G/SCM/N/1/USA/ 1/Suppl. 31 
 
2 October  2020 
(20-6683) Page: 1/22 
Committee on Subsidies and Countervailing Measures  Original: English  
 
NOTIFICATION OF LAWS AND REGULATIONS UNDER  
ARTICLE 32.6 OF THE AGREEMENT  
UNITED STATES 
Supplement  
The following communication, dated 21 September 2020, is being circulated at the request of the 
delegation of the United States.  
 
_______________  
 
 
Pursuant to Article 32.6 of the Agreement on Subsidies and Countervailing Measures, the 
United  States hereby notifies:  
Modification of Regulation s Regarding Benefit and Specificity in Countervailing Duty Proceedings, 
85 Fed. Reg. 6031 (February  4, 2020).  
The United States is notifying a modification to the U.S. Department of Commerce 's (Commerce) 
regulations pertaining to the determination of benef it and specificity in countervailing duty 
proceedings. These modifications clarify how Commerce will determine the existence of a benefit 
when examining a subsidy resulting from currency undervaluation and clarify that companies in the 
traded goods sector of the economy can constitute a group of enterprises for purposes of determining 
whether a subsidy is specific.  
The regulations are effective April 6, 2020, and apply to all segments of countervailing duty 
proceedings initiated by Commerce on or after Apri l 6, 2020.  
[Federal Register Volume 85, Number 23 (Tuesday, February 4, 2020)]  
[Rules and Regulations]  
[Pages 6031 -6044]  
From the Federal Register Online via the Government Publishing Office [ http://www.gpo.gov/  
[Docket No.: 200128 -0035]  
______________________________________________________________________  
DEPARTMENT OF COMMERCE  
International Trade Administration  
19 CFR Part 351  
[Docket No. 200128 -0035]  
RIN 0625 -AB16  
Modification of Regulations Regarding Benefit and Specificity in Countervailing Duty 
Proceedings  
AGENCY:  Enforcement and Compliance, International Trade Administration, Department of 
Commerce.  G/SCM/N/1/USA/ 1/Suppl. 31 
 
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  ACTION:  Final rule.  
SUMMARY:  The Department of Commerce (Commerce) is modifying two regulations pertaining to 
the determination of benefit and specificity in counterva iling duty proceedings. These modifications 
clarify how Commerce will determine the existence of a benefit when examining a subsidy resulting 
from currency undervaluation and clarify that companies in the traded goods sector of the economy 
can constitute a  group of enterprises for purposes of determining whether a subsidy is specific.  
DATES:  
Effective date: April 6, 2020.  
Applicability date: This rule will apply to all segments of proceedings initiated on or after 
April 6, 2020.  
FOR FURTHER INFORMATION CONT ACT: Gregory Campbell at (202) 482 -2239 or 
Matthew  Walden at (202) 482 -2963.  
SUPPLEMENTARY INFORMATION  
1  BACKGROUND  
On May  28, 2019, we published the Modification of Regulations Regarding Benefit and Specificity in 
Countervailing Duty Proceedings; Proposed R ule and Request for Comments .1 In the proposed rule, 
we explained that neither the Tariff Act of 1930, as amended (the Act) nor Commerce 's existing 
countervailing duty (CVD) regulations specify how to determine the existence of a benefit or 
specificity wh en Commerce is examining a potential subsidy resulting from the exchange of currency 
under a unified exchange rate system. We initiated this rulemaking process to fill that gap.  
We received numerous comments on the proposed rule, and we address those comme nts below. 
The proposed rule, comments received, and this final rule can be accessed using the 
Federal  eRulemaking portal at http://www.regulations.gov  under Docket Number ITA -2019-0002. 
After analyzing and carefu lly considering all of the comments that Commerce received, we have 
adopted the modifications described below and amended Commerce 's regulations accordingly.  
2  EXPLANATION OF REGULATORY PROVISIONS AND FINAL MODIFICATIONS  
Commerce is modifying 19 CFR 351.502,  which addresses specificity of domestic subsidies, and is 
adding new 19 CFR 351.528, to govern the determinations of undervaluation and benefit when 
examining potential subsidies resulting from the exchange of an undervalued currency. The 
modification to 19 CFR 351.502 adds new paragraph (c), which explains that enterprises that buy 
or sell goods internationally (i.e., enterprises in the traded goods sector of an economy) can 
comprise a "group" of enterprises for specificity purposes. In essence, this modi fication fills a gap in 
section 771(5A)(D) of the Act, which states that a subsidy can be specific if provided to "a group" of 
enterprises or industries, but does not define the word "group." Existing 19 CFR 351.502 makes 
clear that in determining whether there is a "group," Commerce is not required to determine whether 
there are shared characteristics among the enterprises or industries that are eligible for, or actually 
receive, the subsidy. Moreover, Commerce 's Policy Bulletin 10.1, issued in 2010, clarifies that state -
owned enterprises can constitute a "group" of enterprises within the meaning of section 771(5A)(D) 
of the Act.2 The addition of 19 CFR 351.502(c) is intended to provide further clarification, this time 
for the traded goods sector, regarding the entities that may comprise a "group."  
New 19 CFR 351.528 provides guidance for Commerce 's determinations of undervaluation  and 
benefit when examining a potential subsidy resulting from the exchange of an undervalued currency. 
 
1 84 FR 24406 (proposed rule).  
2 See Import Administration Policy Bulletin 10.1, "Specificity of Subsidies Provided to State -Owned 
Enterprises, " 2010, available  at https://enforcement.trade.gov/policy/PB -10.1.pdf . Commerce h as also 
addressed the issue of the definition of "group " in certain CVD proceedings. For example, we found foreign -
invested enterprises to comprise a "group " under the Act.  See, e.g., Citric Acid and Certain Citrate Salts From 
the People 's Republic of Chin a: Final Affirmative Countervailing Duty Determination , 74 FR 16836 
(April  13, 2009), and accompanying Issues and Decision Memorandum at Comment 16.  G/SCM/N/1/USA/ 1/Suppl. 31 
 
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  Paragraph (a)(1) specifies that Commerce normally will consider whether a benefit is conferred from 
the exchange of U.S. dollars for the currency of the  country under review or investigation only if 
that country 's currency is undervalued during the relevant period. In other words, a determination 
of undervaluation is a prerequisite to proceeding to an analysis of whether a benefit is conferred. To 
determi ne whether there is undervaluation, Commerce normally will consider the gap between the 
country 's real effective exchange rate (REER), on the one hand, and the REER that achieves an 
external balance over the medium term that reflects appropriate policies – otherwise known as the 
equilibrium REER – on the other hand. Paragraph (a)(2) specifies that Commerce normally will make 
an affirmative finding of currency undervaluation only if there has been government action on the 
exchange rate that contributes to an  undervaluation of the currency. In assessing whether there has 
been such government action, Commerce will not normally include monetary and related credit 
policy of an independent central bank or monetary authority. In making its assessment of 
government action on the exchange rate, Commerce may consider the relevant government 's degree 
of transparency regarding actions that could alter the exchange rate.  
Paragraph (b) of section 351.528 states that once Commerce has made an affirmative finding of 
currency  undervaluation, we normally will determine the existence of a benefit after examining the 
difference between (i) the nominal, bilateral U.S. dollar rate consistent with the equilibrium REER, 
and (ii) the actual nominal, bilateral dollar rate during the re levant time period, taking into account 
any information regarding the impact of government action on the exchange rate. If there is a 
difference between (i) and (ii), then the amount of the benefit normally will be determined by 
comparing the amount of the  domestic currency3 that the recipient received to the amount it would 
have received absent the difference between (i) and (ii). In short, under paragraph (b), the benefit 
normally will be equal to the extra amount of domestic currency received by a firm because of the 
undervaluation.  
Information regarding the amount of domestic currency that the recipient actually received from an 
exchange of U.S. dollars normally will come from the recipient itself, through Commerce 's normal 
questionnaire process. In thi s sense, a currency -related subsidy does not differ from the other types 
of subsidies that Commerce normally investigates. However, paragraph (c) of new 19 CFR 351.528 
clarifies that in determining undervaluation (including government action) and the bilat eral 
U.S. dollar rate gap, Commerce will request that the Department of the Treasury (Treasury) provide 
its evaluation and conclusion regarding these issues during a CVD proceeding.  
3  RESPONSE TO COMMENTS ON THE PROPOSED RULE  
Commerce received 47 comments on  the proposed rule. The majority of these comments expressed 
support for a regulation that addresses subsidies resulting from currency undervaluation.  
As a result of the comments, we made changes (primarily additions) to the regulatory text, which 
are summ arized in the "Changes from the Proposed Rule" section below. Many of these additions to 
the regulatory text – for example, the additions describing in greater detail the steps of the benefit 
determination and the additions regarding the role of government  action on the exchange rate – are 
consistent with how we described the rule in the preamble to the proposed rule. In light of the 
comments received, we have decided to include greater detail in the regulatory text itself, rather 
than in the preamble alone . Other changes to the regulatory text – for example, the technical 
changes in 19 CFR 351.502 – respond to comments received.  
Below is a summary of the comments, grouped by issue, followed by Commerce 's response.  
1. Whether the CVD Law is an Appropriate To ol to Remedy Subsidies from Currency Undervaluation  
While many of the comments Commerce received on the proposed rule were focused on technical 
or legal aspects of the methodologies described , several commenters also opined more generally on 
whether it is appropriate and effective, as a policy matter, for Commerce to involve itself in an area 
of analysis in which other U.S. government agencies and international institutions have historically 
been viewed as having primary jurisdiction and competence. These c ommenters argued that the 
CVD law is not the appropriate vehicle for remedying the effects of currency undervaluation. Some 
of these commenters presumed that Commerce would impose a single, across -the-board duty that 
 
3 The term "domestic currency, " as used throughout this notice, means the currency of the country 
under inv estigation or review.  G/SCM/N/1/USA/ 1/Suppl. 31 
 
