[Federal Register Volume 79, Number 90 (Friday, May 9, 2014)]
[Notices]
[Pages 26720-26723]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-10487]


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DEPARTMENT OF COMMERCE

International Trade Administration

[Docket No. 140318257-4257-01]


Differential Pricing Analysis; Request for Comments

AGENCY: Enforcement and Compliance, formerly Import Administration, 
International Trade Administration, U.S. Department of Commerce.

ACTION: Request for comments.

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SUMMARY: The Department of Commerce (the Department) seeks public 
comment on its ``differential pricing'' analysis. This analysis is 
currently being applied in less-than-fair-value investigations and 
certain reviews, including administrative reviews to determine when it 
may be appropriate to use an alternative comparison method based on the 
average-to-transaction comparison method in making comparisons of 
export price or constructed export price and normal value. The 
differential pricing analysis addresses the criteria set forth in 
section 777A(d)(1)(B) of the Tariff Act of 1930, as amended (the Act), 
and is applied in accordance with 19 CFR 351.414. Previously, the 
Department has addressed these criteria using its ``targeted dumping'' 
analysis.

DATES: To be assured of consideration, comments must be received no 
later than June 23, 2014.

ADDRESSES: You may submit comments electronically or in writing. 
Electronic comments should be submitted to [email protected]. If you 
submit comments electronically, you do not need to also submit comments 
in writing. Parties wishing to comment in writing should file, by the 
date specified above, a signed original and four copies of each set of 
comments at the address listed below. The Department will not accept 
nor consider 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. All comments will be made 
available to the public in Portable Document Format (PDF) on the 
Internet at the Enforcement and Compliance Web site at the following 
address: http://www.trade.gov/enforcement/. Accordingly, do not submit 
any information you do not want to become public; i.e., confidential 
business information, personally identifiable information, etc. 
Additionally, all comments will be available for public inspection at 
Enforcement and Compliance's Central Records Unit, Room 7045, between 
the hours of 8:30 a.m. and 5 p.m. on business days. To the extent 
possible, all comments will be posted within 48 hours.

FOR FURTHER INFORMATION CONTACT: Charles Vannatta at (202) 482-4036 or 
Melissa Brewer at (202) 482-1096.

SUPPLEMENTARY INFORMATION: 

Background

    By way of background, the sections below describe: (A) The basis 
for determining whether to apply an alternative comparison methodology 
under the statute and regulations; (B) the background of the 
Department's prior targeted dumping regulation and publication of the 
final rule withdrawing that regulation; and (C) a summary of the 
Department's targeted dumping analysis as it existed during the time 
between the 2008 Withdrawal Notice and the application of the 
Department's differential pricing analysis

A. Determination To Apply an Alternative Comparison Method

    Pursuant to 19 CFR 351.414(c), the Department calculates dumping 
margins by comparing weighted-average export prices (or constructed 
export prices) to weighted-average normal values (the average-to-
average method) unless the Secretary determines another method is 
appropriate in a particular case.\1\ The Department's regulations also 
provide that dumping margins may be calculated by comparing the export 
prices (or constructed export prices) of individual transactions with 
normal values of individual transactions (the transaction-to-
transaction method) or by comparing the export prices (or constructed 
export prices) of individual transactions with the weighted-average 
normal value (the average-to-transaction method).\2\ Application of the 
transaction-to-transaction method is addressed in the Department's 
regulations at 19 CFR 351.414(c)(2).
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    \1\ See Antidumping Proceedings: Calculation of the Weighted-
Average Dumping Margin and Assessment Rate in Certain Antidumping 
Duty Proceedings: Final Modification, 77 FR 8101 (February 14, 2012) 
(``Final Modification for Reviews'').
    \2\ See 19 CFR 351.414(b)(2) and (3).
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    Section 777A(d)(1)(B) of the Act mandates that certain criteria be 
satisfied for the Department to use the average-to-transaction method 
as an alternative to the standard average-to-average method in a less-
than-fair-value investigation. In particular, if the Department finds 
that there is a pattern of export prices (or constructed export prices) 
for comparable merchandise that differ significantly among purchasers, 
regions, or time periods,\3\ and the Department explains why such 
differences cannot be taken into account using the average-to-average 
method,\4\ then the average-to-transaction method may be applied as an 
alternative comparison method in less-than-fair-value investigations. 
In the past, the Department satisfied these statutory requirements 
through the use of its targeted dumping analysis.
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    \3\ See Section 777A(d)(1)(B)(i) of the Act.
    \4\ See Section 777A(d)(1)(B)(ii) of the Act.
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B. Withdrawal of Regulatory Provisions Regarding Targeted Dumping for 
Less-Than-Fair-Value Investigations

