Proposed AD/CVD Regulations Gives Commerce New Tools to Address Foreign State Inaction, Firm Says

The Commerce Department's proposed new regulations governing antidumping and countervailing duty proceedings would arm the agency with "new tools to address foreign governments’ inaction that benefit foreign producers," global law firm Akin Gump said in an alert this week. For instance, Commerce could consider evidence of a foreign government's weak laws on human and labor rights or environmental and intellectual property protections when picking benchmark data to find the existence and amount of subsidies in countervailing duty proceedings.

The firm added that in AD cases with non-market economies, if there is similar evidence of government inaction, "Commerce may conclude that the values in that country are distorted and therefore reject data from the respective country as surrogate values for certain inputs to calculate normal value." The agency already has begun to do so, as evidenced by the activated carbon from China AD case, the alert noted.

Akin Gump also addressed the proposed changes to transnational subsidies, which would eliminate the limit on Commerce's ability to countervail subsidies provided by a foreign government other than the country in which the recipient firm is located. The proposed rules would allow the agency to "target transnational subsidy programs such as China’s Belt and Road Initiative in CVD proceedings," Akin Gump said.

Other changes outlined in the regulations include procedural rule alterations to the timelines and the record development in AD/CVD cases. For instance, Commerce would allow parties to submit scope inquiries of goods not yet imported, providing exporters and importers more certainty about their AD/CVD exposure before they import a product. The agency also floated changes to the pre-initiation stage of scope and circumvention proceedings, giving parties other than the requestor 10 days to submit comments on the adequacy of the application or request, the firm said. Parties also would be able to submit new factual information in circumvention proceedings with their comments, giving the requestor five days to respond.