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  (i) assumes full exchange rate pass thr ough, (ii) is applied to all exporters and all U.S. imports of 
the subject merchandise, and (iii) is totally divorced from "on -the-ground," company -specific 
circumstances and experience.  
Response : Congress gave Commerce the authority to remedy injurious su bsidies, regardless of 
what form they take. The CVD law gives U.S. domestic producers the right to petition Commerce to 
investigate allegedly injurious foreign subsidies, and it requires Commerce to conduct such 
investigations (provided that the applicable  requirements for initiation are met). This is true even 
with respect to issues in which other U.S. Government agencies or international bodies may have 
an overlapping interest. For example, if the domestic industry petitions Commerce alleging that a 
foreign agricultural product or a foreign energy resource is subsidized and injures a domestic 
industry, Commerce generally must investigate the allegations, even though other U.S. government 
agencies have expertise with respect to such products. Commerce routi nely investigates programs 
involving , e.g., export  credits and equity infusions, which are potential forms of subsidization that 
may also be practices monitored by other governmental and international entities. So too with 
currency: if the domestic industr y petitions Commerce alleging that a foreign currency is a 
mechanism for subsidizing an imported product, Commerce generally must investigate the 
allegations, despite the fact that other agencies have an interest in U.S. policy towards foreign 
currencies. This is true even before the adoption of the rule in this notice.  
This interpretation of Commerce 's obligations is consistent with the intent behind the Trade 
Agreements Act of 1979, which transferred the authority for administering CVD investigations from  
Treasury to Commerce. The House Ways and Means Committee explained that this shift: "will give 
these functions high priority within a Department whose principal mission is trade. In the past, 
agencies have arbitrarily set a course of administration of the se statutes contrary to congressional 
intent." Thus, Congress has already decided that because Commerce 's principal mission is trade, it 
is Commerce that should administer the CVD laws with respect to foreign imports and foreign 
subsidies of all types.  
However, Commerce cannot administer the CVD law to counteract currency undervaluation per se . 
Contrary to some of the commenters, and as these regulatory modifications make clear, Commerce 
did not propose an across -the-board CVD in the amount of any currency undervaluation found to 
exist. The CVD law can only counteract countervailable subsidies – i.e., financial  contributions that 
confer a benefit and meet the specificity requirement of the Act – provided with respect to specifically 
defined categories of imp orted goods that injure or threaten injury to a U.S. industry.  
To do this, Commerce will follow a two -step approach. First, we will conduct a REER -based analysis 
to determine if there is potentially actionable currency undervaluation. We will normally not find 
such currency undervaluation unless there has been government action on the exchange rate that 
contributes to the undervaluation. Such government action will not normally include monetary and 
related credit policy of an independent central bank or mon etary authority. The second step will be 
an analysis of "on -the-ground," firm -specific circumstances and experience to determine the extent 
of any countervailable benefit, after taking into account the U.S. dollar rate gap with respect to the 
undervalued c urrency. This approach will ensure that Commerce 's analysis of currency 
undervaluation adheres to the principles and conforms to the requirements of the U.S. CVD law, and 
that it fits squarely within the financial contribution -benefit -specificity framework . Thus, the benefit 
calculation for any exchange or transfer involving an undervalued currency will follow the same 
principles as for any other countervailable subsidy. It will generally be based on the firm -specific 
value of the benefit , i.e., the  extra d omestic currency units received as a result of the undervaluation, 
conferred on the firm.  
Commerce recognizes that implementation will raise a variety of issues, but these should be 
addressed incrementally and over time, through Commerce 's experience in in dividual cases – which 
are informed by arguments put forward by the interested parties as well as the underlying 
administrative record.  
This approach is consistent both with Commerce 's practice in other areas, as well as general 
principles of administrativ e law. In SEC v. Chenery Corporation , the Supreme Court recognized that 
rulemaking is often essential to an agency 's processes, but then also explained, "the agency may 
not have had sufficient experience with a particular problem to warrant rigidifying  its tentative G/SCM/N/1/USA/ 1/Suppl. 31 
 
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  judgment into a hard and fast rule."4 In such situations, "the agency must retain power to deal with 
the problems on a case -to-case basis if the administrative process is to be effective.  There is thus a 
very definite place for the case -by-case evolution of statutory standards."5 The Supreme Court 
explained that "the choice made  between proceeding by general rule or by individual,  
ad hoc litigation is one that lies primarily in the informed discretion of the administrative agency.6  
Likewise, the Court of International Trade (CIT) has recognized that "[a]bsent statutory restraints, 
agencies are generally free to develop policy through either rulemaking or adjudication."7 In Apex, 
the CIT found that Commerce 's differential pricing met hodology in antidumping duty proceedings 
was not required to be implemented through rulemaking.8 
In fact, when Commerce promulgated its current CVD regulations in 1998, we repeatedly noted that 
it was not appropriate to set forth precise rules on every de tail of CVD methodology for every type 
of subsidy.9 Thus we stated that if Commerce at that time had little or no experience with a particular 
issue, we would not issue a regulation on that issue, but rather would resolve it on a case -by-case 
basis or fur ther refine our treatment of it in the future.10  
Therefore, these regulatory modifications do not resolve all potential complex issues that will arise. 
That these case issues can only be resolved over time is true not just for currency undervaluation, 
but for any new type of subsidy Commerce investigates. Commerce 's analytical approach, as 
structured in these regulatory modifications, will ensure that CVD actions against subsidies resulting 
from currency undervaluation remain measured, deliberate, and pred ictable.  
2. Statutory Authority to Promulgate this Rule  
One commenter asserted that Commerce has the statutory authority to evaluate currency 
undervaluation within the CVD law. On the other hand, two commenters argued that Commerce 's 
proposed rule is unlawful because Congress failed to approve legislation that would specifically deem 
currency undervaluation as a countervailable subsidy. Therefore, these commenters claimed that 
Commerce lacks the statutory authority to alter its appro ach without Congressional change to the 
Act. Further, one commenter argued that Commerce has consistently held that "an allegedly 
undervalued unified exchange rate does not constitute a countervailable subsidy," citing to Carbon 
Steel Wire Rod from Poland:  Preliminary Negative Countervailing Duty Determination , 
49 FR 6768,  6771 (February 23, 1984). This commenter argued that, in light of Commerce 's alleged 
practice and Congress 's subsequent amendments to the Act that failed to establish that Commerce 
can co untervail currency undervaluation, Congress, in effect, ratified Commerce 's alleged practice. 
Accordingly, citing GPX,11 this commenter argues that this Congressional acquiescence in 
Commerce 's longstanding practice precludes Commerce from unilaterally alt ering its approach.  
Response:  To the extent that a currency exchange involving an undervalued currency meets the 
statutory definition of a countervailable subsidy, Commerce has the authority to administer the CVD 
law, countervail such a program and write r egulations to effectuate the statute.  
First, contrary to the allegation of one commenter, Commerce does not have an established practice 
that it does not find currency undervaluation to be countervailable. Although this commenter points 
to the preliminary determination of Carbon Steel Wire Rod from Poland  to indicate such a practice, 
Commerce 's finding in that 1984 investigation dealt with multiple currency exchange rates, not the 
type of unified exchange rate system at issue in this regulation. Therefore, Commerce 's statement 
that "an allegedly undervalued unified exchange rate does not constitute a countervailable subsidy" 
can be viewed as dicta given that a unified exchange rate was not the program at issue in that 
investigation. Moreover, in the final de termination of Carbon Steel Wire Rod from Poland , Commerce 
ultimately determined that it cannot apply the CVD law to non -market economies (NMEs) such as 
 
4 SEC v. Chenery Corp. , 332 U.S. 194, 202 (1947).  
5 Id. at 203.  
6 Id. 
7 Apex Frozen Foods Private Ltd. v. United States , 144 F. Supp. 2d 1308, 1319 (CIT 2016).  
8 See id. at 1319-22. 
9 See Countervailing Duties; Final Rule , 63 FR 65348 (November 25, 1998) (1998 Final Rule).  
10 See, e.g ., id. at 65378 , 65394, 65397.  
11 GPX Int 'l Tire Corp. v. United States , 666 F.3d 732, 740 (Fed. Cir. 2011).  G/SCM/N/1/USA/ 1/Suppl. 31 
 
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  Poland (at that time), rendering moot Commerce 's initial statements in the preliminary 
determination.12  
Further, contrary to this commenter 's claims that this alleged "practice" was further upheld in 
subsequent determinations by Commerce not to initiate on currency undervaluation allegations, 
Commerce determined not to initiate on subsequent currency under valuation subsidy allegations 
because we determined that the petitioners ' allegations in those particular proceedings were 
unsupported by reasonably available information regarding the statutory elements for imposition of 
a CVD.13 Commerce 's determinations  not to initiate were not based on any practice regarding 
currency -related subsidies.  
Additionally, since the publication of Carbon Steel Wire Rod from Poland  in 1984, Commerce 's CVD 
law has undergone substantial changes, most significantly in the Uruguay Round Agreements Act.14 
For example, the law underwent a significant change that replaced the term "bounty or grant" with 
the current statutory definition of a "subsidy" as being a financial contribution that confers a 
benefit.15 Thus, given the substantia l changes to the CVD law since 1984, Commerce 's statements 
regarding subsidy programs in 1984 are not binding on its current application of the law.  
Moreover, even if Commerce 's alleged practice was binding — despite its consistent subsequent 
practice indi cating otherwise — Commerce is always free to change its practice, provided that it 
explains its decision, which we have done here.  
Contrary to one commenter 's reliance on GPX to assert that Congressional acquiescence in 
Commerce 's longstanding practice pr ecludes us from unilaterally altering our approach, the GPX 
case is distinguishable.  
In GPX, the Federal Circuit determined that because Commerce had previously interpreted the Act 
such that CVDs could not be assessed on imports from NMEs and, because Cong ress had 
subsequently amended the Act without disturbing Commerce 's interpretation, Congress had, in 
effect, ratified the agency 's interpretation of the statute.16 In evaluating whether Commerce had 
interpreted the statute to determine CVDs could not be as sessed on imports from NMEs, the court 
looked to prior agency briefs that defended its interpretation of the statute, Congressional rejection 
of provisions to amend the law to include subsidies in NMEs as countervailable, and Congressional 
testimony by Com merce asserting that CVDs cannot be assessed on NMEs.17 Further, the court 
looked to a past Federal Circuit case18 which upheld Commerce 's interpretation of the Act that CVDs 
could not be assessed on imports from NMEs.19 
Contrary to the situation in GPX, Commerce does not have a practice that subsidies related to 
currency undervaluation are not countervailable, and there certainly has been no Federal  Circuit 
case affirming that alleged "practice," as there had been prior to the GPX decision. Rather, 
Commerc e in the past did not initiate on currency undervaluation allegations because the petitioners ' 
allegations in those particular proceedings were unsupported. Finally, contrary to these commenters ' 
arguments, the Supreme Court has stated that "failed legisla tive proposals are 'a particularly 
 
