On September 20, 2021, the International Trade Administration of the U.S. Department of Commerce published in the Federal Register “Regulations to Improve Administration and Enforcement of Antidumping and Countervailing Duty Laws”. 86 Fed. Reg. 52,300 – 52,384. The final regulations follow proposed regulations which were published in August 2020. See 85 Fed. Reg. 49,472 – 49,504 (August 13, 2020((proposed rule; request for comments).
Over the years, domestic producers and their workers have complained that antidumping and countervailing duty orders were rendered less effective through bogus new shipper reviews, through evasion by minor modifications to products and by circumvention. It was felt by domestic petitioners that Commerce practice inadvertently encouraged gaming of the system by having corrective action limited to some preliminary action by Commerce.
The Commerce Department similarly has found itself handling far more new shipper reviews than trading partners with many of the review requests proving bogus by the use of limited sales at artificially high prices to obtain reduced duty deposit rates. Similarly, Commerce is required by statute to determine the representativeness of those supporting petitions in 20-40 days but had no limits on when challenges could be filed in that time frame.
Congress passed legislation in 2015 intended to, inter alia, improve the administration and enforcement of U.S. antidumping and countervailing duty laws. See Trade Facilitation and Trade Enforcement Act of 2015, Pub. L. 114-125, 130 Stat 122 (Title IV, Prevention of Evasion of Antidumping and Countervailing Duty Orders).
While the proposed regulatory changes were submitted during the Trump Administration, the changes adopted by the Biden Administration this week are largely the same and reflect the broad bipartisan support for the need to have effective enforcement of U.S. trade remedy laws. See Inside U.S.. Trade’s World Trade Online, Former Commerce official: New AD/CVD rules fix loopholes, inefficiencies (September 21, 2021), https://insidetrade.com/daily-news/former-commerce-official-new-adcvd-rules-fix-loopholes-inefficiencies.
The August 13, 2020 proposal provides a succinct review of the purpose of the proposed changes (85 Fed. Reg. 49,472-473 (footnote omitted):
“The purpose of the regulatory changes proposed in this rulemaking is to strengthen the administration and enforcement of AD/CVD laws, make such administration and enforcement more efficient, and create new enforcement tools for Commerce to address circumvention and evasion of trade remedies. If adopted, these changes would equip Commerce to better fulfill the Congressional intent behind the AD/CVD laws—namely, to protect U.S. companies, workers, farmers, and ranchers from the injurious
effects of unfairly traded imports. In addition, if adopted, these changes would promote the Administration’s objective to enforce the AD/CVD laws rigorously, and to aggressively pursue parties that seek to skirt them. Moreover, the proposed regulations facilitate a stronger and more efficient administration of the AD and CVD laws in the context of Commerce’s proceedings. The proposed changes are summarized briefly here, and discussed further below:
“• Modify section 351.203 to provide for the establishment of a deadline by which parties may file comments on industry support. At present, comments on industry support may be filed up to and including the scheduled date of an initiation determination, leaving Commerce little or no time to consider fully such comments for purposes of determining whether the petition has sufficient industry support. Therefore, such modifications are necessary to enhance Commerce’s ability to consider and act upon such comments in a timely manner.
“• Revise numerous provisions to section 351.214 concerning new shipper reviews to address abuse of those procedures and ensure that the sales to be reviewed are, in fact, bona fide sales. These changes are necessary to conform the regulation to recent statutory changes and to ensure Commerce expends its limited resources on new shipper reviews only where warranted.
“• Revise numerous provisions to section 351.225 concerning scope inquiries by adopting new procedures to preserve resources, expedite deadlines, and remove unnecessary and burdensome notice and service
requirements. These revisions also clarify and codify the substantive basis for Commerce’s scope rulings pertaining to country of origin, scope language interpretation, and ‘mixed-media’ products, which incorporate subject merchandise in some form, in light of past practice and various court decisions. These revisions also ensure that AD/CVD duties are appropriately applied to products determined to be subject to the scope of the order.
“• Adopt new section 351.226 concerning circumvention inquiries, which largely mirrors the proposed
scope procedures. These provisions also clarify Commerce’s authority to self-initiate circumvention inquiries and apply circumvention determinations on a ‘country-wide’ basis.
