In mid-December 2024, the Department of Commerce’s International Trade Administration (ITA) issued a Final Rule amending its trade remedy regulations for the administration of antidumping duty (AD) and countervailing duty (CVD) laws. These regulatory amendments are effective on January 15, 2025.

In many instances, the ITA has codified existing procedures and methodologies. The amendments, however, also create or revise regulatory provisions relating to, inter alia, the collection of cash deposits, indicators used in surrogate country selection, application of antidumping rates in nonmarket economy proceedings, calculation of an all-others’ rate, selection of examined respondents, and attribution of subsidies received by cross-owned input producers and utility providers to producers of subject merchandise. According to an ITA press release, the new regulations seek to:

  • Strengthen ITA’s ability to ensure that exporters from non-market economies such as China, Russia and Vietnam, including state-owned enterprises, are not able to avoid paying the appropriate ADs.
  • Improve communication between the Department of Commerce and Customs and Border Protection (CBP) to better enforce the collection of AD/CVD duties at the border.
  • Ensure that subsidies received by a foreign company’s cross-owned input and utility suppliers are appropriately accounted for in the ITA’s calculation of the subsidy rate.

These new regulations are detailed in nature, and this blog post provides an overview of the most significant revisions of the AD and CVD regulations under this Final Rule. Their impact will require further detailed analysis by both U.S. and foreign companies engaged in trade remedy investigations and reviews. Coupled with its changes implemented in March 2024 regarding the manner in which it conducts certain aspects of AD and CVD investigations (see Thompson Hine Update of March 28, 2024), the ITA undertook in 2024 its first significant changes, updates and modifications to U.S. trade remedy regulations under 19 C.F.R. part 351 in many years.

Overview of Significant Modifications in Final Rule

  1. Cash Deposits and Assessment of Duties: The ITA has revised and updated its cash deposit regulation “to more accurately and holistically reflect Commerce’s establishment and application of cash deposit rates.” Specifically, the revised regulation: (1) explains that, while ITA normally calculates cash deposit rates on an ad valorem basis, it may calculate cash deposit rates on a per-unit basis; (2) describes situations in which the ITA applies cash deposit rates in a producer/exporter combination and the process by which a producer/exporter combination may be excluded from provisional measures and an AD or CVD order as a result of a calculated de minimis cash deposit rate following an investigation; (3) sets forth an AD cash deposit hierarchy for imports from market economies, an AD cash deposit hierarchy for imports from nonmarket economies, and a CVD cash deposit hierarchy; and (4) describes the effective date for cash deposit rates following the correction of ministerial errors in investigations and administrative reviews.  The ITA’s stated intent with these updates is to “provide substantially more guidance to the public on Commerce’s application of cash deposit rates in the normal course of its proceedings.”
  2. Separate Rate Regulation for Nonmarket Economies in AD Proceedings: The Final Rule notes that for “decades, in antidumping proceedings involving nonmarket economy countries, Commerce has repeatedly determined that legally distinct entities are in a sufficiently close relationship to the government to be considered part of a single entity (i.e., the government-controlled entity).” The ITA has revised its methodology in nonmarket economy AD investigations and reviews to more effectively address situations in which a state-owned entity has less than majority state ownership, but the state continues to control an entity through veto power or “golden shares.” The modifications under this Final Rule allow the ITA to apply an updated separate rate test and analysis to entities located in nonmarket economies; and afford the ITA the ability to analyze an entity directly owned or controlled by a nonmarket economy government and located in a third country and determine based on record information if that third-country exporter should be treated as part of the nonmarket economy entity and receive the nonmarket economy entity rate or if it should be granted a separate AD rate. The ITA believes this modification is “consistent with Commerce’s historical analysis and treatment of entities located in nonmarket economies and allows for Commerce to consider the legal and administrative levers present in third countries that might allow for the control of an entity that exports subject merchandise to the United States and is owned, in part or in whole, by the nonmarket economy government.”
  3. Concerns About Potential for Manipulation of Prices, Production, or Export Decisions, by Affiliated Input Suppliers and Home Market Resellers: The new regulations modify the ITA’s practice of collapsing affiliated producers that “have production facilities for similar or identical products that would not require substantial retooling of either facility in order to restructure manufacturing priorities” out of concern over the manipulation of prices and production. This Final Rule explicitly addresses the ability of the ITA to collapse producers and non-producers when it is determined that there is significant potential for the manipulation of prices or production between two or more affiliated parties. The Final Rule also addresses certain exceptions to the ITA’s collapsing practice while reiterating that such determinations are case-specific and often based on proprietary information.
  4. Updated Methodology for Selecting Economically Comparable Surrogate Countries: The Final Rule assists in codifying the ITA’s established practice of considering additional factors to determine which countries may be deemed economically comparable to a non-market economy for purposes of determining normal value in nonmarket economy proceedings. The rule codifies each of the three steps the ITA undertakes in selecting surrogate countries and its practice of annually determining market economies economically comparable to individual nonmarket economies and listing those market economies on Commerce’s website.
  5. New Provision Covering Purchase of Goods for More than Adequate Remuneration (MTAR): For the first time, the ITA has promulgated CVD regulations to address the government purchase of goods for more than adequate remuneration (MTAR) and the provision of rebates or exemptions of indirect taxes and import charges to exporters that purchase capital goods and equipment. While such an alleged subsidy has appeared before the ITA in only limited investigations, the ITA notes that it has developed certain methodologies as to this type of financial contribution, especially where the government is both a provider and a purchaser of the good at issue. The Final Rule offers an explanation for such transactions, codifies the provisions, and adds certain language as to prices that might be excluded as potential benchmarks from the ITA’s analysis in determining the benefit of a MTAR subsidy.
  6. Revisions to Calculation of Ad Valorem Subsidy Rates and Attribution of Subsidies to a Product: This Final Rule explains the ITA’s adjustment of the ad valorem subsidy rate when a country is experiencing high inflation, which is defined for this provision as an inflation rate greater than 25 percent per annum during the relevant period. The ITA notes that when “Commerce developed the current attribution rules for cross-owned companies 25 years ago, it had limited experience with the attribution of subsidies between affiliated companies.” Since then, the ITA has developed a detailed practice as to the treatment of cross-owned companies and the attribution to respondents of subsidies received by cross-owned companies. Based on this experience, it has revised its attribution rules and formally codified them in this Final Rule and, in doing so, fully explaining: (i) the cross-owned input producer attribution rule, (ii) the primarily dedicated input provision, (iii) cross-owned providers of utility products, (iv) other services providers; (v) the language for the transfer of a subsidy; and (vi) the non-attribution of subsidies to plants or factories and the general standing for finding subsidies tied.