    On December 10, 2008, the Department promulgated an interim

[[Page 26721]]

final rule for the purpose of withdrawing 19 CFR 351.414(f) and (g), 
the regulatory provisions regarding targeted dumping, and the 
corresponding regulation governing the deadline for the submission of 
targeted dumping allegations, 19 CFR 351.301(d)(5).\5\ In that rule, 
the Department explained that it ``believes that the withdrawal of the 
provisions will provide the agency with an opportunity to analyze 
extensively the concept of targeted dumping'' and develop its approach 
further as it gains experience in evaluating these allegations. The 
Department invited public comment on the interim final rule, and 
received comments from a number of parties. These comments have been 
posted on the Internet for review by the public at http://enforcement.trade.gov/download/targeted-dumping/comments-20090123/td-cmt-20090123-index.html. These comments have helped to inform the 
Department as it further develops its approach with respect to the use 
of the alternative comparison method.
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    \5\ See Withdrawal of the Regulatory Provisions Governing 
Targeted Dumping in Antidumping Duty Investigations, 73 FR 74930 
(December 10, 2008) (2008 Withdrawal Notice).
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    In addition, on April 22, 2014, the Department promulgated a final 
rule not to apply the previously withdrawn regulatory provisions 
governing targeted dumping in less-than-fair-value investigations,\6\ 
after the U.S. Court of International Trade's decision in Gold East 
(Jiangsu) Paper Co. v. United States.\7\ The Department explained that 
it continues to defend its position that the withdrawal of the targeted 
dumping regulations in the 2008 Withdrawal Notice was proper, and that 
the withdrawn regulations are not operative. However, the Department 
also recognized that the U.S. Court of International Trade in Gold East 
(Jiangsu) Paper Co. v. United States agreed with Gold East's argument 
that the withdrawn regulations should be applied to its dumping margin 
calculations in that proceeding because there was a procedural defect 
in the rulemaking process that withdrew the targeted dumping 
regulations. Therefore, without prejudice to the United States 
government's right to appeal the decision in Gold East (Jiangsu) Paper 
Co. v. United States, or in other proceedings on that issue, the 
Department promulgated a rule to clarify the status of the previously 
withdrawn regulations pursuant to the notice and comment procedures of 
the Administrative Procedures Act (APA) and to invite comment. The 
Department received comments from a number of parties concerning 
whether the previously withdrawn targeted dumping regulations should 
still be withdrawn, and other comments on the Department's recent 
approach regarding the alternative comparison method. These comments 
have also been posted on the internet for review by the public at 
http://www.regulations.gov/#!docketBrowser;rpp=25;po=0;dct=PS;D=ITA-
2013-0002; and have also helped to inform the Department as it further 
develops its approach regarding the alternative comparison method.
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    \6\ See Non-Application of Previously Withdrawn Provisions 
Governing Targeted Dumping in Antidumping Investigations: Final 
Rule, 79 FR 22371 (April 22, 2014).
    \7\ Gold East (Jiangsu) Paper Co. v. United States, 918 F. Supp. 
2d 1317 (Ct. Int'l Trade 2013).
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C. The Targeted Dumping Analysis

