On May 9, 2023, the Department of Commerce (“Commerce”) published proposed rules (“Proposed Rules”) to amend certain areas in its antidumping duty (AD) and countervailing duty (CVD) regulations to “enhance, improve, and strengthen its enforcement of trade remedies.” Interested parties may submit comments by July 10, 2023.
Commerce’s Proposed Rules cover 22 different topics that are related to its AD and CVD regulations. These proposed modifications are generally intended to clarify and codify certain practices and procedures and “to enhance and strengthen other provisions to enforce the trade remedy laws more effectively.” Key aspects of Commerce’s proposed modifications include:
- Particular Market Situation: Commerce proposes to add a new section to its regulations to address its findings of a particular market situation (PMS) that distorts the prices or costs in an exporting country. The Proposed Rules follow various court decisions, including the Federal Circuit’s 2022 NEXTEEL decision which remanded Commerce’s PMS findings to address distortions in the exporting market, and aim to provide guidance as to the legal and evidentiary standards in future PMS findings. For example, the Proposed Rules explain what a PMS is, what information is required for Commerce to make a PMS finding, and provide 12 examples when Commerce might determine the existence of a PMS. These examples include situations where there is significant overcapacity in the production of a significant input used in the production of the subject merchandise or where a state-owned enterprise is directly involved in the production of a significant input used to make the subject merchandise.
- Transnational Subsidies: Commerce proposes to eliminate the current regulation preventing the consideration of allegations of transnational subsidies, which are subsidies that benefit foreign production. In the Proposed Rules, Commerce explained that the assumptions underlying its previous rules preventing the consideration of transnational subsidies have changed, since it observed in recent years “that instances in which a government provides a subsidy that benefits foreign production are far more prevalent.” If adopted, Commerce would potentially be able to countervail transnational subsidy programs that benefit recipients located outside of the subsidizing country, such as subsidy programs arising from China’s Belt and Road Initiative.
- Foreign Government Inactions: Commerce also proposed new rules to address foreign government inactions that benefit foreign producers. The Proposed Rules codify Commerce’s practice of determining that countervailable subsidies are conferred by certain unpaid or deferred fees, fines, and penalties. In addition, Commerce also proposes to address distortions resulting from foreign governments’ “weak, ineffective, or nonexistent property, intellectual property, human rights, labor, and environmental protections” on prices and costs of products in antidumping proceedings within the context of selecting surrogate values and benchmarks in non-market economy proceedings.
As noted previously, the deadline for comments is July 10, 2023. This is an important opportunity for companies and business associations to address and comment on these proposed modifications, and Thompson Hine’s international trade team is available to assist with this process.