In a proposed rule scheduled for publication in the May 28, 2019 Federal Register, the International Trade Administration (ITA) of the Department of Commerce (Commerce) is proposing to modify two regulations that would clarify how ITA determines the existence of a benefit resulting from a subsidy in the form of currency manipulation and undervaluation and how companies in the traded goods sector of an economy can constitute a group of enterprises for purposes of determining whether a subsidy is specific. In a Commerce press release, Secretary Wilbur Ross stated, “This change puts foreign exporters on notice that the Department of Commerce can countervail currency subsidies that harm U.S. industries … Foreign nations would no longer be able to use currency policies to the disadvantage of American workers and businesses.”

In countervailing duty (CVD) proceedings, ITA generally defines countervailable subsidies as financial assistance from foreign governments that benefit the production of goods from foreign companies and are limited to specific enterprises or industries, or are contingent either upon export performance or upon the use of domestic goods over imported goods. Commerce acknowledges in the proposed rule that “There are a variety of possible currency-related fact patterns that might satisfy the legal criteria for countervailability, and it is not Commerce’s intention to identify or address them all” in this rulemaking. Instead, Commerce notes that the modifications proposed are “one way to analyze whether the exchange of undervalued currency results in a countervailable subsidy, that “the issue of currency undervaluation is complex and unlike many of the subsidies [ITA has] examined in the past,” and indicates that ITA would seek and defer to the Department of the Treasury’s evaluation and conclusion as to whether government action on the exchange rate has resulted in currency undervaluation. It is further noted that in “determining whether there has been government action on the exchange rate that undervalues the currency, [ITA] do[es] not intend in the normal course to include monetary and related credit policy of an independent central bank or monetary authority.” Commerce also states that its proposed analysis for currency “is not fundamentally different from the approach we follow for other types of countervailable subsidies we frequently encounter: loosely speaking, we examine whether foreign companies are receiving a financial contribution on terms that are better than what is commercially available, absent government action.”

Commerce in the proposed rule sets forth the criteria it would use to determine whether CVDs should be imposed for currency manipulation and undervaluation and seeks public comment. Comments should be submitted no later than June 27, 2019, through the Federal eRulemaking Portal at, under Docket No. ITA-2019-0002.