    1. Examination Based Upon An Allegation: In less-than-fair-value 
investigations since the 2008 Withdrawal Notice,\8\ before considering 
whether to apply an alternative comparison method, the Department 
required that an allegation of targeted dumping be filed as stated in 
the notice of initiation for the investigation.\9\
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    \8\ Until the implementation of the Final Modification for 
Reviews, the average-to-average comparison methodology was used by 
the Department only in less-than-fair-value investigations, and, 
therefore, the use of the targeted dumping provisions was likewise 
only relevant to these investigations.
    \9\ See, e.g., Polyethylene Retail Carrier Bags From Indonesia, 
Taiwan, and the Socialist Republic of Vietnam: Initiation of 
Antidumping Duty Investigations, 74 FR 19049 (April 27, 2009); Oil 
Country Tubular Goods From the People's Republic of China: 
Initiation of Antidumping Duty Investigation, 74 FR 20671 (May 5, 
2009); Certain Coated Paper Suitable for High-Quality Print Graphics 
Using Sheet-Fed Presses From Indonesia and the People's Republic of 
China: Initiation of Antidumping Duty Investigations, 74 FR 53710 
(October 20, 2009); Certain Stilbenic Optical Brightening Agents 
From the People's Republic of China and Taiwan: Initiation of 
Antidumping Duty Investigations, 76 FR 23554 (April 27, 2011).
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    2. The Nails Test: When sufficiently alleged, the Department 
employed the Nails test \10\ to determine whether a pattern of prices 
that differ significantly among purchasers, regions, or periods of time 
existed within the U.S. market, which was a two-step process.
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    \10\ See Certain Steel Nails From the People's Republic of 
China: Final Determination of Sales at Less Than Fair Value and 
Partial Affirmative Determination of Critical Circumstances, 73 FR 
33977 (June 16, 2008) and Certain Steel Nails from the United Arab 
Emirates: Notice of Final Determination of Sales at Not Less Than 
Fair Value, 73 FR 33985 (June 16, 2008) (collectively, Nails), as 
modified in Multilayered Wood Flooring from the People's Republic of 
China: Final Determination of Sales at Less Than Fair Value, 76 FR 
64318 (October 18, 2011); see also Mid Continent Nail Corp. v. 
United States, Slip. Op. 2010-47 (Ct. Int'l Trade May 4, 2010) and 
Mid Continent Nail Corp. v. United States, Slip. Op. 2010-48 (Ct. 
Int'l Trade May 4, 2010).
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    First, the standard deviation test identified whether the product-
specific, weighted-average price to the allegedly targeted group was 
more than one standard deviation below the product-specific, weighted-
average price for all transactions. The alleged targeted group was 
found to have passed the standard deviation test when more than 33 
percent of the sales to the allegedly targeted group passed this test.
    Second, those sales passing the standard deviation test were then 
evaluated to determine whether they passed the ``gap'' test, which 
determined whether the weighted-average prices of the identified sales 
to the allegedly targeted group were not typical. Where the gap (or 
difference) between the weighted-average prices of the identified sales 
to the allegedly targeted group and the next highest weighted-average 
prices to a non-targeted group exceeded the average gap among the 
weighted-average prices between the non-targeted groups, these 
identified sales passed the ``gap'' test. The sales passing the ``gap'' 
test were evaluated to determine whether they exceeded five percent of 
the allegedly targeted group's total purchases of all products subject 
to investigation. If the sales passing the gap test were sufficient, 
then the Department considered whether the standard average-to-average 
method could account for the observed differences.
    If the Department's two-step analysis confirmed the allegation of 
targeted dumping and the sales found to be targeted were of sufficient 
quantity, then the Department evaluated the difference between the 
weighted-average dumping margin calculated with the average-to-average 
method and the weighted-average dumping margin calculated using the 
average-to-transaction method. Where there was a meaningful difference 
between the results of the average-to-average method and the average-
to-transaction method, the average-to-transaction method was applied to 
all sales to determine the appropriate weighted-average margin of 
dumping for the respondent in question.\11\
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    \11\ See, e.g., Polyethylene Retail Carrier Bags From Taiwan: 
Final Determination of Sales at Less Than Fair Value, 75 FR 14569 
(March 26, 2010); Certain Oil Country Tubular Goods From the 
People's Republic of China: Final Determination of Sales at Less 
Than Fair Value, Affirmative Final Determination of Critical 
Circumstances and Final Determination of Targeted Dumping, 75 FR 
20335 (April 19, 2010); Certain Coated Paper Suitable for High-
Quality Print Graphics Using Sheet-Fed Presses From the People's 
Republic of China: Final Determination of Sales at Less Than Fair 
Value, 75 FR 59217 (September 27, 2010); Certain Stilbenic Optical 
Brightening Agents From Taiwan: Final Determination of Sales at Less 
Than Fair Value, 77 FR 17027 (March 23, 2012).

