Federal Register, Volume 85 Issue 27 (Monday, February 10, 2020)

[Federal Register Volume 85, Number 27 (Monday, February 10, 2020)]
[Notices]
[Pages 7613-7616]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-02524]

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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

Designations of Developing and Least-Developed Countries Under
the Countervailing Duty Law

AGENCY: Office of the United States Trade Representative.

ACTION: Notice.

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SUMMARY: The U.S. Trade Representative is designating World Trade
Organization (WTO) Members that are eligible for special de minimis
countervailable subsidy and negligible import volume standards under
the countervailing duty (CVD) law. Elsewhere in this issue of the
Federal Register, the U.S. Trade Representative is removing the Office
of the United States Trade Representative's rulesthat contain the
designations superseded by this notice.

DATES: The designations are applicable as of February 10, 2020.

FOR FURTHER INFORMATION CONTACT: David P. Lyons, Assistant General
Counsel, at 202-395-9446, or Roy Malmrose, Director for Industrial
Subsidies, at 202-395-9542.

SUPPLEMENTARY INFORMATION:

A. General Background

In the Uruguay Round Agreements Act (URAA), Public Law 103-465,
Congress amended the CVD law to conform to U.S. obligations under the
WTO Agreement on Subsidies and Countervailing Measures (SCM Agreement).
Under the SCM Agreement, WTO Members that have not yet reached the
status of a developed country are entitled to special treatment for
purposes of countervailing measures. Specifically, imports from such
Members are subject to different thresholds for purposes of determining
whether countervailable subsidies are de minimis and whether import
volumes are negligible.
Under section 771(36) of the Tariff Act of 1930, as amended (the
Act), 19 U.S.C. 1677(36), Congress delegated to the U.S. Trade
Representative the responsibility for designating those WTO Members
whose imports are subject to these special thresholds. In addition,
section 771(36)(D) requires the U.S. Trade Representative to publish a
list of designations, updated as necessary, in the Federal Register.
This notice implements the requirements of section 771(36)(D).
On June 2, 1998, the U.S. Trade Representative published an interim
final rule (1998 rule) designating Subsidy Agreement countries eligible
for special de minimis countervailable subsidy and negligible import
volume standards under the CVD law. See 63 FR 29945. ``Subsidies
Agreement country'' is defined in section 701(b) of the Act, 19 U.S.C.
1671(b), and includes countries that are WTO Members. The U.S. Trade
Representative is revising the lists in the 1998 rule, as described
below, and removing the 1998 rule because it now is obsolete.

B. Explanation of the List

1. Introduction

For purposes of countervailing measures, the SCM Agreement extends
special and differential treatment to

[[Page 7614]]

developing and least-developed Members in the following manner:
De Minimis Thresholds: Under Article 11.9 of the SCM Agreement,
authorities must terminate a CVD investigation if the amount of the
subsidy is de minimis, which normally is defined as less than 1 percent
ad valorem. Under Article 27.10(a), however, for a developing Member
the de minimis standard is 2 percent or less. Consistent with Article
27.11 and section 703(b)(4) of the Act, the 2 percent de minimis
threshold also now applies to least-developed countries.
Negligible Import Volumes: Under Article 11.9, authorities must
terminate a CVD investigation if the volume of subsidized imports from
a country is negligible. Under the CVD law, imports from an individual
country normally are considered negligible if they are less than 3
percent of total imports of a product into the United States. Imports
are not considered negligible if the aggregate volume of imports from
all countries whose individual volumes are less than 3 percent exceeds
7 percent of all such merchandise. However, under Article 27.10(b) and
section 771(24)(B) of the Act, imports from a developing or least-
developed Member are considered negligible if the import volume is less
than 4 percent of total imports, unless the aggregate volume of imports
from countries whose individual volumes are less than 4 percent exceeds
9 percent.
In the URAA, Congress incorporated into the CVD law the SCM
Agreement standards for de minimis thresholds and negligible import
volumes. Section 703(b)(4)(B)-(D) of the Act, 19 U.S.C. 1671b(b)(4)(B)-
(D), incorporates the de minimis standards, while section 771(24)(B),
19 U.S.C. 1677(24)(B), incorporates the negligible import standards.
However, in the statute itself, Congress did not identify by name those
WTO Members eligible for special treatment. Instead, section 267 of the
URAA added section 771(36) to the Act, which delegates to the U.S.
Trade Representative the responsibility to designate those WTO Members
subject to special standards for de minimis and negligible import
volume. In addition, section 771(36) requires the U.S. Trade
Representative to publish in the Federal Register, and update as
necessary, a list of the Members designated as eligible for special
treatment under the CVD law.
The effect of these designations is limited to Title VII of the
Act. Specifically, section 771(36)(E) of the Act provides that the fact
that a WTO Member is designated in the list as developing or least-
developed has no effect on how that Member may be classified with
respect to any other law.

2. Data Sources

In making the designations, the U.S. Trade Representative relied on
per capita gross national income (GNI) data from the World Bank and
trade data from the Trade Data Monitor, which contains official data
from national statistical bureaus, customs authorities, central banks,
and other government agencies.

