experience in these proceedings, that the number will not 
be substantial.
    Importers may be U.S. or foreign companies, and some of these 
entities may be considered small entities under the appropriate SBA 
small business size standard. There are no means by which the 
Department can readily determine whether or not a substantial number of 
small importers will be impacted by this rule, as the effect of the 
Department's change in methodology will differ from proceeding to 
proceeding, on a case-by-case basis, and the importers depositing cash 
deposits and/or paying antidumping duties will also differ from 
proceeding to proceeding.
5. A Description of the Projected Reporting, Recordkeeping, and Other 
Compliance Requirements of the Final Rule
    The final rule will require exporters or producers to establish on 
the administrative record that 85 percent or more of an input has been 
purchased from market economy suppliers from one or more market economy 
countries as a share of total purchases of that input from all sources 
(domestic and foreign) during a particular period of investigation or 
administrative review, if the exporter or producer wishes the 
Department to use the weighted-average purchase price paid to the 
market economy supplier(s) to value all of the input (from all 
sources). Furthermore, the final rule will require that exporters or 
producers also establish on the administrative record that the market 
economy input at issue was produced in a market economy, rather than 
merely being sold through a market economy supplier. There will be no 
additional reporting or recordkeeping burdens on U.S. importers as a 
result of this rule.

[[Page 46804]]

6. A Description of the Steps the Agency Has Taken To Minimize the 
Significant Economic Impact on Small Entities Consistent With the 
Stated Objectives of Applicable Statutes, Including a Statement of the 
Factual, Policy, and Legal Reasons for Selecting the Alternative 
Adopted in the Final Rule and Why Each of the Other Significant 
Alternatives to the Rule Considered by the Agency Which Affect the 
Impact on Small Entities Was Rejected
    As required by 5 U.S.C. 604(a), the Department's analysis 
considered significant alternatives. The alternatives which the 
Department considered are: (1) The preferred alternative of modifying 
19 CFR 351.408(c)(1) to (a) establish that if substantially all of an 
input is purchased from market economy suppliers as a share of total 
purchases of that input from all sources during the investigation or 
review period, the Department will use the weighted-average purchase 
price paid to market economy suppliers to value all of the input and 
(b) require that the market economy input at issue actually be produced 
in one or more market economy countries, and not just be sold through 
market economy countries; (2) modify the regulation with respect to 
(1)(a), but not (1)(b); (3) modify the regulation with respect to 
(1)(b), but not (1)(a); or (4) maintain the status quo with respect to 
the valuation of inputs purchased from a market economy supplier and 
paid for in a market economy currency.
    Factors of production for the subject merchandise will be assigned 
a value in the calculation of the weighted-average dumping margin and 
antidumping duty assessment rate, whether the assigned value is a 
market economy purchase price, a surrogate value from a market economy 
country, or a combination of the two. Accordingly, the economic impact 
of providing information and argument to the Department in relation to 
the valuation of the factors of production for entities individually 
examined in the Department's antidumping proceedings is roughly 
equivalent under each of the above-noted alternatives.
    In relation to the possible impact of the alternatives on the 
amount of antidumping duties to be paid by importers of record of the 
subject merchandise, the value of a factor of production is one of 
numerous elements in the calculation of a weighted-average margin of 
dumping. Whether a particular factor value will have any impact on the 
resulting weighted-average dumping margin is not certain. To the extent 
that a small U.S. importer will be economically impacted by this rule, 
it will only be through an increase or decrease in the cash deposits 
and duties posted by that importer as a result in the change of a 
weighted-average dumping margin. In those circumstances where a change 
in the value of an input as a result of this regulatory modification 
does have an impact on the weighted-average dumping margin, the impact 
to the small U.S. importer will depend on whether the publicly sourced 
value is higher or lower than the market economy purchase price(s).
    In this regard, the Department is required by section 773(c)(1)(b) 
of the Act to rely on the best information available for valuing the 
producer's factors of production. The modification to the regulation 
addresses the Department's concerns that a market economy input price 
may not be the best available information when: (1) Market economy 
purchases of an input are insufficient in proportion to NME purchases 
for the Department to objectively conclude that the purchase price for 
the input would have been the same had the firm purchased solely from 
market economy suppliers and (2) the reported pricing of an NME 
produced inputs purchased from a market economy supplier (or reseller) 
can be distorted by NME cost or supply factors. Accordingly, the 
Department considers that the first, preferred alternative is the only 
alternative that fully addresses the Department's policy concerns 
explained in the Background section of this preamble.

Small Business Compliance Guide

    In accordance with Section 212 of the Small Business Regulatory 
Enforcement Fairness Act of 1996, the agency has published a guide to 
assist small entities in complying with the rule. This guide is 
available on the Department's Web site at http://ia.ita.doc.gov/tlei/index.html.

Paperwork Reduction Act

    This rule does not contain a collection of information for purposes 
of the Paperwork Reduction Act of 1980, as amended (44 U.S.C. 3501 et 
seq.).

List of Subjects in 19 CFR Part 351

    Administrative practice and procedure, Antidumping, Business and 
industry, Cheese, Confidential business information, Countervailing 
duties, Freedom of information, Investigations, Reporting and 
recordkeeping requirements.

    Dated: July 22, 2013.
Paul Piquado,
Assistant Secretary for Import Administration.

    For the reasons stated, 19 CFR part 351 is amended as follows:

PART 351--ANTIDUMPING AND COUNTERVAILING DUTIES

0
1. The authority citation for 19 CFR part 351 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 1202 note; 19 U.S.C. 1303 
note; 19 U.S.C. 1671 et seq.; and 19 U.S.C. 3538.


0
2. In Sec.  351.408, revise paragraph (c)(1) to read as follows:


Sec.  351.408  Calculation of normal value of merchandise from 
nonmarket economy countries.

* * * * *
    (c) * * *
    (1) Information used to value factors. The Secretary normally will 
use publicly available information to value factors. However, where a 
factor is produced in one or more market economy countries, purchased 
from one or more market economy suppliers and paid for in market 
economy currency, the Secretary normally will use the price(s) paid to 
the market economy supplier(s) if substantially all of the total volume 
of the factor is purchased from the market economy supplier(s). For 
purposes of this provision, the Secretary defines the term 
``substantially all'' to be 85 percent or more of the total volume 
purchased of the factor used in the production of subject merchandise. 
In those instances where less than substantially all of the total 
volume of the factor is produced in one or more market economy 
countries and purchased from one or more market economy suppliers, the 
Secretary normally will weight-average the actual price(s) paid for the 
market economy portion and the surrogate value for the nonmarket 
economy portion by their respective quantities.
* * * * *
[FR Doc. 2013-18547 Filed 8-1-13; 8:45 am]
BILLING CODE 3510-DS-P