Tougher Enforcement of AD/CV Duty Laws Could be Coming | Yunnan Inorganic Salts Group Co.,Ltd

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The International Trade Administration is proposing to amend its regulations to enhance, improve, and strengthen its enforcement of antidumping and countervailing duty laws. Comments on this proposed rule are due no later than July 10.

This rule proposes to create a new regulation that addresses the elements the ITA may consider in determining if a particular market situation exists that likely distorts the cost of production, including a PMS such that the cost of materials and fabrication or other processing of any kind does not accurately reflect the cost of production in the ordinary course of trade. These changes would take into consideration the comments received in response to an advance notice of proposed rulemaking issued in November 2022, provide 12 examples of scenarios in which the ITA might determine the existence of a PMS that distorts the cost of production, and indicate that allegations of a PMS must be accompanied on the record by relevant information reasonably available to the interested party making the allegation.

The ITA is also proposing to create a new regulatory section and modify two existing sections to address foreign government inactions that benefit foreign producers. One change would address the consideration of evidence of weak, ineffective, or non-existent property, intellectual property, human rights, labor, and environmental protections and the impact that the lack of such protections has on the prices and costs of products in selecting surrogate values and benchmarks. Another change would codify the ITA’s practice of determining that countervailable subsidies are conferred by certain unpaid or deferred fees, fines, and penalties.

Further, this rule would update and address issues that have arisen since the ITA created or amended regulations on scope, circumvention, and covered merchandise issues in September 2021. Changes include addressing merchandise commercially produced but not yet imported; the acceptance of pre-initiation submissions in response to scope applications and circumvention inquiry requests; the revision of time limits if the ITA seeks clarification on a scope application or circumvention inquiry request; clarification of when section 301 does and does not apply to such proceedings; clarification of when “continue to suspend” language applies to entries pre-initiation in scope and covered merchandise proceedings; revisions to allow the sharing of information between AD and CV segments when scope, circumvention, or covered merchandise inquiries for companion orders are conducted on the AD segment; providing greater detail on the application of scope clarifications; and allowing for extensions for initiation and preliminary circumvention determinations.

Finally, the ITA is proposing to incorporate a number of long-standing practices into its regulations. This includes addressing subsidies provided to support compliance with government-imposed mandates; treatment of outstanding loans as grants after three years of no payments of interest and principal; the use of an outside investor standard in determining the benefit of an equity infusion; the allocation period in measuring the benefit of equity infusions or debt forgiveness; the treatment of certain income tax subsidy benefits as not tied with respect to particular markets or products; the use of a five-year period to determine if the premium rates charged on export insurance are inadequate to cover long-term operating costs and losses; and the use of alternative methodologies in attributing export subsidies and domestic subsidies to certain products exported and/or sold by a firm.

For more information on the proposed changes and how they may affect your business, please contact attorney Kristen Smith at (202) 730-4965 or via email.

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