3. Designation of WTO Members as Least-Developed Countries

As explained above, the distinction between developing and least-
developed countries no longer matters for purposes of the de minimis
threshold: both are eligible for the same 2 percent rate. Nonetheless,
for clarity and consistent with section 771(36) of the Act, this notice
separately identifies developing and least-developed countries. The
list of WTO Members that are least-developed countries is derived from
Annex VII to the SCM Agreement, which describes least-developed
countries as those designated by the United Nations (Annex VII(a)) and
named in Annex VII(b)), provided the per capita GNP has not reached
$1,000 per annum. A number of WTO Members are included on the United
Nations list of least-developed countries,\1\ and several more are
included under Annex VII(b) based upon their GNI per capita at constant
1990 dollars: C[ocirc]te d'Ivoire, Ghana, Honduras, Kenya, Nicaragua,
Nigeria, Pakistan, Senegal, and Zimbabwe.\2\
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\1\ United Nations World Economic Situation and Prospects
(2019), p. 173, available at https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/WESP2019_BOOK-ANNEX-en.pdf.
\2\ See Doha Ministerial Decision on Implementation-Related
Issues and Concerns, WT/MIN(01)17 (November 20, 2001) (specifying
that Annex VII(b) is to list Members until their GNP per capita
reaches $1,000 in constant 1990 U.S. dollars for three consecutive
years; see also Updating GNP Per Capita for Members Listed in Annex
VII(b) as Foreseen in Paragraph 10.1 of the Doha Ministerial
Decision and in Accordance with the Methodology in G/SCM/38, G/SCM/
110/Add.16 (May 14, 2019) (circulating updated calculations by the
Secretariat).
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C. Designation of WTO Members Eligible for 2 Percent De Minimis
Standard

1. Introduction

Based on section 771(36)(D) of the Act, in determining which WTO
Members should be considered as developing and, thus, eligible for the
2 percent de minimis standard, the U.S. Trade Representative has
considered appropriate economic, trade, and other factors, including
the level of economic development of a country (based on a review of
the country's per capita GNI) and a country's share of world trade. The
U.S. Trade Representative developed the list of Members eligible for
the 2 percent de minimis standard based on the following criteria: (1)
Per capita GNI, (2) share of world trade, and (3) other factors such as
Organization for Economic Co-operation and Development (OECD)
membership or application for membership, European Union (EU)
membership, and Group of Twenty (G20) membership.

2. Per Capita GNI

Similar to the 1998 rule, the U.S. Trade Representative relied on
the World Bank threshold separating ``high income'' countries from
those with lower per capita GNIs.\3\ This means that WTO Members with a
per capita GNI below $12,375 were treated as eligible for the 2 percent
de minimis standard, subject to the other factors described below.
Advantages of relying upon the World Bank high income designation
include that it is straightforward to apply, based on a recognized GNI
dividing line between developed and developing countries for purposes
of the world's primary multilateral lending institution, and consistent
with the test for beneficiary developing country status set out in the
U.S. Generalized System of Preferences statute, section 502(e) of the
Trade Act of 1974.
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\3\ The 1998 rule used per capita gross national product rather
than GNI. The most recent World Bank data set this dividing line at
$12,375. See New country classifications by income level: 2019-2020,
World Bank Data Blog, July 1, 2019, available at https://blogs.worldbank.org/opendata/new-country-classifications-income-level-2019-2020.
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3. Share of World Trade

The U.S. Trade Representative also considered whether countries
account for a significant share of world trade and, thus, should be
treated as ineligible for the 2 percent de minimis standard. In the
1998 rule, the U.S. Trade Representative considered a share of world
trade of 2 percent or more to be ``significant'' because of the
commitment in the Statement of Administration Action (SAA), approved by
the Congress along with the URAA, that Hong Kong, Korea, and Singapore
would be ineligible for developing country treatment, and each of these
countries accounted for a share of world trade in excess of 2 percent.
The U.S. Trade Representative now considers 0.5 percent to be a more
appropriate indicator of a ``significant'' share of world trade.
According to the most recent available data from 2018,

[[Page 7615]]

relatively few countries account for such a large share (i.e., more
than 0.5 percent) of world trade, and those that do include many of the
wealthiest economies.
For purposes of U.S. CVD law, the U.S. Trade Representative
therefore considers countries with a share of 0.5 percent or more of
world trade to be developed countries. Thus, Brazil, India, Indonesia,
Malaysia, Thailand, and Viet Nam are ineligible for the 2 percent de
minimis standard, notwithstanding that, based on the most recent World
Bank data, each country has a per capita GNI below $12,375.