Other AD and CVD Regulations Modifications

In addition to these major revisions under the Final Rule, the ITA has also adopted the following modifications addressing:

  • The citation of certain New Factual Information on the record.
  • The procedures for the selection of additional respondents in various proceedings.
  • The requirements for interested parties filing factual information to rebut, clarify or correct factual information on the record.
  • The deadlines for the submission of Benchmark and Surrogate Value Data.
  • The sharing of data with CBP for not only fraud investigations but also negligence and gross negligence investigations.
  • The removal of the Integral Linkage Specificity Provision and the Agricultural and Small- and Medium-Sized Businesses Exceptions to the Specificity Rule for CVD investigations.
  • Indirect Taxes and Import Charges on Capital Goods and Equipment (Export Programs) as CVD subsidies.
  • The removal of the regulations on Green Light and Green Box Subsidies.
  • The ITA’s CVD methodology and long-standing CVD policies.

The Final Rule provides details on these updates and modifications more technical or minor in nature, or that codify and reflects modifications made by Congress in 2015 to Title VII of the Tariff Act of 1930.

Updated AD and CVD Annexes

In addition, under a separate Final Rule, the ITA has updated the annexes accompanying the AD and CVD regulations. Specifically, the ITA has updated the number of days and the regulations cross-referenced for each of the listed events and deadlines for parties in AD and CVD investigations and administrative reviews. The ITA has also updated the annexes pertaining to sunset reviews and added new annexes IX, X, and XI to provide additional guidance to Scope Inquires, Circumvention Inquiries, and Covered Merchandise Referrals.

——-

While many of these revisions essentially codify and modify long-standing ITA AD and CVD investigatory practices, they are detailed and extensive in nature. Thompson Hine’s International Trade practice group has experience with AD and CVD laws, regulations, and policies and is available to assist companies with questions or concerns about this Final Rule.