12 Carbon Steel Wire Rod from Poland; Final Negative Countervailing Duty Determination, 
29 FR 19374,  19375 (May 7, 1984).  
13 See, e.g., Certain Coated Paper Suitable for High -Quality Print Graphics Using Sheet -Fed Presses from 
the People 's Republic of China: Final Affirmative Countervailing Duty Determination , 75 Fed. Reg. 59213 
(Sept ember  27, 2010), and accompanying Issues and Decision Memorandum at cmts. 5 -7; Aluminum 
Extrusions From the People's Republic of China: Preliminary Affirmative Countervailing Duty Determination, 
75 FR 54302 (September 7, 2010) (unchanged in Aluminum Extrusions F rom the People's Republic of China: 
Final Affirmative Countervailing Duty Determination, 76 FR 18521 (April 4, 2011)); and Notice of Initiation of 
Countervailing Duty Investigations: Coated Free Sheet Paper from the People 's Republic of China, Indonesia, 
and the Republic of Korea, 71 FR 68546 (November 27, 2006).  
14 See, e.g., Uruguay Round Agreements Act of 1994, Pub. L. No. 103 -465, 108 Stat. 4809 (1994).  
15 Id. 
16 GPX Int 'l Tire Corp., 666 F.3d at 737 -45. 
17 Id. at 737 -740. 
18 Georgetown Steel Corp. v. United States, 801 F.2d 1308 (Fed. Cir. 1986).  
19 GPX, 666 F.3d at 741 -745. G/SCM/N/1/USA/ 1/Suppl. 31 
 
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  dangerous ground on which to rest an interpretation of a prior statute. '"20 Therefore, we disagree 
that Commerce does not have statutory authority to promulgate this final rule.  
3. Financial Contribution  
Several commenter s argued that currency undervaluation and exchanges of currency do not 
constitute financial contributions under either section 771(5)(D) of the Act or Article 1.1(a)(1) of the 
WTO Agreement on Subsidies and Countervailing Measures (SCM Agreement). They arg ued that an 
exchange of currency is neither a "direct transfer of funds," as indicated in the proposed rule, nor 
any other type of listed financial contribution. One commenter argued that the conversion of one 
currency into another is a purchase and sale o f items of equivalent value and also that the sale of 
something to the government – unless it is the sale of a "good," which currency is not – is not a 
financial contribution. This commenter also noted that when an exporter earns foreign currency on 
an exp ort sale, it might never convert that foreign currency into domestic currency. According to 
this commenter, even when the exporter does convert that foreign currency, it may be impossible 
to link the currency exchange back to the export sale.  
Other comment ers urged Commerce to take a broad view of the types of entities that can constitute 
"authorities" capable of providing financial contributions within the meaning of section  771(5)(B) of 
the Act. Some commenters also urged Commerce to take a broad view of the "entrustment or 
direction" standard in section 771(5)(B)(iii) of the Act during investigations of currency -related 
subsidies. They argued that there may be a large variety of government actions that amount to 
entrustment or direction when a government undervalues its currency and that an express 
government mandate that banks purchase foreign currency is not a prerequisite to a finding of 
entrustment or direction.  
Response : These regulatory modifications do not address financial contribution under 
section  771(5)(B) and section 771(5)(D) of the Act. In fact, none of Commerce 's existing CVD 
regulations directly address financial contribution. Accordingly, we do not consider it  necessary to 
respond in detail to these comments, many of which are more appropriately made in the context of 
a particular CVD proceeding than in this rulemaking process.  
As we stated in the proposed rule, "[t]he receipt of domestic currency from an autho rity (or an entity 
entrusted or directed by an authority) in exchange for U.S. dollars could constitute the financial 
contribution under section 771(5)(D) of the Act."21 We maintain this view, but of course any such 
finding will depend upon the facts on th e record of the proceeding. We disagree that an exchange 
of currency can never be a "direct transfer of funds" within the meaning of section 771(5)(D)(i) of 
the Act. The word "transfer" suggests a conveyance, passing or exchange of something from one 
perso n to another. The word "funds" suggests money or some monetary resource. Further, contrary 
to one commenter, we disagree that the question of whether "equivalent value" was exchanged is 
relevant to a financial contribution analysis. If anything, this relat es to the determination of benefit.  
With respect to the commenters that raised issues regarding interpretations of the statutory terms 
"authority" and "entrusts or directs," we find that these issues are more appropriately raised in the 
context of an actua l CVD proceeding. The issue of whether a provider of a financial contribution is 
an authority arises frequently in our CVD proceedings, and our practice is well -developed and known 
by interested parties. With respect to the "entrusts or directs" language i n section 771(5)(B)(iii) of 
the Act, we explained in the 1998 Final Rule  that "we do not believe it is appropriate to develop a 
precise definition of the phrase for purposes of these regulations" and that it was not necessary to 
provide an "illustrative li st" of actions that could constitute entrustment or direction.22 At the same 
time, we explained that we would examine entrustment or direction on a case -by-case basis, that 
we would "enforce this provision vigorously," and that the statutory language could  encompass a 
"broad range of meanings."23 We reiterate these points here.  
 
20 Central Bank, N.A. v. First Interstate Bank, N.A. , 511 U.S. 164, 187 (1994) (quoting Pension Benefit 
Guaranty Corp. v. LTV Corp. , 496 U.S. 633, 650 (199 0)). 
21 Proposed Rule, 84 FR at 24408.  
22 See 1998 Final Rule , 63 FR at 65349.  
23 See id., 63 FR at 65349, 65351.  G/SCM/N/1/USA/ 1/Suppl. 31 
 
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  4. Determination of Undervaluation  
Several commenters claimed the proposed rule needs to have more objective and clear criteria. 
Some commenters were in support of the proposed rule but advocated for a more clear and concise 
decision -making process, including a predetermined set of objective criteria, for determining if a 
currency is manipulated to avoid uncertainty and charges of arbitrariness. Other commenters argued 
that since there is no one agreed -upon methodology for calculating currency undervaluation, any 
such estimate would unavoidably be subjective. One such comment claimed Commerce 's proposed 
methodology is too broad to be understood, properly applied and trans parent, and is therefore 
arbitrary and unenforceable. According to the commenter, although Commerce claimed that "[i]n 
determining whether there has been government action on the exchange rate that undervalues the 
currency, [it does] not intend in the norm al course to include monetary and related credit policy of 
an independent central bank or monetary authority…," it did not define "the normal course." This, 
the commenter claimed, opens the door to a wide range of actions and could lead to unpredictability . 
Similarly, the comment expressed concern that Commerce does not define "external balance" that 
an equilibrium REER would achieve or "the relevant time period" that Commerce would consider.  
Another commenter argued that even if Commerce used the Internati onal Monetary Fund 's (IMF) 's 
approach for estimating the equilibrium REER, since the IMF utilizes a wide range of methods to 
make its determinations, Commerce should not use the IMF 's estimation of the equilibrium REER as 
a stand -alone determination but ra ther as one component of its overall assessment. This commenter 
also pointed out a discrepancy related to the second step of Commerce 's methodology: estimating 
the nominal, bilateral U.S. dollar exchange rate consistent with the equilibrium REER that would  
have prevailed but for the undervaluation. The commenter contended that the equilibrium REER 
estimated does not provide any information on bilateral exchange rates.  
Various commenters urged Commerce to consider methods for calculating the equilibrium REER  
other than those commonly used by the IMF and other third parties, claiming that these 
methodologies, unlike the one described by Commerce in the proposed rule, will produce a REER 
that causes a true zero -balance in the current account (i.e., neither  a trade surplus nor a trade 
deficit). Other commenters recommended that, in addition to considering the equilibrium REER as 
defined in its proposed methodology, when measuring the extent of undervaluation, Commerce 
should also consider the equilibrium REER as defined in either the IMF 's macroeconomic balance 
approach (which has effectively been replaced with the External Balance Assessment approach - the 
IMF's preferred methodology) or the purchasing power parity approach. Alternatively, Commerce 
could focus no t on the REER but on the fundamental equilibrium exchange rate (FEER) in accordance 
with the methodology proposed by the Peterson Institute for International Economics (PIIE). The 
commenters argued, among other points, that the right approach varies by cou ntry and that in some 
cases these alternatives may better capture economic conditions and provide more accurate 
estimates of undervaluation for the currencies of certain countries.  
Response:  Commerce recognizes the challenges in countervailing subsidies re sulting from 
exchanges of undervalued currencies and the variation in the analytical methods used and the REER 
gap estimates produced. However, these are measurement and valuation problems not unlike those 
that arise in many CVD proceedings, and Commerce w ill therefore follow standard procedure for 
CVD proceedings in the currency context. All information and evidence on the administrative record 
will be reviewed, and all estimates of REER gaps, U.S. dollar exchange rate gaps and the underlying 
methodologies  and data will be assessed after receiving any input from Treasury and in light of 
interested party comments. Commerce 's ultimate determination will be fully documented and 
supported by evidence on the administrative record, and the general analytical appr oach will be that 
described in the final rule.  
Commerce agrees with the commenters that multiple valid methodologies may exist for calculating 
the equilibrium REER and that no single definition or formula necessarily fully captures a country 's 
appropriate medium -term external balance. Section 358.528 of this final rule states that Commerce 
normally will examine the gap between the country 's real effective exchange rate (REER) and the 
real effective exchange rate that achieves an external balance over the me dium term that reflects 
appropriate policies (equilibrium REER) and will carry out its analyses based on the determinations 
and information from Treasury and other relevant record information. Specifically, an assessment of 
the appropriate level for countr ies' external balances and REERs that takes into account 
macroeconomic fundamentals, demographics, cyclical factors, and desired medium -term 
macroeconomic policies, and which generates multilaterally consistent estimates, would not G/SCM/N/1/USA/ 1/Suppl. 31 
 