“• Adopt new section 351.227 concerning ‘covered merchandise referrals’ from CBP under section 517 of
the Act, which largely mirror the proposed scope and circumvention procedures and allow Commerce
maximum flexibility to further develop its procedures and practice as it gains more experience in this new area of the law.
“• Adopt new section 351.228, which is specifically targeted at improving enforcement of AD and CVD orders and ensuring the effectiveness of those orders. Under new section 351.228, Commerce may determine to impose a certification requirement on an importer or another interested party to further
ensure that entries of merchandise subject to an AD/CVD order are appropriately classified as subject
“• Modify section 351.402 regarding importer certifications for the payment or reimbursement of AD/CVD duties on entries subject to AD orders to account for updated procedures.
“• Adopt necessary changes, consistent with certain substantive proposed rules discussed above, to two
procedural provisions: Section 351.103(d)(1) pertaining to letters of appearance and public service lists, and section 351.305(d) pertaining to importer filing requirements for access to business proprietary information in Commerce’s proceedings.”
While there are some modifications to the proposed regulations in the final rule released this week, the purpose and intent remains the same — make U.S. laws more effective and reduce the opportunities for gaming the process. Effective dates for changes made vary. Some changes take effect for petitions or requests filed on or after October 20, 2021(changes to 351.203, 351.214) or on that date for 351.228, 351.402(f)(2). November 4 is listed as the effective date for changes to 351.225, 351.103(d), 351.305(d), 351.226, 351.227 with a few modifications having other dates. See 86 Fed. Reg. 52,300 (“Applicability Dates”).
The changes made by the new or revised regulations are practical and should be important in many cases in reducing costs for all parties and hopefully in reducing the gaming and evasion that has plagued many orders over the years.
More can and should be done to streamline antidumping and countervailing duty proceedings to the benefit of the agency and all parties.
First, in administrative reviews, respondents who participated in an earlier phase of the proceeding should be required to provide the data in a manner consistent with Commerce’s earlier finding with regard to that company, with failure to do so a basis to go to facts available. Such an approach doesn’t eliminate the ability of respondents to provide alternative data and arguments for why such data should be used but would reduce the gaming that often occurs where respondents who have lost an issue, simply submit data not reflecting Commerce’s prior decision with the possibility that Commerce and parties don’t catch the failure.
In investigations and in reviews, there should be shorter time limits on submitting complete questionnaire responses with rejection of data submitted after those dates. Both Commerce and Petitioners go through a series of data reviews sometimes with complete revisions to data being submitted shortly before the preliminary determination which renders earlier review less relevant or irrelevant. This wastes resources for all parties and limits the ability of petitioners to flag issues of concern. The ability to submit major revisions to data sets over time also obviously encourages gaming of the process. The time for final data sets (or revisions) can be longer in investigations but should be short and unmovable in administrative reviews where all foreign producers are on notice that annual reviews can occur.
Third, Commerce needs to review and enforce requirements for public versions from respondents. Particularly on issues such as model match and adjustments to prices in the relevant markets or elements of cost, meaningful public versions can be critical for a petitioning industry to flag problems with the approach, elements, adjustments or comparisons proposed by respondents. While it is critical that Commerce control the selection process of criteria and model comparisons, failure to enforce public version requirements on a uniform basis has been a longstanding problem and can result in agency decisions that don’t reflect the best information that should be available.
Fourth, Commerce should develop a library of standard questionnaire forms that have been translated into as many of the languages of countries subject to investigation as possible. While requiring responses in English is necessary, there is no reason that the basic questionnaire form can’t be translated into a large number of languages to be of assistance to foreign companies served with a questionnaire. Having worked with U.S. companies engaged in trade remedy cases in foreign countries, it is obvious that corporate, sales, plant personnel could develop information more quickly if the basic questionnaire form was in the local language. The U.S. should raise the issue in the relevant WTO committees to obtain similar action among trading partners.
While there are many substantive issues as well, there is much that can and should be done to improve the effectiveness and administratively efficient operation of U.S. laws beyond this week’s important regulatory changes.