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[[Page 26722]]

Differential Pricing Analysis

    While the Nails test is a statutorily consistent and statistically 
sound methodology for identifying whether the average-to-transaction 
method might be appropriate, the Department has continued to seek to 
refine its approach with respect to the use of an alternative 
comparison method. Given the Department's experience over the last 
several years, and based on the Department's further research, analysis 
and consideration of the numerous comments and suggestions on what 
guidelines, thresholds, and tests should be used in determining whether 
to apply an alternative comparison method based on the average-to-
transaction method, the Department is developing a new approach for 
determining whether application of such a comparison method is 
appropriate in a particular segment of a proceeding pursuant to 19 CFR 
351.414(c)(1) and consistent with section 777A(d)(1)(B) of the Act. The 
new approach is referred to as the ``differential pricing'' analysis, 
as a more precise characterization of the purpose and application of 
section 777A(d)(1)(B) of the Act. After obtaining some experience with 
this new approach,\12\ the Department is now seeking public comment on 
the possible further development of its approach for use of an 
alternative comparison method.
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    \12\ See, e.g., Xanthan Gum From the People's Republic of China: 
Final Determination of Sales at Less Than Fair Value, 78 FR 33351 
(June 4, 2013) and issues and decision memorandum cmt. 3; Xanthan 
Gum From Austria: Final Determination of Sales at Less Than Fair 
Value, 78 FR 33354 (June 4, 2013); Circular Welded Carbon Steel 
Pipes and Tubes From Thailand: Final Results of Antidumping Duty 
Administrative Review; 2011-2012, 78 FR 65272 (October 31, 2013); 
Final Determination of Sales at Less Than Fair Value: Silica Bricks 
and Shapes From the People's Republic of China, 78 FR 70918 
(November 27, 2013); Stainless Steel Plate in Coils from Belgium: 
Final Results of Antidumping Duty Administrative Review; 2011-2012, 
78 FR 79662 (December 31, 2013); Welded Carbon Steel Standard Pipe 
and Tube Products from Turkey: Final Results of Antidumping Duty 
Administrative Review; 2011-2012, 78 FR 79665 (December 31, 2013).
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    Normally, the Department makes these types of changes in the 
context of its proceedings, on a case-by-case basis.\13\ For these 
particular changes, however, the Department is seeking comments to 
further develop and/or refine its differential pricing analysis, even 
though the notice and comment requirements of the APA do not apply ``to 
interpretative rules, general statements of policy, or rules of agency 
organization, procedure, or practice'' such as these.\14\ As the 
Department gains greater experience with addressing potentially hidden 
or masked dumping that can occur when the Department determines 
weighted-average dumping margins using the average-to-average 
comparison method, the Department expects to continue to develop its 
approach with respect to the use of an alternative comparison method. 
The Department is requesting comments on this analysis to facilitate 
that development as the Department expects to take account of all 
comments received, as appropriate. Further, in the context of ongoing 
and future proceedings, parties to the particular proceeding will have 
an opportunity to provide comments that are relevant to the possible 
use of an alternative comparison method in that proceeding.
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    \13\ In the context of its proceedings, Commerce is entitled to 
make changes and adopt a new approach provided it explains the basis 
for the change, and the change is a reasonable interpretation of the 
statute. Saha Thai Steel Pipe Company v. United States, 635 F.3d 
1335, 1341 (2011).
    \14\ See 5 U.S.C. 553(b)(3)(A).
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    Unlike under the targeted dumping analysis, the differential 
pricing analysis does not require an allegation, but instead would be 
conducted in each segment of a proceeding. The recent investigations of 
Xanthan Gum from China and Xanthan Gum from Austria, in which the 
Department employed a differential pricing analysis, are instructive, 
and can help the public understand the analysis. There, the Department 
explained that the differential pricing analysis requires a finding of 
a pattern of export prices (or constructed export prices) for 
comparable merchandise that differs significantly among purchasers, 
regions, or time periods. If such a pattern is found, differential 
pricing analysis helps the Department evaluate whether such differences 
can be taken into account when using the average-to-average method to 
calculate the weighted-average dumping margin.
    As explained in the Xanthan Gum investigations, this analysis 
evaluates all purchasers, regions, and time periods to determine 
whether there exists a pattern of prices that differ significantly. The 
analysis incorporates default group definitions for purchasers, 
regions, time periods, and comparable merchandise. Purchasers are based 
on the consolidated customer codes (or, if unavailable, the customer 
code) reported by the respondent. Regions are defined using the 
reported destination code (e.g., zip code) and are grouped into regions 
based upon standard definitions provided by the U.S. Census Bureau. 
Time periods are defined by the quarter within the period of 
investigation or administrative review based upon the reported date of 
sale. Comparable merchandise is defined as the product control number 
and any characteristics of the sales, other than purchaser, region and 
time period, that the Department uses in making comparisons between 
export price (or constructed export price) and normal value for the 
individual dumping margins. During the course of an investigation or 
administrative review, as in the investigation in Xanthan Gum, 
interested parties would be given the opportunity to present arguments 
and justifications for modifying these default group definitions.
    The Department further explained in Xanthan Gum that in the first 
stage of the differential pricing analysis, the Department uses two 
tests--the ``Cohen's d test'' and the ``ratio test''--to determine 
whether there is a pattern of prices that differ significantly. The 
Cohen's d test is a generally recognized statistical measure of the 
extent of the difference in the means between a test group and a 
comparison group. The Department calculates the Cohen's d coefficient 
with respect to comparable merchandise if the test and comparison 
groups of data each have at least two observations, and if the sales 
quantity for the comparison group accounts for at least five percent of 
the total sales quantity of the comparable merchandise. The Cohen's d 
coefficient is used to evaluate the extent to which the net prices to a 
particular purchaser, region or time period differ significantly from 
the net prices of all other sales of comparable merchandise. In a 
Cohen's d test analysis, the extent of these differences can be 
quantified by one of three fixed thresholds: Small, medium or large. Of 
these thresholds, the large threshold provides the strongest indication 
that there is a significant difference between the means of the test 
and comparison groups, while the small threshold provides the weakest 
indication that such a difference exists. The Department finds that the 
difference is significant, and that the sales of the test group pass 
the Cohen's d test, if the calculated Cohen's d coefficient is equal to 
or exceeds the large threshold.
    The Department next uses a ``ratio test'' to assess the extent of 
the significant price differences for all sales as measured by the 
Cohen's d test. If the value of sales to purchasers, regions, and time 
periods that pass the Cohen's d test accounts for 66 percent or more of 
the value of total sales, then the identified pattern of export prices 
that differ significantly supports the