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  necessarily indicate tha t a zero balance for the current account would be "appropriate" for all 
countries. As such, if the facts on the record for a case indicate circumstances warranting the use of 
an alternative methodology to calculate the equilibrium REER, the rule preserves Commerce 's 
flexibility to do so in exceptional cases. However, in most cases, we intend to follow the normal rule 
set forth in new section 351.528.  
In light of the comments received, and to provide more guidance to the public and interested parties 
in our CVD proceedings, these final modifications to our regulations specify in greater detail than did 
the proposed rule the process we will follow in examining an alleged subsidy relating to the exchange 
of an undervalued currency. We also note that many of the  comments evinced a misunderstanding 
of the exact type of subsidy at issue, the benefit calculation proffered in the proposed rule, and the 
process for calculating a CVD rate more generally. Therefore, this final rule adds new section 351.528 
to our regula tions to specifically address the exchange of undervalued currencies. Paragraph (a) of 
section 351.528 provides the criteria Commerce will follow in determining whether a currency is 
undervalued. Paragraph (b) describes how Commerce will determine the exis tence and amount of 
any benefit resulting from the exchange of an undervalued currency. Given Commerce 's lack of 
experience with examining this type of subsidy, we disagree that more detail is warranted at this 
time. As we stated in the 1998 Final Rule  with respect to similar issues for which we had little 
experience, we intend to follow the general principles set forth in this final rule, and we may develop 
more detailed criteria as we gain experience.24  
5. Government Action on the Exchange Rate  
Several c ommenters urged greater clarity on how "government action on the exchange rate" would 
factor into the assessment of currency undervaluation. They argued that a foreign government 
should be engaged in activity purposefully aimed at undervaluing its currency  for Commerce to find 
undervaluation. In other words, Commerce should limit its application of the proposed new rule to 
currency undervaluation caused by official actions that target the exchange rate for competitive 
purposes and not to currency fluctuatio ns caused by monetary and fiscal policies or any non -policy 
factors. Some commenters claimed that, due to strong economic growth and higher interest rates 
than other advanced economies, the U.S. dollar is arguably overvalued on a purchasing power parity 
(PPP) basis, but that this situation should not constitute grounds for imposing countervailing duties 
against our major trading partners.  
Response : We have added language in a new paragraph 351.528(a)(2) stating that Commerce 
normally will make an affirmativ e finding of currency undervaluation only if there has been 
government action on the exchange rate that contributes to an undervaluation of the currency. Such 
government action will not normally include monetary and related credit policy of an independent 
central bank or monetary authority. In making its assessment of government action on the exchange 
rate, Commerce may also consider the relevant government 's degree of transparency regarding 
actions that could alter the exchange rate.  
The scope of governmen t action under this final rule will necessarily become more clear as 
Commerce considers a range of government actions over time and the institutional settings in which 
they are undertaken.  This could potentially include whether and how meaningful distinctions can be 
made between government action and market action.  
6. Calculation of the Benefit  
One commenter argued that Commerce 's benefit formula of "X percent duty for X percent 
undervaluation" will significantly over -penalize a producer because th e notion that "X percent duty" 
counteracts "X percent undervaluation" is only true under certain circumstances. This commenter 
provided several examples to illustrate its point. Furthermore, the commenter claimed that 
determining the tariff duty that accur ately countervails the extent of undervaluation is a difficult and 
imprecise process that varies considerably from industry to industry and from firm to firm.  
Some commenters stated that the proposed rule suggested that Commerce will only calculate a 
benef it from sales to the United States that occur in U.S. dollars; however, these commenters 
suggested that it is also possible that sales to third countries could be denominated in dollars and 
 
24 See, e.g.,  1998 Final Rule , 63 FR at 65378.  G/SCM/N/1/USA/ 1/Suppl. 31 
 
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  thus benefit from the same undervaluation when converted to the do mestic currency. Moreover, a 
government 's currency undervaluation practices may also impact goods traded in other international 
currencies. In order to capture the full benefit from currency undervaluation, these commenters 
argued that dollar -denominated s ales to third countries should also be included in the benefit 
calculation.  
Some commenters also argued that Commerce should countervail the benefit that exporters receive 
from converting all currencies into the domestic currency, instead of only counterva iling the benefit 
received from converting U.S. dollars into the domestic currency. These commenters believed that 
doing so would capture the full benefit of the undervaluation, which is calculated on a REER -basis 
(i.e., the domestic currency is undervalue d relative to a basket of currencies, and not simply 
bilaterally undervalued relative to the dollar).  
Response : The first comment misunderstands the benefit analysis set forth in the proposed rule 
and adopted in this final rule. Nowhere in the proposed rul e did we suggest, and nowhere in this 
final rule do we suggest, that "X percent undervaluation" will lead to "X percent duty." A 10% 
undervaluation will not automatically lead to a duty of 10%. This is not the approach to benefit and 
duty calculation promu lgated in this final rule.  
Rather, this final rule makes clear that when Commerce determines under section 351.528 that a 
country 's currency is undervalued, there may be a benefit to a particular firm when that firm 
exchanges U.S. dollars for domestic curr ency and receives more domestic currency than it otherwise 
would have absent the undervaluation. Commerce agrees with this commenter 's argument that this 
calculation must be firm -specific.  
With respect to the argument that we should account for dollar -denominated sales to third countries 
in our benefit calculation, paragraph 351.528(b)(2) of the regulatory text in this final rule states 
that the amount of any benefit from a currency exchange normally will be based on the difference 
between the amount of dom estic currency the firm received in exchange for U.S. dollars and the 
amount of domestic currency the firm would have received absent the difference between (i) the 
nominal, bilateral U.S. dollar rate consistent with the equilibrium REER and (ii) the actua l nominal, 
bilateral U.S. dollar rate during the relevant time period, taking into account any information 
regarding the impact of government action on the exchange rate. We do not find it necessary, in 
this final rule, to specify or anticipate the manner in which the firm earned the U.S. dollars that it is 
converting. The relevant point is that there may be a benefit at the point of the conversion of those 
U.S. dollars into the undervalued domestic currency. There might be a variety of means by which 
the firm earned the U.S. dollars and, to the extent that is relevant, we will assess the facts on a 
case-by-case basis consistent with sections 701 and 771(5)(B) of the Act and the provisions of this 
final rule.  
Regarding the comments that we should calculate t he benefit after taking into account conversions 
of all currencies (not just the U.S. dollar) into the domestic currency, we have not adopted this 
position in this final rule. Although the determination of undervaluation, as outlined in 
section  351.528(a),  is made with respect to a basket of currencies, section 351.528(b) specifies that 
Commerce will determine the existence of a benefit after examining the difference between (i) the 
nominal, bilateral U.S. dollar rate consistent with the equilibrium REER an d (ii) the actual nominal, 
bilateral U.S. dollar rate during the relevant time period, taking into account any information 
regarding the impact of government action on the exchange rate. In other words, this final rule only 
addresses conversions of U.S. do llars into domestic currency that might give rise to a countervailable 
subsidy. Given Commerce 's lack of experience with determining the benefit from exchanges of 
currency, we find that conversions of U.S. dollars are the appropriate focus at this time. On ce 
Commerce gains more experience in investigating and analyzing this type of subsidy, there may 
come a time to adopt the approach advocated by these commenters.  
7. Other Calculation Issues  
One commenter stated that if the benefit from an undervalued curre ncy is limited to the excess 
domestic currency a firm receives in exchange for U.S. dollars, the sales denominator should also 
be limited to sales in U.S. dollars. To allocate the excess domestic currency over a firm 's total sales 
revenue to determine the subsidy rate for the currency program would understate the benefit 
conferred by currency undervaluation.  G/SCM/N/1/USA/ 1/Suppl. 31 
 
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  A second commenter argued that the existence of a net benefit to an exporter from an undervalued 
exchange rate cannot be presumed due to the fact that an individual exporter may engage in a 
variety of transactions in a foreign currency. This commenter stated that the costs for imported 
goods such as materials and machinery that may be used by the exporter would increase with an 
undervalued exchange rate.  As a result, the measurement of the net impact of an undervalued 
currency is necessarily a complex undertaking that requires a comprehensive analysis of the effect 
of the exchange rate not only on the exports of the finished product, but also on the cost of all inputs 
used by the producer and its upstream suppliers. In a similar vein, a third commenter argued that 
the determination of the duty rate that accurately countervails any undervaluation is very difficult 
and will vary from industry to industry and  from firm to firm. This commenter stated that firms with 
the same level of sales revenue will have different subsidy rates from the currency undervaluation 
based on their level of imported goods used in the production of its merchandise and provided three  
examples to demonstrate the argument.  
Response : The essential concept, with which we agree, behind the argument of the first commenter 
is that the numerator and the denominator for our subsidy calculations must be on the same basis. 
This is the fundamenta l premise of our attribution regulation codified at 19 CFR 351.525. This 
regulation sets forth how we calculate the ad valorem  subsidy rate and attribute a subsidy to the 
sales value of the product or products that benefit from the subsidy. In any future C VD proceeding 
involving a subsidy resulting from the exchange of an undervalued currency, the appropriate 
numerator and denominator will be based upon the facts on the record of that proceeding consistent 
with the application of the attribution rules in 19  CFR 351.525.  
While the first commenter cited to our attribution regulation, the second and third commenters did 
not reference any statutory or regulatory support for their arguments with respect to the calculation 
of an alleged subsidy resulting from curr ency undervaluation. The second commenter has argued 
that an undervalued currency may increase certain costs to a firm, which supposedly would negate 
or offset any benefits received by that firm due to an undervalued exchange rate. The commenter 
argued tha t an undervalued exchange rate will increase the firm 's costs for imported raw materials 
and equipment, which should be considered in determining whether the firm received a benefit from 
exchanges of the undervalued currency.  
We disagree with this commente r that these modifications to our regulations should include this 
concept. We note that section 771(6) of the Act provides for only a limited number of adjustments 
to the gross countervailable subsidy in order to calculate the net countervailable subsidy. These are: 
(a) any application fee, deposit, or similar payment paid in order to qualify for, or to receive, the 
benefit of the countervailable subsidy; (b) any loss in value of the countervailable subsidy resulting 
from its deferred receipt, if the deferr al is mandated by government order; and (c) export taxes, 
duties, or other charges levied on the export of merchandise to the United States specifically 
intended to offset the countervailable subsidy received. The adjustment proposed by this commenter 
is not included within the list in section 771(6) of the Act, and therefore we are not including it in 
this final rule.  
Likewise, we disagree with the third commenter that the cost of imported inputs is relevant to the 
benefit calculation for a subsidy resulting from a firm 's exchange of U.S. dollars for the undervalued 
domestic currency. In effect, this commenter is suggesting an offset to the benefit conferred through 
exchanges of undervalued currency. However, such an offset is not contemplated by sec tion 771(6) 
of the Act. Nevertheless, we agree with this commenter that the subsidy rate calculation will be firm -
specific. Except with respect to the calculation of the all -others rate under section 705(c)(5) of the 
Act, a country -wide rate under section 777A(e)(2)(B) of the Act or a "non -selected" respondent rate 
in an administrative review, all of our subsidy rates are firm -specific. The identical subsidy provided 
to three different firms could produce different subsidy rates given a number of factors su ch as sales 
revenue, whether the subsidy is untied or tied (and to which product or products it is tied), and the 
presence of cross -owned companies. In fact, it would be unusual to have identical subsidy rates for 
different firms.  
8. The Role of Treasury  
Comments fell across a wide spectrum with respect to the role Treasury should play in a 
determination that undervalued currency gives rise to a countervailable subsidy. Some commenters 
argued that Treasury holds the primary expertise, reflecting its role hi storically as the lead 
U.S. government agency with responsibility for exchange rate policy, in assessing whether foreign G/SCM/N/1/USA/ 1/Suppl. 31 
 
