ITA May Consider Granting Market-Economy Treatment to Individual Entities in China Antidumping Proceedings
The International Trade Administration has issued a notice seeking comments on whether it should consider granting complete or partial market-economy treatment to individual entities for the calculation of normal value in antidumping proceedings involving China, which is considered a non-market economy (NME).
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Comments must be submitted by June 25, 2007.
(Normal value has been defined as the price at which merchandise is sold or offered for sale in the principal markets of the country from which it is exported.)
ITA Currently Only Examining One NME - China
The ITA does not preclude the possibility that market-economy treatment for individual entities in NMEs other than China might be warranted. At this time however, the ITA is only examining China's economy1.
Normal Value for China Now Calculated Using Prices from a Surrogate
Currently, it is the ITA's practice to calculate normal value in China AD proceedings by valuing the China producer's factors of production using, to the extent possible, prices from a market economy that is at a comparable level of economic development and that is also a significant producer of comparable merchandise (surrogate).
Comments Sought on How to Assess Market-Orientation of Individual Entities
The ITA states that despite considerable reforms, the Chinese government retains for itself considerable levers of control over China's economy. While an entity may be market-oriented, the cost of certain inputs obtained in the broader economy may necessarily be determined on a non-market basis. Given this situation, the ITA requests parties to consider to what extent, if any, a finding of market-orientation for an individual entity might be limited, and how an entity's prices and costs within China could be utilized together with certain surrogate prices and costs in ITA AD calculations.
(The ITA currently employs an industry-wide test in AD NME proceedings to determine if market-economy treatment is warranted for the calculation of normal value. However, no industry in China has yet passed the requisite market-oriented industry (MOI) test, which requires that three conditions2 be met.
Given the high standard that must be met for an industry to obtain MOI status, the ITA also requests that parties focus their comments on the conditions and factors that would guide the ITA's assessment of the market-orientation of individual entities, as opposed to industries.)
1 examined on a country-wide basis
2The ITA has outlined three conditions that must be met in order for an MOI to exist: (1) that there be virtually no government involvement in production or prices for the industry; (2) that the industry be marked by private or collective ownership that behaves in a manner consistent with market considerations; and (3) that producers be found to pay market-determined prices for all major inputs, and for all but an insignificant proportion of minor inputs.
(See ITT's Online Archives or 04/06/07 news, 07040625, for BP summary of Commerce's preliminary decision to apply CV duty law to China.
See ITT's Online Archives or 10/27/06 news, 06102715, for BP summary of a previous ITA notice which revised its AD methodology for valuing market economy inputs for NMEs, specifically concerning cases where an NME country producer sources an input from both market economy suppliers and from within the NME.)
- comments must be submitted by June 25, 2007
ITA contact - Carrie Blozy (202) 482-5403
ITA notice (FR Pub 05/25/07) available at http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/pdf/E7-10130.pdf