Commerce Proposes AD/CVD Reg Updates on NME Policy, Attribution of Input Suppliers' Subsidies

The Commerce Department on July 12 released a proposed rule updating various aspects of its antidumping and countervailing duty regulations. The agency said the changes largely "codify existing procedures and methodologies" and also "create or revise" provisions related to the "collection of cash deposits," use of AD rates on nonmarket economy nations, calculation of an all-others' rate, respondent selection and "attribution of subsidies received by cross-owned input producers and utility providers to producers of subject merchandise."

Comments are due by Sept. 10.

The proposed rule codified much of Commerce's practice surrounding AD proceedings on NME nations in which the agency uses a presumption that an exporter from that nation is controlled by the foreign government. The regulation provides four specific instances where the government owns less than 50% of an entity but "still has the ability to control or influence the entity's production and commercial decisions." As a result, Commerce would assign that entity the country-wide AD rate.

The first circumstance is where the government is provided "special shares," sometimes dubbed "golden shares," granting the government the ability to exert a "disproportionate level of influence" over an entity's decisions. The second circumstance is where the government can "veto or control an entity's production and commercial decisions." The third circumstance is where government officials hold "positions of authority in the entity." Lastly, the fourth circumstance is where the entity is "obligated by law" to keep one or more government officials in positions of power.

The proposed rule would additionally allow Commerce to consider "any other information on the record suggesting that the government has direct and indirect influence over the exporter's export activities."

Commerce said its proposed regulations would more "accurately and more holistically describe Commerce's establishment and application of cash deposit rates." The proposed rule would explain that some cash deposit rates are set on an "ad valorem basis at importation, while others are calculated on a per-unit basis."

The proposed rule describes situations where Commerce applies cash deposit rates in a "producer/exporter combination," and where a company can be excluded from provisional measures after receiving a de minimis cash deposit rate. The agency also laid out an AD cash deposit hierarchy for goods from market economies and nonmarket economies and a CVD cash deposit hierarchy.

Regarding the attribution of subsidies received by input suppliers to the CVD respondent itself, Commerce listed several factors in its new rule that the agency can consider in finding if an input product is "primarily dedicated" to the production of the downstream product.

The agency will review nine factors, including "whether the input is a link in the overall production chain," whether the input supplier's business activities center on providing the input to the downstream producer and whether the input is a common one "used in the production of a wide variety of products and industries."

Commerce also revised its regulation on attributing subsidies to holding companies and their subsidiaries, now stating that a "transferred subsidy will be solely attributed to the products produced by the recipient of the transferred subsidy." Transferred subsidies from cross-owned corporations will be attributed solely to goods made by the recipient of the transferred subsidy, the agency said.

Commerce additionally is looking to modify the attribution of subsidies to cross-owned corporations that provide electricity, natural gas or other similar utility products. The agency said it "will attribute subsidies received by a provider of utility products to the combined sales of the cross-owned producer and the sales of products sold by the producer of subject merchandise if at least one of two identified conditions are met."