- 12 - 
 
  government actions result in currency manipulation, and therefore Commerce should ultimately 
defer to Treasury 's judgment in making the  decision as to whether undervaluation exists in a given 
CVD proceeding. Other  commenters recognized that Treasury has relevant experience that 
Commerce should take into account, but that Commerce should ultimately make any determination 
regarding underval uation subsidies for CVD purposes.  
Commenters also stated that Commerce should clarify the difference between "currency 
manipulation," as Treasury investigates in its semi -annual reports on exchange practices of 
U.S. trading partners, and "currency underva luation" in Commerce 's proposed rule. Still other 
commenters argued that Treasury should not be involved, or should only be involved to the extent 
that it is treated similarly to that of any objective, third party source of data and analysis, in making 
the relevant determination. The latter group tended to emphasize the point that Commerce should 
use a different standard from Treasury 's manipulation standard. Treasury, they argued, has not 
utilized its own statutory authority to the fullest, as evidenced by  the fact that it has not found any 
country to be a currency manipulator since the mid -1990s. Commenters argued that strong 
enforcement of the trade remedy laws will require relying on stronger, less -discretionary statutory 
authority than that which govern s Treasury 's findings.  
Four commenters objected to the language in the preamble to the proposed rule that Commerce 
would "defer" to Treasury on the issue of undervaluation. Three commenters suggested that we 
replace the word "defer" in the preamble of the proposed rule with the phrase "confer with, and seek 
advice from, " Treasury.  Two commenters objected to the statement in the proposed rule that 
Commerce "will request that the Secretary of the Treasury provide Treasury 's evaluation and 
conclusion as to" undervaluation, and suggested that the rule simply state that Commerce "will 
determine" the issue of undervaluation. Another commenter argued that Commerce 's deference to 
Treasury in the proposed rule  is an inappropriate delegation of Commerce 's statutory authority to 
determine CVDs under the Act. This commenter argued that federal courts have ruled that an agency 
with delegated authority from Congress may not sub -delegate that authority to another entity. Two 
commenters argued that Commerce did not provide sufficient explanation in the preamble to the 
proposed rule as to when it wou ld depart from Treasury 's recommendation regarding undervaluation.  
Other commenters raised concerns that Treasury 's involvement in Commerce 's investigatory 
process, which is governed by tight statutory timelines, could cause disruption to that process and 
potentially delay relief to the petitioning U.S. industry. These commenters request that, if Treasury 
is to be involved, Commerce should specify clear dates by which Treasury 's views and supporting 
information would be put on the record of a given proceedi ng, to ensure that all parties have 
sufficient time to submit rebuttal factual information and to comment. Other commenters suggested 
that any Treasury input should not go on the record until after Commerce issues a preliminary 
finding, given the very shor t statutory deadline (e.g., 65  days from initiation) for issuing such 
preliminary decisions in a CVD investigation.  
Response:  Commerce recognizes that Treasury has considerable experience and data that are 
relevant to an analysis of currency undervaluation  as envisioned in this regulation. That said, 
Commerce makes its determination regarding CVDs pursuant to a different legal authority from 
Treasury 's statutory currency determinations, and for a different statutory purpose. The purpose of 
the CVD remedy is  to provide redress to particular domestic industries that are found by the 
U.S. International Trade Commission (ITC) to be injured (or threatened with injury) by imports that 
Commerce determines to benefit from specific subsidies. Under the CVD law, the p etitioning U.S. 
industries have a right to relief – because section 701 of the Act mandates that duties "shall be 
imposed" – where Commerce and the ITC make these requisite findings. A determination that the 
foreign subsidizing government is intending  to provide its subsidized industries a competitive 
advantage vis -à-vis their U.S. and international competitors, or to otherwise manipulate the playing 
field, is not a required element of a CVD determination under U.S. law.  
In contrast, pursuant to the Omnibus  Trade and Competitiveness Act of 1988 and the 
Trade  Facilitation and Trade  Enforcement Act of 2015, Treasury is responsible for completing and 
releasing a semi-annual  Report to Congress on Macroeconomic and Foreign Exchange Policies of 
Major Trading Partn ers of the United States. In its analysis, Treasury assesses a range of 
developments in international economic and exchange rate policies of selected trading partners, 
including currency developments. The 1988 statute directs Treasury to determine whether countries 
manipulate the rate of exchange between their currency and the United States dollar for purposes  of 
preventing effective balance of payments adjustments or gaining unfair competitive advantage in G/SCM/N/1/USA/ 1/Suppl. 31 
 
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  international trade. The 2015 statute requires Tre asury to assess the macroeconomic and currency 
policies of major trading partners and conduct enhanced analysis of and engagement with those 
partners if they trigger certain objective criteria that provide insight into possibly unfair currency 
practices.25 
We therefore agree with those commenters who argue that the statutory provisions pursuant to 
which Treasury conducts its analysis differ from the statutory provisions governing Commerce 's CVD 
analysis. Accordingly, whereas the analysis in Treasury 's semi-annual  reports examining possible 
currency manipulation may have relevance to Commerce 's determination, Treasury 's analysis in its 
semi-annual  reports is distinct from the analysis as to whether there is undervaluation for purposes 
of a CVD proceeding. In other words, Treasury conducts a different analysis, pursuant to a different 
statutory authority and subject to different statutory criteria, in its semi-annual  reports. 
Nonetheless, these statutes reflect Congress ' recognition that Treasury has expertise in currency -
related matters.  
With respect to the comments arguing that Commerce cannot legally "defer" decision -making 
authority to Treasury under principles of administrative law, section 771(1) of the Act designates 
the Secretary of Commerce as the admin istering authority of the CVD law. This means that Congress 
has delegated to Commerce, and no other agency, the authority to determine the existence of 
countervailable subsidies, impose duties, and otherwise administer the CVD law. Commerce 's 
authority und er the CVD law is distinct and independent from Treasury 's authority to consider 
whether countries manipulate their currency pursuant to 22 U.S.C . § 5305 and 19 U.S.C. § 4421.  
We agree with the commenters who argued that it is important for Commerce to ret ain ultimate 
authority on administering the CVD law, including determining whether exchanges of an undervalued 
currency constitute countervailable subsidies in a given case. We acknowledge that federal courts 
have found that when Congress delegates authori ty to an agency, that agency cannot redelegate 
that authority to a separate entity.26 However, this final rule does not delegate any decision -making 
authority from Commerce to Treasury, but rather provides that Commerce will request and expect 
to receive T reasury 's evaluation and conclusion as to undervaluation, government action and the 
bilateral U.S. dollar rate gap during a CVD proceeding. In any such future CVD proceeding involving 
currency undervaluation, we intend to place Treasury 's evaluation and conclusion on the record and 
allow the submission of factual information to rebut, clarify or correct Treasury 's evaluation and 
conclusion, as required by 19 CFR 351.301(c)(4). In recognition of Treasury 's experience in the area 
of evaluatin g currency undervaluation, Commerce will defer to Treasury 's expertise, but we will not 
delegate to Treasury the ultimate determination of whether currency undervaluation involves a 
countervailable subsidy in a given case. It is lawful for one federal agen cy to turn to another for 
"advice and policy recommendations" in an area where that other agency might have particular 
expertise.27 Accordingly, we intend to defer to Treasury 's expertise with respect to currency 
undervaluation. Therefore, we disagree with  the commenters that objected to the proposed rule on 
this basis. We further disagree with the commenters that suggested that we need to describe in 
detail when we will depart from Treasury 's evaluation and conclusion regarding undervaluation. We 
expect th at we will normally follow Treasury 's evaluation and conclusion regarding undervaluation, 
 
25 Following the closing of the comment period for the proposed rule, Treasury designated a country 
(China) as a currency manipulator for the first time.  See Press Release, Treasury Designates China as a 
Currency Manipulator (Aug. 5, 2019),  https://home.treasury.gov/news/press -releases/sm751 . 
26 See G.H. Daniels III & Associates v. Perez, 626 Fed. Appx. 205, 210 -12 (10th Cir. 2015) (holding that 
the Department of Homeland Security 's subdelegation of its authorities under the H -2B visa program to an 
outside agency, the Department of  Labor, was improper); see also U.S. Telecom Ass 'n v. FCC, 359 F.3d 554, 
565-66 (D.C. Cir. 2004) (prohibiting the FCC from delegating its decision -making authority to state 
commissions);  Shook v. D.C. Fin. Responsibility & Mgmt. Assistance Auth., 132 F.3d 775, 783 -84 and n.6 
(D.C.  Cir. 1998) (forbidding the Control Board in the Department of Education from redelegating its delegated 
powers to a Board of Trustees); and ETSI Pipeline Project v. Missouri, 484 U.S. 495, 511, 517 (1988) (holding 
that the Army wa s not permitted to redelegate to the Department of the Interior power to contract to remove 
water for industrial use that Congress delegated to the Army). But see Louisiana Forestry Ass 'n Inc. v. Sec 'y 
U.S. Dep 't of Labor, 745 F.3d 653, 671 -75 (3rd Cir. 20 14) (determining that the Department of 
Homeland  Security did not delegate its authority under the H -2B visa program to the Department of Labor).  
27 See U.S. Telecom Ass 'n v. Federal Comm 'ns Commission, 359 F.3d 554, 568 (D.D.C. 2017) ( "[A] 
federal agency m ay turn to an outside entity for advice and policy recommendations, provided the agency 
makes the final decisions itself "); see also Bellion Spirits v. United States, 393 F. Supp. 3d 5, 15 -17 (D.D.C. 
2019) (upholding the Alcohol and Tobacco Tax and Trade B ureau 's reliance on the scientific fact -finding and 
analysis of the Food and Drug Administration because the Bureau retained ultimate decision -making authority).  G/SCM/N/1/USA/ 1/Suppl. 31 
 
