The U.S. Department of Commerce (Commerce) is proposing to change its rules with respect to its procedure for issuing liquidation instructions, to U.S. Customs and Border Protection (CBP), for certain entries subject to antidumping duty orders. See 76 FR 34046 (June 10, 2011): http://www.gpo.gov/fdsys/pkg/FR-2011-06-10/pdf/2011-14446.pdf. More specifically, Commerce proposes to change its rules such that it will instruct CBP to liquidate "certain entries," suspended under antidumping duty orders, for "non-reviewed" non-market economy exporters--i.e., non-market economy exporters that are not involved in an antidumping administrative review for a particular period of review (POR)--at the country-wide antidumping duty rate. Id.
As Commerce explains in its published Federal Register notice on the matter, in an antidumping administrative review involving a non-market economy (NME) country, importers "enter subject merchandise at a company-specific cash deposit rate, a separate rate, or the NME-wide rate. Entries of subject merchandise are subject to cash-deposit requirements and are suspended from liquidation until the Department instructs CBP to liquidate the entries. See section733(d)(2) of the Act. When no review is requested for a particular AD order for a given review period, the Department instructs CBP to liquidate all entries of subject merchandise for that period at the cash-deposit rate that was required at the time of entry." Id. That is, the entries are liquidated a rate determined in a prior antidumping proceeding--an investigation, an administrative review, or a new shipper review. "When a review is requested for a firm for a given review period, entries that have been identified by an importer as that firm’s merchandise remain suspended from liquidation during the pendency of the administrative review." Id. At the end of the administrative review proceeding, Commerce instructs CBP to liquidate the entries based on its findings relevant to the involved POR. That is, it instructs CBP to liquidate the entries based on the company-specific or other rate found, in the final results of review, applicable to each reviewed respondent.
Under most, if not all, NME antidumping orders, the "NME-wide" rate is, in reality, punitive, effectively blocking access to the U.S. market for exporters to which it is applied. In fact, many NME antidumping orders have NME-wide duty rates exceeding one-hundred percent.
The apparent concern is that Commerce is discovering, in the course of its antidumping administrative review proceedings, that certain U.S. importers are falsely claiming that their entries originated with a firm that is participating in an administrative review, when in fact the entries originated with an exporter not being reviewed for the POR during which the entries were made.
The exact form of the proposed rule change is not entirely clear from the Federal Register notice, and its rather ambiguous wording provides more confusion than guidance with respect to several important issues. For example, Commerce does not explain what it means by "certain entries." Taken by themselves, these words seem to suggest that Commerce does not intend to apply the NME-wide rate to all entries from non-reviewed exporters. But if that is the case, the notice offers no clear guidance concerning where Commerce might draw the line.
Furthermore, other language in the notice seems to suggest that Commerce indeed intends to liquidate all entries from non-reviewed exporters, regardless of whether or not those exporters were reviewed previously, and regardless of whether or not those exporters have long track records of low, de minimis, or even zero antidumping duty rates, and regardless of whether or not those exporters have long-established reputations for complying with the letter and spirit of U.S. fair trade law. To wit, the notice indicates that Commerce "is proposing to refine its practice with respect to the rate at which it instructs CBP to liquidate certain entries from non-reviewed exporters. Specifically, the Department proposes to instruct CBP to liquidate such entries at the NME-wide rate." This language implies that there will be no exceptions: if an exporter is not reviewed, its entries will be liquidated at the NME-wide rate, end of story.
Needless to say, an exporter can hardly be expected to remain competitive in the U.S. market if its U.S. sales are being assessed duties that match or exceed the sales prices of its goods. Thus, if Commerce truly intends to apply NME-wide rates to all non-reviewed exporters, it can expect an unprecedented surge in requests for review on the part of NME exporters wishing to retain access to the U.S. market. Certainly hundreds--perhaps even thousands--of NME exporters that were content to sit out annual administrative reviews would feel compelled to participate in Commerce's proceedings each and every POR. Commerce has neither the personnel nor the funding to manage such a spike in its active caseload. One is left to wonder, then, what exceptions the proposed rule might ultimately contain by which Commerce may have the option to decline to review certain exporters without having to impose punitive NME-wide duty rates on those exporters for their being "non-reviewed." It remains to be seen.
Adding to the confusion over Commerce's intended direction with respect to this rule change, toward the end of its Federal Register notice, Commerce states that "when a party does not file a separate-rate application, the Department lacks necessary information on the record to determine whether it is entitled to a separate rate." Id. In context, this phrase seems like a non sequitur. However, it could be read as a hint of Commerce's intent to leave a loophole through which parties to antidumping proceedings could engage in the sorts of activities highlighted in a February 11, 2011 Wall Street Journal Article by James R. Hagerty, titled Cash Softens Trade Blow: Payments to U.S. Rivals Lets Chinese Furniture Makers Skirt Import-Duty Review. Does Commerce intend to allow an exporter that engages in activity of the sort described in the aforementioned article--even if the involved antidumping petitioner eventually retracts its request for review of that exporter, and that exporter is consequently not reviewed--to continue selling its goods in the U.S. market via its previously-established company-specific rate, as long as that exporter applied for a separate rate for the POR at issue? In other words, will a separate rate application allow a "non-reviewed" exporter to avoid the NME-wide rate, in effect giving it the green light to dump its goods, at prices less than fair value, with utter abandon, and without fear of repercussions in the form of higher antidumping duty rates? It seems unlikely that Commerce would knowingly do anything to encourage activity of the sort described in the Wall Street Journal article. But, again, it remains to be seen.