4. Other Factors

Section 771(36)(D) of the Act contemplates that the U.S. Trade
Representative may consider additional factors. To that end, consistent
with the 1998 rule, the U.S. Trade Representative took into account EU
membership, which indicates a relatively high level of economic
development. In addition, under section 771(3) of the Act, the EU may
be treated as a single country for purposes of the CVD law and, while
uncommon, there have been CVD investigations against merchandise from
the European Communities, rather than EU Member States. Because the EU
is ineligible for the 2 percent de minimis standard, it would be
anomalous to treat an individual EU Member as eligible for that
standard. Accordingly, for purposes of U.S. CVD law, the U.S. Trade
Representative considers all EU Members as developed countries. Thus,
Bulgaria and Romania are ineligible for the 2 percent de minimis
standard, notwithstanding that, based on the most recent World Bank
data, each country has a per capita GNI below $12,375.
The U.S. Trade Representative also took into account OECD
membership and applications for OECD membership. The characterization
of the OECD as a grouping of developed countries has been confirmed
throughout its existence in a number of published OECD documents, and
the OECD consistently has been viewed as, and acts itself in the
capacity of, the principal organization of developed economies
worldwide. Thus, by joining or applying to join the OECD, a country
effectively has declared itself to be developed. Although the 1998 rule
considered OECD membership only, given the significance of this self-
designation, the act of applying to the OECD, in addition to joining,
indicates that a country is developed. Accordingly, the U.S. Trade
Representative has determined that an OECD member or applicant should
not be eligible for the 2 percent de minimis standard. Thus, Colombia
and Costa Rica are ineligible for the 2 percent de minimis standard,
notwithstanding that, based on the most recent World Bank data, each
country has a per capita GNI below $12,375.
The U.S. Trade Representative also took into account G20
membership. The G20 was established in September 1999, and so was not
considered in the 1998 rule. The G20 is a preeminent forum for
international economic cooperation, which brings together major
economies and representatives of large international institutions such
as the World Bank and International Monetary Fund. Given the global
economic significance of the G20, and the collective economic weight of
its membership (which accounts for large shares of global economic
output and trade), G20 membership indicates that a country is
developed. Thus, Argentina, Brazil, India, Indonesia, and South Africa
are ineligible for the 2 percent de minimis standard, notwithstanding
that, based on the most recent World Bank data, each country has a per
capita GNI below $12,375.
The U.S. Trade Representative did not consider social development
indicators such as infant mortality rates, adult illiteracy rates, and
life expectancy at birth, as a basis for changing a designation. The
U.S. Trade Representative did consider that if a country considers
itself a developed country, or has not declared itself a developing
country in its accession to the WTO, it should not be considered a
developing country for purposes of the SCM Agreement. Therefore,
Albania, Armenia, Georgia, Kazakhstan, the Kyrgyz Republic, Moldova,
Montenegro, North Macedonia, and Ukraine are ineligible for the 2
percent de minimis standard, notwithstanding that, based on the most
recent World Bank data, each country has a per capita GNI below
$12,375.
Furthermore, the 1998 rule omitted WTO Members that in the past had
been, or could have been, considered as nonmarket economy countries not
subject to the CVD law. Because nonmarket economies may now be subject
to CVD law, the lists set forth in this notice do not omit nonmarket
economies.

D. Designation of Developed Countries

The 1998 rule included a list of ``developed countries'' that did
not qualify as developing or least developed. Because section 771(36)
of the Act does not require the U.S. Trade Representative to maintain a
list of developed countries, this notice does not include such a list.

E. List of Least-Developed and Developing Countries

In accordance with section 771(36) of the Act, imports from least-
developed and developing WTO Members set forth in the following lists
are subject to a de minimis standard of 2 percent and a negligible
import standard of 4 percent:

Least-Developed Countries Under Section 771(36)(B) of the Act

Afghanistan
Angola
Bangladesh
Benin
Burkina Faso
Burundi
Cambodia
Central African Republic
Chad
C[ocirc]te d'Ivoire
Democratic Republic of the Congo
Djibouti
Gambia
Ghana
Guinea
Guinea-Bissau
Haiti
Honduras
Kenya
Lao People's Democratic Republic
Lesotho
Liberia
Madagascar
Malawi
Mali
Mauritania
Mozambique
Myanmar
Nepal
Nicaragua
Niger
Nigeria
Pakistan
Rwanda
Senegal
Sierra Leone
Solomon Islands
Tanzania
Togo
Uganda
Vanuatu
Yemen
Zambia
Zimbabwe

Developing Countries Under Section 771(36)(A) of the Act

Bolivia
Botswana
Cabo Verde
Cameroon
Cuba
Dominica
Dominican Republic
Ecuador
Egypt
El Salvador

[[Page 7616]]

Eswatini
Fiji
Gab[oacute]n
Grenada
Guatemala
Guyana
Jamaica
Jordan
Maldives
Mauritius
Mongolia
Morocco
Namibia
Papua New Guinea
Paraguay
Peru
Philippines
St. Lucia
St. Vincent & Grenadines
Samoa
Sri Lanka
Suriname
Tajikistan
Tonga
Tunisia
Venezuela

Joseph Barloon,
General Counsel, Office of the U.S. Trade Representative.
[FR Doc. 2020-02524 Filed 2-7-20; 8:45 am]
BILLING CODE 3290-F0-P