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Reminder: New AD Review Methodology w/o Zeroing Takes Effect April 17, 2012

This is a reminder that, as set forth in its February 14, 2012 final rule, the International Trade Administration will calculate antidumping rates in a manner which provides offsets for non-dumped comparisons (i.e., no “zeroing”) while adopting a new monthly average-to-average calculation methodology as its default practice, for all administrative reviews where the preliminary results are issued after April 16, 2012. Note that this elimination of zeroing is a matter of policy; the amended regulations do not specify the provision of offsets. Furthermore, alternative methodologies may still be utilized by ITA in exceptional circumstances, although the ITA does not specify what these circumstances may be.

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“Zeroing” refers to the practice of using only sales at less than fair value to determine the estimated AD duty rate, excluding all non-dumped sales from the calculation. In order to be WTO consistent, the ITA has already eliminated "zeroing" in AD investigations that use an average-to-average methodology.

(This default practice will additionally apply for any reviews currently discontinued by the ITA if such reviews are continued after April 16 by a court. The ITA is also modifying its practice in five-year sunset reviews, such that it will not rely on weighted-average dumping margins that were found to be calculated using WTO-inconsistent zeroing methodology, and has already applied the new non-zeroing methodology in the preliminary determination of a section 129 proceeding. See ITT’s Online Archives 12021329 for summary of the ITA’s February 14 final rule adopting this methodology in reviews, and 12032826 for summary of the March 23, 2012 preliminary results of an ITA section 129 proceeding, which applied the new methodology to recalculate rates in administrative reviews of 8 AD orders, finding zero rates for 25 companies.)

Average-to-Average w/ Offsets is “Default”; Other Methodologies May be Applied

While the ITA states it will provide offsets (and eliminate zeroing) as its default policy, the provision of offsets is not stipulated by the amended regulations. In the February 14 Preamble to the regulations, the ITA said “it is not necessary, appropriate or desirable for the [ITA]…to [adopt] a total prohibition of zeroing regardless of comparison method or case-specific circumstance.”

The Preamble also says transaction-to-transaction and average-to-transaction methodologies may still be applied when ITA determines that another method is appropriate in a particular case. However, the regulations do not provide for specific cases when such methodologies will be applied, and the ITA’s Preamble said “it would be inappropriate to further speculate as to either the case-specific circumstances that would warrant the use of an alternative methodology in future reviews, or what type of alternative methodology might be employed.”

Implementation Timetable for New Approach

1. All reviews - prelim results after April 16, 2012. The new approach will be effective and applicable to all reviews pending before the ITA for which the preliminary results are issued after April 16, 2012.

2. Sunset reviews -- prelim or final results after April 16, 2012. The ITA will modify its practice such that it will not rely on dumping margins that were calculated using WTO-inconsistent “zeroing” methodology in all sunset reviews pending before the ITA for which either the preliminary results or expedited final results of the sunset review are issued after April 16, 2012. (ITA does not anticipate that it will need to recalculate the dumping margins in the vast majority of future sunset determinations)

3. WTO panels and Section 129 proceedings. In addition, this approach has and will be used in implementing the findings of WTO panels on zeroing involving the European Community (EC) (US-zeroing and continued zeroing), Japan (US-zeroing) and Mexico (US-Stainless Steel), with respect to any AD duty proceedings conducted pursuant to Section 129 of the Uruguay Round Agreements Act.

4. Reviews continued after April 16, 2012 due to court decision. This approach will also be applicable to any reviews currently discontinued by the ITA if such reviews are continued after April 16, 2012 by reason of a final and conclusive judgment of a U.S. Court.