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  and any departure from Treasury 's evaluation and conclusion will be based on substantial evidence 
on the administrative record.  
Regarding the comments expressing conc ern about the impact of Treasury 's role on the deadlines 
of CVD proceedings, section 351.528 states that Commerce will request from Treasury its evaluation 
and conclusion as to the issues of undervaluation, government action and the U.S. dollar rate gap. 
Commerce intends to do so well before the deadline for a preliminary determination on the alleged 
currency subsidy. We will place on the record any information timely received from Treasury and 
intend to follow all normal procedures in Commerce 's regulation s – such as those in 
19 CFR 351.301  – with respect to that information. It is Commerce 's intention that, normally, such 
information will be placed on the record prior to a preliminary determination regarding the alleged 
currency subsidy so that, where poss ible and appropriate, Commerce can take it into account in its 
preliminary findings. Regardless of when the information is placed on the record, however, and as 
with all record information in a CVD proceeding, interested parties will have adequate opportun ity 
to rebut any information provided by Treasury with factual information of their own. All interested 
parties and U.S. government agencies also have the opportunity to submit case briefs and rebuttal 
briefs to Commerce, pursuant to 19 CFR 351.309, after Commerce issues its preliminary 
determination.  
9. Specificity  
Several commenters argued that the proposed addition of paragraph (c) to 19 CFR 351.502 would 
contravene U.S. law and WTO rules. They argued that the traded goods sector is too diverse of a 
sector to constitute a "group" of enterprises under the Act and SCM Agreement. One commenter, 
citing to prior CVD investigations of aluminum extrusions and coated paper suitable for high -quality 
print graphics using sheet -fed presses from the People 's Republic  of China, claimed that treating 
exporters as a "group" for purposes of specificity for domestic subsidies is contrary to Commerce 's 
past practice. Other commenters, on the other hand, generally supported the proposed modification. 
They argued that definin g the traded goods sector as a "group" is a positive step toward addressing 
specificity for certain types of subsidies.  
More broadly, some commenters went beyond the proposed regulatory text and argued that 
currency undervaluation and exchanges of currency  are not "specific" under U.S. or international 
law. Specifically, these commenters claimed that such subsidies, which are all -encompassing and 
broadly available throughout the economy, cannot be deemed specific under the statute or satisfy 
the "known or p articularized" requirement of specificity under Article 2.1 of the SCM Agreement. 
One commenter cited to Commerce 's past determinations in this regard, and subsequent affirmance 
by the CIT, as demonstrative of the agency 's historical understanding of the t erm "specific." Because 
the provisions of the SCM Agreement mirror those of the Act, several commenters also claimed that 
the proposed rule  would conflict with WTO rules.  
Some commenters argued that Commerce should not limit its specificity analysis to tha t under the 
proposed rule alone (i.e., a domestic subsidy), because currency -related subsidies could also be 
viewed as export subsidies. One commenter further urged Commerce to allow domestic industries 
to allege currency undervaluation as an export subsid y. In contrast, one commenter claimed that 
treating currency undervaluation as an export subsidy is never proper under WTO rules, because 
the mere fact that such subsidies are provided to enterprises that export is not, in itself, enough to 
be found to be specific.  
Other commenters requested revisions to the proposed language regarding specificity. For purposes 
of defining the relevant "group" of enterprises, several commenters requested that Commerce 
elaborate on its interpretation of the term "primarily."  According to these commenters, that term 
(i.e., primarily), if left undefined, would be restrictive, and even critical to effective implementation. 
As one possible solution, some of these commenters proposed that Commerce replace the term with 
the phrase "actively engaged in," thereby establishing a more discretionary basis for assessment. 
Separately, one commenter suggested that Commerce replace the phrase "may consider" with "will 
consider" for purposes of consistency with other CVD regulations.  
Response : As described above, Commerce is modifying 19 CFR 351.502 to add new paragraph (c), 
which clarifies that in analyzing specificity, Commerce normally will consider enterprises that buy or 
sell goods internationally to comprise a "group" of enterprises with in the meaning of G/SCM/N/1/USA/ 1/Suppl. 31 
 
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  section  771(5A)(D) of the Act. Therefore, under this regulation, if a subsidy is limited to enterprises 
that buy or sell goods internationally, or if enterprises that buy or sell goods internationally are the 
predominant users or receive disproportionately large amounts of a subsidy, then that subsidy may 
be specific. This regulatory modification is similar to prior interpretations of the statutory term 
"group." For example, we have found state -owned enterprises and foreign -invested enterp rises to 
comprise "groups" under the Act.28 
We agree with the commenters who suggested removing the word "primarily" from the proposed 
rule, because the use of this word may raise problems with administrability due to its ambiguity. We 
also agree with the commenters who suggested changing the phrase "may consider." New 
section  351.502(c) now states that Commerce "normally will consider enterprises that buy or sell 
goods internationally to comprise such a group." This phrase ("normally will") is more consist ent 
with the terminology used in most of our CVD regulations.  
We disagree that this regulatory modification runs afoul of U.S. law or WTO rules. 
Section  771(5A)(D) of the Act does not define the word "group." Therefore, it is within Commerce 's 
authority to  adopt a permissible interpretation of that term.29 The interpretation adopted by 
paragraph (c) is permissible, because enterprises that buy or sell goods internationally are certainly 
an identifiable set of enterprises, and they constitute a subset of all  economic actors within a country. 
Moreover, as mentioned above, this type of interpretation of the term "group" is consistent with our 
practice. Regarding the argument that enterprises that buy or sell goods internationally could come 
from a variety of di fferent industries, we do not disagree. But this is irrelevant under our existing 
regulations, because 19 CFR 351.502(b) states that there need not be shared characteristics among 
the enterprises that comprise a group.30  
We further note that section 771(5 A)(A) of the Act deems export subsidies and import -substitution 
subsidies to be specific per se , without regard to whether there is a narrow or diverse array of 
industries or companies reflected by the recipients of those two categories of subsidies, or wh ether 
there are any other common characteristics among those recipients. The SCM Agreement not only 
likewise deems these two categories of subsidies to be specific, but also prohibits them outright.31 
Specifically in the context of undervalued currency, moreover, we note that if an exchange rate is 
too low or undervalued, it underprices exports and overprices imports. This directly distorts 
international trade on a systemic basis with the same direct a dverse impact on trade as the 
simultaneous provision of import -substitution and export subsidies. Accordingly, treating importers 
and exporters of goods as a group for specificity purposes is entirely consistent with the international 
trade focus and remed ial purposes of the trade remedy laws.  
With respect to any statements Commerce may have made in prior investigations regarding issues 
that are squarely addressed and clarified in this final rule, it is a fundamental principle of 
administrative law that an agency is allowed to change its practice, provided the change is 
reasonable and explained.32 Not only have we explained any such changes, but we are also adopting 
them through this notice -and-comment rulemaking.  
Some of the comme nters stepped beyond the text of the proposed regulatory provision to argue the 
specificity of currency -related subsidies per se . This regulatory modification to 19 CFR 351.502 only 
concerns the definition of the term "group," and cannot possibly address t he specificity of a particular 
type of subsidy per se . Rather, an affirmative or negative finding of specificity for a particular type 
of subsidy can only occur in a CVD proceeding. Nonetheless, we offer the following observations. 
Under section 771(5) of the Act, a countervailable subsidy must be one that is found specific under 
section 771(5A) of the Act. Section 771(5A)(D)(iii) of the Act, in turn, permits a finding of specificity 
as a matter of fact ( de facto ) where, inter alia , "(a)n enterprise or indu stry is a predominant user of 
a subsidy" or "receives a disproportionately large amount of the subsidy." The Federal Circuit has 
held that determinations of "dominance" and "disproportionality" for the purposes of de facto 
 
28 See Import Administration Policy Bulletin 10.1, supra  note 2; Citric Acid and Certain Citrat e Salts 
From the People 's Republic of China: Final Affirmative Countervailing Duty Determination , supra note 2.  
29 See Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc. , 467 U.S. 837 (1984).  
30 In any event, enterprises that buy or sell goods internationally clearly do share a characteristic, 
namely, that they buy or sell goods internationally.  
31 See Article  3 of the SCM Agreement.  
32 See FCC v. Fox Television Stations, Inc. , 556 U.S. 502, 515 (2 009); see also Huvis Corp v. 
United  States , 570 F. 3d 1347, 1354 (Fed. Cir. 2009).  G/SCM/N/1/USA/ 1/Suppl. 31 
 
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  specificity must be made on a fac t-specific, case -by-case basis.33 The CIT has further held that one 
enterprise or industry may in fact "predominantly" benefit from a subsidy even though that subsidy 
is nominally available to many different enterprises or industries.34 Accordingly, there is no bright 
line rule at which an enterprise or industry or group of enterprises or industries would be deemed a 
predominant user or a disproportionate beneficiary. Indeed, in determining whether an enterprise 
or industry (or group thereof) is a dispropor tionate or predominant beneficiary of a subsidy, 
Commerce evaluates the relative share of the benefits received as opposed to the absolute share of 
the benefit. Thus, an inquiry into whether an alleged subsidy is all -encompassing or broadly available 
throu ghout an economy, requires case -by-case analysis, which Commerce intends to perform for 
currency undervaluation allegations, consistent with its statutory obligation. Moreover, because 
U.S. law is consistent with our international obligations, we disagree with commenters that the 
proposed rule  conflicts with WTO rules, specifically the requirements of the SCM Agreement.  
We also disagree with commenters that the proposed rule limits the domestic industries ' ability to 
bring certain allegations (such as expor t subsidy allegations) regarding such subsidies, or that it 
limits Commerce 's specificity analysis with respect to such allegations. This final rule only addresses 
the definition of the term "group" for domestic subsidy purposes; it does not address export  
subsidies. Indeed, Commerce, will continue to consider allegations concerning currency 
undervaluation and exchanges of currency – as well as all subsidy allegations – consistent with its 
statutory and regulatory obligations, including this final rule . And Commerce 's evaluation of the facts 
of the proceeding, on a case -by-case basis, will serve to facilitate its analysis, and decisions on how 
to proceed with allegations concerning currency undervaluation and exchanges of currency. Because 
Commerce 's evaluat ion of each allegation will be based on the facts of each case and consistent with 
U.S. law, there is no need to opine on the one commenter 's statement that treating currency 
undervaluation as an export subsidy is never proper under international law.  
10. General Comments  
Commerce 's Proposal Infringes on the IMF 's Authority  
We received comments from various parties arguing that our proposed rule  infringes upon the 
jurisdiction of the IMF. One commenter stated that under Article XV of the GATT, the IMF is th e 
appropriate venue to handle currency -related issues and that to countervail currency undervaluation 
could violate that GATT Article. Another commenter also argued that the IMF is the appropriate 
forum to deal with exchange rates and currency manipulation . This commenter argued that this is 
clear from the provisions of Article XV:2 of GATT 1994, which indicate that it is the IMF, and not the 
WTO, that has authority over problems concerning monetary reserves, balance of payments and 
foreign exchange arrange ments. Another commenter argued that individual members of the IMF do 
not have the right to assess whether another member is involved in exchange rate manipulation or 
whether the member 's exchange rate is undervalued. Finally, another commenter also argued  that 
the proposed rule  attempts to supersede the leading role played by the IMF on currency and 
exchange rate issues.  
Response:  We find the arguments made by these commenters to be without legal foundation. There 
is nothing under U.S. law or the IMF Artic les of Agreement that prevents a sovereign member of the 
IMF from analyzing whether an exchange involving an undervalued currency constitutes a 
countervailable subsidy under a nation 's CVD law. These commenters have cited to no provision 
under U.S. law or within the IMF Articles of Agreement that prohibits the remedies set forth under 
the CVD law to be applied against imports that benefit from countervailable subsidies resulting from 
an undervalued currency. In addition, the proposed rule  does not infringe upon any rights or 
obligations set forth under the IMF Articles of Agreement. There is no language in the proposed rule  
that restricts in any manner the actions undertaken by the IMF, nor have the commenters referenced 
any language in the proposed rule  that infringes on any actions of the IMF. Moreover, we note that 
the SCM Agreement explicitly includes certain currency -related practices in item (b) of the 
"Illustrative List of Export Subsidies" in Annex I, and therefore it is incorrect to suggest that the IMF 
is the only international organization with jurisdiction over currency matters.  
Moreover, under the section 771(1) of the Act, Commerce is designated as the administering 
authority of the CVD law. As such, under section 701 of the Act, we are legally m andated to 
 