[[Page 26723]]

consideration of the application of the average-to-transaction method 
to all sales as an alternative to the average-to-average method. If the 
value of sales to purchasers, regions, and time periods that pass the 
Cohen's d test accounts for more than 33 percent and less than 66 
percent of the value of total sales, then the results support 
consideration of the application of an average-to-transaction method to 
those sales identified as passing the Cohen's d test as an alternative 
to the average-to-average method, and application of the average-to-
average method to those sales identified as not passing the Cohen's d 
test. If 33 percent or less of the value of total sales passes the 
Cohen's d test, then the results of the Cohen's d test do not support 
consideration of an alternative to the average-to-average method.
    If both tests in the first stage (i.e., the Cohen's d test and the 
ratio test) demonstrate the existence of a pattern of prices that 
differ significantly such that an alternative comparison method should 
be considered, then in the second stage of the differential pricing 
analysis, the Department examines whether using only the average-to-
average method can appropriately account for such differences. In 
considering this question, the Department determines whether using an 
alternative comparison method yields a meaningful difference in the 
weighted-average dumping margin as compared to that resulting from the 
use of the average-to-average method only. If the difference between 
the two weighted-average dumping margins is meaningful, then this 
demonstrates that the average-to-average method cannot account for the 
observed price differences, and, therefore, an alternative comparison 
method would be appropriate. In determining whether a difference in the 
two weighted-average dumping margins is meaningful, the Department 
considers whether (1) the resulting weighted-average dumping margin 
moves across the de minimis threshold, or (2) there is a 25 percent or 
greater relative change in the weighted-average dumping margins between 
the average-to-average method and an appropriate alternative comparison 
method where both rates are not zero or de minimis.
    The Department is interested in public comments on the differential 
pricing analysis described above for the purpose of determining whether 
to apply an alternative comparison method. To assist commenters, the 
Department has made available on its Web site, http://www.trade.gov/enforecement/, SAS programs which the Department currently use to 
conduct its differential pricing analysis. Also available on the Web 
site is the definition of the regions from the U.S. Census Bureau.
    Any questions concerning file formatting, document conversion, 
access on the Internet, or other electronic filing issues should be 
addressed to Moustapha Sylla, Enforcement and Compliance Webmaster at 
(202) 482-0866, email address: [email protected].

    Dated: April 28, 2014.
Paul Piquado,
Assistant Secretary, for Enforcement and Compliance.
[FR Doc. 2014-10487 Filed 5-8-14; 8:45 am]
BILLING CODE 3510-DS-P