33 AK Steel Corp.  v. United  States , 192 F. 3d 1367,  1382-1385 (Fed. Cir. 1999).  
34 Royal  Thai Gov't v. United  States , 441 F. Supp.  2d 1350,  1364 (CIT 2006).  G/SCM/N/1/USA/ 1/Suppl. 31 
 
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  determine whether any government or public entity of a country is providing, directly or indirectly, 
a countervailable subsidy with respect to the manufacture, production, or export of a class or kind 
or merchandise imported into the United Stat es. Therefore, we are legally required to address, and  – 
if the ITC finds injury – provide a remedy for, any action of a government or public entity that results 
in a subsidy that meets the definition of a countervailable subsidy defined under section 771( 5) of 
the Act and is specific as defined under section 771(5A) of the Act. Indeed, Commerce has previously 
investigated exchange rate regimes.35 Furthermore, at the time of the adoption of the 
SCM Agreement and the subsequent enactment of the Uruguay Round Agreements Act, there was 
only a narrow list of government actions that, notwithstanding the provisions of sections 771(5) and 
771(5A) of the Act, would be treated as non -countervailable. This list was set forth under 
section  771(5B) of the A ct. This list of exempted practices did not include exchange rate regimes, 
and, in addition, has long -since expired.  
Possible Retaliation by U.S. Trading Partners  
Some commenters argued against implementing the proposed regulation on the grounds that, 
should the United States begin to apply its CVD law against imports that allegedly benefit from 
undervalued currencies, this would result in disruption of international trade of goods and services, 
and could also lead U.S. trading partners to retaliate through  the imposition of CVDs of their own, 
or through some other similar actions, especially in light of recent statements from the 
U.S. Administration about possible actions to lower the U.S. dollar value. This would have an adverse 
impact on U.S. exports of m anufactured goods and agricultural products, and potentially reduce 
economic growth, especially if the WTO were to rule adversely against this practice. Similarly, one 
commenter notes that the IMF was originally created to avoid the risks of politicization  of bilateral 
exchange rates disputes and a return to beggar -thy-neighbor currency policies, which are risks that 
implementation of the proposed regulation may recreate.  
Response:  As noted elsewhere in this notice, under the CVD statute, the petitioning U. S. industries 
have a right to relief where Commerce determines that countervailable subsidies exist and the ITC 
determines that any such subsidies that benefit the imports in question cause, or threaten to cause, 
injury to those petitioning industries. Com merce must fully enforce the CVD law regardless of 
whether doing so may prompt trading partners to attempt to retaliate through the improper 
imposition of CVDs against U.S . exports or through other means. Having previously received and 
addressed allegation s that exchange rate regimes result in countervailable subsidies that injure 
U.S.  industry, it is entirely consistent with the U.S. countervailing duty law that Commerce provide 
additional guidance on such matters through this rulemaking. When it comes to  Commerce 's 
attention that other countries are imposing retaliatory trade remedies or other trade barriers in a 
manner inconsistent with their international obligations, Commerce will work with the 
U.S. Trade  Representative 's office and other interagency p artners to ensure that U.S. rights are fully 
protected.  
Other Methods to Combat Currency Manipulation/Misalignment May Be More Effective  
A few commenters argued that the proposed rule is not the most effective method to address 
currency manipulation becaus e it would simply countervail imports from a specific industry (instead 
of all exports from the country under investigation or review) and because any duties would be 
contingent upon an affirmative injury ruling from the ITC. Others opined that the propose d rule is 
inappropriate because it fails to address the root cause of the currency misalignment ( i.e., the 
dollar 's overvaluation due to years of excessive global demand for dollar -denominated assets and 
financial capital). Some of these commenters suggest ed potentially more effective alternatives that 
would better address the issue, such as countervailing currency intervention (CCI), 
Market  Access  Charge (MAC), and naming China a currency manipulator. However, all three of these 
commenters supported Commer ce's proposed rule and believed that it was an important (albeit 
imperfect) first step towards fully addressing the issue. One commenter noted that Commerce should 
coordinate with Treasury to implement CCI, which would reduce bureaucratic problems that wou ld 
likely occur under Commerce 's proposed countervailing duty approach.  
 
35 See, e.g.,  Final Negative Countervailing Duty Determination: Pork Rind Pellets from Mexico , 
48 FR 39105 (August 29, 1983); Final Affirmative Countervailing Duty Determination: Certain Electrical 
Conductor Aluminum Redraw Rod from Venezuela , 53 FR 24763 (June 30, 1988).  These cases involved dual 
exchange rate regimes.  G/SCM/N/1/USA/ 1/Suppl. 31 
 
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  Response:  While the alternatives proposed by commenters for combating currency misalignment 
and manipulation may or may not be more effective than the modifications proposed by Commerc e, 
Commerce cannot implement any of them, because: (1) concerning the option to label China a 
currency manipulator, Treasury, and not Commerce, possesses the sole statutory authority to label 
a country a currency manipulator; and (2) both the other two pro posed alternatives (CCI and MAC) 
also fall outside of Commerce 's purview and have no connection to subsidies or CVDs.  
Relationship to the Antidumping Law  
Some commenters argued that Commerce should or could use the antidumping law to address 
currency under valuation. For example, one commenter suggested that currency undervaluation 
could be one factor that leads to a finding of a particular market situation in an antidumping 
proceeding. This commenter argued that currency undervaluation can distort costs in the comparison 
market by distorting the costs of input products.  
Response:  This final rule addresses only CVD proceedings. Nothing in this final rule should be 
construed as affecting Commerce 's antidumping duty regulations or practice in any way. The issue  
of what constitutes a particular market situation in an antidumping proceeding is a case -by-case 
determination, and interested parties are permitted to make a timely allegation of a particular 
market situation in antidumping proceedings.  
11. Economic Impa ct 
Some commenters noted that there is a large difference in the estimates produced by the two 
economic impact assessments included in the proposed rule, with the first estimating an economic 
impact of $3.9 to $16.6 million in duties collected annually and  the second estimating a range of 
$1.71 to $3.14 billion in new duties collected annually on Chinese imports alone. These comments 
claimed that this suggests Commerce lacks a reliable or well -developed methodology for imposing 
CVDs for currency undervaluat ion. 
Some comments predicted the impacts the duties would have. One commenter argued that linking 
the well -known undervaluation issue with the more obscure CVD law will increase public awareness 
of the latter and result in a greater number of CVD allegatio ns from a variety of U.S. industries 
demanding that CVDs be enforced to remedy the amount of benefit provided to foreign producers. 
The commenter therefore contended that the proposed rule will likely increase its economic impact 
to a level well beyond Com merce 's estimations. Another commenter claimed that there has been a 
significant cost to overall U.S. employment and GDP as a result of the U.S. government not 
effectively addressing the trade effects of undervalued foreign currencies and that eliminating this 
cost could increase U.S. GDP by between $288 billion and $720 billion and create 2.3 to 5.8 million 
jobs. 
Other commenters argued that imposing CVDs to offset the benefit of currency -related subsidies to 
imported goods would likely have relatively lit tle impact overall to the U.S. economy, although it 
could provide much -needed relief to the industries and workers that have been specifically impacted 
by currency undervaluation. While some other commenters agreed that the overall impact was likely 
to be relatively small, they suggested that this was an argument against implementing this proposed 
regulation because the likely positive impact does not justify the significant risks involved. Still other 
commenters expressed concern that countervailing underv alued currencies would have a negative 
impact on the U.S. economy because it will force U.S. producers to switch to other foreign suppliers. 
They claimed the resulting shift in supply chains will have a widespread effect on U.S. prices of the 
relevant merc handise.  
Response:  The significant divergence in the estimates produced by the two alternative approaches 
reflects the nature of this exercise, which involves numerous variables and several simplifying 
assumptions that must be made for analytic tractabilit y, as well as data constraints. Under the 
Alternative 1, "bottom -up" approach, Commerce estimated the total value of additional duties that 
would be collected on all imports of the relevant merchandise if currency -related subsidies were 
countervailed in fu ture proceedings using standard benefit -to-the-recipient calculation 
methodologies.  In contrast, under Alternative 2, Commerce followed a "top -down" approach to 
estimate total additional duties on the basis of market price effects. Thus, both approaches 
attempted to quantify the economic impact of the implementation of this regulation in terms of total G/SCM/N/1/USA/ 1/Suppl. 31 
 
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  additional duties, but necessarily involved different variables and assumptions made, which in large 
part explains the divergent economic impact estimates. S ince each estimate involves a margin of 
error, Commerce provided both assessments to give a sense of the dollar range of the possible 
economic impact of implementing this regulation.  
Alternative 1 is based on Commerce 's experience and practice, as well as with the requirements of 
the Act and Commerce 's regulations. Under the law, CVDs are calculated and applied to offset 
benefits that accrue at the firm level.  Although countervailing subsidies resulting from currency 
undervaluation may increase the number o f allegations brought forth by petitioners and investigated 
by Commerce in a given case, any resulting CVDs would still be contingent on an affirmative injury 
finding by the ITC, thereby significantly limiting the economic impact of the proposed rule. No 
commenters argued specifically for the adoption of Alternative 2 over Alternative 1 as the appropriate 
economic impact analysis, although at least one commenter argued, without citing to any specific 
data for support and without specifying which alternative  it was addressing, that the economic 
impact could be higher than the estimate in the proposed rule.  
Commerce agrees with commenters who argue that currency undervaluation has adversely affected 
the U.S. economy. Although, as discussed above, it is not pos sible to determine the economic impact 
of implementing this rule with certainty, the collection of appropriate duties will have a significant 
positive impact on the specific U.S. industries harmed by undervalued currencies.  Some commenters 
objected that Co mmerce 's economic impact estimates fail to account for what they believe will be a 
vast number of currency allegations and additional CVD cases (and presumably orders) that will 
result from the proposed rule. While the number of allegations in future CVD p roceedings is almost 
certain to increase by at least one, it is unlikely currency allegations would increase the total number 
of cases, since that would be contingent upon an affirmative injury finding, which, as we discussed 
in the proposed rule at 24412,  depends on a host of factors other than whether the currency is 
undervalued. Furthermore, currency -related duties in terms of their magnitude and scope of 
application would reflect subsidy benefits calculated under the same benefit -to-the-recipient 
framew ork that governs all of Commerce 's subsidy benefit calculations. Currency -related duties 
would apply to foreign exporters in a CVD proceeding that receive a benefit by converting U.S. 
dollars to their domestic currency. The duties would not be applied across the board to all imports 
of the subject merchandise in an equal amount, but rather would reflect on -the-ground company -
level circumstances. With respect to the trade -diversion effects that some commenters argue 
currency -related duties could have, Commerce notes that currency -related duties in this regard 
would be no different than duties associated with other subsidies and (as explained above) are 
unlikely to increase the number of orders under which duties are collected. As Commerce noted in  
the proposed rule  at 24411, at the time of drafting Commerce had 58 CVD orders on China, the 
most for any single country. Each CVD order typically involves multiple subsidy programs. Yet 
despite the increasing number of orders (starting with zero in 2006) , U.S. imports from China have 
continued to rise significantly over the last several years to $540 billion in 2018.  
As we explained in the proposed rule,36 Commerce 's CVD determinations are made on a case -by-
case basis, and each determination is based solely on the administrative record of that case, as well 
as on the Act and Commerce 's regulations. Commerce 's economic assessment of this final rule is 
not meant to serve as a predictor of the results of future CVD proceedings in which currency -related 
subsidies are alleged. Rather, our economic assessment is done solely to comply with 
Executive  Order 12866.  
Changes from the Proposed Rule  
As noted in the previous "Response to Comments on the Proposed Rule" section, in this final rule, 
and as a result of th e comments on the proposed rule, we made changes (primarily additions) to 
the regulatory text. Many of these additions to the regulatory text – for example, the additions 
describing in greater detail the steps of the benefit determination and the additions  regarding the 
role of government action on the exchange rate – are consistent with how we described the rule in 
the preamble to the proposed rule. In light of the comments received, we have decided to include 
greater detail in the regulatory text itself, rather than in the preamble alone. Other changes to the 
regulatory text – for example, the technical changes in 19 CFR 351.502 – respond to comments 
received.  
 
36 See Proposed Rule, 84 FR at 24409.  G/SCM/N/1/USA/ 1/Suppl. 31 
 
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  In particular, Commerce has made certain modifications to the proposed rule 's regulatory text for  
19 CFR 351.502(c) with respect to specificity. In particular, in response to comments, we removed 
the word "primarily" from the description of the enterprises that buy or sell goods internationally 
that may comprise a group of enterprises. We also changed  the phrase "may consider" to "normally 
will consider," in response to comments.  
Additionally, we have created new 19 CFR 351.528 to contain the rules governing the determination 
of benefit for subsidies resulting from exchanges of undervalued currencies. We determined that it 
is more appropriate to put these rules in their own regulatory provision, rather than adding language 
in a paragraph of the general provisions of 19 CFR 351.503. Additionally, in response to comments 
received, we have provided additio nal detail on the various steps in the benefit determination. New  
paragraph  351.528(a)(1) makes clear that a determination of undervaluation normally is a 
prerequisite to proceeding with the benefit determination. New paragraph 351.528(a)(2) makes 
clear th at a finding of government action on the exchange rate that contributed to the undervaluation 
normally is a prerequisite to the finding of undervaluation in paragraph (a)(1). New 
paragraph  351.528(b)(1) explains that Commerce normally will calculate the be nefit after taking 
into account the U.S. dollar rate gap. New paragraph 351.528(b)(2) explains that Commerce 
normally will determine the amount of the benefit by comparing the amount of domestic currency a 
firm received to the amount it would have received  absent the U.S. dollar rate gap. New 
paragraph  351.528(c) is similar to language in the proposed rule, in that it specifies that Commerce 
will seek an evaluation and conclusion from Treasury regarding the issues of undervaluation, 
government action, and t he U.S. dollar rate gap.  
Classifications  
Executive Order 12866  
It has been determined that this rule is economically significant for purposes of 
Executive  Order  12866.  
Executive Order 13771  
This rule constitutes regulatory action within the meaning of Exec utive Order 13771.  
Economic Impact  
In the proposed rule at 24409, Commerce presented two alternative approaches to estimating the 
economic impact of the adoption of this rule. Under Alternative 1, Commerce estimated an economic 
impact ranging from $4 milli on to less than $17 million. Under Alternative 2, Commerce estimated 
an impact in the range of between $1.71 billion and $3.14 billion. We received a small number of 
limited public comments on these estimates, which we have addressed above. None of the com ments 
contained a detailed argument that one of the alternatives is more accurate than the other.  
As we stated in the proposed rule, this economic impact analysis is done solely to conform with the 
requirements of Executive Order 12866 and is not meant to serve as a predictor of the facts in any 
potential future cases, nor to indicate the likelihood of any particular future determinations, should 
we receive currency -related subsidy allegations in the future. Commerce 's CVD determinations are 
based solely on  the administrative record of the proceeding at hand, consistent with the Act and 
Commerce 's regulations.  
Paperwork Reduction Act  
This rule contains no new collection of information subject to the Paperwork Reduction Act, 
44 U.S.C.  Chapter 35.  
Congressiona l Review Act  
This rule is subject to the Congressional Review Act provisions of the Small Business Regulatory 
Enforcement Fairness Act of 1996 (5 U.S.C. 801, et seq. ) and will be transmitted to the Congress 
and to the Comptroller General for review in accordance with such provisions.  G/SCM/N/1/USA/ 1/Suppl. 31 
 
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  Executive Order 13132  
This rule does not contain policies with federalism implications as that term is defined in section 1(a) 
of Executive Order 13132, dated August 4, 1999 (64 FR 43255 (August 10, 1999)).  
Regulatory Flexi bility Act  
The Chief Counsel for Regulation for the Department of Commerce has certified to the Chief Counsel 
for Advocacy of the Small Business Administration under the provisions of the 
Regulatory  Flexibility  Act, 5 U.S.C. 605(b), that this final rule wo uld not have a significant economic 
impact on a substantial number of small business entities. The factual basis for this certification was 
published with the proposed rule and is not repeated here. No comments were received regarding 
the Regulatory  Flexib ility Act. As a result, the conclusion in the certification memorandum for the 
proposed rule remains unchanged and a final regulatory flexibility analysis is not required and one 
has not been prepared.  
List of Subjects in 19 CFR Part 351  
Administrative pra ctice and procedure, Antidumping, Business and industry, Cheese, Confidential 
business information, Countervailing duties, Freedom of information, Investigations, Reporting and 
recordkeeping requirements.  
Dated: January 29, 2020.  
Jeffrey I. Kessler , 
Assist ant Secretary for Enforcement and Compliance . 
For the reasons stated, 19 CFR Part 351 is amended as follows:  
PART 351 —ANTIDUMPING AND COUNTERVAILING DUTIES  
 1. The authority citation for 19 CFR part 351 continues to read as follows:  
Authority:  5 U.S.C. 301; 19 U.S.C. 1202 note; 19 U.S.C. 1303 note; 19 U.S.C. 1671 et seq. ; and 
19 U.S.C. 3538.  
 2. In § 351.502, redesignate paragraphs (c) through (f) as paragraphs (d) through (g), and 
add paragraph (c) to read as follows:  
§ 351.502  Specificity of  domestic subsidies.  
* * * * * 
(c) Traded goods sector . In determining whether a subsidy is being provided to a "group" of 
enterprises or industries within the meaning of section 771(5A)(D) of the Act, the Secretary normally 
will consider enterprises that buy or sell goods internationally to comprise such a group.  
* * * * * 
 3. Add new § 351.528 to read as follows:  
§ 351.528  Exchanges of undervalued currencies.  
(a) Currency undervaluation —(1) In general . The Secretary normally will consider whether a benef it 
is conferred from the exchange of United States dollars for the currency of a country under review 
or investigation under a unified exchange rate system only if that country 's currency is undervalued 
during the relevant period. In determining whether a country 's currency is undervalued, the 
Secretary normally will take into account the gap between the country 's real effective exchange rate 
(REER) and the real effective exchange rate that achieves an external balance over the medium 
term that reflects app ropriate policies (equilibrium REER).  G/SCM/N/1/USA/ 1/Suppl. 31 
 
- 22 - 
 
  (2) Government action . The Secretary normally will make an affirmative finding under 
paragraph  (a)(1) only if there has been government action on the exchange rate that contributes to 
an undervaluation of the currency.  In assessing whether there has been such government action, 
the Secretary will not normally include monetary and related credit policy of an independent central 
bank or monetary authority. The Secretary may also consider the government 's degree of 
transpa rency regarding actions that could alter the exchange rate.  
(b) Benefit —(1) In general . Where the Secretary has made an affirmative finding under 
paragraph  (a)(1), the Secretary normally will determine the existence of a benefit after examining 
the differe nce between (i) the nominal, bilateral United States dollar rate consistent with the 
equilibrium REER and (ii) the actual nominal, bilateral United States dollar rate during the relevant 
time period, taking into account any information regarding the impact  of government action on the 
exchange rate.  
(2) Amount of benefit . Where there is a difference under paragraph (b)(1), the amount of the benefit 
from a currency exchange normally will be based on the difference between the amount of currency 
the firm recei ved in exchange for United States dollars and the amount of currency that firm would 
have received absent the difference referred to in paragraph (b)(1).  
(c) Information sources.  In applying this section, t he Secretary will request that the Secretary of th e 
Treasury provide its evaluation and conclusion as to the determination s under paragraphs (a) and 
(b)(1) . 
 
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